Forest Service: Status of Efforts to Achieve Cost Efficiency (Fact Sheet,
04/26/94, GAO/RCED-94-185FS).

Congress requested that the Forest Service prepare a cost study for its
timber program that would analyze how to achieve an annual cost
reduction of at least five percent.  The Forest Service's April 1993
report on timber cost efficiency discussed such areas as the overall
timber program, the program's organization, the Timber Sale Program
Information Reporting System, financial management, and attempts to
monitor cost efficiency.  In the year since the study was issued, the
Forest Service has made progress toward completing 21 of 23 action items
targeted for completion by October 1993 or October 1994.  The results of
the regional offices' cost efficiency efforts have been mixed.  In
addition, the Forest Service has undertaken other, nontimber
initiatives, such as reorganizing and downsizing, that could improve the
agency's overall efficiency.  Overall, from fiscal year 1992 to fiscal
year 1993, the Forest Service reduced its timber program expenses
nationally by about 7.2 percent.  Total annual timber program expenses
declined in six of the nine regions during this period. However, six of
the nine regions' timber sales programs showed a net loss when annual
expenses were deducted from revenues for fiscal year 1993.

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

 REPORTNUM:  RCED-94-185FS
     TITLE:  Forest Service: Status of Efforts to Achieve Cost Efficiency
      DATE:  04/26/94
   SUBJECT:  Natural resources
             Accountability
             Agricultural programs
             Timber sales
             Forest management
             Cost effectiveness analysis
             Cost control
             Federal agency reorganization
             Reductions in force
IDENTIFIER:  Forest Service Timber Sale Program Information Reporting 
             System
             Forest Service Timber Sales Program
             National Performance Review
             
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Cover
================================================================ COVER


Fact Sheet for Congressional Requesters

April 1994

FOREST SERVICE - STATUS OF EFFORTS
TO ACHIEVE COST EFFICIENCY

GAO/RCED-94-185FS

Forest Service's Cost Efficiency Efforts


Abbreviations
=============================================================== ABBREV

  GAO - General Accounting Office
  TSPIRS - Timber Sale Program Information Reporting System

Letter
=============================================================== LETTER


B-256974

April 26, 1994

The Honorable Sidney R.  Yates
Chairman
The Honorable Ralph Regula
Ranking Minority Member
Subcommittee on Interior
Committee on Appropriations
House of Representatives

Your Subcommittee has long been concerned with the escalating costs
of the Forest Service's timber program.  As a result, you asked the
Forest Service to prepare a cost reduction study for its timber
program and provide "a comprehensive analysis of its [the timber
program's] costs, and a multiyear program to achieve an annual
reduction in these costs of not less than 5 percent." In response to
your request, on April 16, 1993, the Forest Service issued its report
entitled Timber Cost Efficiency Study--Final Report. 

The Forest Service's timber cost efficiency study addressed such
areas as the overall timber program, the program's organization, the
Timber Sale Program Information Reporting System (TSPIRS), financial
management, and efforts to monitor cost efficiency.  The report
included 29 action items to be completed by the Forest Service's
Washington Office; 23 of these items had target completion dates of
either October 1993 or October 1994.  In addition, each region was
required to prepare action plans specific to its needs and submit
them to the Washington Office. 

This fact sheet responds to your request that we review the progress
made by the Forest Service in achieving the initiatives set forth in
its timber cost efficiency study and specifically (1) provides the
status of the Washington Office's actions as of March 31, 1994; (2)
summarizes the regional results; and (3) provides an overview of
other Forest Service initiatives that could contribute to overall
improvements in the Forest Service's efficiency. 

In summary, in the year since the issuance of the timber cost
efficiency study, the Forest Service's Washington Office has made
progress toward completing 21 of the 23 action items targeted for
completion by October 1993 or October 1994.  The results of the
regional offices' cost efficiency efforts have been mixed; some
regions are moving more rapidly than others in their attempts to
achieve cost efficiency.  In addition, the Forest Service has
undertaken other, nontimber initiatives, such as reorganization and
downsizing, that could improve the agency's overall efficiency. 

Overall, from fiscal year 1992 to fiscal year 1993, the Forest
Service reduced its timber program expenses nationally by about 7.2
percent, from $1,038.2 million to $963.6 million.  Total annual
timber program expenses declined in six of the nine regions during
this period.  However, six of the nine regions' timber sales programs
showed a net loss when annual expenses were deducted from revenues
for fiscal year 1993. 


   STATUS OF COST EFFICIENCY
   INITIATIVES
------------------------------------------------------------ Letter :1


      WASHINGTON OFFICE'S EFFORTS
---------------------------------------------------------- Letter :1.1

Of the 23 action items targeted for completion by either October 1993
or October 1994, the Washington Office has made progress in
completing all but two items.  Action on the remaining two items is
contingent on the completion of ongoing studies.  Among the most
significant items completed or substantially completed are the
following: 

  Included a budget line item for Ecosystem Management in the fiscal
     year 1995 budget to provide for inventories, forest planning,
     and ecosystem monitoring. 

  Established cost efficiency as a performance standard and included
     it in all fiscal year 1993 TSPIRS and timber program activity
     reviews conducted.  The Forest Service will continue to
     emphasize cost efficiency in future TSPIRS and timber program
     activity reviews. 

  Conducted a national reorganization study to explore the entire
     agency's structure.  The final product is expected in September
     1994. 

  Separated the information on the costs of the timber commodity
     program, the personal-use program, and the forest stewardship
     program in the fiscal year 1993 TSPIRS report instead of
     combining all of the figures into one total, as had been done
     previously. 

  Completed a below-cost timber sale policy and a minimum-rate policy
     and forwarded them for the Department of Agriculture's approval. 
     The Department, however, is now reexamining both policies with
     the help of an interdisciplinary task force and expects to have
     options developed by the end of fiscal year 1994. 

  Revised one of the two major types of timber contracts and
     forwarded it for departmental approval.  Once this contract is
     approved, the Washington Office will revise the second contract. 

The specific status of all 29 Washington Office action items is
presented in section 1. 


      REGIONAL EFFORTS
---------------------------------------------------------- Letter :1.2

The results of the cost efficiency efforts by the Forest Service's
regional offices are mixed, according to the Chairman of the Cost
Efficiency Task Force.  Each region was responsible for preparing and
implementing its own cost efficiency plan, which was then reviewed by
the Washington Office.  The Washington Office's reviews found that
some regions are rapidly pursuing the idea of becoming cost
efficient, while other regions are moving more slowly.  Examples of
regional cost efficiency actions include the following: 

  Some regions have consolidated, or "zoned," certain activities--for
     example, timber sale preparation--at the forest or district
     level to meet downsizing goals and reduce costs.  Other regions
     are continuing to study the concept for other applications. 

  One region has raised the minimum rates it will accept for timber
     sold to generate more revenue. 

  One region plans to phase out commercial timber sales on several of
     its below-cost forests. 

  One region has a project under way to ensure that all
     resources--for example, timber, recreation, and fish and
     wildlife--pay their "fair share" of the joint costs--for
     example, general administrative costs. 

  One region is monitoring overhead costs assessed on each
     resource--that is timber, recreation, fish and wildlife--to make
     sure that each resource pays only what is reasonable for that
     resource to pay. 

The Chairman of the task force periodically reviews what progress the
regional offices are making in achieving their cost efficiency goals. 


   OTHER FOREST SERVICE
   INITIATIVES COULD IMPROVE
   EFFICIENCY
------------------------------------------------------------ Letter :2

While the action items contained in the timber cost efficiency study
relate to the timber program, the Forest Service expanded some of
these initiatives to include the entire agency and has undertaken
other initiatives that could improve its overall efficiency.  These
other initiatives are detailed in section 2 and summarized below: 

  A team was formed to describe the "Forest Service of the Future"
     and how the Forest Service could be transformed to achieve that
     vision.  All areas of the Forest Service are subject to review,
     including its organizational structure, mission, and
     geographical needs.  The team is gathering data and the final
     report is expected in September 1994. 

  "Land stewardship contracts" are being tested in four forests. 
     These contracts allow forests to offset a project's costs with a
     portion of the value of the timber receipts.  The contracts are
     viewed as an incentive to reduce costs so that more revenue is
     available for use on local projects. 

  The Forest Service downsized by 1,133 permanent positions from
     October 1992 through March 1994.  In addition, close to 700
     additional positions were still listed as excess to the agency's
     needs as of March 29, 1994.  However, as of April 11, 1994,
     2,317 employees had agreed to take advantage of the $25,000
     incentive buyout signed by the President on March 30, 1994. 

  A major budget restructuring package was included in the
     President's fiscal year 1995 budget.  The Forest Service
     designed the proposals to reduce the complexity of the existing
     system and improve efficiency. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3

To determine the status of the current cost efficiency initiatives,
we met with timber management, fiscal, and budget officials in the
Washington Office and interviewed several regional officials by
telephone.  We reviewed proposals and other supporting documentation
provided by these officials. 

To identify the other Forest Service initiatives, we met with the
Washington Office's fiscal, personnel, and timber management
officials and reviewed documentation provided by them. 

We discussed the information presented in this fact sheet with
officials in the Washington Office's Timber Management Office, who
agreed that the information accurately presents the status of the
Forest Service's actions as of March 31, 1994. 


---------------------------------------------------------- Letter :3.1

We are providing copies of this fact sheet to the Secretary of
Agriculture and the Chief of the Forest Service.  We will make copies
available to other interested parties on request. 

Please contact me on (202) 512-7756 if you or your staff have any
questions about the content of this fact sheet.  Major contributors
to this product include Linda L.  Harmon, Assistant Director, and
Jill J.  Lund, Evaluator-in-Charge. 

James Duffus III
Director, Natural Resources
 Management Issues


GAO'S UPDATE OF THE FOREST
SERVICE'S COST-EFFICIENCY ACTION
PLAN
============================================================ Chapter 1

                                [Original]
                                Planned
                                completion
Action item\a                   date\a            Status as of 3/31/94
------------------------------  ----------------  ------------------------------
Timber program
--------------------------------------------------------------------------------
Implement the below-cost        October 1993      During the previous
policy to insure: 1) the long-                    administration, the Forest
term benefits of the timber                       Service had drafted a below-
purpose component of the                          cost timber sale policy and
timber sale program exceed the                    sent it to the Secretary of
component costs; and 2) where                     Agriculture for approval. In
timber harvest is used to                         February 1994, the Department
achieve "other purpose"                           decided to reexamine this
objectives, it is the most                        policy with the help of an
financially efficient means of                    interdisciplinary task force.
achieving those objectives.                       Plans call for the team to
                                                  have options developed by the
                                                  end of fiscal year 1994.
                                                  Currently, no national policy
                                                  on below-cost sales exists.

Modification of timber sale     October 1994      Action on this item will occur
program management practices                      after the development of a
or, if needed, changes in                         national below-cost policy.
timber sale program levels
would be implemented to
achieve these requirements.

Complete a national             October 1994      In February 1994, the Forest
information needs assessment                      Service issued a report
to provide a basis for                            containing a comprehensive
substantially reducing                            view of its financial
duplication and the                               management processes. Similar
proliferation of requests to                      studies are under way for the
field units. Complete a cost                      other management systems. The
analysis of collecting and                        goal is to fully integrate all
maintaining information.                          financial and resource
Review regional assessments                       management systems into a
already completed.                                network fully responsive to
                                                  its users. This entire project
                                                  is ongoing and expected to
                                                  take several years. Work
                                                  started in October 1993 on the
                                                  preparation of an extensive
                                                  data dictionary to precisely
                                                  define all data elements. Work
                                                  on the data dictionary is
                                                  scheduled for completion in
                                                  April 1994.

Consult with the Congressional  October 1994      The Forest Service made a list
committees to find ways to                        of all internal and external
eliminate duplicate requests                      reports that it regularly
and outdated reports.                             prepares. It plans to meet
                                                  with congressional recipients
                                                  to determine whether the
                                                  reports are still needed. No
                                                  date has yet been set for the
                                                  meeting, but plans call for a
                                                  meeting to be set after the
                                                  appropriations hearings in
                                                  April 1994.

Develop a simplified timber     October 1994      The Forest Service has revised
sale contract for use on sales                    one of its two major timber
requiring only minor or no new                    contracts. The revised
road construction.                                contract, known as the 2400-
                                                  6, was sent to the Secretary
                                                  of Agriculture in January 1994
                                                  and is awaiting approval. Once
                                                  this contract is approved, the
                                                  Forest Service will proceed
                                                  with plans to revise the other
                                                  major timber contract, the
                                                  2400-4.

Coordinate with appropriate     October 1997      Letters have gone out to
staffs to emphasize cost                          Regional Foresters and
efficiency in forest timber                       Washington Office staff
program activity reviews,                         directors stating that cost
project planning and                              efficiency is now a
N[ational] E[nvironmental]                        performance standard. Timber
P[olicy] A[ct] and N[ational]                     program and Timber Sales
F[orest] M[anagement] A[ct]                       Program Information Reporting
training.                                         System (TSPIRS) activity
                                                  reviews conducted in fiscal
                                                  year 1993 emphasized cost
                                                  efficiency. It will continue
                                                  to be an item of emphasis in
                                                  future reviews and remains an
                                                  ongoing action item.

Implement the revised minimum   October 1994      During the previous
rate policy.                                      administration, the Forest
                                                  Service drafted a minimum-
                                                  rate policy and sent it to the
                                                  Secretary of Agriculture for
                                                  approval. In February 1994,
                                                  the Department decided to
                                                  reexamine the policy with the
                                                  help of an interdisciplinary
                                                  task force. Plans call for the
                                                  task force to have options
                                                  developed by the end of fiscal
                                                  year 1994. The Forest Service
                                                  is uncertain as to the
                                                  departmental timetable but
                                                  will implement the policy as
                                                  soon as it is approved.

Administer Cultural Resources   October 1993      Accounting procedures have
Management as a separate                          been revised. The timber
program ensuring that the cost                    resource pays for cultural
of [the] program is not                           resource surveys contained
charged to timber.                                within the timber project
                                                  area. Cultural resources must
                                                  now fund state-required
                                                  surveys that extend beyond
                                                  project boundaries.

Coordinate with Ecosystem       October 1993      A budget line item for
Management to insure that                         Ecosystem Management was
timber project costs are                          included in the President's
shared by benefiting                              fiscal year 1995 budget to
functions.                                        provide funding for
                                                  inventories, forest planning,
                                                  and ecosystem monitoring. All
                                                  benefiting resources were
                                                  required to provide funds for
                                                  this new line item.

Include cost efficiency         October 1996      Cost efficiency was included
implementation as an issue in                     in all timber program and
all W[ashington] O[ffice]                         TSPIRS activity reviews
Timber and Fiscal Activity                        conducted by the Washington
Reviews.                                          Office in fiscal year 1993.
                                                  This action item is ongoing,
                                                  as cost efficiency will
                                                  continue to be part of future
                                                  reviews.


TSPIRS
--------------------------------------------------------------------------------
Explore using economies of      October 1993      In fiscal year 1993, TSPIRS
scale analysis to remove small                    separated the information on
timber programs from the below                    the costs of the timber
cost timber sale requirements.                    commodity program, the
                                                  personal-use program, and the
                                                  forest stewardship program.
                                                  Some forests with small timber
                                                  commodity programs will
                                                  eliminate them because of
                                                  concerns about cost
                                                  efficiency.

Provide incentives for          October 1994      For allocation of the fiscal
regional and forest managers                      year 1994 budget to the
to use the annual TSPIRS                          regions, TSPIRS data, central
reports to adjust their timber                    accounting system information,
programs.                                         personnel numbers, and volume
                                                  figures were used for the
                                                  first time to make some
                                                  adjustments. This was done to
                                                  reward forests whose costs and
                                                  personnel were more in line
                                                  with the size of their timber
                                                  programs. The Forest Service
                                                  continues to explore other
                                                  incentives.


Financial management
--------------------------------------------------------------------------------
Establish a service wide work   October 1994      A budget restructuring
activity-based unit costing                       proposal was developed,
process to provide accurate                       approved by the Department of
data on the cost of doing                         Agriculture and the Office of
business.                                         Management and Budget, and
                                                  included in the fiscal year
                                                  1995 President's budget. It
                                                  awaits congressional approval.
                                                  More detail is provided on
                                                  this project in section 2.

Place strong organizational     October 1995      Adherence to "charge as
emphasis on "charge as worked"                    worked" principles continues
to improve the integrity of                       to be reviewed as a part of
data collected.                                   activity and performance
                                                  reviews. Current barriers--
                                                  for example, reprogramming
                                                  authority--are being addressed
                                                  by the budget proposals
                                                  contained in the fiscal year
                                                  1995 budget and are awaiting
                                                  congressional approval.

Determine the actual costs of   October 1994      This action item has been
the timber sale program at the                    placed on hold until after the
Regional, Forest, and District                    national reorganization study
levels.                                           is completed and the regions
                                                  have downsized through fiscal
                                                  year 1995.

Work with appropriate teams     October 1994      Changes have been proposed in
and staffs to change the                          the fiscal year 1995 budget
program budget process to                         proposal and are awaiting
develop out-year budgets on                       congressional approval. These
the basis of costs that                           budget proposals are discussed
accurately reflect today's                        in section 2.
business environment.

Review and change how ET 113    October 1994      In the proposed budget for
funds (Other Resource Support)                    fiscal year 1995, the Forest
are requested from Congress,                      Service requested that support
allocated by the W[ashington]                     dollars that were previously
O[ffice], and administered by                     given to other resources to
the field.                                        support the timber program be
                                                  given to the timber program to
                                                  pay for support costs. For
                                                  example, the money for
                                                  recreation support to the
                                                  timber program is now
                                                  allocated to, and paid by,
                                                  timber. This proposal is
                                                  discussed in section 2.

In coordination with the        October 1993      Indirect costs were precisely
Consistent Costing team, adopt                    defined and the "General
a standard definition for                         Administration" line item was
indirect timber program costs                     abolished as part of the
to be applied Agency-wide,                        budget restructuring proposal
with the objective of                             included in the President's
providing consistent data for                     budget for fiscal year 1995.
comparison of costs between                       It awaits congressional
field units.                                      approval.

Change the way inventory is     October 1993      The Ecosystem Management
charged. Replace separate                         budget line item was included
functional inventory codes,                       in the President's budget for
with one inventory code for                       fiscal year 1995; it was
all functions. Remove                             designed to handle all charges
inventory costs from TSPIRS.                      for inventory. This budget
                                                  line item has been approved by
                                                  the Department and the Office
                                                  of Management and Budget and
                                                  awaits congressional approval.

Explore ways to facilitate      October 1994      A proposal to increase the
reprogramming to be more                          reprogramming limits was
responsive to the forests and                     approved by the Department and
districts.                                        the Office of Management and
                                                  Budget and included in the
                                                  President's budget for fiscal
                                                  year 1995. It awaits
                                                  congressional approval.

Explore opportunities to move   October 1994      Some regions are exploring
from leased space to                              this option but are first
government owned space as the                     waiting for staffing levels to
organization is downsized.                        stabilize.

Explore ways to share           October 1994      Work on this item is in
ecosystem costs between                           process. The establishment of
benefiting functions.                             an Ecosystem Management budget
                                                  line item was the first step.


Timber management organization
--------------------------------------------------------------------------------
Look at the timber              October 1994      A national reorganization
organization from top to                          study is currently under way
bottom as it relates to                           to look at the Forest
ecosystem management and new                      Service's entire
skills that will be needed in                     organizational structure. The
5 years.                                          final date for this study is
                                                  planned for September 1994.
                                                  This study is further
                                                  explained in section 2.

Study W[ashington] O[ffice]     October 1994      Work on this item is
timber national commitments                       completed. National
for the use of timber funds to                    commitments have been
determine ways to decrease                        separated into two groups--
overhead costs.                                   those that benefit all
                                                  resources equally and those
                                                  that do not. Some national
                                                  commitments have been
                                                  redefined and assigned to the
                                                  specific resources they
                                                  benefit.

Explore ways to reduce costs    October 1994      A study dealing with this
by consolidating forest and                       issue was completed and sent
district offices.                                 to the Department during the
                                                  previous administration. The
                                                  current administration has
                                                  taken no action. The
                                                  organizational structure of
                                                  the Forest Service is being
                                                  reviewed as part of the
                                                  national reorganization study,
                                                  which is discussed in section
                                                  2.


Monitoring
--------------------------------------------------------------------------------
Develop ways to reward          October 1993      Efficiency has been recognized
efficiency efforts that are                       by allocating more funds to
implemented and that reflect                      successful regions and
measurable gains.                                 awarding "land stewardship"
                                                  contracts on a limited basis.
                                                  Land stewardship contracts are
                                                  discussed in section 2.
                                                  Efforts to find additional
                                                  ways to reward cost efficiency
                                                  will continue.

Monitor accomplishments of      Annually thru     The Cost Efficiency Task Force
Regional action plans.          Fiscal Year 1997  Chairman reviewed updated
                                                  plans from the regions for
                                                  fiscal year 1994.

Include cost efficiency as an   Annually thru     Both timber management and
action item in all F[iscal]     Fiscal Year 1997  fiscal staffs included cost
Y[ear] 1993 activity reviews                      efficiency as a part of their
by Timber Management and                          fiscal year 1993 activity
Fiscal staffs.                                    reviews and plan to do so in
                                                  the future.

At the end of each fiscal       Annually thru     These cost data have been
year, compare regional unit     Fiscal Year 1997  generated and were provided in
costs to the previous fiscal                      March 1994.
year. Provide the data to the
Chief, Deputy Chiefs, and
Regional Foresters for use in
performance ratings.
--------------------------------------------------------------------------------
\a The information in columns 1 and 2 is quoted from the Forest
Service's Timber Cost Efficiency Study--Final Report dated April 16,
1993. 


FOREST SERVICE'S INITIATIVES TO
IMPROVE EFFICIENCY
============================================================ Chapter 2

On the basis of the action items undertaken for the Timber Cost
Efficiency Study--Final Report, the Forest Service expanded some
initiatives to include the entire agency and undertook other
initiatives to achieve greater efficiency throughout the agency. 
These initiatives relate to reorganizing and downsizing the agency,
introducing a series of budget proposals to improve the management
and use of taxpayers' dollars, using land stewardship contracts as
cost incentives, and improving accountability. 


   FOREST SERVICE'S REORGANIZATION
---------------------------------------------------------- Chapter 2:1

To examine the issue of whether today's Forest Service is consistent
with what will be needed in the future, the Chief of the Forest
Service and the Assistant Secretary of Agriculture for Natural
Resources and Environment chartered and selected a team in the fall
of 1993 to develop a "reinvention" strategy for the agency.  The team
consists of Forest Service employees from throughout the agency and
is led by an Associate Deputy Chief. 

Specifically, the team was asked to describe (1) the "Forest Service
of the Future" and (2) how the Forest Service could be transformed to
achieve that vision.  The team will review all areas of the Forest
Service, including its organizational purpose, outcomes, culture,
work, and structure.  Specifically, the team will review the Forest
Service's

  mission, vision, and guiding principles;

  relationship with the public, customer satisfaction, service and
     value provided, and the condition of ecosystems;

  beliefs, norms, attitudes, and behaviors;

  relationships among units, organizational levels, methods used to
     accomplish work, systems, and how well work is integrated; and

  geographic and operational needs, allocation of budgets and people,
     and ways to integrate ecosystem management into the work. 

The team is conducting a series of "town hall" meetings in major
cities throughout the country to solicit comments from the public. 
After completing these meetings in mid-1994, the team will decide on
its anticipated product and necessary testing requirements.  The
target delivery date for the final report is September 1994. 

The results of this study could significantly affect many areas
relating to cost efficiency; for example, the team could recommend
that certain offices be closed or management levels be abolished. 


   ORGANIZATIONAL DOWNSIZING
---------------------------------------------------------- Chapter 2:2

Over the past several years, the amount of timber available for sale
has steadily declined, and as a result, the Forest Service has been
formally downsizing its organization.  In October 1991 through March
1994, the Forest Service eliminated 1,133 permanent, full-time
positions.  However, as of March 29, 1994, almost 700 positions were
still listed as excess to the agency's needs for fiscal year 1994. 

About one-half of the positions listed as excess are located in
Region 6 (Pacific Northwest).  In this region, timber offered for
sale dropped from 1,093.9 million board feet in fiscal year 1991 to
629.6 million board feet in fiscal year 1993.  During the period
October 1991 through March 1994, permanent, full-time positions
decreased from 6,913 to 6,280.  The Forest Service, however,
estimates that it needs to eliminate another 348 positions in this
region in fiscal year 1994.  As of April 11, 1994, 489 employees in
Region 6 had expressed interest in leaving the agency under the
incentive buyout. 

Several factors affect the Forest Service's ability to downsize as
rapidly as might be expected, including: 

  Employees who had planned to retire were staying on in hopes of
     obtaining an additional "incentive buyout" of $25,000.  On March
     30, 1994, the President signed this incentive buyout, and as a
     result, 2,317 Forest Service employees agreed to voluntarily
     leave the agency as of April 11, 1994. 

  The Department of Agriculture must approve all employee transfers
     for positions at grade GS-13 and above.  Waiting for approval of
     the requested transfers has kept employees in positions that
     would have been eliminated had the transfers been permitted. 

  Employees occupying positions listed as excess to the agency's
     needs in one location have turned down job offers from other
     units with vacancies.  The excess position could not be
     eliminated until the employee left.  As a result, the Chief, on
     February 18, 1994, issued a letter to Forest Service employees
     and declared that anyone whose position is listed as excess to
     his/her home unit's needs and who has received a job offer from
     another unit must take the position offered.  After 60 days, any
     offer must result in a placement or reassessment of the
     employee's funding status so that his/her name is removed from
     the surplus list. 

Although many of the factors previously affecting the Forest
Service's ability to downsize have been addressed or resolved, the
final outcome of downsizing will not be known for several months. 
According to Forest Service officials, while downsizing will reduce
costs in the long run, it may adversely affect costs in fiscal year
1994, as the agency must pay employee separation costs--such as
incentive payment and lump sum annual leave payments--to every
eligible employee who decides to leave the agency.  They estimate
this will cost about $67 million in fiscal year 1994. 


   BUDGET PROPOSALS
---------------------------------------------------------- Chapter 2:3

The September 1993 National Performance Review used the Forest
Service as an example of an agency with an overly complex budget
structure.  To address this criticism, the Forest Service proposed
reforming its budget structure to "facilitate implementation of
ecosystem management, reduce the complexity, and improve the
efficiency of the current system." The Forest Service included this
proposal in its fiscal year 1995 Budget Explanatory Notes, and some
of its key measures are outlined below. 


      BUDGET STRUCTURE
-------------------------------------------------------- Chapter 2:3.1

The Forest Service's current budget system contains 72 separate
trackable accounts, or expanded line items, whose amounts must be
estimated 2 years before the money will actually be received.  The
Forest Service's explanatory notes state that such time lags combined
with such detail hamper the agency's ability to implement the
integrated resource approach necessary for ecosystem management or to
respond to rapidly changing conditions. 

The budget restructuring proposal would reduce the number of
trackable accounts from 72 to 42.  Much of the accounting data and
other information currently part of all accounts would still be
available.  However, the Forest Service believes that fewer accounts
will allow it more flexibility to respond to changed conditions and
will increase efficiency by simplifying the budget process. 

The restructuring proposal also introduces a budget line item for
Ecosystem Management.  For the fiscal year 1995 budget, the Forest
Service included this line item to fund inventories, forest planning,
and the monitoring of ecosystem management projects. 


      REPROGRAMMING AUTHORITY
-------------------------------------------------------- Chapter 2:3.2

Currently, the Forest Service may reprogram the lesser of 10 percent
or $250,000 of a trackable account.  The restructuring proposal would
increase the reprogramming authority to 15 percent of an account
total.  This additional reprogramming authority would permit some
delegation of authority to the field and enable field staff to
respond to changed demands for funding that have occurred in the 2
years between budget preparation and receipt. 

According to the Forest Service, it spends significant time on
preparing reprogramming requests, which come first from the districts
and then must be combined at the forest, region, and national levels
before being sent to the Department of Agriculture, the Office of
Management and Budget, and the Appropriations Committee. 


      FUNDING RESOURCE SUPPORT
      ACTIVITIES
-------------------------------------------------------- Chapter 2:3.3

Currently, when the timber resource group prepares a timber sale, it
must obtain input from the fish and wildlife resource group on such
subjects as how species located in the area will be affected by a
proposed timber harvest.  The money for this "other resource support"
of a timber sale is provided to the resource group providing the
support--that is, fish and wildlife.  This current method of
providing direct dollars to one resource while providing the
necessary support dollars to another resource can result in project
delays when the proper mix of support and direct dollars is not
available.  In the above example, if the timber resource had the
funds it needed to prepare its portion of a timber sale, but fish and
wildlife did not have the funds necessary to do the species surveys,
then the project would be delayed. 

By placing both direct and support funds within the benefiting
resource, the Forest Service believes that fewer project delays will
occur that are caused by funding conflicts and that resource costs
will be more consistently estimated. 


   LAND STEWARDSHIP CONTRACTS
---------------------------------------------------------- Chapter 2:4

In the fiscal year 1992 appropriations act, the Congress authorized
the Forest Service to test land stewardship contracts on a limited
basis.  Under these contracts, selected forests could apply a
reasonable portion of the revenue generated by the sale of timber to
offset project costs.  The act gave the purpose of the contracts as
"achieving ecologically defensible management practices." The revenue
generated was to be used for, but not limited to, "site preparation,
replanting, silviculture programs, recreation, wildlife habitat
enhancement, and other multiple-use enhancement on selected
projects."

As of March 31, 1994, the Forest Service was preparing a report to
the Congress describing its experiences with the land stewardship
contracts.  A Forest Service official told us that basically the
report concludes that sufficient testing had been completed and that
the contracts work very well in some instances, but not in others. 
For example, land stewardship contracts work well when the primary
objective is to bring the land to a certain condition.  However, they
are not considered the best vehicle to use when the primary objective
is harvesting timber because land stewardship contracts are
multipurpose, which makes them more complicated than single-purpose
timber sale contacts. 

The Forest Service would like to continue using land stewardship
contracts, and its report addresses several issues that the Forest
Service believes need to be resolved before the test can be expanded
beyond the four test forests. 


   ACCOUNTABILITY PROJECT
---------------------------------------------------------- Chapter 2:5

For several years, the Congress, as well as others, has argued that
the Forest Service is no longer delivering what is expected or
promised.  Examples of such situations include the failure to sell as
much timber as expected and spending wilderness funds on
nonwilderness recreation projects.\1

As a result of these concerns, the Chief of the Forest Service, in
the fall of 1991, formed a task force of employees from throughout
the agency to review the issue of "accountability." The task force
was asked to explore whether the agency could continue to deliver on
agreements, considering all of the changed conditions under which it
must operate--that is, shrinking budgets and the increased scrutiny
by state and local agencies, interested citizen groups, individuals,
and the media. 

To accomplish its objective, the task force solicited the views of
its own members, hundreds of Forest Service employees, the Chief and
his staff, key customers, and management and communications
consultants on the perspectives of accountability that should be
addressed.  The task force also considered the results of prior GAO
and Office of Inspector General reports that identified areas in
which the Forest Service has failed to be accountable for what it had
been asked to do. 

Using the information gathered, the task force first defined
accountability as "being answerable for what we do" and determined
that in order to be accountable, the agency "must do what we agreed
or were directed to do; as we agreed or are required to do it."

The task force then developed a seven-step process designed to
provide the procedures necessary to achieve better accountability. 
For example, the first step in the process is to establish work
agreements that include measures and standards.  This is defined as
involving the customer and clarifying the what, when, where, how, and
why of the agreement.  Other steps involve assessing performance and
communicating the results to customers. 

The team issued its report in February 1994, and its concepts have
been adopted by the Forest Service's leadership team consisting of
the Chief, Deputies, Resource Directors, and Regional Foresters.  The
report cites as the Forest Service's ultimate goal for the future to: 

     "Achieve a leadership and organizational culture in which
     responsibility and accountability for excellence are shared by
     all employees and in the execution of the Forest Service's
     Mission, Vision, and Guiding Principles."


--------------------
\1 See Wilderness Management:  Accountability for Forest Service
Funds Needs Improvement (GAO/RCED-92-33, Nov.  4, 1991). 

