Performance Budgeting: Observations on the Use of OMB's Program  
Assessment Rating Tool for the Fiscal Year 2004 Budget		 
(30-JAN-04, GAO-04-174).					 
                                                                 
The Office of Management and Budget's (OMB) Program Assessment	 
Rating Tool (PART) is meant to provide a consistent approach to  
evaluating federal programs during budget formulation. To better 
understand its potential, congressional requesters asked GAO to  
examine (1) how PART changed OMB's fiscal year 2004 budget	 
decisionmaking process, (2) PART's relationship to the Government
Performance and Results Act of 1993 (GPRA), and (3) PART's	 
strengths and weaknesses as an evaluation tool. 		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-174 					        
    ACCNO:   A09185						        
  TITLE:     Performance Budgeting: Observations on the Use of OMB's  
Program Assessment Rating Tool for the Fiscal Year 2004 Budget	 
     DATE:   01/30/2004 
  SUBJECT:   Evaluation methods 				 
	     Performance measures				 
	     Planning programming budgeting			 
	     Program evaluation 				 
	     OMB Program Assessment Rating Tool 		 

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GAO-04-174

United States General Accounting Office

                     GAO Report to Congressional Requesters

January 2004

PERFORMANCE BUDGETING

 Observations on the Use of OMB's Program Assessment Rating Tool for the Fiscal
                                Year 2004 Budget

                                       a

GAO-04-174

Highlights of GAO-04-174, a report to congressional requesters

The Office of Management and Budget's (OMB) Program Assessment Rating Tool
(PART) is meant to provide a consistent approach to evaluating federal
programs during budget formulation. To better understand its potential,
congressional requesters asked GAO to examine (1) how PART changed OMB's
fiscal year 2004 budget decisionmaking process, (2) PART's relationship to
the Government Performance and Results Act of 1993 (GPRA), and (3) PART's
strengths and weaknesses as an evaluation tool.

GAO recommends that OMB (1) address the capacity demands of PART, (2)
strengthen PART guidance, (3) address evaluation information availability
and scope issues, (4) focus program selection on crosscutting comparisons
and critical operations, (5) broaden the dialogue with congressional
stakeholders, and (6) articulate and implement a complementary
relationship between PART and GPRA.

OMB generally agreed with our findings, conclusions, and recommendations
and stated that it is already taking actions to address many of our
recommendations.

GAO also suggests that Congress consider the need for a structured
approach to articulating its perspective and oversight agenda on
performance goals and priorities for key programs.

www.gao.gov/cgi-bin/getrpt?GAO-04-174.

To view the full product, including the scope and methodology, click on
the link above. For more information, contact Paul Posner at (202)
512-9573 or [email protected].

January 2004

PERFORMANCE BUDGETING

Observations on the Use of OMB's Program Assessment Rating Tool for the Fiscal
Year 2004 Budget

PART helped structure OMB's use of performance information for its
internal program and budget analysis, made the use of this information
more transparent, and stimulated agency interest in budget and performance
integration. OMB and agency staff said this helped OMB staff with varying
levels of experience focus on similar issues.

Our analysis confirmed that one of PART's major impacts was its ability to
highlight OMB's recommended changes in program management and design. Much
of PART's potential value lies in the related program recommendations, but
realizing these benefits requires sustained attention to implementation
and oversight to determine if desired results are achieved. OMB needs to
be cognizant of this as it considers capacity and workload issues in PART.

There are inherent challenges in assigning a single rating to programs
having multiple purposes and goals. OMB devoted considerable effort to
promoting consistent ratings, but challenges remain in addressing
inconsistencies among OMB staff, such as interpreting PART guidance and
defining acceptable measures. Limited credible evidence on results also
constrained OMB's ability to rate program effectiveness, as evidenced by
the almost 50 percent of programs rated "results not demonstrated."

PART is not well integrated with GPRA-the current statutory framework for
strategic planning and reporting. By using the PART process to review and
sometimes replace GPRA goals and measures, OMB is substituting its
judgment for a wide range of stakeholder interests. The PART/GPRA tension
was further highlighted by challenges in defining a unit of analysis
useful for both program-level budget analysis and agency planning
purposes. Although PART can stimulate discussion on program-specific
measurement issues, it cannot substitute for GPRA's focus on thematic
goals and department-and governmentwide crosscutting comparisons.
Moreover, PART does not currently evaluate similar programs together to
facilitate trade-offs or make relative comparisons.

PART clearly must serve the President's interests. However, the many
actors whose input is critical to decisions will not likely use
performance information unless they feel it is credible and reflects a
consensus on goals. It will be important for OMB to discuss timely with
Congress the focus of PART assessments and clarify the results and
limitations of PART and the underlying performance information. A more
systematic congressional approach to providing its perspective on
performance issues and goals could facilitate OMB's understanding of
congressional priorities and thus increase PART's usefulness in budget
deliberations.

Contents

  Letter

Results in Brief
Background
OMB Used the PART to Systematically Assess ProgramPerformance

and Make Results Known, but Follow-up on PART Recommendations Is Uncertain

Despite OMB's Considerable Efforts to Create a Credible Evaluation Tool,
PART Assessments Require Judgment and Were Constrained by Data Limitations

Subjective Terms and a Restrictive Format Contributed to Subjective and
Inconsistent Responses There Were Inconsistencies in Defining Acceptable
Measures and in Logically Responding to Question "Pairs" Disagreements on
Performance Information Led to Creation of a "Results Not Demonstrated"
Category The Fiscal Year 2004 PART Process Was a Parallel, Competing
Approach to GPRA's Performance Management Framework

Defining a "Unit of Analysis" That Is Useful for Program-Level Budget
Analysis and Agency Planning Purposes Presents Challenges

Conclusions and General Observations Matter for Congressional
Consideration Recommendations for Executive Action Agency Comments

1 4 8

11

17

20

21

25

27

29 33 36 36 37

Appendixes

Appendix I:

Appendix II:

Appendix III:

Appendix IV:

Scope and Methodology 39

The Fiscal Year 2004 PART and Differences Between the
Fiscal Year 2004 and 2005 PARTs 48
Section I: Program Purpose & Design (Yes, No, N/A) 48
Section II: Strategic Planning (Yes, No, N/A) 48
Section III: Program Management (Yes, No, N/A) 50
Section IV: Program Results (Yes, Large Extent, Small

Extent, No) 53

Development of PART 62 Fiscal Year 2003 62 Fiscal Year 2004 62 Fiscal Year
2005 64

Comments from the Office of Management and Budget 65

                                    Contents

Appendix V:GAO Contacts and Staff Acknowledgments 67 GAO Contacts 67
Acknowledgments 67

Tables	Table 1: Table 2: Table 3:

Table 4:

Table 5:

Table 6:

Table 7:

Table 8:

Table 9:

Overview of Sections of PART Questions 9
Overview of PART Program Types 10
The Effect of Overall PART Score on Proposed Funding
Changes (Discretionary Programs) 43
The Effect of Overall PART Score on Proposed Funding
Changes (Small Discretionary Programs) 44
The Effect of Overall PART Score on Proposed Funding
Changes (Medium-Size Discretionary Programs) 44
The Effect of Overall PART Score on Proposed Funding
Changes (Large Discretionary Programs) 44
The Effect of PART Component Scores on Proposed
Funding Changes (All Discretionary Programs) 45
The Effect of PART Component Scores on Proposed
Funding Changes (Small Discretionary Programs) 45
Side-by-Side of the Fiscal Year 2005 PART and the Fiscal
Year 2004 PART Questions 54

Figures Figure 1: Fiscal Year 2004 PART Recommendations 13 Figure 2:
Number of Discretionary PART Programs by Rating and Funding Result, Fiscal
Years 2003-2004 14 Figure 3: The PART Process and Budget Formulation
Timelines 64

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separately.

A

United States General Accounting Office Washington, D.C. 20548

January 30, 2004

The Honorable George V. Voinovich
Chairman
Subcommittee on Oversight of Government Management, the Federal

Workforce and the District of Columbia Committee on Governmental Affairs
United States Senate

The Honorable Todd R. Platts
Chairman
Subcommittee on Government Efficiency and Financial Management
Committee on Government Reform
House of Representatives

The Honorable Sam Brownback
United States Senate

The Honorable Todd Tiahrt
House of Representatives

Since the 1950s, the federal government has attempted several
governmentwide initiatives designed to better align spending decisions
with expected performance-what is often commonly referred to as
"performance budgeting." Consensus exists that prior efforts-including
the Hoover Commission, the Planning-Programming-Budgeting-System
(PPBS), Management by Objectives, and Zero-Based Budgeting (ZBB)-
failed to significantly shift the focus of the federal budget process from
its
long-standing concentration on the items of government spending to the
results of its programs.

In the 1990s, Congress and the executive branch laid out a statutory and
management framework that provides the foundation for strengthening
government performance and accountability, with the Government
Performance and Results Act of 19931 (GPRA) as its centerpiece. GPRA is
designed to inform congressional and executive decision making by
providing objective information on the relative effectiveness and
efficiency
of federal programs and spending. A key purpose of the act is to create
closer and clearer links between the process of allocating scarce
resources

1 Pub. L. No. 103-62 (1993).

and the expected results to be achieved with those resources. This type of
integration is critical, as we have learned from prior initiatives that
failed in part because they did not prove to be relevant to budget
decision makers in the executive branch or Congress.2 GPRA requires not
only a connection to the structures used in congressional budget
presentations but also consultation between the executive and legislative
branches on agency strategic plans, which gives Congress an oversight
stake in GPRA's success.3

In its overall structure, focus, and approach GPRA incorporates two
critical lessons learned from previous reforms. First, any approach
designed to link plans and budgets-that is, to link the responsibility of
the executive to define strategies and approaches with the legislative
"power of the purse"-must explicitly involve both branches of our
government. PPBS and ZBB failed in part because performance plans and
measures were developed in isolation from congressional oversight and
resource allocation processes.

Second, the concept of performance budgeting has and likely will continue
to evolve. Thus, no single definition of performance budgeting encompasses
the range of past and present needs and interests of federal decision
makers. The need for multiple definitions reflects the differences in the
roles various participants play in the budget process. And, given the
complexity and breadth of the federal budget process, performance
budgeting must encompass a variety of perspectives in its efforts to link
resources with results.

This administration has made the integration of performance and budget
information one of five governmentwide management priorities under its
President's Management Agenda (PMA).4 A central element in this initiative
is the Office of Management and Budget's (OMB) Program Assessment Rating
Tool (PART) that OMB describes as a diagnostic tool meant to provide a
consistent approach to evaluating federal programs as part of the

2 U.S. General Accounting Office, Performance Budgeting: Past Initiatives
Offer Insights for GPRA Implementation, GAO/AIMD-97-46 (Washington, D.C.:
Mar. 27, 1997).

3 See Pub. L. No. 103-62, S: 2 (1993), 5 U.S.C. S: 306 (2003), and 31
U.S.C. S:S: 1115-1116 (2003).

4 In addition to budget and performance integration, the other four
priorities under the PMA are strategic management of human capital,
expanded electronic government, improved financial performance, and
competitive sourcing.

executive budget formulation process. The PART is the latest iteration of
50 years of federal performance budgeting initiatives. It applies 25
questions to all "programs"5 under four broad topics: (1) program purpose
and design, (2) strategic planning, (3) program management, and (4)
program results (i.e., whether a program is meeting its long-term and
annual goals) as well as additional questions that are specific to one of
seven mechanisms or approaches used to deliver the program.6

To better understand the PART's potential as a mechanism for assessing
program goals and results, you asked us to examine (1) how the PART
changed OMB's decision-making process in developing the President's fiscal
year 2004 budget request; (2) the PART's relationship to the GPRA planning
process and reporting requirements; and (3) the PART's strengths and
weaknesses as an evaluation tool, including how OMB ensured that the PART
was applied consistently.

To respond to your request, we reviewed OMB materials on the development
and implementation of the PART as well as the results produced by the PART
assessments. To assess consistency of the PART's application, we performed
analyses of OMB data from the PART program summary and assessment
worksheets for each of the 234 programs OMB reviewed for fiscal year 2004,
including a statistical analysis of the relationship between the PART
scores and funding levels in the President's Budget. We also identified
several sets of similar programs that we examined more closely to
determine if comparable or disparate criteria were applied in producing
the PART results for these clusters of programs. We reviewed 28 programs
in nine clusters covering food safety, water supply, military equipment
procurement, provision of health care, statistical agencies, block grants
to assist vulnerable populations, energy research programs, wildland fire
management, and disability compensation. We also interviewed OMB officials
regarding their experiences with the PART in the fiscal year 2004 budget
process.

5 There is no standard definition for the term "program." For purposes of
PART, OMB described the unit of analysis (program) as (1) an activity or
set of activities clearly recognized as a program by the public, OMB,
and/or Congress; (2) having a discrete level of funding clearly associated
with it; and (3) corresponding to the level at which budget decisions are
made.

6 The seven major categories are competitive grants, block/formula grants,
capital assets and service acquisition programs, credit programs,
regulatory-based programs, direct federal programs, and research and
development programs. Tax programs were not addressed for the fiscal year
2004 PART process.

As part of our examination of the usefulness of the PART as an evaluation
tool and also to obtain agency perspectives on the relationship between
PART and GPRA, we interviewed department and agency officials, including
senior managers, and program, planning, and budget staffs at (1) the
Department of Health and Human Services (HHS), (2) the Department of
Energy (DOE), and (3) the Department of the Interior (DOI). We selected
these three departments because they had a variety of program types (e.g.,
block/formula grants, competitive grants, direct federal, and research and
development) that were subject to the PART and could provide a broad-based
perspective on how the PART was applied to different programs. With the
exception of our summary analyses of all 234 programs, the information
obtained from OMB and agency officials and our review of selected programs
is not generalizable to the PART process for all 234 programs. However,
the consistency and frequency with which similar issues were raised by OMB
and agency officials suggest that our review reliably captures several
significant and salient aspects of the PART as a budget and evaluation
tool.

Our review focused on the fiscal year 2004 PART process. We conducted our
work from May 2003 through October 2003 in accordance with generally
accepted government auditing standards. Detailed information on our scope
and methodology appears in appendix I. OMB provided written comments on a
draft of this report that are reprinted in appendix IV.

Results in Brief	The PART has helped to structure and discipline OMB's use
of performance information for its internal program analysis and budget
review, made the use of this information more transparent, and stimulated
agency interest in budget and performance integration. Both OMB and agency
staff noted that this helped ensure that OMB staff with varying levels of
experience focused on the same issues, fostering a more disciplined
approach to discussing program performance with agencies. Several agency
officials also told us that the PART was a catalyst for bringing agency
budget, planning, and program staff together since none could fully
respond to the PART questionnaire alone.

Our analysis confirmed that one of the PART's major impacts was its
ability to highlight OMB's recommended changes in program management and
design. Over 80 percent of the recommendations made for the 234 programs
assessed for the fiscal year 2004 budget process were for improvements in
program design, assessment, and program management; less than 20 percent
were related to funding issues. As OMB and others

recognize, performance is not the only factor in funding decisions.
Determining priorities-including funding priorities-is a function of
competing values and interests. Although OMB generally proposed to
increase funding for programs that received ratings of "effective" or
"moderately effective" and proposed to cut funding for those programs that
were rated "ineffective," our review confirmed OMB's statements that
funding decisions were not applied mechanistically. That is, for some
programs rated "effective" or "moderately effective" OMB recommended
funding decreases, while for several programs judged to be "ineffective"
OMB recommended additional funding in the President's budget request with
which to implement changes.

Much of the potential value of the PART lies in the related program
recommendations and associated improvements, but realization of these
benefits will require sustained attention to implementation and oversight
in order to determine if the desired results are being achieved. Such
attention and oversight takes time, and OMB needs to be cognizant of this
as it considers the capacity and workload issues in the PART. Currently
OMB plans to assess an additional 20 percent of all federal programs
annually. Each year, the number of recommendations from previous years'
evaluations will grow-and a system for monitoring their implementation
will become more critical. OMB encouraged its Resource Management Offices
(RMO) to consider many factors in selecting programs for the fiscal year
2004 PART assessments, such as continuing presidential initiatives and
programs up for reauthorization. While all programs would eventually be
reviewed over the 5-year period, selecting related programs for review in
a given year would enable decision makers to analyze the relative efficacy
of similar programs in meeting common or similar outcomes. We recommend
that OMB centrally monitor and report on agency implementation and
progress on PART recommendations to provide a governmentwide picture of
progress and a consolidated view of OMB's workload in this area. In
addition, to target scarce analytic resources and to focus decision
makers' attention on the most pressing policy issues, we recommend that
OMB reconsider plans for 100 percent coverage of federal programs by
targeting PART assessments based on such factors as the relative
priorities, costs, and risks associated with related clusters of programs
and activities. We further recommend that OMB select for review in the
same year related or similar programs or activities to facilitate such
comparisons and trade-offs.

Developing a credible evidence-based rating tool to provide bottom-line
ratings for programs was a major impetus in developing the PART.

However, inherent challenges exist in assigning a single "rating" to
programs that often have multiple purposes and goals. Despite the
considerable time and effort OMB has devoted to promoting consistent
application of the PART, the tool is a work in progress. Additional
guidance and considerable revisions are needed to meet OMB's goal of an
objective, evidence-based assessment tool. In addition to difficulties
with the tool itself-such as subjective terminology and a restrictive
yes/no format- providing flexibility to assess multidimensional programs
with multiple purposes and goals often implemented through multiple actors
has led to a reliance on OMB staff judgments to apply general principles
to specific cases. OMB staff were not fully consistent in interpreting the
guidance for complex PART questions and in defining acceptable measures.
In addition, the limited availability of credible evidence on program
results also constrained OMB staff's ability to use the PART to rate
programs' effectiveness. Almost 50 percent of the 234 programs assessed
for fiscal year 2004 received a rating of "results not demonstrated"
because OMB decided that program performance information, performance
measures, or both were insufficient or inadequate. OMB, recognizing many
of the limitations with the PART, modified the PART for fiscal year 2005
based on lessons learned during the fiscal year 2004 process, but issues
remain. We therefore recommend that OMB continue to improve the PART
guidance by (1) clarifying when output versus outcome measures are
acceptable and (2) better defining an "independent, quality evaluation."
We further recommend that OMB both clarify its expectations regarding the
nature, timing, and amount of evaluation information it wants from
agencies for the purposes of the PART and consider using internal agency
evaluations as evidence on a case-by-case basis.

The PART is not well integrated with GPRA-the current statutory framework
for strategic planning and reporting. According to OMB officials, GPRA
plans were organized at too high a level to be meaningful for
program-level budget decision making. To provide decision makers with
program-specific, outcome-based performance data useful for executive
budget formulation, OMB has stated its intention to modify GPRA goals and
measures with those developed under the PART. As a result, OMB's judgment
about appropriate goals and measures is substituted for GPRA judgments
based on a community of stakeholder interests. Agency officials

we spoke with expressed confusion about the relationship between GPRA
requirements and the PART process. Many view PART's program-byprogram
focus and the substitution of program measures as detrimental to their
GPRA planning and reporting processes. OMB's effort to influence program
goals is further evident in recent OMB Circular A-11 guidance7 that
clearly requires each agency to submit a performance budget for fiscal
year 2005, which will replace the annual GPRA performance plan.

The tension between PART and GPRA was further highlighted by the
challenges in defining a unit of analysis that is useful both for
program-level budget analysis and agency planning purposes. Although the
PART reviews indicated to OMB that GPRA measures are often not sufficient
to help it make judgments about programs, the different units of analysis
used in these two performance initiatives contributed to this outcome. For
the PART, OMB created units of analysis that tied to discrete funding
levels by both disaggregating and aggregating certain programs. In some
cases, disaggregating programs for the PART reviews ignored the
interdependency of programs by artificially isolating them from the larger
contexts in which they operate. Conversely, in other cases in which OMB
aggregated programs with diverse missions and outcomes for the PART
reviews, it became difficult to settle on a single measure (or set of
measures) that accurately captured the multiple missions of these diverse
components. Both of these "unit of analysis" issues contributed to the
lack of available planning and performance information.

Although the PART can stimulate discussion on program-specific performance
measurement issues, it is not a substitute for GPRA's strategic,
longer-term focus on thematic goals and department- and governmentwide
crosscutting comparisons. GPRA is a broad legislative framework that was
designed to be consultative with Congress and other stakeholders and
allows for varying uses of performance information, while the PART applies
evaluation information to support decisions and program reviews during the
executive budget formulation process. Moreover, GPRA can anchor the review
of programs by providing an overall strategic context for programs'
contributions toward agency goals. We therefore recommend that OMB seek to
achieve the greatest benefit from both GPRA and PART by articulating and
implementing an integrated, complementary relationship between the two. We
further recommend that OMB continue to improve the PART guidance by
expanding the discussion

7 OMB Circular A-11, Preparation, Submission, and Execution of the Budget,
Section 220.

of how programs-also known as "units of analysis"-are determined,
including recognizing the trade-offs, implications, or both of such
determinations.

As part of the President's budget preparation, the PART clearly must serve
the President's interests. However, experience suggests that efforts to
integrate budget and performance are promoted when Congress and other key
stakeholders have confidence in the credibility of the analysis and the
process used. It is unlikely that the broad range of players whose input
is critical to decisions will use performance information unless they
believe it is relevant, credible, reliable, and reflective of a consensus
about performance goals among a community of interested parties.
Similarly, the measures used to demonstrate progress toward a goal, no
matter how worthwhile, cannot appear to serve a single set of interests
without potentially discouraging use of this information by others. We
therefore recommend that OMB attempt to build on the strengths of GPRA and
PART by seeking to communicate early in the PART process with
congressional appropriators and authorizers about what performance issues
and information are most important to them in evaluating programs.
Furthermore, while Congress has a number of opportunities to provide its
perspective on performance issues and goals through its authorization,
oversight, and appropriations processes, we suggest that Congress consider
the need for a more structured approach for sharing with the executive
branch its perspective on governmentwide performance matters, including
its views on performance goals and outcomes for key programs and the
oversight agenda.

In commenting on a draft of this report, OMB generally agreed with our
findings, conclusions, and recommendations. OMB outlined actions it is
taking to address many of our recommendations, including refining the
process for monitoring agencies' progress in implementing the PART
recommendations, seeking opportunities for dialogue with Congress on
agencies' performance, and continuing to improve executive branch
implementation of GPRA plans and reports. OMB also suggested some
technical changes throughout the report that we have incorporated as
appropriate. OMB's comments appear in appendix IV. We also received
technical comments on excerpts of the draft provided to the Departments of
the Interior, Energy, and Health and Human Services, which are
incorporated as appropriate.

Background	The current administration has taken several steps to
strengthen and further performance-resource linkages for which GPRA laid
the groundwork. Central to the budget and performance integration
initiative, the PART is meant to strengthen the process for assessing the
effectiveness of programs by making that process more robust, transparent,
and systematic. As noted above, the PART is a series of diagnostic
questions designed to provide a consistent approach to rating federal
programs. (See app. II for a reproduction of the PART.) Drawing on
available performance and evaluation information, the questionnaire
attempts to determine the strengths and weaknesses of federal programs
with a particular focus on individual program results. The PART asks, for
example, whether a program's long-term goals are specific, ambitious, and
focused on outcomes, and whether annual goals demonstrate progress toward
achieving long-term goals. It is designed to be evidence based, drawing on
a wide array of information, including authorizing legislation, GPRA
strategic plans and performance plans and reports, financial statements,
inspector general and GAO reports, and independent program evaluations.
PART questions are divided into four sections; each section is given a
specific weight in determining the final numerical rating for a program.
Table 1 shows an overview of the four PART sections and the weights OMB
assigned.

Table 1: Overview of Sections of PART Questions

                           Section Description Weight

I. Program Purpose and To assess whether 20% Design  o  the purpose is
clear, and

o  the program design makes sense.

         II. Strategic Planning To assess whether the agency sets valid   10% 
                                                            programmatic 
                                                    o  annual goals, and 
                                                     o  long-term goals. 

        III. Program Management To rate agency management of the program, 20% 
                                                                including 
                                              o  financial oversight, and 
                                          o  program improvement efforts. 

IV. Program To rate program performance on goals reviewed in 50%
Results/Accountability  o  the strategic planning section, and

o  through other evaluations.

Source: GAO analysis of the Budget of the United States Government, Fiscal
Year 2004, Performance and Management Assessments (Washington, D.C.:
February 2003).

In addition, each PART program is assessed according to one of seven
approaches to service delivery. Table 2 provides an overview of these
program types and the number and percentage of programs covered by each
type in the fiscal year 2004 President's Budget performance assessments.

                    Table 2: Overview of PART Program Types

Number/percentage Program type Description of programsa

1. Direct federal Programs in which support and services are provided
primarily by federal employees. 29%

2. Block/formula Programs that distribute funds to state, local,

grant and tribal governments and other entities by 18% formula or block
grant.

         3. Competitive  Programs that distribute funds to state, local, 
                  grant           and tribal governments, organizations,  16% 
                               individuals, and other entities through a 
                                                    competitive process. 

         4. Capital assets        Programs in which the primary means to 
               and service          achieve goals is the development and  15% 
               acquisition  acquisition of capital assets (such as land, 
                                 structures, equipment, and intellectual 
                             property) or the purchase of services (such 
                              as maintenance and information technology) 
                                               from a commercial source. 

5. Research and Programs that focus on creating knowledge

development or applying it toward the creation of systems, 14% devices,
methods, materials, or technologies.

          6. Regulatory-       Programs that employ regulatory action to 
                   based        achieve program and agency goals through   6% 
                             rule making that implements, interprets, or 
                                  prescribes law or policy, or describes 
                               procedure or practice requirements. These 
                           programs issue significant regulations, which 
                                              are subject to OMB review. 

7. Credit Programs that provide support through 4 loans, loan guarantees,
and direct credit. 2%

8. Mixedb Programs that contain elements of different 4 program types. 2%

Source: GAO summary and analysis of the Budget of the United States
Government, Fiscal Year 2004, Performance and Management Assessments
(Washington, D.C.: February 2003).

aPercentages do not add to 100 percent due to rounding.

bOMB noted that in rare cases, drawing questions from two of the seven
PART program types-that is, creation of a "mixed" program type-yields a
more informative assessment.

During the fiscal year 2004 budget cycle, OMB applied the PART to 234
programs (about 20 percent of the fiscal year 2004 President's Budget
request to Congress8), and gave each program one of four overall ratings:
(1) "effective," (2) "moderately effective," (3) "adequate," or (4)
"ineffective" based on program design, strategic planning, management, and
results. A fifth rating, "results not demonstrated," was given-
independent of a program's numerical score-if OMB decided that a program's
performance information, performance measures, or both were insufficient
or inadequate. The administration plans to assess an additional 20 percent
of the budget each year until the entire executive branch has been
reviewed. For more information on the development of the PART, see
appendix III.

OMB Used the PART to Systematically Assess Program Performance and Make
Results Known, but Follow-up on PART Recommendations Is Uncertain

The PART clarified OMB's use of performance information in its budget
decision-making process and stimulated new interest in budget and
performance integration. OMB generally proposed budget increases for
programs that received ratings of "effective" or "moderately effective"
and decreased funding requests for those programs that were rated
"ineffective," but there were clear exceptions. Moreover, the more
important role of the PART was not in making resource decisions but in its
support for recommendations to improve program design, assessment, and
management. OMB's ability to use the PART to identify and address future
program improvements and measure progress-a major purpose of the PART-is
predicated on its ability to oversee the implementation of PART
recommendations. However, it is not clear that OMB has a centralized
system to oversee the implementation of such recommendations or evaluate
their effectiveness.

The PART Made Budget and Performance Integration at OMB More Transparent

The PART helped structure and discipline the use of performance
information in the budget process and made the use of such information
more transparent throughout the executive branch. According to OMB senior
officials and many of the examiners and branch chiefs, the PART lent
structure to a process that had previously been informal and gave OMB
staff a systematic way of asking performance-related questions. Both

8 OMB defined 20 percent of the budget as either 20 percent of programs or
their funding levels so long as all programs are assessed over the 5-year
cycle for fiscal years 2004 through 2008 budget requests.

agency and OMB staff noted that this helped ensure that OMB staff with
varying levels of experience focused on the same issues, fostering a more
disciplined approach to discussing performance within OMB and with
agencies. Agency officials told us that by encouraging more communication
between departments and OMB, the PART helps illuminate both how OMB makes
budget decisions and how OMB staff think about program management. The
PART also provided a framework for raising performance issues during the
OMB Director's Reviews. OMB managers and staff reported that it led to
richer discussions on what a program should be achieving, whether the
program was performing effectively, and how program performance could be
improved.

Agencies also reported that the PART process expanded the dialogue between
program, planning, and budget staffs, and stimulated interest in budget
and performance integration. Several agency officials stated that the PART
worksheets were a catalyst for bringing staffs together since none could
fully respond to the questionnaire alone. OMB and agency officials agreed
that the PART led to more interactions between OMB and agency program and
planning staff and, in turn, increased program managers' awareness of and
involvement in the budget process. According to OMB and several agency
officials, the PART process-that is, responding to the PART
questionnaire-involved staff outside of the performance management area.
Additionally, both agency and OMB officials said that the attention given
to programs that were not routinely reviewed was a positive benefit of the
PART process.

Use of Performance Information Was Evident in OMB's Recommendations

OMB senior officials told us that one of the PART's most notable impacts
was its ability to highlight OMB's recommended changes in program
management and design. As shown in figure 1, we found that 82 percent of
PART recommendations addressed program assessment, design, and management
issues; only 18 percent of the recommendations had a direct link to
funding matters.9

9 The 234 programs assessed for fiscal year 2004 contained a total of 612
recommendations.

1: Fiscal YeFi ar 2004 PARTgure Recommendations

The majority of recommendations relate to changes that go well beyond
funding consideration for one budget cycle. For example, OMB and HHS
officials agree that the Foster Care program as it is currently designed
does not provide appropriate incentives for the permanent placement of
children; the program financially rewards states for keeping children in
foster care instead of the original intent of providing temporary, safe,
and appropriate homes for abused or neglected children until children can
be returned to their families or other permanent arrangements can be made.
The PART assessment provided support for OMB's recommendation that
legislation be introduced that would create an option for states to
participate in an alternate financing program that would "better meet the
needs of each state's foster care population."

Performance information included in the PART for the Department of Labor's
(DOL) Community Service Employment for Older Americans program helped to
shape OMB's recommendation to increase competition for the grants. OMB
concluded that although the Older Americans Act of 2000 amendments10
authorize competition for grants in cases in which grantees repeatedly
fail to perform, the programs' 10 national grantees

10 Pub. L. No. 106-501 (2000).

have historically been the sole recipients of grant funds regardless of
performance. OMB recommended that DOL award national grants competitively
to strengthen service delivery and open the door to new grantees.

As OMB and others recognize, performance is not the only factor in funding
decisions. Determining priorities-including funding priorities-is a
function of competing values and interests. As seen in figure 2, we found
that PART scores were generally positively related to proposed funding
changes in discretionary programs but not in a mechanistic way. In other
words, PART scores did not automatically determine funding changes. OMB
proposed funding increases for most of the programs rated "effective" or
"moderately effective" and proposed funding decreases for most of the
programs rated "ineffective," but there were clear exceptions. Programs
rated as "results not demonstrated"-which reflected a range of PART
scores-had mixed results.

Figure 2: Number of Discretionary PART Programs by Rating and Funding
Result, Fiscal Years 2003-2004

Note: Discretionary programs refer to those programs with budgetary
resources provided in appropriation acts. Because Congress controls
spending for mandatory programs-generally entitlement programs such as
food stamps, Medicare, and veterans' pensions-indirectly rather than
directly through the appropriations process, we excluded them from our
analysis. Of the 234 programs, we could not classify 11 as being either
predominantly mandatory or discretionary; these programs are excluded from
our analysis as well, and are listed in appendix I.

A large portion of the variability in proposed budget changes could not be
explained by the quantitative measures reported by the PART. Regressions
of PART scores never explained more than about 15 percent of the proposed
budget changes. For only the one-third of discretionary programs with the
smallest budgets, we found that the composite PART scores had a modest but
statistically significant effect on proposed budget changes (measured in
percentage change) between fiscal years 2003 and 2004. For a fuller
discussion of the statistical methods used, see appendix I.

The relationship between performance levels and budget decisions was not
one-dimensional. For example, OMB rated the Department of Defense's Basic
Research program as "effective," but recommended a reduction in
congressionally earmarked projects that it stated did not meet the
program's merit review process. OMB also recommended reducing funding for
DOE's International Nuclear Materials Protection and Cooperation program
(rated "effective") because difficulties in obtaining international
agreements had resulted in the availability of sufficient unobligated
balances11 to make new funding unnecessary. However, OMB sometimes
proposed funding increases for programs that were rated "ineffective" to
implement improvement plans that had been developed, such as the Internal
Revenue Service's new Earned Income Tax Credit compliance initiatives and
DOE's revised environmental cleanup plans for its Environmental Management
(Cleanup) program.

Capacity Issues Could Affect OMB's Ability to Use the PART to Drive
Program Improvements

OMB has said that a major purpose of the PART is to focus on program
improvements and measure progress. Effectively implementing PART
recommendations aimed at program improvements will require sustained
attention and sufficient oversight of agencies to ensure that the
recommendations are producing desirable results. However, each year, the
number of recommendations from previous years' evaluations will grow.
Currently, OMB plans to assess an additional 20 percent of all federal
programs annually such that all programs would eventually be reviewed over
a 5-year period. OMB encouraged its RMOs to consider a variety of factors
in selecting programs for the fiscal year 2004 PART assessments, including
continuing presidential initiatives and programs up for reauthorization.
Strengthening the focus on selecting related programs for review in a
given year would enable decision makers to analyze the relative

11 Unobligated balances are defined as portions of available budget
authority that the agency has not set aside to cover current legal
liabilities.

efficacy of similar programs in meeting common or similar outcomes. As our
work has shown, unfocused and uncoordinated programs waste scarce funds,
confuse and frustrate program customers, and limit overall program
effectiveness. Therefore it is prudent to highlight crosscutting program
efforts and clearly relate and address the contributions of alternative
federal strategies toward meeting similar goals.

Although OMB has created a template for agencies to report on the status
of their recommendations and has reported that agencies are implementing
their PART recommendations, OMB has no central system for monitoring
agency progress or evaluating the effectiveness of changes. While RMOs are
responsible for overseeing agency progress, OMB senior managers will not
have a comprehensive governmentwide picture of progress on the
implementation of PART recommendations, nor will they have a complete
picture of OMB's workload in this area. As OMB has recognized, following
through on the recommendations is essential for improving program
performance and ensuring accountability.

Senior OMB managers readily recognized the increased workload the PART
placed on examiners-in one public forum we attended, a senior OMB official
described many examiners as being very concerned about the additional
workload. However, OMB expects the workload to decline as OMB and agency
staff become more familiar with the PART tool and process, and as issues
with the timing of the PART reviews are resolved. Agency officials told us
that originally, there was no formal guidance for reassessing PART
programs-it varied by RMO. When issued, OMB's formal PART guidance limited
reassessments to (1) updating the status/implementation of recommendations
from the fiscal year 2004 PART and (2) revisiting specific questions for
which new evidence exists. OMB expected that in most reassessments, only
those questions in which change could be demonstrated would be "reopened."
OMB officials acknowledged that this formal guidance is at least partly
due to resource constraints.

OMB staff were divided on whether the PART assessments made an appreciable
difference in time spent on its budget review process. Many of those we
spoke with told us that their workloads during the traditional budget
season have always been heavy and that PART did not add significantly to
their work, especially since the PART generally formalized a process
already taking place. Those who did acknowledge workload concerns said
that they were surprised at the amount of time it was taking to reassess
programs. In fact, more than one OMB official told us that

reassessing programs was taking almost as long as brand-new assessments,
despite the fact that OMB scaled back the scope of these reassessments.

Despite OMB's Considerable Efforts to Create a Credible Evaluation Tool,
PART Assessments Require Judgment and Were Constrained by Data Limitations

OMB went to great lengths to encourage consistent application of the PART
in the evaluation of government programs, including pilot testing the
instrument, issuing detailed guidance, and conducting consistency reviews.
However, while the instrument can undoubtedly be improved, any tool that
is sophisticated enough to take into account the complexity of the U.S.
government will always require OMB staff to exercise interpretation and
judgment. Providing flexibility to assess multidimensional programs with
multiple purposes and impacts has led to a reliance on OMB staff judgments
to apply general principles to specific cases. Accordingly, OMB staff were
not fully consistent in interpreting complex questions about agency goals
and results. In addition, the limited availability of credible evidence on
program results also constrained OMB's ability to use the PART to rate
programs' effectiveness.

Inherent Performance Measurement Challenges Make It Difficult to
Meaningfully Interpret a Bottom-Line Rating

OMB published a single, bottom-line rating for the PART results as well as
individual section scores, which are potentially more useful for
identifying information gaps and program weaknesses. For example, one
program that was rated "adequate" overall got high scores for purpose (80
percent) and planning (100 percent), but did poorly in being able to show
results (39 percent) and in program management (46 percent). Thus, the
individual section ratings provided a better understanding of areas
needing improvement than the overall rating alone. Bottom-line ratings
inevitably force choices on what best exemplifies a program's mission-even
when a program has multiple goals-and encourages a determination of the
effectiveness of the program even when performance data are unavailable,
the quality of those data is uneven, or they convey a mixed message on
performance.

Many of the outcomes for which federal programs are responsible are part
of a broader effort involving federal, state, local, nonprofit, and
private partners. We have previously reported that it is often difficult
to isolate a particular program's contribution to an outcome and
especially so when it involves third parties.12 This was reinforced by the
results of the fiscal year 2004 PART reviews. One of the patterns that OMB
identified in its ratings was that grant programs received lower than
average ratings. To OMB this suggested the need for greater effort by
agencies to make grantees accountable for achieving overall program
results. However, grant structure and design play a role in how federal
agencies are able to hold third parties responsible and complicate the
process of identifying the individual contributions of a federal program
with multiple partners. In particular, block grants present implementation
challenges, especially in those instances in which national goals are not
compatible with state and local priorities.

OMB Employed Numerous Tools and Techniques to Promote and Improve
Consistent Application of the PART

OMB went to great lengths to encourage consistent application of the PART
in the evaluation of government programs. These efforts included (1)
testing the PART in selected agencies before use in the fiscal year 2004
assessment, (2) issuing detailed guidance and worksheets for use by PART
teams, (3) making the Performance Evaluation Team (PET) available to
answer PART implementation questions, (4) establishing an Interagency
Review Panel (IRP) to review consistency of PART evaluations, and (5)
making improvements to the fiscal year 2005 process and guidance based
upon the fiscal year 2004 experience.

OMB conducted a pilot test of the PART and released a draft of the PART
questionnaire for public comment prior to its use for the fiscal year 2004
budget cycle. During Spring Review in 2002, OMB and agency staff piloted
the draft PART on 67 programs. The PART was also shared with and commented
on by the Performance Measurement Advisory Council and other external
groups. According to OMB, the results of the Spring Review and feedback
from external groups were used to revise the draft version of the PART to
lessen subjectivity and increase the consistency of reviews.

12 See GAO-03-595T and U.S. General Accounting Office, Managing for
Results: Efforts to Strengthen the Link Between Resources and Results at
the Administration for Children and Families, GAO-03-9 (Washington, D.C.:
Dec. 10, 2002).

OMB issued detailed guidance to help OMB and agency staff consistently
apply the PART and created electronic "templates" or worksheets to aid in
completing PART assessments. This guidance explains the purpose of each
question and describes the evidence required to support a "yes" or "no"
answer. In order to account for different types of programs, several
questions tailored to the seven program types were added to the PART
(primarily in Section III-Program Management). While the PART guidance
cannot be expected to cover every situation, the instructions established
general standards for PART evaluations.

PET addressed in "real time" questions and issues that OMB staff that were
completing the PART evaluations repeatedly raised. PET consisted of
examiners drawn from across the OMB organization representing a variety of
programmatic knowledge and experiences. It served as a sounding board for
OMB staff and a source for sharing experiences, issues, and useful
approaches and also provided training to OMB and agency staff on the
process. For example, in one OMB branch, staff were grappling with how to
apply the PART to a set of block grants. They went through the instrument
with the PET member from their RMO and continued to consult with that
individual throughout the process.

OMB also formed IRP, which consisted of both OMB and agency officials, to
conduct a consistency check of the PART reviews and to review formal
appeals of the process or results for particular questions. During the
fiscal year 2004 budget process, IRP conducted a consistency review of 10
percent of the PART evaluations using a subset of the PART questions that
OMB staff identified as being the most subjective or difficult to
interpret. IRP also reviewed formal agency appeals to determine whether
there was consistent treatment of similar situations.

As an Evaluation Tool, the Despite the considerable time and effort OMB
has devoted to promoting PART Has Weaknesses in Its consistent application
of the PART, difficulties both with the tool itself Design and, as a
Result, Its (such as subjective terminology and a restrictive yes/no
format) and with

implementing the tool (including inconsistencies in defining acceptable

Implementation	measures and contradictory answers to "pairs" of related
questions) aggravated the general performance measurement challenges
described earlier.

Subjective Terms and a Restrictive Format Contributed to Subjective and
Inconsistent Responses

Many PART questions contain subjective terms that are open to
interpretation. Examples include terminology such as "ambitious" in
describing sought-after performance measures. Because the appropriateness
of a performance measure depends on the program's purpose, and because
program purposes can vary immensely, an ambitious goal for one program
might be unrealistic for a similar but more narrowly defined program. Some
agency officials claimed that having multiple statutory goals
disadvantaged their programs. Without further guidance, subjective
terminology can influence program ratings by permitting OMB staff's views
about a program's purpose to affect assessments of the program's design
and achievements.

Although OMB employed a yes/no format for the PART because OMB believes it
aided standardization, the format resulted in oversimplified answers to
some questions. OMB received comments on the yes/no format in conducting
the PART pilot. Some parties liked the certainty and forced choice of
yes/no. Others felt the format did not adequately distinguish between the
performance of various programs, especially in the results section
(originally in the yes/no format). In response to these concerns, OMB
revised the PART in the spring of 2002 to include four response choices in
the results section (adding "small extent" and "large extent" to the
original two choices "yes" and "no"), while retaining the dichotomous
yes/no format in the other three sections. OMB acknowledged that a "yes"
response should be definite and reflect a very high standard of
performance, and that it would more likely be difficult to justify a "yes"
answer than a "no" answer. Nonetheless, agency officials have commented
that the yes/no format is a crude reflection of reality, in which progress
in planning, management, or results is more likely to resemble a continuum
than an on/off switch.

Moreover, the yes/no format was particularly troublesome for questions
containing multiple criteria for a "yes" answer. As discussed previously,
we conducted an in-depth analysis of PART assessments for 28 related
programs in nine clusters and compared the responses to related questions.
That analysis showed six instances in which some OMB staff gave a "yes"
answer for successfully achieving some but not all of the multiple
criteria, while others gave a "no" answer when presented with a similar
situation. For example, Section II, Question 1, asks, "Does the program
have a limited number of specific, ambitious, long-term performance goals
that focus on outcomes and meaningfully reflect the purpose of the
program?" The PART defines successful long-term goals by multiple,
distinct characteristics

(program has long-term goals, time frames by which the goals are to be
achieved, etc.), but does not clarify whether a program can receive a
"yes" if each of the characteristics is met, or if most of the
characteristics are met. This contributed to a number of inconsistencies
across program reviews. For example, OMB judged DOI's Water Reuse and
Recycling program "no" on this question, noting that although DOI set a
long-term goal of 500,000 acre-feet per year of reclaimed water, it failed
to establish a time frame for when it would reach the target. However, OMB
judged the Department of Agriculture's and DOI's Wildland Fire programs
"yes" on this question even though the programs' long-term goals of
improved conditions in high-priority forest acres are not accompanied by
specific time frames. In another example, OMB accepted DOD's recently
established long-term strategic goals for medical training and provision
of health care even though it did not yet have measures or targets for
those goals. By breaking out targets and ambitious time frames separately
from the question of annual goals, agencies have an opportunity to get
credit for progress made.

There Were Inconsistencies in Defining Acceptable Measures and in
Logically Responding to Question "Pairs"

In particular, our analysis of the nine program clusters revealed three
instances in which OMB staff inconsistently defined appropriate
measures-outcome versus output-for programs. Officials also told us that
OMB staff used different standards to define measures as outcome oriented.
This may reflect, in part, the complexity of and relationship between
expected program benefits. Outcomes are generally defined as the results
of outputs-products and services-delivered by a program. But in some
programs, long-term outcomes are expected to occur over time through
multiple steps. In these cases, short-term outcomes-immediate changes in
knowledge and awareness-might be expected to lead to intermediate
outcomes-behavioral changes in the future-and eventually result in
long-term outcomes-benefits to the public.

In the employment and training area, OMB accepted short-term outcomes,
such as obtaining high school diplomas or employment, as a proxy for
longterm goals for the HHS Refugee Assistance program, which aims to help
refugees attain economic self-sufficiency as soon as possible after they
arrive. However, OMB did not accept the same employment rate measure as a
proxy for long-term goals for the Department of Education's Vocational
Rehabilitation program because it had not set long-term targets beyond a
couple of years. In other words, although neither program contained
longterm outcomes, such as participants gaining economic self-sufficiency,
OMB accepted short-term outcomes in one instance but not the other.

Similarly, OMB gave credit for output measures of claims processing (time,
accuracy, and productivity) as a proxy for long-term goals for the Social
Security Administration's Disability Insurance program, but did not accept
the same output measures for the Veterans Disability Compensation program.
OMB took steps to address this issue for fiscal year 2005.

We also found that three "question pairs" on the PART worksheets are
linked, yet in two of the three "pairs," a disconnect appeared in how OMB
staff responded to these questions for a given program.13 For example, 29
of the 90 programs (32 percent) judged as lacking "independent and quality
evaluations of sufficient scope conducted on a regular basis" (Section II,
Question 5) were also judged as having "independent and quality
evaluations that indicated the program is effective and achieving results"
(Section IV, Question 5). There is a logical inconsistency in these two
responses. In another instance, there was no linkage between the questions
that examine whether a program has annual goals that demonstrate progress
toward achieving long-term goals and whether the program actually achieves
its annual goals. For example, 15 of the 75 programs (20 percent) judged
not to have adequate annual performance goals (Section II, Question 2)
were nevertheless credited for having made progress on their annual
performance goals (Section IV, Question 2). However, the guidance for the
latter question clearly indicates that a program must receive a "no" if it
received a "no" on the existence of annual goals (Section II, Question 2).
It seems that some raters held programs to a higher standard for the
quality of goals than for progress on them.

13 In the third question pair, a question in the planning section asks
about whether the program has long-term goals, and a question in the
results section asks whether the agency has made progress in achieving the
program's long-term goals. Yet, in 6 of the 115 programs (5 percent)
judged not to have adequate long-term goals, credit was given for making
progress on their long-term goals even though the guidance again clearly
states that a program must receive a "no" if the program received a "no"
on the existence of long-term outcome goals.

The Lack of Performance Information Creates Challenges in Effectively
Measuring Program Performance

According to OMB, 115 out of 234 programs (49 percent) lacked "specific,
ambitious, long-term performance goals that focus on outcomes" (Section
II, Question 1). In addition, OMB found that 90 out of 234 programs (38
percent) lacked sufficient "independent, quality evaluations" (Section II,
Question 5). While the validity of these assessments may be subject to
interpretation and debate, our previous work14 has raised concerns about
the capacity of federal agencies to produce evaluations of program
effectiveness.

The lack of evaluations may in part be driven by how OMB defined an
"independent and quality evaluation." To be independent, nonbiased parties
with no conflict of interest would conduct the evaluation, but agency
officials felt that OMB staff started from the default position that
agencysponsored evaluations are, by definition, biased. However, our
detailed review of 28 PART worksheets found only 7 instances in which OMB
explicitly noted its rejection of evaluations: 1 for being too old, 3 for
not being independent (of the 3, 1 was an internal agency review and 2
were conducted by industry groups), and the remaining 3 for not assessing
program results. OMB officials have acknowledged that this issue was a
point of friction with agencies and that beyond GAO, inspectors general,
and other government reports that were automatically presumed to be
independent, the independence standard was considered on a case-by-case
basis. In these case-by-case situations, OMB staff told us that they
looked for some degree of detachment and objectivity in the evaluations.
For example, in the case of one DOE-sponsored evaluation, the OMB examiner
attended the meetings of the review group that conducted the evaluation in
order to see firsthand what sorts of questions the committee posed to the
department officials. In OMB's estimation, there was clear independence.
While OMB changed the fiscal year 2005 guidance to recognize evaluations
contracted out to third parties and agency program evaluation offices as
possibly being sufficiently independent, the new guidance generally
prohibits evaluations conducted by the program itself from being
considered "independent."

Other reasons evaluation data may be limited include (1) constraints on
federal agencies' ability to influence program outcomes and reliance on
states and others for data for programs for which responsibility has

14 U.S. General Accounting Office, Program Evaluation: Agencies Challenged
by New Demand for Information on Program Results, GAO/GGD-98-53
(Washington, D.C.: Apr. 24, 1998).

devolved to the states and (2) the lack of a statutory mandate or
dedicated funds for evaluation, which agency officials told us can hamper
efforts to conduct studies or to improve administrative data collection.

As we have previously noted, program evaluations can take many forms and
agencies may obtain evaluations in a variety of ways. 15 Some evaluations
simply analyze routinely collected program administrative data; others
involve special surveys. The type of evaluation can greatly affect
evaluation cost. Net impact evaluations compare outcomes for program
participants to those of a randomly assigned control group and are
designed for situations in which external factors are also known to
influence those outcomes. However, the adequacy of an evaluation design
can only be determined relative to the circumstances of the program being
evaluated. In addition, agencies can obtain evaluations by having program
or other agency staff collect and analyze the data, by conducting the work
jointly with program partners (such as state agencies), or by hiring
contract firms to do so. Our survey of 81 federal agency offices
conducting evaluations in 1995 of program results found they were most
commonly located in administrative offices at a major subdivision level or
in program offices (43 and 30 percent, respectively). Overall, they
reported conducting 51 percent of their studies in-house, while 34 percent
were contracted out. Depending on the sensitivity of the study questions,
agencies can conduct credible internal evaluations by adopting procedures
to ensure the reliability and validity of data collection and analysis.

15 GAO/GGD-98-53.

Disagreements on Performance Information Led to Creation of a "Results Not
Demonstrated" Category

During the PART process OMB created an additional rating category,
"results not demonstrated," which was applied to programs regardless of
their score if OMB decided that one or both of two conditions pertained:
(1) OMB and the agency could not reach agreement on long-term and annual
performance measures and (2) there was inadequate performance information.
Almost 50 percent of the 234 programs assessed for fiscal year 2004
received this rating of "results not demonstrated," ranging from
highscoring programs such as the Consumer Product Safety Commission (83)
to low-scoring programs such as the Department of Veterans Affairs
Disability Compensation program (15). OMB officials said that this rating
was given to programs when agreement could not be reached on long-term and
annual performance measures and was applied regardless of the program's
PART score. Our own review found that OMB generally assigned the "results
not demonstrated" rating as described above.16

It is important for users of the PART information to interpret the
"results not demonstrated" designation as "unknown effectiveness" rather
than as meaning the program is "ineffective." Having evidence of poor
results is not the same as lacking evidence of effectiveness. Because the
PART guidance sets very high standards for obtaining a "yes," a "no"
answer can mean either that a program did not meet the standards, or that
there is no evidence on whether it met the standards. In some readily
measured areas, lack of evidence of an action may indicate that the
standard probably was not met. However, because effectiveness is often not
readily observed, lack of evidence on program effectiveness cannot be
automatically interpreted as meaning that a program is ineffective.
Furthermore, an agency might have results for goals established under
GPRA, but if OMB and the agency could not reach agreement on new or
revised goals or measures, then OMB gave a program the rating "results not
demonstrated."

16 However, we found 8 cases (out of 118) programs that were rated as
"results not demonstrated" despite having both annual and long-term
performance goals and evidence that these goals were being met.

Changes to the PART and Related Guidance for Fiscal Year 2005 Are Meant to
Address Previously Identified Problems

OMB, recognizing many of the issues we have just discussed, made
modifications to the PART instrument and guidance in time for the fiscal
year 2005 process. OMB said these changes were based upon lessons learned
during the fiscal year 2004 process and input from a variety of sources,
such as PET, IRP, and agency officials, although we were unable to
determine which changes resulted from which recommendations. Although the
PART as used for fiscal year 2005 is very similar to that for fiscal year
2004, several questions were added, dropped, merged with other questions,
or divided into two questions. For example, a research and development
question used in the fiscal year 2004 PART that received "not applicable"
answers in 13 out of the 32 cases in which it was applied was dropped from
the fiscal year 2005 PART. According to OMB officials, several of the
multicriteria questions were split into separate questions in order to
reduce inconsistency, as described earlier in this report. Appendix II
provides more complete information on the guidance changes between fiscal
years 2004 and 2005. To complement the fiscal year 2005 PART guidance and
offer strategies for addressing common performance measurement challenges,
many of which were encountered during the fiscal year 2004 process, OMB
released a separate document, titled Performance Measurement Challenges
and Strategies, which was the result of a workshop in which agencies
participated and identified measurement challenges and shared best
practices and possible work-arounds.

Instead of reestablishing IRP (which included both agency and OMB
representatives) for the fiscal year 2005 process, OMB officials told us
that PET (which included only OMB representatives) would conduct a
consistency review of 25 percent of all PART evaluations, with at least
one consistency check per OMB branch. OMB also told us that it has asked
the National Academy of Public Administration (NAPA) to review PET's
consistency review for the fiscal year 2005 process; the scope and results
of that review were not available to us during our audit work.17 OMB
senior officials cited resources, timing, and the differing needs of the
fiscal year 2004 and 2005 PART processes as reasons for dropping the IRP
review. The absence of agency participation in this important phase of the
PART could hamper ensuring crucial transparency and credibility.

17 Because our audit focused on the fiscal year 2004 PART process, our
engagement was not limited by OMB's decision to not share its reasoning
for shifting the consistency review from IRP to PET or our lack of access
to the NAPA review.

The Fiscal Year 2004 PART Process Was a Parallel, Competing Approach to
GPRA's Performance Management Framework

The PART was designed for and is used in the executive branch budget
preparation and review process; as such, the goals and measures used in
the PART must meet OMB's needs. However, GPRA-the current statutory
framework for strategic planning and reporting-is a broader process
involving the development of strategic and performance goals and
objectives to be reported in strategic and annual plans. OMB's desire to
collect performance data that better align with budget decision units
means that the fiscal year 2004 PART process was a parallel competing
structure to the GPRA framework. Although OMB acknowledges that GPRA was
the starting point for the PART, as we explain below, the emphasis is
shifting such that over time the performance measures developed for the
PART and used in the budget process may come to drive agencies' strategic
planning processes.

Agencies told us that in some cases, OMB is replacing PART goals and
measures for those of GPRA. Effective for fiscal year 2005, OMB's Circular
A-11 guidance states that performance budgets are to replace GPRA's annual
performance plans. Agencies see the change as detrimental to planning and
reporting under GPRA and as a resource drain since they have to respond to
both GPRA and PART requirements. Some agency officials told us that
although the PART can stimulate discussion on programspecific performance
measurement issues, it is not a substitute for GPRA's outcome-oriented,
strategic look at thematic goals and departmentwide program comparisons.
Moreover, while the PART does not eliminate the departmental strategic
plans created under GPRA, many OMB and agency officials told us that the
PART is being used to shape the strategic plans.

OMB's Efforts to Link Performance Information with the Budget Often
Conflict with Agencies' GPRA Planning Efforts

OMB guidance and officials made clear that GPRA goals, measures, and
reports needed to be modified to provide decision makers with
programspecific, outcome-based performance data that better aligned with
the budget presentation in the President's Budget. According to OMB, such
changes were needed because performance reporting under GPRA had evolved
into a process separate from budget decision making, with GPRA plans
organized at too high a level to be meaningful for program-level budget
analysis and management review. Furthermore, according to OMB officials,
GPRA plans had too many performance measures, which made it difficult to
determine an agency's priorities. However, as some officials pointed out,
the cumulative effect of adding new PART measures to GPRA plans may
actually increase the number of measures overall; both agency and OMB
officials recognize that this is contrary to goals issued by an OMB
official previously responsible for the PART, indicating his desire to
reduce the number of GPRA measures by at least 25 percent in at least 70
percent of federal departments.18 As a result of these
sometimes-conflicting perspectives, agency officials said that responding
to both PART and GPRA requirements increased their workloads and was a
drain on staff resources.

OMB's most recent Circular A-11 guidance clearly requires that each agency
submit a performance budget for fiscal year 2005 and that this should
replace the annual GPRA performance plan.19 These performance budgets are
to include information from the PART assessments, where available,
including all performance goals used in the assessment of program
performance done under the PART process. Until all programs have been
assessed using the PART, the performance budget will also include
performance goals for agency programs that have not yet been assessed
using the PART. OMB's movement from GPRA to PART is further evident in the
fiscal year 2005 PART guidance stating that while existing GPRA
performance goals may be a starting point during the development of PART
performance goals, the GPRA goals in agency GPRA documents are to be
revised significantly, as needed, to reflect OMB's instructions for
developing the PART performance goals. Lastly, this same guidance states
that GPRA plans should be revised to include any new performance measures
used in the PART and unnecessary measures should be deleted from GPRA
plans.

18 Memorandum to the President's Management Council, "Where We'd Be Proud
To Be," May 21, 2003.

19 OMB Circular A-11, Preparation, Submission, and Execution of the
Budget.

OMB's interest in developing more useful program goals is further evident
in its PART recommendations. Almost half of the fiscal year 2004 PART
recommendations related to performance assessment-developing outcome goals
and measures; cost or efficiency measures; and increasing the
tracking/monitoring of data, improving the tracking/monitoring of data, or
both. GPRA was generally the starting point for PART discussions about
goals and measures, and many agency officials told us that OMB used the
PART to modify agencies' existing GPRA goals and measures. Agency
officials reported that the discussions about goals and measures were one
of the main areas of contention during the PART process. At the same time,
agency officials acknowledged that (1) sometimes OMB staff accepted
current GPRA measures and (2) sometimes the new PART measures and goals
were improvements over the old GPRA measures-the PART measures were more
aggressive, more outcome-oriented, more targeted, or all of the above.

Defining a "Unit of Analysis" That Is Useful for Program-Level Budget
Analysis and Agency Planning Purposes Presents Challenges

The appropriate unit of analysis or "program" is not always obvious. What
OMB determined was useful for a PART assessment did not necessarily match
agency organization or planning elements. Although the units of analysis
varied across the PART assessments, OMB's guidance stated that they should
be linked to a recognized funding level in the budget. In some cases, OMB
aggregated separate programs for the purposes of the PART, while in other
cases it disaggregated programs. Aggregating programs to tie them to
discrete funding levels sometimes made it difficult to create a limited,
but comprehensive, set of measures for programs with multiple missions.
Disaggregating programs sometimes ignored the interdependence of programs
by artificially isolating programs from the larger contexts in which they
operate. Both contributed to the lack of available planning and
performance information. For example, aggregating rural water supply
projects as a single unit of analysis may have been a logical choice for
reviewing related activities, but it created problems in identifying
planning and performance information useful for the PART since these
projects are separately administered. In another case, HHS officials told
us that the PART program Substance Abuse Treatment Programs of Regional
and National Significance is an amalgamation of activities funded in a
single budget line, not an actual program. They said it was a challenge to
make these activities look as if they functioned as a single program.

Disaggregating a program too narrowly can create problems by distorting
its relationship to other programs involved in achieving a common goal.

For example, agency officials described a homeless program in which
outreach workers help homeless persons with emergency needs and refer them
to other agencies for housing and needed services. They said that their
OMB counterparts suggested that the program adopt long-term outcome
measures indicating number of persons housed. Agency officials argued that
chronically homeless people require many services and that this federal
program often supports only some of the services needed at the initial
stages of intervention. The federal program, therefore, could contribute
to, but not be primarily responsible for, affecting late stages of the
intervention process, like housing status.

These issues reveal some of the unresolved tensions between the
President's budget and performance initiative-a detailed budget
perspective-and GPRA-a more strategic planning view. In particular, agency
officials are concerned with problems in trying to respond to both and
overwhelmingly agreed that the PART required a large amount of agency
resources to complete. Moreover, some agency officials said that the PART
(a program-specific review) is not well suited to one of the key purposes
of strategic plans-to convey agencywide, long-term goals and objectives
for all major functions and operations. In addition, the time horizons are
different for the two initiatives-PART assessments focus on program
accomplishments to date while GPRA strategic planning is longterm and
prospective in nature.

Changes Made to GPRA in the PART Process Create Uncertainty About
Opportunities for Substantive Input by Interested Parties and
Congressional Stakeholders

As noted above, PART goals and measures must meet OMB's needs, while GPRA
is a broader process involving the development of strategic and
performance goals and objectives to be reported in strategic and annual
plans. As a phased reform, GPRA required development of the planning
framework first, but also explicitly encouraged links to the budget.20 Our
work has shown that under GPRA agencies have made significant progress.21
Additionally, GPRA requires agencies to consult with Congress and solicit
the views of other stakeholders as they develop their strategic plans.22
We have previously reported23 that stakeholder involvement appears
critical for getting consensus on goals and measures. Stakeholder
involvement can be particularly important for federal agencies because
they operate in a complex political environment in which legislative
mandates are often broadly stated and some stakeholders may strongly
disagree about the agency's mission and goals.

The relationship between the PART and its process and the broader GPRA
strategic planning process is still evolving. Some tension between the
level of stakeholder involvement in the development of performance
measures in the GPRA strategic planning process and the process of
developing performance measures for the PART is inevitable. Compared to
the relatively open-ended GPRA process any budget formulation process is
likely to seem closed. An agency's communication with stakeholders,
including Congress, about goals and measures created or modified during
the formulation of the President's budget is likely to be less than during
the development of the agency's own strategic or performance plan. Since
different stakeholders have different needs and no one set of goals and
measures can serve all purposes, the PART can complement GPRA but should
not replace it.

20 31 U.S.C. S: 1115(a) (2003).

21 U.S. General Accounting Office, Managing for Results: Agency Progress
in Linking Performance Plans With Budgets and Financial Statements,
GAO-02-236 (Washington, D.C.: Jan. 4, 2002).

22 5 U.S.C. S: 306(d) (2003).

23 U.S. General Accounting Office, Agencies' Strategic Plans Under GPRA:
Key Questions to Facilitate Congressional Review (Version 1),
GAO/GGD-10.1.16 (Washington, D.C.: May 1997).

Although these tensions between the need for internal deliberations and
broader consultations are inevitable, if the PART is to be accepted as a
credible element in the development of the President's budget proposal,
congressional understanding and acceptance of the tool and its analysis
will be important. In order for performance information to more fully
inform resource allocations, decision makers must also feel comfortable
with the appropriateness and accuracy of the performance information and
measures associated with these goals. It is unlikely that decision makers
will use performance information unless they believe it is credible and
reliable and reflects a consensus about performance goals among a
community of interested parties. Similarly, the measures used to
demonstrate progress toward a goal, no matter how worthwhile, cannot serve
the interests of a single stakeholder or purpose without potentially
discouraging use of this information by others.

While it is still too soon to know whether OMB-directed measures will
satisfy the needs of other stakeholders and GPRA's broader planning
purposes, several appropriations subcommittees have stated, in their
appropriations hearings, the need to link the PART with congressional
oversight. For example, the House Committee on Appropriations,
Subcommittee on the Department of the Interior and Related Agencies notes
that while it supports the PMA, the costs of initiatives associated with
it have generally not been requested in annual budget justifications or
through reprogramming procedures.24 The Subcommittee, therefore, has been
unable to evaluate the costs, benefits, and effectiveness of these
initiatives or to weigh the priority that these initiatives should receive
as compared with ongoing programs funded in the Interior Appropriations
bill. Similarly, the House Report on Treasury and Transportation
Appropriations included a statement in support of the PART, but noted that
the administration's efforts must be linked with the oversight of Congress
to maximize the utility of the PART process, and that if the
administration treats as privileged or confidential the details of its
rating process, it is less likely that Congress will use those results in
deciding which programs to fund. Moreover, the Subcommittee said it
expects OMB to involve the House and Senate Committees on Appropriations
in the development of the PART ratings at all stages in the process.25

24 H.R. Rep. No. 108-195, p. 8 (2003). 25 H.R. Rep. No. 108-243, pp.
168-69 (2003).

While Congress has a number of opportunities to provide its perspective on
performance issues and performance goals, such as when it establishes or
reauthorizes a new program, during the annual appropriations process, and
in its oversight of federal operations, opportunities exist for Congress
to more systematically articulate performance goals and outcomes for key
programs of major concern and to allow for timely congressional input in
the selection of the PART programs to be assessed.

Conclusions and General Observations

OMB, through its development and use of the PART, has more explicitly
infused performance information into the budget formulation process;
increased the attention paid to evaluation and performance information;
and ultimately, we hope, increased the value of this information to
decision makers and other stakeholders. By linking performance information
to the budget process, OMB has provided agencies with a powerful incentive
for improving data quality and availability. The level of effort and
involvement by senior OMB officials and staff clearly signals the
importance of this strategy in meeting the priorities outlined in the PMA.
OMB should be credited with opening up for scrutiny-and potential
criticism-its review of key areas of federal program performance and then
making its assessments available to a potentially wider audience through
its Web site.

While the PART clearly serves the needs of OMB in budget formulation,
questions remain about whether it serves the needs of other key
stakeholders. The PART could be strengthened to enhance its credibility
and prospects for sustainability by such actions as (1) improving
agencies' and OMB's capacity to cope with the demands of the PART, (2)
strengthening the PART guidance, (3) expanding the base of credible
performance information by strategically focusing evaluation resources,
(4) selecting programs for assessment to facilitate crosscutting
comparisons and trade-offs, (5) broadening the dialogue with congressional
stakeholders, and (6) articulating and implementing a complementary
relationship between PART and GPRA.

OMB's ambitious schedule for assessing all federal programs by the fiscal
year 2008 President's Budget will require a tremendous commitment of OMB's
and agencies' resources. Implementation of the PART recommendations will
be a longer-term and potentially more significant result of the PART
process than the scores and ratings. No less important will be OMB's
involvement both in encouraging agency progress and in signaling its
continuing commitment to improving program management and results through
the PART. OMB has created a template by which

agencies report on the status of the recommendations and left follow-up on
the recommendations to each RMO. However, there is no single focal point
for evaluating progress and the results of agency efforts governmentwide;
without this it will be difficult for OMB to judge the efficacy of the
PART and to know whether the increased workload and trade-offs made with
other activities is a good investment of OMB and agency resources.

The goal of the PART is to evaluate programs systematically, consistently,
and transparently, but in practice, the tool requires OMB staff to use
independent judgment in interpreting the guidance and in making yes or no
decisions for what are often complex federal programs. These difficulties
are compounded by poor or partial program performance data. Therefore, it
is not surprising that we found inconsistencies in our analysis of the
fiscal year 2004 PART assessments. Recognizing the inherent limitations of
any tool to provide a single performance answer or judgment on complex
federal programs with multiple goals, continued improvements in the PART
guidance, with examples throughout, can nonetheless help encourage a
higher level of consistency as well as transparency.

The PART requires more performance and evaluation information than
agencies currently have, as demonstrated by the fact that OMB rated over
50 percent of the programs for fiscal year 2004 as "results not
demonstrated" because they "did not have adequate performance goals" or
"had not yet collected data to provide evidence of results." In the past,
we too have noted limitations in the quality of agency performance and
evaluation information and in agency capacity to produce rigorous
evaluations of program effectiveness. Furthermore, our work has shown that
few agencies deployed the rigorous research methods required to attribute
changes in underlying outcomes to program activities. However, program
evaluation information often requires large amounts of agency resources to
produce, and the agency and OMB may not agree on what is important to
measure, particularly when a set of measures cannot serve multiple
purposes. Agreement on what are a department or agency's critical,
high-risk programs and how best to evaluate them could help leverage
limited resources and help determine what are the most important program
evaluation data to collect.

Federal programs are designed and implemented in dynamic environments
where competing program priorities and stakeholders' needs must be
balanced continually and new needs must be addressed. GPRA is a broad
legislative framework that was designed to be consultative with Congress
and other stakeholders and allows for varying uses of performance

information, while the PART applies evaluation information to support
decisions and program reviews during the executive budget formulation
process. While the PART reflects the administration's management
principles and the priority given to using performance information in
OMB's decision-making process, its focus on program-level assessments
cannot substitute for the inclusive, crosscutting strategic planning
required by GPRA. Moreover, GPRA can anchor the review of programs by
providing an overall strategic context for programs' contributions toward
agency goals. Although PART and GPRA serve different needs, a strategy for
integrating the two could help strengthen both.

Opportunities exist to develop a more strategic approach to the selection
and prioritization of areas to be assessed under the PART process.
Targeting PART assessments based on such factors as the relative
priorities, costs, and risks associated with related clusters of programs
and activities could not only help ration scarce analytic resources but
could also focus decision makers' attention on the most pressing policy
and program issues. Moreover, such an approach could facilitate the use of
PART assessments to review the relative contributions of similar programs
to common or crosscutting goals and outcomes.

As part of the President's budget preparation, the PART clearly must serve
the President's interests. However, it is unlikely that the broad range of
actors whose input is critical to decisions will use performance
information unless they believe it is credible and reliable and reflects a
consensus about performance goals among a community of interested parties.
Similarly, the measures used to demonstrate progress toward a goal, no
matter how worthwhile, cannot appear to serve a single set of interests
without potentially discouraging use of this information by others. If the
President or OMB wants the PART and its results to be considered in the
congressional debate, it will be important for OMB to (1) involve
congressional stakeholders early in providing input on the focus of the
assessments; (2) clarify any significant limitations in the assessments as
well as the underlying performance information; and (3) initiate
discussions with key congressional committees about how they can best take
advantage of and leverage PART information in authorizations,
appropriations, and oversight processes.

As we have previously reported, effective congressional oversight can help
improve federal performance by examining the program structures agencies
use to deliver products and services to ensure that the best, most
cost-effective mix of strategies is in place to meet agency and national

goals. While Congress has a number of opportunities to provide its
perspective on performance issues and performance goals, such as when it
establishes or reauthorizes a new program, during the annual
appropriations process, and in its oversight of federal operations, a more
systematic approach could allow Congress to better articulate performance
goals and outcomes for key programs of major concern. Such an approach
could also facilitate OMB's understanding of congressional priorities and
concerns and, as a result, increase the usefulness of the PART in budget
deliberations.

Matter for In order to facilitate an understanding of congressional
priorities and

concerns, we suggest that Congress consider the need for a strategy
thatCongressional could include (1) establishing a vehicle for
communicating performance Consideration goals and measures for key
congressional priorities and concerns;

(2) developing a more structured oversight agenda to permit a more
coordinated congressional perspective on crosscutting programs and
policies; and (3) using such an agenda to inform its authorization,
oversight, and appropriations processes.

Recommendations for Executive Action

We have seven recommendations to OMB for building on and improving the
first year's experience with the PART and its process. We recommend that
the Director of OMB take the following actions:

o 	Centrally monitor agency implementation and progress on PART
recommendations and report such progress in OMB's budget submission to
Congress. Governmentwide councils may be effective vehicles for assisting
OMB in these efforts.

o 	Continue to improve the PART guidance by (1) expanding the discussion
of how the unit of analysis is to be determined to include trade-offs made
when defining a unit of analysis, implications of how the unit of analysis
is defined, or both; (2) clarifying when output versus outcome measures
are acceptable; and (3) better defining an "independent, quality
evaluation."

o 	Clarify OMB's expectations to agencies regarding the allocation of
scarce evaluation resources among programs, the timing of such
evaluations, as well as the evaluation strategies it wants for the
purposes of the PART, and consider using internal agency evaluations as

evidence on a case-by-case basis-whether conducted by agencies,
contractors, or other parties.

o 	Reconsider plans for 100 percent coverage of federal programs and,
instead, target for review a significant percentage of major and
meaningful government programs based on such factors as the relative
priorities, costs, and risks associated with related clusters of programs
and activities.

o 	Maximize the opportunity to review similar programs or activities in
the same year to facilitate comparisons and trade-offs.

o 	Attempt to generate, early in the PART process, an ongoing, meaningful
dialogue with congressional appropriations, authorization, and oversight
committees about what they consider to be the most important performance
issues and program areas warranting review.

o 	Seek to achieve the greatest benefit from both GPRA and PART by
articulating and implementing an integrated, complementary relationship
between the two.

Agency Comments	We provided a draft of this report to OMB for its review
and comment. OMB generally agreed with our findings, conclusions, and
recommendations. In addition, OMB outlined actions it is taking to address
many of our recommendations, including refining the process for monitoring
agencies' progress in implementing the PART recommendations, seeking
opportunities for dialogue with Congress on agencies' performance, and
continuing to improve executive branch implementation of GPRA plans and
reports. OMB officials provided a number of technical comments and
clarifications, which we incorporated as appropriate to ensure the
accuracy of our report. OMB's comments appear in appendix IV. We also
received technical comments on excerpts of the draft provided to the
Departments of the Interior, Energy, and Health and Human Services.
Comments received from the Departments of Energy and the Interior were
incorporated as appropriate. The Department of Health and Human Services
had no comments.

OMB noted that performance information gleaned from the PART process has
not only informed budget decisions but has also helped direct program
management, identified opportunities to improve program design, and
promoted accountability. We agree. As shown in figure 1 in our report, we

found that 82 percent of PART recommendations addressed program
assessment, design, and management issues; only 18 percent of the
recommendations had a direct link to funding matters.

We are sending copies of this report to the Director of OMB, appropriate
congressional committees, and other interested members of Congress. We
will also make copies available to others upon request. In addition, the
report will be available at no charge on the GAO Web site at
http://www.gao.gov.

If you or your staff have questions about this report, please contact Paul
Posner at (202) 512-9573 or [email protected]. An additional contact and key
contributors to this report are listed in appendix V.

David M. Walker Comptroller General of the United States

Appendix I

Scope and Methodology

To address the objectives in this report, we reviewed Office of Management
and Budget (OMB) materials and presentations on the development and
implementation of the Program Assessment Rating Tool (PART) as well as the
results of the PART assessments. Our review of materials included
instructions for using PART, OMB's testimony concerning PART, and public
remarks made by OMB officials at relevant conferences and training. We
also reviewed PART-related information on OMB's Web site, including the
OMB worksheets used to support the assessments, and attended OMB's PART
training for the fiscal year 2004 process.

For this report, we focused on the process and final results of the fiscal
year 2004 PART process, but also looked at the initial stages of the
fiscal year 2005 process. We compared the PART guidance for both years and
asked agency and OMB staff to discuss generally the differences between
the 2 fiscal years. We did not review the final results for the fiscal
year 2005 PART, which are embargoed until the publication of the
President's fiscal year 2005 budget request. For the same reasons, we did
not review the results of any reassessments conducted for fiscal year 2005
on programs originally assessed for fiscal year 2004. This report presents
the experiences of staff from the three departments and OMB officials who
we interviewed. We did not directly observe the PART process (for either
year) in operation nor did we independently verify the PART assessments as
posted on OMB's Web site or the program or financial information contained
in the documents provided as evidence for the PART assessments. We did,
however, take several steps to ensure that we reliably downloaded and
combined the PART summaries and worksheets with our budget and
recommendation classifications. Our steps included (1) having the computer
programs we used to create and process our consolidated dataset verified
by a second programmer; (2) having transcribed data elements from all
programs checked back to source files; and (3) having selected,
computer-processed data elements checked back to source files for a random
sample of programs and also for specific programs identified in our
analyses.

To better understand the universe of programs OMB assessed for fiscal year
2004, we developed overall profiles of PART results and examined
relationships between such characteristics as type of program, type of
recommendation, overall rating, total PART score, and answers for each
question on PART. This review enabled us to generally confirm some
information previously reported by OMB, for example, that PART scores do
not automatically determine proposed funding and that grant programs
scored lower overall than other types of programs. It also allowed us to

Appendix I Scope and Methodology

select a sample of programs for more in-depth review, and this sample was
used to determine which OMB and agency officials we interviewed.

To gain a better understanding of the PART process at both OMB and
agencies, to inform our examination of the usefulness of PART as an
evaluation tool, and to obtain various perspectives on the relationship
between PART and GPRA, we interviewed officials at OMB and three selected
departments. At OMB, we interviewed a range of staff, such as associate
directors, deputy assistant directors, branch chiefs, and examiners.
Specifically, we interviewed staff in two Resource Management Offices
(RMO). In the Human Resources Programs RMO, we spoke with staff from the
Health Division and the Education and Human Resources Division. In the
Natural Resources, Energy and Science RMO we interviewed staff from the
Energy and Interior Branches. In addition, we obtained the views of two
groups within OMB that were convened specifically for the PART process:
the Performance Evaluation Team (PET) and the Interagency Review Panel
(IRP). The IRP included agency officials in addition to staff from OMB.

The three departments for which we reviewed the PART process were the
Department of Energy (DOE), the Department of Health and Human Services
(HHS), and the Department of the Interior (DOI). We selected these three
departments based on our data analysis of program types. The departments
selected and their agencies had a variety of program types (e.g.,
block/formula grants, competitive grants, direct federal, and research and
development) that were subject to PART and could provide us with a
broad-based perspective on how PART was applied to different programs
employing diverse tools of government. We also chose these three
departments because they had programs under PART review within the two
RMOs at OMB where we did more extensive interviewing, thus enabling us to
develop a more in-depth understanding of how the PART process operated for
a subset of programs. We used this information to complement our broader
profiling of all 234 programs assessed. Within DOE we studied the
experiences of the Office of Science, the Office of Energy Efficiency and
Renewable Energy, and the Office of Fossil Energy. Within HHS, we studied
the experiences of the Administration for Children and Families, the
Health Resources and Services Administration, and the Substance Abuse and
Mental Health Services Administration. Within DOI, we studied the
experiences of the Bureau of Land Management, the Bureau of Indian
Affairs, and the National Park Service. We interviewed planning, budget,
and program staff within each of the nine agencies as well as those

Appendix I Scope and Methodology

at the department level. We also reviewed relevant supporting materials
provided by these departments in conjunction with these interviews.

To allow us to describe how PART was used in fiscal year 2004 to influence
changes in future performance, we created a consolidated dataset in which
we classified recommendations OMB made by three areas in need of
improvement: (1) program design, (2) program management, and (3) program
assessment. A fourth category was created for those recommendations that
involved funding issues. We created a consolidated dataset of information
from our analysis of recommendations and selected information from the
PART program summary page and worksheet for each program.1

In addition, for approximately 95 percent of the programs, we identified
whether the basis for program funding was mandatory or discretionary. It
was important to separate discretionary and mandatory programs in our
review of PART's potential influence on the President's budget proposals
because funding for mandatory programs is determined through
authorizations, not through the annual appropriations process. Of the 234
programs that OMB assessed for fiscal year 2004, we identified 27
mandatory programs and 196 discretionary, but could not categorize 11
programs as solely mandatory or discretionary because they were too mixed
to classify.2

For discretionary programs, we explored the relationship between PART
results and proposed budget changes in a series of regression analyses.3
Using statistical analysis, we found that PART scores influenced proposed

1 The PART program summary sheets are included in the Budget of the United
States Government, Fiscal Year 2004, Performance and Management
Assessments (Washington, D.C.: February 2003). The summary sheets and
worksheets for the 234 programs are on OMB's Web site:
http://www.whitehouse.gov/omb/budget/fy2004/pma.html.

2 These 11 programs are animal welfare, food aid, multifamily housing
direct loans and rental assistance, rural electric utility loans and
guarantees, and rural water and wastewater grants and loans programs in
the Department of Agriculture; the nursing education loan repayment and
scholarship program in HHS; the methane hydrates program in DOE; the
reclamation hydropower program in DOI; the long-term guarantees program in
the U.S. Export-Import Bank; and the climate change and development
assistance/population programs in the Agency for International
Development.

3 We tested the regression on mandatory programs and as expected the
results showed no relationship between the PART scores and the level of
funding proposed in the President's Budget.

Appendix I Scope and Methodology

funding changes for discretionary programs; however, a large amount of
variability in these changes remains unexplained. We examined proposed
funding changes between fiscal years 2003 and 2004 (measured by percentage
change) and the relationship to PART scores for the programs assessed in
the fiscal year 2004 President's Budget. These scores are the weighted
sums of scores for four PART categories: Program Purpose and Design,
Strategic Planning, Program Management, and Program Results and
Accountability. The corresponding weights assigned by OMB are 0.2, 0.1,
0.2, and 0.5, respectively.4 Tables in this appendix report regression
results obtained using the method of least squares with
heteroskedasticitycorrected standard errors.5 The same estimation method
is used throughout this analysis.

Overall PART scores have a positive and statistically significant effect
on discretionary program funding. The programs evaluated by OMB include
both mandatory and discretionary programs. Regression results for
mandatory programs showed-as expected-no relationship between PART scores
and the level of funding in the President's Budget proposal. Assessment
ratings, however, can potentially affect the funding for discretionary
programs either in the President's Budget proposal or in congressional
deliberations on spending bills.6 Table 3 reports the regression results
for discretionary programs.

4 Budget of the United States Government, Fiscal Year 2004, Performance
and Management Assessments, 10.

5 For a discussion of this method, see W.H. Greene, Econometric Analysis,
Section 10.3 (Upper Saddle River, N.J.: Prentice Hall, 2003).

6 Budget of the United States Government, Fiscal Year 2001, A Citizen's
Guide to the Federal Budget (Washington, D.C.: February 2000),
http://w3.access.gpo.gov/usbudget/fy2001/guide03.html, (downloaded April
2003), 2.

Appendix I Scope and Methodology

Table 3: The Effect of Overall PART Score on Proposed Funding Changes
(Discretionary Programs)

                             Coefficient          Robust              
                   Variable     estimate standard error  t-Statistic  P-value 
         Overall PART score        0.536           0.159         3.38   0.001 
                   Constant      -25.671           8.682        -2.96   0.003 

Source: GAO analysis of OMB data.

Notes: R-squared = 0.058, Prob-F = 0.001, N = 196. Originally we
identified 197 discretionary programs. However, no fiscal year 2004 budget
estimate is reported for the Disclosed Worker Assistance program due to
grant consolidation at the Department of Labor. (Budget of the United
States Government, Fiscal Year 2004, Performance and Management
Assessments (Washington, D.C.: February 2003), 191.) This reduced the
number of discretionary programs to 196.

The estimated coefficient of the overall score is positive and
significant. These results show that the aggregate PART score has a
positive and statistically significant effect on the proposed change in
discretionary programs' budget, suggesting that programs with better
scores are more likely to receive larger proposed budget increases.

To examine the effect of program size on our results, we divided all
programs equally into three groups-small, medium, and large-based on their
fiscal year 2003 funding estimate. Regressions similar to those reported
in table 3 were then performed for discretionary programs in each group.
The results, reported in tables 4, 5, and 6 suggest that the statistically
significant effect of overall scores on budget outcomes exists only for
the smaller programs. The estimated coefficient of the overall score for
large programs, which is significant but only at the 10 percent level,
reflects an outlier.7 Once this outlier is dropped, the estimated
coefficient becomes statistically insignificant.

7 The outlier is the Community Oriented Policing Services program with an
estimated 77 percent reduction in funding (see OMB, Budget of the U.S.
Government, Fiscal Year 2004, Performance and Management Assessments,
(Washington, D.C.: February 2003), 178). The outlier in this case is
identified using scatter plot and estimating with and without the outlier.
The reported results for small and medium programs are not outlier driven.

Appendix I Scope and Methodology

Table 4: The Effect of Overall PART Score on Proposed Funding Changes
(Small Discretionary Programs)

                             Coefficient          Robust              
                   Variable     estimate standard error  t-Statistic  P-value 
         Overall PART score        1.074           0.404         2.66   0.010 
                   Constant      -50.523          21.155        -2.39   0.020 

Source: GAO analysis of OMB data.

Note: R-squared = 0.092, Prob-F = 0.01, N = 71.

Table 5: The Effect of Overall PART Score on Proposed Funding Changes
(Medium-Size Discretionary Programs)

                             Coefficient          Robust              
                   Variable     estimate standard error  t-Statistic  P-value 
         Overall PART score        0.306           0.188         1.62   0.109 
                   Constant      -17.984          12.480        -1.44   0.154 

Source: GAO analysis of OMB data.

Note: R-squared = 0.039, Prob-F = 0.109, N = 67.

Table 6: The Effect of Overall PART Score on Proposed Funding Changes
(Large Discretionary Programs)

                             Coefficient          Robust              
                   Variable     estimate standard error  t-Statistic  P-value 
         Overall PART score        0.194           0.109         1.77   0.082 
                   Constant       -8.216           7.778        -1.06   0.295 

Source: GAO analysis of OMB data.

Note: R-squared = 0.057, Prob-F = 0.082, N = 58.

The statistical analysis suggests that among the four components of the
PART questionnaire, program purpose, management, and results have
statistically significant effects on proposed funding changes, but the
effects of program purpose and results are more robust across the
estimated models. The overall score is a weighted average of four
components: Program Purpose and Design, Strategic Planning, Program
Management, and Program Results and Accountability.8 To identify which of
the four components contribute to the significant relationship observed
here, we

Appendix I Scope and Methodology

examined the effect of each on proposed changes in programs' funding
levels. Tables 7 and 8 show estimates from regressions of the proposed
funding change on purpose, planning, management, and results scores for
all discretionary programs as well as small discretionary programs alone.

Table 7: The Effect of PART Component Scores on Proposed Funding Changes
(All Discretionary Programs)

                         Coefficient           Robust               
             Variable       estimate   standard error  t-Statistic    P-value 
              Purpose          0.325            0.127          2.56     0.011 
                 Plan         -0.259            0.199         -1.30     0.194 
           Management          0.191            0.117          1.63     0.105 
              Results          0.363            0.205          1.77     0.078 
             Constant        -33.096           14.136         -2.34     0.020 

Source: GAO analysis of OMB data.

Note: R-squared = 0.087, Prob-F = 0.003, N = 196.

Table 8: The Effect of PART Component Scores on Proposed Funding Changes
(Small Discretionary Programs)

                         Coefficient           Robust               
             Variable       estimate   standard error  t-Statistic    P-value 
              Purpose          0.223            0.274          0.81     0.419 
                 Plan         -0.671            0.543         -1.24     0.221 
           Management          0.547            0.304          1.80     0.077 
              Results          0.956            0.534          1.79     0.078 
             Constant        -42.455           34.800         -1.22     0.227 

Source: GAO analysis of OMB data.

Note: R-squared = 0.149, Prob-F = 0.043, N = 71.

These results suggest that among the four components, program purpose,
management, and results are more likely to affect the proposed budget
changes for discretionary programs. When all discretionary programs are

8 Budget of the United States Government, Fiscal Year 2004, Performance
and Management Assessments, 10.

Appendix I Scope and Methodology

included, the estimated coefficients are positive and significant for
results (at the 10 percent level) and purpose. When only the small
discretionary programs are included, the estimated coefficients are
positive and significant for both management and results (at the 10
percent level). We also estimated the above regression for medium and
large programs, but coefficient estimates were not statistically
significant, except for the estimated coefficient of purpose for medium
programs.

PART scores explain at most about 15 percent of the proposed funding
changes, leaving a large portion of the variability in proposed funding
changes unexplained. This suggests that most of the variance is due to
institutional factors, program specifics, and other unquantifiable
factors. The coefficient of determination (or R2) is used to measure the
proportion of the total variation in the regression's dependent variable
that is explained by the variation in the regressors (independent
variables).9 The maximum value of this measure across all estimated
regressions is about 15 percent.

Similar analyses were carried out for changes in the proposed budget for
fiscal year 2004 and congressionally appropriated amounts in fiscal year
2002. Results were qualitatively similar to those reported here.

To assess the strengths and weaknesses of PART as an evaluation tool and
the consistency with which it was applied, we analyzed data from all 234
programs that OMB reviewed using PART for fiscal year 2004. As part of our
examination of the consistency with which PART was applied to programs, we
also focused on a subset of programs to assess the way in which certain
measurement issues were addressed across those programs. The issues were
selected from those identified in interviews with officials from the
selected agencies described above and our own review of the PART program
summaries and worksheets. Measurement issues included acceptance of output
versus outcome measures of annual and long-term goals, types of studies
accepted as program evaluations, acknowledgment of related programs, and
justifications for judging a PART question as "not applicable." Programs
were selected that formed clusters, each addressing a similar goal or
shared a structural similarity pertinent to performance measurement, to
examine whether PART assessment issues were handled similarly across
programs when expected. We reviewed the worksheets and compared the
treatment of assessment issues across specific questions

9 See Greene, 33.

Appendix I Scope and Methodology

within and across programs in a cluster to identify potential
inconsistencies in how the tool was applied. We reviewed a total of 28
programs in nine clusters. The nine clusters are food safety, water
supply, military equipment procurement, provision of health care,
statistical agencies, block grants to assist vulnerable populations,
energy research programs, wildland fire management, and disability
compensation.

With the exception of our summary analyses of all 234 programs, the
information obtained from OMB and agency interviews, related material, and
review of selected programs is not generalizable to the PART process for
all 234 programs reviewed in fiscal year 2004. We conducted our review
from May through October 2003 in accordance with generally accepted
government auditing standards.

Appendix II

The Fiscal Year 2004 PART and Differences Between the Fiscal Year 2004 and
2005 PARTs

Below we have reproduced OMB's fiscal year 2004 PART instrument. We have
also included the comparison of fiscal year 2004 and fiscal year 2005 PART
questions that appeared in the fiscal year 2005 PART guidance (see table
9).

Section I: Program 1. Purpose & Design (Yes, 2. No, N/A)

3.

4.

5.

Is the program purpose clear?

Does the program address a specific interest, problem or need?

Is the program designed to have a significant impact in addressing the
interest, problem or need?

Is the program designed to make a unique contribution in addressing the
interest, problem or need (i.e., not needlessly redundant of any other
Federal, state, local or private efforts)?

Is the program optimally designed to address the interest, problem or
need?

Specific Program Purpose & Research and Development Programs
Design Questions by
Program Type 6. (RD. 1) Does the program effectively articulate potential
public

benefits?

7.	(RD. 2) If an industry-related problem, can the program explain how the
market fails to motivate private investment?

Section II: Strategic 1.	Does the program have a limited number of
specific, ambitious longterm performance goals that focus on outcomes and
meaningfully

Planning (Yes, No, N/A) reflect the purpose of the program?

2.	Does the program have a limited number of annual performance goals that
demonstrate progress toward achieving the long-term goals?

3.	Do all partners (grantees, subgrantees, contractors, etc.) support
program-planning efforts by committing to the annual and/or long-term
goals of the program?

Appendix II
The Fiscal Year 2004 PART and Differences
Between the Fiscal Year 2004 and 2005 PARTs

4.	Does the program collaborate and coordinate effectively with related
programs that share similar goals and objectives?

5.	Are independent and quality evaluations of sufficient scope conducted
on a regular basis or as needed to fill gaps in performance information to
support program improvements and evaluate effectiveness?

6.	Is the program budget aligned with the program goals in such a way that
the impact of funding, policy, and legislative changes on performance is
readily known?

7.	Has the program taken meaningful steps to address its strategic
planning deficiencies?

Specific Strategic Planning Regulatory-Based Programs Questions by Program
Type

8.	(RD. 1) Are all regulations issued by the program/agency necessary to
meet the stated goals of the program, and do all regulations clearly
indicate how the rules contribute to achievement of the goals?

Capital Assets and Service Acquisition Programs

8.	(Cap. 1) Are acquisition program plans adjusted in response to
performance data and changing conditions?

9.	(Cap. 2) Has the agency/program conducted a recent, meaningful,
credible analysis of alternatives that includes trade-offs between cost,
schedule and performance goals?

Research and Development Programs

8.	(RD. 1) Is evaluation of the program's continuing relevance to mission,
fields of science, and other "customer" needs conducted on a regular
basis?

9. (RD. 2) Has the program identified clear priorities?

                                  Appendix II
                   The Fiscal Year 2004 PART and Differences
                  Between the Fiscal Year 2004 and 2005 PARTs

Section III: Program 1. Management (Yes, No, N/A)

2.

3.

4.

5.

6.

7.

Does the agency regularly collect timely and credible performance
information, including information from key program partners, and use it
to manage the program and improve performance?

Are Federal managers and program partners (grantees, subgrantees,
contractors, etc.) held accountable for cost, schedule and performance
results?

Are all funds (Federal and partners') obligated in a timely manner and
spent for the intended purpose?

Does the program have incentives and procedures (e.g., competitive
sourcing/cost comparisons, IT improvements) to measure and achieve
efficiencies and cost effectiveness in program execution?

Does the agency estimate and budget for the full annual costs of operating
the program (including all administrative costs and allocated overhead) so
that program performance changes are identified with changes in funding
levels?

Does the program use strong financial management practices?

Has the program taken meaningful steps to address its management
deficiencies?

Specific Program Management Questions by Program Type

Competitive Grant Programs

8.	(Co. 1) Are grant applications independently reviewed based on clear
criteria (rather than earmarked) and are awards made based on results of
the peer review process?

9.	(Co. 2) Does the grant competition encourage the participation of
new/first-time grantees through a fair and open application process?

10. (Co. 3) Does the program have oversight practices that provide
sufficient knowledge of grantee activities?

11. (Co. 4) Does the program collect performance data on an annual basis
and make it available to the public in a transparent and meaningful
manner?

Appendix II
The Fiscal Year 2004 PART and Differences
Between the Fiscal Year 2004 and 2005 PARTs

Block/Formula Grant Programs

8.	(B. 1) Does the program have oversight practices that provide
sufficient knowledge of grantee activities?

9.	(B. 2) Does the program collect grantee performance data on an annual
basis and make it available to the public in a transparent and meaningful
manner?

Regulatory-Based Programs

8.	(Reg. 1) Did the program seek and take into account the views of
affected parties including state, local and tribal governments and small
businesses, in drafting significant regulations?

9.	(Reg. 2) Did the program prepare, where appropriate, a Regulatory
Impact Analysis that comports with OMB's economic analysis guidelines and
have these RIA analyses and supporting science and economic data been
subjected to external peer review by qualified specialists?

10. (Reg. 3) Does the program systematically review its current
regulations to ensure consistency among all regulations in accomplishing
program goals?

11. (Reg. 4) In developing new regulations, are incremental societal costs
and benefits compared?

12. (Reg. 5) Did the regulatory changes to the program maximize net
benefits?

13. (Reg. 6) Does the program impose the least burden, to the extent
practicable, on regulated entities, taking into account the costs of
cumulative final regulations?

Capital Assets and Service Acquisition Programs

8.	(Cap. 1) Does the program define the required quality, capability, and
performance objectives of deliverables?

9.	(Cap. 2) Has the program established appropriate, credible, cost and
schedule goals?

Appendix II
The Fiscal Year 2004 PART and Differences
Between the Fiscal Year 2004 and 2005 PARTs

10. (Cap. 3) Has the program conducted a recent, credible, cost-benefit
analysis that shows a net benefit?

11. (Cap. 4) Does the program have a comprehensive strategy for risk
management that appropriately shares risk between the government and
contractor?

Credit Programs

8.	(Cr. 1) Is the program managed on an ongoing basis to assure credit
quality remains sound, collections and disbursements are timely and
reporting requirements are fulfilled?

9.	(Cr. 2) Does the program consistently meet the requirements of the
Federal Credit Reform Act of 1990, the Debt Collection Improvement Act and
applicable guidance under OMB Circulars A-1, A-34, and A-129?

10. (Cr. 3) Is the risk of the program to the U.S. Government measured
effectively?

Research and Development Programs

8.	(RD. 1) Does the program allocate funds through a competitive,
meritbased process, or, if not, does it justify funding methods and
document how quality is maintained?

9.	(RD. 2) Does competition encourage the participation of new/first-time
performers through a fair and open application process?

10. (RD. 3) Does the program adequately define appropriate termination
points and other decision points?

11. (RD. 4) If the program includes technology development or construction
or operation of a facility, does the program clearly define deliverables
and required capability/performance characteristics and appropriate,
credible cost and schedule goals?

                                  Appendix II
                   The Fiscal Year 2004 PART and Differences
                  Between the Fiscal Year 2004 and 2005 PARTs

Section IV: Program Results (Yes, Large Extent, Small Extent, No)

1.	Has the program demonstrated adequate progress in achieving its
longterm outcome goal(s)?

o 	Long-Term Goal I: Target: Actual Progress achieved toward goal:

o 	Long-Term Goal II: Target: Actual Progress achieved toward goal:

o 	Long-Term Goal III: Target: Actual Progress achieved toward goal:

2.	Does the program (including program partners) achieve its annual
performance goals?

                                       o

                                       o

                                       o

Key Goal I: Performance Target: Actual Performance:

Key Goal II: Performance Target: Actual Performance:

Key Goal III: Performance Target: Actual Performance:

Note: Performance targets should reference the performance baseline and
years, e.g. achieve a 5% increase over base of X in 2000.

3.	Does the program demonstrate improved efficiencies and cost
effectiveness in achieving program goals each year?

4.	Does the performance of this program compare favorably to other
programs with similar purpose and goals?

5.	Do independent and quality evaluations of this program indicate that
the program is effective and achieving results?

Appendix II
The Fiscal Year 2004 PART and Differences
Between the Fiscal Year 2004 and 2005 PARTs

Specific Results Questions by Program Type

Regulatory-Based Programs

6.	(Reg. 1) Were programmatic goals (and benefits) achieved at the least
incremental societal cost and did the program maximize net benefits?

Capital Assets and Service Acquisition Programs

6.	(Cap. 1) Were program goals achieved within budgeted costs and
established schedules?

Research and Development Programs

6.	(RD. 1) If the program includes construction of a facility, were
program goals achieved within budgeted costs and established schedules?

Table 9: Side-by-Side of the Fiscal Year 2005 PART and the Fiscal Year
2004 PART Questions

This year's question (fiscal year Last year's question (fiscal year
2005 PART) 2004 PART) Comment

I. Program purpose & design

     Is the program purpose   1            Same            
             clear?                                        
Does the program address a 2 Does the program address a                    
                     specific                     specific Wording clarified.
        and existing problem,   interest, problem or need? 
                 interest, or                              
             need?                                         

3 	Is the program designed to have a Dropped; "significant" worked
significant impact in addressing the against small programs and interest,
problem or need? was not clear.

Is the program designed 4 Is the program designed to    Wording clarified. 
             so that it is   make a                        
          not redundant or          unique contribution in 
        duplicative of any                  addressing the 
     other Federal, state,       interest, problem or need 
          local or private                   (i.e., is not 
           effort?           needlessly redundant of any   
                             other                         
                              Federal, state or, local or  
                                        private            
                                       effort)?            

       Is the program design       Is the program             Minor change to 
1.4 free of major             5 optimally designed          clarify focus; 
                                   to                  
       flaws that would limit              address the  "optimally" was too   
       the program's               national, interest,         broad.         
                                               problem 
           effectiveness or             or need?       
              efficiency?                              
                  Is the program                          New question to     
1.5  effectively targeted, so                              address         
       that resources will reach                       distributional design. 
       intended                                        
            beneficiaries and/or                       
               otherwise address                       
         the program's purpose                         
               directly?                               

Appendix II
The Fiscal Year 2004 PART and Differences
Between the Fiscal Year 2004 and 2005 PARTs

                         (Continued From Previous Page)

This year's question (fiscal year Last year's question (fiscal year
2005 PART) 2004 PART) Comment

         Specific Program Purpose and Design Questions by Program Type

Research and Development Programs

RD.1	Does the program effectively articulate Dropped; covered by 1.2.
potential public benefits?

RD. 2	If an industry-related problem, can the Dropped; covered by I.2 and
program explain how the market fails I.5. to motivate private investment?

II. Strategic planning

Does the program have a limited 1 Does the program have a limited Splits
old II.1 into separate

number of specific long-term number of specific, ambitious long-questions
on existence of (1)

performance measures that focus on term performance goals that focus on
long-term performance

outcomes and meaningfully reflect the outcomes and meaningfully reflect
the measures and (2) targets for

purpose of the program? purpose of the program?	these measures. Together,
the measures and targets comprise the long-term performance goals
addressed in last year's question.

Does the program have ambitious Splits old II.1; see above.
targets and timeframes for its long
term measures?

Does the program have a 2  Does the program have a   Splits old II.2 into  
                   limited            limited                 separate        
     number of specific               number of annual questions on existence 
           annual                    performance goals of (1)                 
      performance measures   that demonstrate progress     annual performance 
                  that can   toward                                  measures 
    demonstrate progress      achieving the long-term   and (2) targets for   
           toward                     goals?                   these          
achieving the program's                              measures. Together,   
                 long-term                                      the           
           goals?                                        measures and targets 
                                                                     comprise 
                                                       the annual performance 
                                                       goals                  
                                                         addressed in last    
                                                               year's         
                                                             question.        

Does the program have baselines and Splits old II.2; see above.
ambitious targets for its annual
measures?

Do all partners (including 3 Do all partners (grantees, Wording clarified. 
                    grantees,              sub-            
sub-grantees, contractors,   grantees, contractors,     
             cost-              etc.) support              
     sharing partners, and       program planning efforts  
             other                          by             
         government partners)     committing to the annual 
                commit to and                 and/or long- 
       work toward the annual   term goals of the program? 
                 and/or long-                              
term goals of the program?                              

4 	Does the program collaborate and Moved to question 3.5. coordinate
effectively with related programs that share similar goals and objectives?

Appendix II
The Fiscal Year 2004 PART and Differences
Between the Fiscal Year 2004 and 2005 PARTs

                         (Continued From Previous Page)

          This year's question   Last year's question      
                  (fiscal year   (fiscal year              
           2005 PART)                   2004 PART)              Comment       
Are independent evaluations 5    Are independent and                       
               of                         quality          Wording clarified.
          sufficient scope and   evaluations of sufficient 
             quality conducted             scope           
      on a regular basis or as   conducted on a regular    
                     needed to   basis or as               
               support program   needed to fill gaps in    
              improvements and   performance               
    evaluate effectiveness and    information to support   
                     relevance            program          
    to the problem, interest,    improvements and evaluate 
            or need?                                       
                                      effectiveness?       

Are budget requests explicitly tied to 6 Is the program budget aligned
with the Modified.
accomplishment of the annual and program goals in such a way that the
long-term performance goals, and are impact of funding, policy, and
the resource needs presented in a legislative changes on performance is
complete and transparent manner in readily known?
the program's budget?

Has the program taken meaningful 7 Same.
steps to correct its strategic planning
deficiencies?

Specific Strategic Planning Questions by Program Type

    Regulatory Based Programs Capital Assets & Service Acquisition Programs

2.RG1 Are all regulations issued by the  Reg. 1 Same. 
         program/agency necessary to meet          
         the stated goals of the program,          
         and                                       
         do all regulations clearly                
         indicate how                              
         the rules contribute to                   
         achievement of                            
         the goals?                                

Cap. 1	Are acquisition program plans Dropped; covered in 2.CA1 and
adjusted in response to performance 3.CA1. data and changing conditions?

2.CA1	Has the agency/program conducted a Cap. 2 Has the agency/program
conducted a Minor change. recent, meaningful, credible analysis recent,
meaningful, credible analysis of alternatives that includes trade-offs of
alternatives that includes trade-offs between cost, schedule, risk, and
between cost, schedule and performance goals and used the performance
goals? results to guide the resulting activity?

                                  R&D Programs

R&D programs addressing technology development or the construction or
operation of a facility should answer 2.CA1.

2.RD1    If applicable, does the RD. 1 Is evaluation of the      Modified. 
                     program assess       program's                 
         and compare the potential          continuing relevance to 
         benefits of                                mission, fields 
         efforts within the program       of science, and other     
         to other                         "customer"                
         efforts that have similar        needs conducted on a      
         goals?                           regular basis?            
2.RD2 Does the program use a     RD. 2 Has the program           Modified. 
         prioritization                   identified clear          
         process to guide budget          priorities?               
         requests and                                               
         funding decisions?                                         

Appendix II
The Fiscal Year 2004 PART and Differences
Between the Fiscal Year 2004 and 2005 PARTs

                         (Continued From Previous Page)

This year's question (fiscal year Last year's question (fiscal year
2005 PART) 2004 PART) Comment

III. Program management

Does the agency regularly collect 1 Same.
timely and credible performance
information, including information from
key program partners, and use it to
manage the program and improve
performance?

          Are Federal managers and program 2       Same. 
        partners (including grantees, sub-      
       grantees, contractors, cost-sharing      
       partners, and other government           
      partners) held accountable for cost,      
         schedule and performance results?      

Are funds (Federal and partners') 3 Same. obligated in a timely manner and
spent for the intended purpose?

          Does the program have procedures 4       Same. 
       (e.g. competitive sourcing/cost          
        comparisons, IT improvements,           
        appropriate incentives) to measure      
         and achieve efficiencies and cost      
       effectiveness in program execution?      

Does the program collaborate and Same as old question 2.4.
coordinate effectively with related
programs?

5 	Does the agency estimate and budget Now covered by guidance for for the
full annual costs of operating question 2.7. the program (including all
administrative costs and allocated overhead) so that program performance
changes are identified with changes in funding levels?

Does the program use strong financial 6 Same. management practices?

Has the program taken meaningful 7 Same.
steps to address its management
deficiencies?

Specific Program Management Questions by Program Type

                           Competitive Grant Programs

3.CO1 Are grants awarded   Co. 1 Are grant applications      Modified.     
         based on a clear           independently             Guidance also   
         competitive process        reviewed based on clear   captures former 
         that includes a                    criteria          question Co. 2. 
         qualified assessment       (rather than earmarked)  
              of merit?             and are                  
                                    awards made based on     
                                    results of the           
                                      peer review process?   

Appendix II
The Fiscal Year 2004 PART and Differences
Between the Fiscal Year 2004 and 2005 PARTs

                         (Continued From Previous Page)

This year's question (fiscal year Last year's question (fiscal year
2005 PART) 2004 PART) Comment

Co.2	Does the grant competition encourage Now considered in guidance for
the participation of new/first-time answering 3.CO1, above. grantees
through a fair and open application process?

3.CO2 	Does the program have oversight Co. 3 Does the agency have
sufficient Wording clarified. practices that provide sufficient knowledge
about grantee activities? knowledge of grantee activities?

3.CO3 Does the program collect grantee    Co. 4 Same. 
         performance data on an annual basis       
         and make it available to the public       
                                        in a       
         transparent and meaningful manner?        

                          Block/Formula Grant Programs

3.BF1	Does the program have oversight B. 1 Same. practices that provide
sufficient knowledge of grantee activities?

3.BF2 Does the program collect grantee     B. 2 Same. 
         performance data on an annual basis       
          and make it available to the public      
                                         in a      
         transparent and meaningful manner?        

                           Regulatory Based Programs

3.RG1 	Did the program seek and take into Reg. 1 Did the program seek and
take into Wording clarified. account the views of all affected account the
views of affected parties parties (e.g., consumers; large and including
state, local and tribal small businesses; State, local and governments and
small businesses in tribal governments; beneficiaries; and drafting
significant regulations? the general public) when developing significant
regulations?

3.RG2 	Did the program prepare adequate Reg. 2 Did the program prepare,
where Minor change. regulatory impact analyses if required appropriate, a
Regulatory Impact by Executive Order 12866, regulatory Analysis (RIA) that
comports with flexibility analyses if required by the OMB's economic
analysis guidelines Regulatory Flexibility Act and and have these RIA
analyses and SBREFA, and cost-benefit analyses if supporting science and
economic data required under the Unfunded been subjected to external peer
Mandates Reform Act; and did those review, as appropriate, by qualified
analyses comply with OMB specialists? guidelines?

3.RG3 Does the program systematically    Reg. 3 Same. 
          review its current regulations to        
                                     ensure        
         consistency among all regulations         
         in                                        
         accomplishing program goals?              

Reg. 4	In developing new regulations, are Merged into new 3.RG4.
incremental societal costs and benefits compared?

Appendix II
The Fiscal Year 2004 PART and Differences
Between the Fiscal Year 2004 and 2005 PARTs

                         (Continued From Previous Page)

         This year's question           Last year's question 
         (fiscal year                   (fiscal year         
               2005 PART)                    2004 PART)          Comment      
3.RG4   Are the regulations          Did the regulatory    Combines former 
               designed to       Reg. 5 changes to the              questions 
         achieve program goals,         program maximize net Reg. 4, 5, & 6.  
         to the extent                  benefits?            
         practicable, by                                     
         maximizing the net                                  
             benefits of its                                 
          regulatory activity?                               

                   Reg. 6 Does the program impose the least  Merged in to new 
                                                                       3.RG4. 
                          burden, to the extent practicable, 
                          on                                 
                          regulated entities, taking into    
                          account                            
                               the costs of cumulative final 
                                                regulations? 

                Capital Assets and Service Acquisition Programs

3.CA1        Is the program managed by       New question, covers old Cap. 
               maintaining clearly defined             1, 2, 3, and 4.        
          deliverables, capability/performance  
            characteristics, and appropriate,   
            credible cost and schedule goals?   

                Cap. 1 Does the program clearly define the    Merged into new 
                                                                    2.CA1 and 
                         required quality, capability, and             3.CA1. 
                                performance objectives for 
                                 deliverables and required 
                                  capabilities/performance 
                                          characteristics? 

                Cap 2.      Has the program established Merged into new 2.CA1 
                                                                          and 
                        appropriate, credible, cost and                3.CA1. 
                                        schedule goals? 
                       Has the program conducted a      Merged into new 2.CA1 
                Cap 3. recent,                                            and 
                       credible, cost-benefit analysis                 3.CA1. 
                       that                             
                                   shows a net benefit? 

Cap 4.	Does the program have a Merged into new 2.CA1 and comprehensive
strategy for risk 3.CA1. management that appropriately shares risk between
the government and contractor?

                                Credit Programs

3.CR1 Is the program managed on an        Cr. 1 Same. 
         ongoing basis to assure credit            
         quality                                   
         remains sound, collections and            
         disbursements are timely, and             
         reporting requirements are                
         fulfilled?                                

Cr. 2	Does the program consistently meet Merged into new 3.CR2. the
requirements of the Federal Credit Reform Act of 1990, the Debt Collection
Improvement Act and applicable guidance under OMB Circulars A-1, A-11, and
A-129?

Appendix II
The Fiscal Year 2004 PART and Differences
Between the Fiscal Year 2004 and 2005 PARTs

                         (Continued From Previous Page)

This year's question (fiscal year Last year's question (fiscal year
2005 PART) 2004 PART) Comment

3.CR2  Do the program's credit  Cr. 3 Is the risk of the   Combines former 
                  models                 program to the U.S.     Cr. 2 and 3. 
            adequately provide           Government measured  
                 reliable,               effectively?         
         consistent, accurate and                             
         transparent                                          
         estimates of costs and                               
         the risk to the                                      
                Government?                                   

                       Research and Development Programs

R&D programs addressing technology development or the construction or
operation of a facility should answer 3.CA1. R&D programs that use
competitive grants should answer 3.CO1, CO2 and CO3.

3.RD1 For R&D programs other     RD. 1 Does the program allocate Modified. 
         than                             funds                     
                 competitive grants       through a competitive,    
                 programs, does the       merit-based               
         program allocate funds and       process, or, if not, does 
         use                              it justify                
         management processes that        funding methods and       
         maintain                         document how              
         program quality?                 quality is maintained?    

                       RD. 2 Does competition encourage the Covered by 3.CO1. 
                                           participation of 
                                             new/first-time 
                             performers through a fair and  
                             open                           
                                       application process? 

RD. 3 	Does the program adequately define Covered by 2.CA1 and 3.CA1.
appropriate termination points and other decision points?

RD. 4 	If the program includes technology Covered by 2.CA1 and 3.CA1.
development or construction or operation of a facility, does the program
clearly define deliverables, capability/performance characteristics, and
appropriate, credible cost and schedule goals?

IV. Program results

             Has the program       1      Has the program       Minor change. 
              demonstrated                  demonstrated        
       adequate progress in          adequate progress in       
       achieving its                 achieving its              
          long-term performance      long-term outcome goal(s)? 
                 goals?                                         
4.2 Does the program (including 2 Same.                      
                           program                              
       partners) achieve its                                    
       annual                                                   
       performance goals?                                       

4.3       Does the program demonstrate      3   Same. 
         improved efficiencies or cost            
         effectiveness in achieving program       
         goals each year?                         

4.4     Does the performance of 4    Does the performance of Minor change. 
                      this program                 this program 
        compare favorably to other   compare favorably to other 
                         programs,                     programs 
       including government,          with similar purpose and  
       private, etc.,                          goals?           
        with similar purpose and                                
                 goals?                                         

Appendix II
The Fiscal Year 2004 PART and Differences
Between the Fiscal Year 2004 and 2005 PARTs

                         (Continued From Previous Page)

This year's question (fiscal year Last year's question (fiscal year
2005 PART) 2004 PART) Comment

        Do independent evaluations of       5      Same. 
      sufficient scope and quality indicate      
          that the program is effective and      
              achieving results?                 

                   Specific Results Questions by Program Type

                           Regulatory Based Programs

4.RG1   Were programmatic goals (and            Same. 
           benefits) achieved at the least        
           incremental societal cost and did the  
           program maximize net benefits?         

Capital Assets and Service Acquisition Programs

4.CA1	Were program goals achieved within Cap. 1 Same. budgeted costs and
established schedules?

Research and Development Programs

R&D programs addressing technology RD. 1 If the program includes
construction of Simplified.
development or the construction or a facility, were program goals achieved
operation of a facility should answer within budgeted costs and
established
4.CA1. schedules?

Source: OMB Web site, http://www.whitehouse.gov/omb/part/bpm861.pdf (downloaded
                              Apr. 7, 2003), 6-12.

Appendix III

Development of PART

Fiscal Year 2003	This administration's efforts to link budget and
performance began with the fiscal year 2003 budget, in which the
administration announced the "Executive Branch Management Scorecard," a
traffic-light grading system to report the work of federal agencies in
implementing the President's Management Agenda's five governmentwide
initiatives. Each quarter, OMB assessed agencies achievement toward the
"standards of success"- specific goals articulated for each of the five
initiatives. Since some of the five initiatives require continual efforts,
OMB also assessed agencies' progress toward achieving the standards. The
fiscal year 2003 President's Budget also included OMB's assessments of the
effectiveness of 130 programs and a brief explanation of the assessments.
According to OMB, the assessments were based on OMB staff's knowledge of
the programs and professional judgments; specific criteria were not
publicly available with which to support OMB's judgments.

Fiscal Year 2004	During the spring of 2002, an internal OMB task
force-PET-consisting of staff from various OMB divisions, created PART to
make the process of rating programs robust and consistent across
government programs. During the development of PART, OMB solicited input
from interested parties both inside and outside the federal government,
including GAO and congressional staff. PART was tested on 67 programs
during a series of Spring Review meetings with the OMB Director. Based on
these results and other stakeholder feedback, PET recommended a series of
refinements to PART, such as using a four-point scale in the Results
section as opposed to the "yes/no" format. Another key change was revising
the Program Purpose and Design section (Section I) to remove the question
"Is the federal role critical?" because it was seen as subjective-based on
an individual's political views.

Appendix III Development of PART

In July 2002, OMB issued PART in final and accompanying instructions for
completing the assessments for the President's fiscal year 2004 budget
submission. Later that month, OMB provided a series of training sessions
on PART for staff from OMB and agencies. Agencies received completed PART
assessments during early September 2002 and submitted written appeals to
OMB by mid-September. OMB formed the IRP, comprising OMB and agency
officials, to conduct consistency reviews1 and provide recommendations on
selected PART appeals. The IRP also provided OMB with a broad set of
recommendations aimed at improving the PART based on IRP's experience with
the consistency audit and appeals. OMB was to finalize all PART
assessments by the end of September 2002, although both agency and OMB
officials told us that changes and appeals continued through the end of
the budget season. RMOs within OMB provided draft summaries of PART
results to the Director of OMB during the Director's review of agencies'
budget requests. The President's fiscal year 2004 budget (issued February
3, 2003) included a separate volume containing one-page summaries of the
PART results for each of the 234 programs that were assessed.2

The relationship between PART and the administration's proposals was
presented in agencies' budget justification materials sent to Congress. In
an unprecedented move, OMB also posted PART, one-page rating results, and
detailed supporting worksheets on its Web site. OMB also included its Web
address in the Performance and Management Assessments volume of the budget
and, in the budget itself, also described PART and its process and asked
for comments on how to improve PART.

Figure 3 depicts a time line of the events related to the formulation of
the President's budget request, including the key stages of PART
development.

1 According to OMB, IRP performed consistency reviews on a stratified
random sample of programs that completed the PART in preparation for the
fiscal year 2004 budget. While IRP made recommendations regarding its
findings, it did not have the authority to enforce them.

2 Fiscal Year 2004 Budget of the United States Government, Performance and
Management Assessments, (Washington, D.C.: February 2003).

                        Appendix III Development of PART

          Figure 3: The PART Process and Budget Formulation Timelines

Fiscal Year 2005	For the fiscal year 2005 PART, OMB moved the entire
assessment process from the fall to spring. OMB told us that the change
was meant to help alleviate the burden of having the PART process overlap
the end of the budget season, when workload is already so heavy. Another
difference between the 2 years was that agency officials reported that OMB
was more collaborative with the agencies in selecting the programs for the
fiscal year 2005 PART.

Training on the PART assessments to be included in the President's fiscal
year 2005 budget began in early May 2003. Agencies submitted PART appeals
in early July, and OMB aimed to resolve the appeals and finalize the PART
scores by the end of July. In December of 2003, RMOs were to finalize the
summaries of PART results, which will be published in February along with
the fiscal year 2005 President's Budget.

Appendix IV

Comments from the Office of Management and Budget

Appendix IV
Comments from the Office of Management
and Budget

Appendix V

                     GAO Contacts and Staff Acknowledgments

GAO Contacts	Paul Posner, (202) 512-9573 Denise Fantone, (202) 512-4997

Acknowledgments	In addition to the above contacts, Kristeen McLain, Jackie
Nowicki, and Stephanie Shipman made significant contributions to this
report. Thomas Beall, Joseph Byrns, Hashem Dezhbakhsh, Evan Gilman,
Patrick Mullen, David Nicholson, and Mark Ramage also made key
contributions to this report.

GAO's Mission	The General Accounting Office, the audit, evaluation and
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