Results Act: Observations on the Nuclear Regulatory Commission's Draft
Strategic Plan (Correspondence, 07/31/97, GAO/RCED-97-206R).

Pursuant to a congressional request, GAO reviewed the draft strategic
plan submitted by the Nuclear Regulatory Commission (NRC), as required
by the Government Performance and Results Act.

GAO noted that: (1) to its credit, NRC has been actively pursuing the
objectives of the Results Act since 1995, when it launched its own
strategic planning initiative; (2) however, NRC's draft plan does not
provide the Congress with complete information for its consultation with
NRC; (3) the draft plan contains two of the six required elements of the
Results Act--the mission and the goals and objectives; (4) while NRC's
draft plan meets some of the requirements for three others, it does not
describe: (a) the resources, such as staff skills and experiences,
capital, and information, that will be needed to execute the plan's
strategies; (b) how key external factors could affect the achievement of
its goals; and (c) its schedule for future program evaluations; (5) NRC
has not included in its draft plan the relationship between the
long-term goals and objectives and its annual performance goals; (6) the
draft plan reflects NRC's major legislative requirements but does not
expressly link its mission, goals and objectives, and strategies with
NRC's relevant major statutory responsibilities; (7) although NRC shared
its draft and is consulting with other agencies, the current draft plan
does not fully discuss some programs and activities that are
crosscutting, or similar to those of other federal agencies; (8) the
draft plan would benefit by a more thorough discussion of these issues;
(9) GAO's previous work has highlighted major management challenges that
NRC needs to address more completely in its draft plan; (10) the draft
plan does not provide a thorough discussion of these issues; (11)
similarly, the draft plan does not discuss in sufficient detail the
consequences of competition and economic uncertainties in the electric
utility industry with respect to decommissioning issues; (12) GAO has
reported that NRC's cost estimates for decommissioning are not
realistic, which could mean future problems for those licensees not
having sufficient funds to properly close their facilities; (13) while
there are indications that some NRC systems may not provide reliable
information for measuring results, NRC is continuing its efforts to
improve integration of performance measures, cost information, and
financial reporting; and (14) NRC's Office of the Inspector General
plans to do more work to determine if these systems can provide reliable
information.

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

 REPORTNUM:  RCED-97-206R
     TITLE:  Results Act: Observations on the Nuclear Regulatory 
             Commission's Draft Strategic Plan
      DATE:  07/31/97
   SUBJECT:  Interagency relations
             Congressional/executive relations
             Strategic planning
             Program evaluation
             Agency missions
             Nuclear energy
             Management information systems
             Information resources management
             Data integrity
IDENTIFIER:  NRC Strategic Assessment and Rebaselining Initiative
             GAO High Risk Program
             
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Cover
================================================================ COVER



September 1997


GAO/RCED-97-206R

NRC's Draft Strategic Plan

(141080)


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

  BOP - Federal Bureau of Prisons
  CFO - Chief Financial Officers
  DEA - Drug Enforcement Administration
  DOJ - Department of Justice
  FBI - Federal Bureau of Investigation
  INS - Immigration and Naturalization Service
  NRC - x
  OMB - Office of Management and Budget
  DOE - x
  OIG - x
  AEC - x
  NEPA - x
  EPA - x

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


B-277583

July 31, 1997

The Honorable Richard K.  Armey
Majority Leader
House of Representatives

The Honorable John Kasich
Chairman, Committee on the Budget
House of Representatives

The Honorable Dan Burton
Chairman, Committee on Government Reform
 and Oversight
House of Representatives

The Honorable Bob Livingston
Chairman, Committee on Appropriations
House of Representatives

Subject:  Results Act:  Observations on the Nuclear Regulatory
Commission's Draft Strategic Plan

On June 12, 1997, you asked us to review the draft strategic plans
submitted by the Cabinet departments and selected major agencies for
consultation with the Congress as required by the Government
Performance and Results Act of 1993 (the Results Act).  This report
is our response to that request concerning the Nuclear Regulatory
Commission (NRC). 

NRC faces significant challenges as it begins to plan for its future. 
Many nuclear power plants are cutting costs to stay competitive in
the face of deregulation.  The safety consequences of these actions
will likely result in NRC's reassessing its regulatory program in the
future.  Furthermore, an aging nuclear industry is challenging NRC's
ability to ensure that adequate funds are available for
decommissioning plants that have closed prematurely.  Finally, the
prospect of NRC's assuming oversight over the Department of Energy's
(DOE) laboratories and weapons plants would dramatically affect NRC's
resources, structure, and strategies. 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
------------------------------------------------------------ Letter :1

We agreed to review NRC's draft plan and assess (1) whether it
fulfills the requirements of the Results Act and provide our views on
its overall quality; (2) whether NRC's key statutory authorities are
reflected in the draft plan and, if so, how they relate to the
missions and the goals in the draft plan; (3) whether it reflects
interagency coordination for crosscutting programs, activities, or
functions that are similar or complementary to those of other federal
agencies; (4) whether it addresses the major management challenges
that we have previously identified; and (5) the adequacy of NRC's
data and information systems for providing reliable information for
measuring results. 

We reviewed NRC's most recent draft strategic plan--dated July 1,
1997--that NRC provided to congressional committees.  Our overall
assessment of NRC's draft strategic plan was generally based on our
knowledge of NRC's operations and programs; our various reviews of
NRC; our discussions with NRC's Chief Financial Officer and Deputy
Director, Division of Budget and Analysis; and other existing
information available at the time of our assessment. 

Specifically, the criteria we used to determine whether NRC's draft
strategic plan complies with the requirements of the Results Act were
the Results Act, supplemented by the Office of Management and
Budget's (OMB) guidance on developing the plans (Circular A-11, Part
2).  To make judgments about the overall quality of the plan and its
components, we used our May 1997 guidance for congressional review of
the plans (GAO/GGD-10.1.16) as a tool.  To determine whether the plan
contains information on interagency coordination and addresses the
management problems previously identified by GAO, we relied on our
general knowledge of NRC's operations and programs and the results of
our previous reports.  In determining whether NRC's draft strategic
plan reflects its major statutory responsibilities, we reviewed
applicable legislation, consulted with NRC's Office of General
Counsel, and as you requested, we coordinated our review with the
Congressional Research Service.  To determine whether NRC has
adequate systems in place to provide reliable information on
performance, we relied on the results of our previous reports and
those from NRC's Office of the Inspector General (OIG). 

It is also important to recognize that NRC's final strategic plan is
not due to the Congress and OMB until September 1997.  Furthermore,
the Results Act anticipated that it may take several planning cycles
to perfect the process and that the final plan will be continually
refined as future planning cycles occur.  Thus, our findings reflect
a "snapshot" of the draft plan at this time.  We recognize that
developing a strategic plan is a dynamic process and that NRC is
continuing work to revise the draft with input from OMB,
congressional staff, and other stakeholders. 

Our work was performed in June and July 1997 in accordance with
generally accepted government auditing standards. 


   BACKGROUND
------------------------------------------------------------ Letter :2

NRC was created as an independent agency by the Energy Reorganization
Act of 1974, which abolished the Atomic Energy Commission (AEC) and
moved the AEC's regulatory function to NRC.  This act, along with the
Atomic Energy Act of 1954, as amended, provides the foundation for
NRC's regulation of the nation's commercial nuclear power industry
and the use of various kinds of radioactive materials for research
and development; medical diagnosis and treatment; and industrial,
academic, and consumer activities.  NRC's appropriation for fiscal
year 1997 is $477 million; it has a staff of 3,061.  NRC has licensed
110 commercial nuclear power reactors to operate in 32 states and has
issued approximately 21,600 licenses either itself or through the 30
states that have signed agreements with NRC allowing them to regulate
the use of radioactive material within their respective states. 

NRC began its strategic planning process in August 1995.  The effort,
referred to as NRC's Strategic Assessment and Rebaselining
Initiative, was the major program evaluation that supported the
development of NRC's strategic plan.  In Phase I of that initiative,
NRC examined its functions and activities, including its statutes,
regulations, and guidance documents from the Commission.  After
analyzing this information, NRC identified direction-setting issues
to influence the strategic direction of NRC.  In Phase II, NRC
evaluated these issues and developed and evaluated a range of options
for the future.  These evaluations resulted in a series of issue
papers that were provided to NRC's stakeholders for comment.  The
comments received were reviewed by the Commission.  The Commission's
decisions on the issue papers formed the basis for NRC's draft plan. 

In addition, NRC issued its first audited financial statements in
fiscal year 1992 and received its first unqualified audit opinion in
fiscal year 1994.  In fiscal years 1995 and 1996, NRC was also one of
six federal agencies that participated in a governmentwide pilot
project to streamline financial management reporting into a single
accountability report.  The project was undertaken in accordance with
the Government Management Reform Act of 1994.  In addition, NRC is
continuing its efforts to improve the integration of performance
measures, cost information, and financial reporting.  Its first step
is to prepare a strategic plan, then a performance plan and a program
report to implement the Results Act. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :3

To its credit, NRC has been actively pursuing the objectives of the
Results Act since 1995, when it launched its own strategic planning
initiative.  However, NRC's draft plan does not provide the Congress
with complete information for its consultation with NRC.  The draft
plan contains two of the six required elements of the Results
Act--the mission and the goals and objectives.  While NRC's draft
plan meets some of the requirements for three others, it does not
describe (1) the resources, such as staff skills and experiences,
capital, and information, that will be needed to execute the plan's
strategies; (2) how key external factors could affect the achievement
of its goals; and (3) its schedule for future program evaluations. 
Finally, NRC has not included in its draft plan the relationship
between the long-term goals and objectives and its annual performance
goals. 

The draft plan reflects NRC's major legislative requirements but does
not expressly link its mission, goals and objectives, and strategies
with NRC's relevant major statutory responsibilities.  The Results
Act does not require the agencies' strategic plans to contain a
statement of statutory authorities.  However, we believe that
including such linkages may permit a better understanding of the
diversity and complexity of NRC's overall mission and goals and
objectives. 

Although NRC shared its draft and is consulting with other agencies,
the current draft plan does not fully discuss some programs and
activities that are crosscutting, or similar to those of other
federal agencies.  For example, NRC and DOE share responsibility in
the federal government's high-level waste disposal program:  DOE
builds such facilities, which NRC must license.  Consequently, NRC is
affected by changes in DOE's strategies and program funding.  The
draft plan would benefit by a more thorough discussion of these
issues. 

Our previous work has highlighted major management challenges that
NRC needs to address more completely in its draft plan.  For example,
weaknesses in how NRC oversees nuclear power plants have led to
questions about the quality of the information that NRC uses to
inform the public about the safety condition of nuclear plants. 
Furthermore, we reported that NRC was not aggressively making plants
fix their safety problems and has difficulty measuring the safety
condition of the plants it is required to regulate.  The draft plan
does not provide a thorough discussion of these issues.  Similarly,
the draft plan does not discuss in sufficient detail the consequences
of competition and economic uncertainties in the electric utility
industry with respect to decommissioning issues.  We have reported
that NRC's cost estimates for decommissioning are not realistic,
which could mean future problems for those licensees not having
sufficient funds to properly close their facilities. 

While there are indications that some NRC systems may not provide
reliable information for measuring results, NRC is continuing its
efforts to improve the integration of performance measures, cost
information, and financial reporting.  NRC's OIG plans to do more
work to determine if these systems can provide reliable information. 


   DRAFT STRATEGIC PLAN DOES NOT
   CONTAIN ALL KEY ELEMENTS
   REQUIRED BY THE RESULTS ACT
------------------------------------------------------------ Letter :4

NRC's draft plan does not provide the Congress with complete
information for its consultation with NRC.  The draft plan contains
two of the six required elements of the Results Act (the mission and
the goals and objectives), meets some of the requirements of three
others, but does not include the relationship between its long-term
goals and objectives and its annual performance goals. 


      MISSION STATEMENT INCLUDED
      IN DRAFT PLAN
---------------------------------------------------------- Letter :4.1

NRC's draft plan provides a short, overarching mission statement
covering its basic responsibilities:  "To regulate the Nation's
civilian use of byproduct, source, and special nuclear materials to
ensure adequate protection of the public health and safety, to
promote the common defense and security, and to protect the
environment." While general in nature, the mission statement covers
NRC's major activities.  In addition, NRC has a vision statement that
amplifies the importance of the stakeholders' respect for and
confidence in the NRC. 


      GOALS AND OBJECTIVES DEFINED
      IN DRAFT PLAN
---------------------------------------------------------- Letter :4.2

The second major element in NRC's draft plan is its strategic goals
and objectives.  The goals and objectives cover NRC's major functions
and activities and are generally results-oriented.  NRC presents
seven overall goals for accomplishing its mission.  One of them is
that NRC's stakeholders have clear and accurate information and have
respect for and confidence in NRC's regulatory program.  This goal is
particularly important and represents a major challenge to NRC in the
light of the safety deficiencies recently discovered in several of
the nation's commercial power reactors.  For example, several
reactors in the Northeast are shut down for safety problems that NRC
was unable to prevent despite a significant oversight presence. 


      RESOURCE NEEDS TO EXECUTE
      STRATEGIES NOT DISCUSSED
---------------------------------------------------------- Letter :4.3

NRC's draft plan includes a large number of strategies under each of
its goals, and the plan has several measures that will be used to
evaluate the results of the strategies.  While the list is extensive
and the measures are reasonable, the strategies do not describe (1)
the resources, such as staff skills and experiences, capital, and
information, that will be needed to execute the strategies and (2)
the assignment of accountability to its managers for achieving the
goals.  Also, NRC did not provide projections of the funding and
staff that will be available over the period covered by the plan. 
Without this information, it is difficult to judge NRC's likelihood
of success in achieving the goals or the appropriateness of the
strategies. 

In addition, NRC recognizes that it may be asked to greatly expand
its regulatory responsibilities in the future.  However, the draft
plan does not describe the full extent of resources that will be
needed for this expansion.  An advisory committee was formed in 1994
by DOE to examine and to make recommendations on the external
regulation of DOE's facilities, including its national laboratories
and weapons plants.  The advisory committee recommended that DOE be
regulated by an external regulator.  NRC is one of the organizations
that is being considered for such external regulation.  If full
responsibility for such DOE activities is assigned to NRC, it would,
according to NRC's Chairman, add significantly to the agency's
current nuclear regulatory responsibilities and require a
restructuring of the agency and significant additional resources. 
For example, NRC estimates that this change could cost from $150
million to $200 million and add 1,100 to 1,600 personnel.  To
facilitate its consultations with the Congress, NRC's plan should
discuss the impact of this change on its organization and future
resource needs. 


      SOME KEY EXTERNAL FACTORS
      NOT INCLUDED
---------------------------------------------------------- Letter :4.4

NRC's draft plan did not identify all key factors external to the
agency and beyond its control that could significantly affect the
achievement of the strategic goals.  For five of the seven goals in
its draft plan, NRC listed major factors that could affect the
achievement of its goals over the period covered by the plan. 
Furthermore, there were two goals for which the draft plan did not
discuss key external factors:  protecting the environment and
regulatory excellence.  Unless the Congress is able to consider the
external factors affecting these goals, it may have difficulty in
effectively consulting with NRC about the draft plan. 


      PROGRAM EVALUATIONS ARE
      DESCRIBED, BUT SCHEDULES FOR
      FUTURE EVALUATIONS ARE NOT
      INCLUDED
---------------------------------------------------------- Letter :4.5

The draft plan describes NRC's evaluations that support the
development of its strategic plan.  NRC notes that the major program
evaluation supporting the development of its draft plan was the
Strategic Assessment and Rebaselining Initiative.  In addition, NRC
cited other evaluations it considered when it developed its strategic
plan.  However, the draft plan does not contain a schedule for future
program evaluations, as required by the Results Act.  Also, it does
not describe the general methodology to be used, the timetable, the
general scope of an evaluation, or the particular issues to be
addressed, as called for by OMB guidance. 


      RELATIONSHIP BETWEEN
      LONG-TERM GOALS AND ANNUAL
      PERFORMANCE GOALS IS NOT
      INCLUDED
---------------------------------------------------------- Letter :4.6

The relationship between the long-term goals and the annual
performance goals is incomplete.  Although NRC has included some
measures, it has not yet outlined the type, nature, and scope of the
goals to be included in its annual performance plan, nor has NRC
fully described the relationship between its annual performance goals
and its strategic goals.  Without this information, it is difficult
to evaluate whether NRC's long-term strategic goals will be linked to
its annual performance plans and the day-to-day activities of its
managers and staff. 


   LEGISLATIVE AUTHORITIES ARE
   CONSIDERED
------------------------------------------------------------ Letter :5

The Results Act does not require a statement of major statutory
responsibilities to be included with the agency's plan.\1
Nevertheless, NRC's draft plan mentions its statutory authorities for
its mission and some of its goals.  On the basis of our review of
relevant legislation, we believe that (1) the activities defined in
NRC's plan are supported by legislation and (2) the plan reflects
NRC's major legislative requirements.  We also believe that expressly
linking all of NRC's goals and strategies to its major statutory
authorities would facilitate a better understanding of the diversity
and complexity of its overall mission, goals, and strategies. 

NRC's draft plan acknowledges that the principal safety terms
embodied in its mission are not expressly defined by statute.  NRC
believes that it has interpreted those terms in a manner consistent
with congressional intent through regulations, decisions, and
practices that have withstood congressional and judicial review.  We
generally agree.  Also, the Commission's inclusion of environmental
protection in its mission statement is derived from the National
Environmental Policy Act (NEPA) rather than from legislation specific
to NRC.  This aspect of NRC's mission flows from an early NEPA
decision in which NRC's predecessor agency was directed to take
special note of the environmental impacts of its licensing decisions. 


--------------------
\1 OMB Circular A-11 suggests that an agency's mission statement may
include a brief discussion of the agency's enabling or authorizing
legislation.  This suggestion, however, does not extend to the
statement of goals and strategies. 


   CROSSCUTTING PROGRAM ACTIVITIES
   NOT FULLY ADDRESSED, BUT
   COORDINATION IS OCCURRING
------------------------------------------------------------ Letter :6

Although NRC shared its draft plan and is consulting with other
agencies--principally DOE and the Environmental Protection Agency (
EPA)--the plan does not contain a complete discussion of the programs
and activities that are crosscutting, or similar to those of other
federal agencies.  Because overlapping and fragmented programs can
waste scarce funds, confuse and frustrate program customers, and
limit the overall effectiveness of the federal effort, it is
important for NRC to address these issues in its plan. 

For example, NRC and DOE have joint responsibilities in a long-range
undertaking of high-level waste disposal:  DOE builds such
facilities, which NRC must license.  NRC's efforts are dependent on
the funding DOE receives and the amount of work DOE undertakes. 
Recent budget reductions and other changes in DOE's waste program
have caused NRC to significantly redirect its waste disposal efforts,
including the deferral of the activities necessary for licensing. 
The high-level waste issue is evolving, and more changes are likely
given the contentiousness of the issue among federal, state, and
local officials and the public.  The draft plan lacks a sense of how
the two programs will be coordinated with respect to changes in
funding and program direction.  NRC's draft plan could be improved by
describing how it plans to fulfill its responsibility without causing
undue delay or unnecessary rework in DOE's reduced high-level waste
disposal program. 

In another example, NRC and EPA are jointly involved in developing
standards covering such issues as radioactive mixed waste, air
emissions of radionuclides, decommissioning, and low-level waste
standards.  In our prior work on some of these issues, we discussed
the differences among standards set by federal agencies.\2 Federal
radiation standards that have been developed reflect a lack of
overall interagency consensus on how much radiation risk to the
public is acceptable.  Because the standards have different
regulatory applications and are based on different technical
methodologies, the estimated risks to the public that are associated
with these standards and guidelines vary considerably.  NRC's draft
plan does not discuss how the agency is working with EPA and others
to develop consensus, nor does the plan discuss the impact on NRC's
programs if EPA develops more stringent standards than those that NRC
is now using. 


--------------------
\2 Nuclear Health and Safety:  Consensus on Acceptable Radiation Risk
to the Public Is Lacking (GAO/RCED-94-190, Sept.  19, 1994). 


   DRAFT PLAN ADDRESSES PREVIOUSLY
   IDENTIFIED MANAGEMENT PROBLEMS
------------------------------------------------------------ Letter :7

NRC's draft plan addresses major management challenges that we have
previously identified:  overseeing the safety of nuclear power plants
and ensuring adequate decommissioning funds.  However, the plan could
be more helpful if the measures to address these challenges were
clearer. 

In discussing NRC's oversight of nuclear power plant safety, the
draft plan says that NRC will regularly assess, objectively measure,
and report on licensees' performance and that it will use this
information to identify adverse safety trends and to identify early
the individual plants with declining performance.  It further states
that it will halt operations if performance falls below an acceptable
level.  However, as we recently reported, NRC was not aggressively
making plants fix their safety problems.\3 We also found that NRC's
process for informing the public of the existence of problem plants
was deficient, resulting in misinformation about the safety condition
of some nuclear plants.  Part of the problem is that NRC does not
precisely define safety and thus has difficulty measuring the safety
condition of the plants it is required to regulate.  Instead, NRC
presumes that plants are safe if they operate within their approved
designs and in accordance with NRC's regulations.  However, NRC is no
longer confident that all plants are operating as designed.  We
recognize the difficulty in measuring safety, but without an accurate
and reliable set of measures on nuclear plant safety conditions, NRC
will continue to struggle with its program.  The draft plan would
benefit by a more thorough discussion and outline of safety measures. 

Similarly, in discussing the adequacy of funds for decommissioning
nuclear plants, NRC's plan notes that it will ensure that licensees
have adequate funds available for decommissioning by establishing
additional financial requirements.  However, growing competition and
economic uncertainty in the electric utility industry is challenging
both NRC and the industry to set proper levels of funding for
decommissioning.  We previously reported that NRC's cost estimates
for decommissioning appeared low.  NRC required only that utilities
set aside decommissioning funds of $105 million for a 1,100-megawatt
pressurized water reactor and $135 million for a 1,100-megawatt
boiling water reactor.\4 With many plants not completing their useful
life, plants may not be setting aside the total amount of funds
needed for decommissioning.  NRC's draft plan would benefit by a more
thorough discussion of this issue. 


--------------------
\3 Nuclear Regulation:  Preventing Problem Plants Requires More
Effective NRC Action (GAO/RCED-97-145, May 30, 1997). 

\4 Nuclear Regulation:  NRC's Decommissioning Cost Estimates Appear
Low (GAO/RCED-88-184, July 29, 1988). 


   ACTIONS MAY BE NEEDED TO
   PROVIDE RELIABLE INFORMATION ON
   PERFORMANCE
------------------------------------------------------------ Letter :8

NRC may need to develop new systems and improve old ones to track
performance measures evolving from the draft plan and to identify
management problems.  NRC acknowledges deficiencies and has a number
of initiatives under way.  For example, NRC's CFO is developing a
plan for an agencywide financial management system.  The goal for
this plan is to be operational within the next 2 years, to integrate
financial planning data with performance data, and eliminate the need
for multiple financial tracking systems.  In March 1997, the acting
CFO submitted a plan that identified a proposed approach to
developing an integrated financial management system. 

In addition, NRC will need to address several issues raised in other
audit reports.  For example: 

  -- The OIG has done a number of reviews of NRC's information
     systems and found that NRC has had a history of weak information
     systems development.  For example, an OIG official told us that
     the Office of Information Resources Management's projects lacked
     the management controls to provide information in a systematic
     manner to management. 

  -- Our recent review of NRC's inspection program found that NRC has
     not made a concerted effort to verify the accuracy,
     completeness, or reliability of its data on nuclear plant
     performance indicators.\5 These data are used by NRC to measure
     the effectiveness of its programs.  We and the OIG have noted
     that these performance measures are generated by the regulated
     industry, which made the data difficult to assess and verify as
     well as analyze. 


--------------------
\5 Nuclear Regulation:  Preventing Problem Plants Requires More
Effective NRC Action (GAO/RCED-97-145, May 30, 1997). 


      IMPORTANT INFORMATION
      TECHNOLOGY MANAGEMENT
      CHALLENGES ARE NOT FULLY
      ADDRESSED
---------------------------------------------------------- Letter :8.1

The Paperwork Reduction Act of 1995 and the Clinger-Cohen Act of 1996
direct agencies to implement a framework of modern technology
management based on practices followed by leading private and public
organizations that have successfully used technology to improve
performance and help meet strategic goals.  Under these laws,
agencies are to better relate their technology plans and information
technology use to their programs' missions and goals.  While NRC
notes that a strategic information resources management plan
describing information resources management activities will be
developed and maintained, the draft plan does not discuss how NRC
intends to plan for and use information technology to support the
agency's missions and improve program performance. 

Furthermore, we recently reported that NRC, like many other agencies,
will face emerging management challenges of implementing modern
technology and resolving the need for computer systems to be changed
to accommodate dates beyond the year 1999--the "year 2000 problem."
Consequently, in developing its information resources management
plan, NRC needs to discuss how it plans to address the year 2000
problem as well as any significant information security
weaknesses--two issues that we have identified as high-risk across
the government.\6


--------------------
\6 GAO High-Risk Series (GAO/HR-97-20, Feb.  1997). 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :9

We provided a draft of this report to NRC for its review and comment. 
(NRC's comments are in the enclosure.) While NRC said our report
makes several suggestions that will be useful as it finalizes its
draft strategic plan, it disagreed that the draft plan lacked the key
elements required by the Results Act.  NRC believes that its draft
plan contains the essential information necessary for a meaningful
dialogue between NRC and its oversight committees.  In particular,
NRC did not agree that (1) its resource needs should have been
discussed because it said that it did not have any unique resource
needs; (2) it needs to include key external factors for two of its
general goals, protecting the environment and regulatory excellence;
and (3) its draft strategic plan did not include the relationship
between its long-term goals and its annual performance goals.  In
addition, while NRC agreed that its plan did not include a specific
schedule for future program evaluations or the general methodology,
scope, or issues to be addressed, it pointed out that its plan does
state that a high-level program evaluation focal point was
established in NRC's new organizational structure and that the
grouping of offices for this regulatory effectiveness organization
was designed to facilitate improvement of program evaluation. 

We agree with NRC that the Results Act anticipated that it may take
several planning cycles to perfect the planning process, and we
recognize that NRC is continuing to revise its draft plan to provide
a better foundation for the consultation process with the Congress. 
However, the Results Act and implementing OMB guidance require that
all elements be included in an agency's plan.  The Results Act and
implementing OMB guidance expect a discussion of required resources,
such as human, capital, and information, needed to achieve goals and
strategies.  In connection with the need to include a discussion of
external factors that may influence the achievement of goals, we
believe that the draft plan could have included more information. 
For its "protecting the environment" goal, changing federal and state
environmental policies have a reasonable likelihood of occurring. 
Its "excellence" goal is highly dependent on the aggressiveness of
licensees to follow NRC's regulations.  These types of external
factors appear to be important and, therefore, should be included in
NRC's plan.  In connection with the required discussion of how
strategic goals link to annual performance goals, the draft plan
recognizes that linkages are needed but does not define these
linkages beyond asserting that the existence of performance goals
establishes the relationships.  The Results Act and OMB's guidance
require the plans to clarify the linkages by, among other things,
defining key terms, discussing how well information technology is
supporting goals, and if any goals have been established to reduce
the unintended negative effects of an agency's programs.  In
addition, we made changes to our report where appropriate in response
to NRC's detailed comments. 


---------------------------------------------------------- Letter :9.1

As arranged with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this letter
until 30 days from its issue date.  At that time, we will send copies
of this letter to the Minority Leader of the House of
Representatives; Ranking Minority Members of your Committees; the
Chairmen and Ranking Minority Members of other Committees that have
jurisdiction over NRC's activities; the Chairman of NRC; and the
Director, Office of Management and Budget.  Copies will be made
available to others on request. 

Please call me at (202) 512-5138 if you or any of your staff have any
questions about this letter.  Major contributors to this report were
Gary R.  Boss, Philip A.  Olson, and Jackie A.  Goff. 

Victor S.  Rezendes
Director, Energy, Resources,
 and Science Issues

Enclosure




(See figure in printed edition.)Enclosure I
COMMENTS FROM THE NUCLEAR
REGULATORY COMMISSION
============================================================== Letter 



(See figure in printed edition.)



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