Results Act: DOE Can Improve Linkages Among Plans and Between Resources
and Performance (Chapter Report, 04/14/98, GAO/RCED-98-94).

Pursuant to a congressional request, GAO reviewed certain aspects of the
Department of Energy's (DOE) implementation of the Government
Performance and Results Act of 1993, focusing on the Department's
strategic and annual planning.

GAO noted that: (1) subordinate strategic and multiyear plans prepared
by DOE's programs, field offices, and contractors are not clearly linked
to the goals, objectives, and strategies of the Department's strategic
plan; (2) although DOE's Strategic Management System guidance provides a
basic outline of the planning process, it does not provide clear
directions on how these subordinate plans should be linked to DOE's
strategic plan; (3) additionally, DOE formed its Strategic Management
System around its business lines and its organizations are not aligned
with the business lines; (4) for example, DOE has three main program
offices--Defense Programs, Energy Research, and Environmental
Management--whose work is done through various field organizations and
management and operating contractors; (5) as a result, these different
program offices and their supporting organizations often contribute to
the fulfillment of the same business lines through a variety of
different, complex, crosscutting relationships; (6) DOE, in its first
annual performance plan under the Results Act, links the annual
performance plan's goals and measures to those in the strategic plan;
(7) DOE also provides a description of how budgetary resources are
linked to its strategic goals; (8) however, the annual performance plan
could be more useful if it described how the requested budgetary
resources are linked to the annual performance goals in the plan; (9) in
addition, DOE did not incorporate the approved performance goals and
incentive fees in its performance-based management and operating
contracts--accounting for 70 percent of DOE's obligations--until after
the start of the current fiscal year and after the contractors had
already begun their work; (10) the goals and incentive fees agreed to in
these contracts are intended to guide and enhance the contractors'
performance; and (11) not incorporating the goals and incentive fees
until after the contractors begin work reduces the usefulness of
performance-based contracting.

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

 REPORTNUM:  RCED-98-94
     TITLE:  Results Act: DOE Can Improve Linkages Among Plans and 
             Between Resources and Performance
      DATE:  04/14/98
   SUBJECT:  Strategic planning
             Agency missions
             Federal agency reorganization
             Contractor performance
             Program management
             Congressional/executive relations
             Management information systems
IDENTIFIER:  DOE Strategic Plan
             DOE Stockpile Stewardship and Management Program
             DOE Environmental Restoration Program
             DOE Environmental Management Program
             GPRA
             Government Performance and Results Act
             
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Cover
================================================================ COVER


Report to the Chairman, Committee on Commerce, House of
Representatives

April 1998

RESULTS ACT - DOE CAN IMPROVE
LINKAGES AMONG PLANS AND BETWEEN
RESOURCES AND PERFORMANCE

GAO/RCED-98-94

Results Act

(141055)


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

  DOE - Department of Energy
  M&O - management and operating
  OMB - Office of Management and Budget

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


B-279289

April 14, 1998

The Honorable Thomas J.  Bliley, Jr.
Chairman, Committee on Commerce
House of Representatives

Dear Mr.  Chairman: 

This report responds to your request that we assess certain aspects
of the Department of Energy's implementation of the Government
Performance and Results Act of 1993.  The report describes issues
concerned with the Department's strategic and annual planning and
contains recommendations designed to align the Department's
organization with its business lines, better link the Department's
internal strategic plans to its overall strategic plan, improve the
usefulness of the Department's annual performance plan, and result in
the more timely inclusion of annual goals and incentive fees in
management and operating contracts. 

As arranged with your office, unless you publicly announce its
contents earlier, we plan no further distribution of this report
until 15 days after the date of this letter.  At that time, we will
send copies to the Secretary of Energy; the Director, Office of
Management and Budget; the House Committee on Science; the House
Committee on Government Reform and Oversight; the Senate Committee on
Governmental Affairs; the House and Senate Committees on
Appropriations; and other interested parties.  We will make copies
available to others on request. 

If you or your staff have any questions about this report, please
contact me at (202) 512-7106.  Major contributors to this report are
listed in appendix III. 

Sincerely yours,

Susan D.  Kladiva
Associate Director, Energy,
 Resources, and Science Issues


EXECUTIVE SUMMARY
============================================================ Chapter 0


   PURPOSE
---------------------------------------------------------- Chapter 0:1

The Congress passed the Government Performance and Results Act of
1993 to shift federal management and decision-making away from a
focus on staffing and activities to a focus on the results of federal
programs.  The Results Act is intended to improve the efficiency and
effectiveness of federal programs by requiring each federal agency to
establish performance measurement systems that include strategic
plans, annual performance plans, and annual reports on its programs'
performance.  Since the Results Act was passed, the Department of
Energy (DOE) has taken several actions in response, including the
development of a Strategic Management System to align its planning,
budgeting, and evaluation processes and the adoption of
performance-based management contracts as the vehicle for managing
the work at its facilities. 

The Chairman of the House Committee on Commerce, noting the
importance of the Results Act, requested that GAO review DOE's early
efforts to implement the act.  Specifically, GAO evaluated how well
(1) DOE's program and field units linked their subordinate plans to
the departmental strategic plan and (2) DOE linked the goals of its
strategic plan to its annual performance plan and the goals for its
performance-based management and operating contracts. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:2

Within the past year, DOE has prepared its initial strategic plan and
annual performance plan to comply with the requirements of the
Results Act.  When passing the act, the Congress anticipated that it
might take several planning cycles to perfect the process and that
plans would be continually refined in future planning cycles.  The
strategic plan serves as the basic underpinning for the performance
measurement system and includes the agency's mission statement and
its long-term goals and objectives for implementing the mission.  The
annual performance plan links the agency's day-to-day activities to
the agency's long-term strategic goals.  Finally, the agency must
prepare an annual report on its programs' performance to provide
feedback to federal managers, policymakers, and the public on the
results achieved during the fiscal year. 

DOE has several diverse missions, including the environmental
restoration of the nation's nuclear weapons production facilities,
the stewardship of the nation's nuclear weapons, the development of
the nation's energy policy, research and development on energy and
basic science, and the management of five power marketing
administrations.  DOE conducts its work through a complex
organization that includes headquarters offices, operations offices
and field offices, and management and operating contractors.  The
contractors carry out the bulk of DOE's responsibilities at its
facilities and represented about 70 percent ($13.8 billion) of the
Department's total obligations in fiscal year 1997. 

In 1996, DOE adopted a Strategic Management System with a goal of
linking planning, budgeting, and program evaluation throughout the
Department.  In this system, DOE has organized its diverse functions
and operations into four business lines--energy resources, national
security, environmental quality, and science and technology--plus a
functional area called corporate management.  DOE's strategic goals
and objectives are stated within the context of these four business
lines and the corporate management function. 


   RESULTS IN BRIEF
---------------------------------------------------------- Chapter 0:3

Subordinate strategic and multiyear plans prepared by DOE's programs,
field offices, and contractors are not clearly linked to the goals,
objectives, and strategies of the Department's strategic plan. 
Although DOE's Strategic Management System guidance provides a basic
outline of the planning process, it does not provide clear directions
on how these subordinate plans should be linked to DOE's strategic
plan.  Additionally, DOE formed its Strategic Management System
around its business lines and its organizations are not aligned with
the business lines.  For example, DOE has three main program
offices--Defense Programs, Energy Research, and Environmental
Management--whose work is done through various field organizations
and management and operating contractors.  As a result, these
different program offices and their supporting organizations often
contribute to the fulfillment of the same business lines through a
variety of different, complex, crosscutting relationships. 

DOE, in its first annual performance plan under the Results Act,
links the annual performance plan's goals and measures to those in
the strategic plan.  DOE also provides a brief description of how
budgetary resources are linked to its strategic goals.  However, the
annual performance plan could be more useful if it described how the
requested budgetary resources are linked to the annual performance
goals in the plan.  In addition, DOE did not incorporate the approved
performance goals and incentive fees in its performance-based
management and operating contracts--accounting for 70 percent of
DOE's obligations--until after the start of the current fiscal year
and after the contractors had already begun their work.  The goals
and incentive fees agreed to in these contracts are intended to guide
and enhance the contractors' performance.  Not incorporating the
goals and incentive fees until after the contractors begin work
reduces the usefulness of performance-based contracting. 


   PRINCIPAL FINDINGS
---------------------------------------------------------- Chapter 0:4


      DOE'S ORGANIZATIONS DID NOT
      SHOW HOW THEIR SUBORDINATE
      STRATEGIC PLANS WERE LINKED
      TO DOE'S DEPARTMENTAL
      STRATEGIC PLAN
-------------------------------------------------------- Chapter 0:4.1

The subordinate strategic plans that were prepared by DOE's programs,
field organizations, and contractors do not specifically state how
their goals are linked to the goals, objectives, and strategies of
DOE's departmental strategic plan.  However, planning staff from the
organizations that developed these strategic and multiyear plans said
that they could link their goals to those of DOE's strategic plan. 
In some cases, they said that they could provide such linkages
because the goals of DOE's strategic plan were vague.  GAO believes
that clear linkage between the subordinate plans and DOE's strategic
plan is important so that the various organizations that prepare
these plans remain focused on DOE's goals and objectives.  This
linkage should be identified and explained in the plans. 


         THE STRUCTURE OF DOE AND
         ITS STRATEGIC PLAN DIFFER
------------------------------------------------------ Chapter 0:4.1.1

Although DOE's strategic plan is structured according to its business
lines, its organization is structured by program, function, and
geographical location.  A number of DOE units contribute to the same
business line, and some may contribute to more than one business
line.  For example, two of DOE's three main headquarters program
offices, the Office of Defense Programs and the Office of
Environmental Management, contribute to the environmental quality
business line along with two smaller headquarters offices.  The
relationship among business lines and organizations is more complex
when DOE's field offices and management and operating contractors are
considered.  For example, the Oak Ridge Operations Office performs
work for all three of the main headquarters program offices and
contributes to all four business lines.  Because Oak Ridge uses
several management and operating contractors to perform its work, the
contractors also contribute to the different business lines. 
Crosscutting relationships are therefore required throughout the
organization to fulfill the various missions, goals, and objectives
of the business lines.  GAO has previously stated that an
organization's activities, core processes, and resources should be
aligned to support its missions and help it achieve its goals. 


         MANY DOE UNITS PREPARE
         THEIR OWN STRATEGIC AND
         MULTIYEAR PLANS
------------------------------------------------------ Chapter 0:4.1.2

Planning is done at five levels within DOE.  The three main
headquarters program offices prepare their own strategic plans, as
does each field office GAO visited.  Individual DOE laboratories and
contractors also prepare strategic and multiyear plans.  The Savannah
River Site, for instance, has two strategic plans that cover
environmental quality, but neither explains how its goals and
objectives are meant to fulfill the departmental environmental
quality strategic goal, objective, or strategy.  DOE has not issued
specific directions on how these plans should link to the
departmental strategic plan or on whether these various organizations
should prepare strategic or operational plans.  The Office of
Environmental Management and the Office of Defense Programs are
developing strategic plans that integrate program goals with field
office and contractors' goals.  By integrating these goals, it
appears that these plans will provide a more coordinated approach to
strategic planning.  DOE's Acting Director of Strategic Planning,
Budget and Program Evaluation agreed that plans should be clearly
linked and said that the program offices should have an integrated
system that explains how all levels of planning are tied together. 
However, he explained that weak linkages occur because the current
DOE strategic plan was completed within the past year and the
Strategic Management System has not matured yet. 


         DOE MAY NOT NEED ALL
         STRATEGIC AND MULTIYEAR
         PLANS BEING PREPARED
------------------------------------------------------ Chapter 0:4.1.3

DOE's guidance for strategic planning requires that only a minimum
number of plans be published and that plans be consolidated and
redundancies eliminated wherever possible.  However, distinguishing
which plans are unnecessary and redundant and which plans represent a
minimum number of plans is a difficult task.  GAO believes, based on
examples of plans reviewed, that some plans may be overlapping or
redundant.  For example, planning officials within the Office of
Defense Programs said that its strategic plan, called the Green Book,
is the primary plan needed for its program.  However, at least one of
the office's subprograms has produced its own plan, and others are
being developed.  Moreover, the Sandia National Laboratories had both
an institutional plan, which included a strategic plan, and a second
separate strategic plan. 


      DOE COULD BETTER LINK
      RESOURCES TO PERFORMANCE
      LEVELS AND WAS LATE
      INCORPORATING GOALS AND
      INCENTIVE FEES FOR
      CONTRACTORS' PERFORMANCE
-------------------------------------------------------- Chapter 0:4.2

DOE's annual performance plan for fiscal year 1999, the first such
plan it has developed under the Results Act, links the annual
performance goals to the strategic goals and objectives identified in
the departmental strategic plan.  Furthermore, the plan shows
requested budgetary resources associated with its program activities
and related business line goals.  However, GAO believes that DOE
could improve its annual performance plan by directly linking annual
performance goals to the requested budgetary resources needed to
provide that level of performance during the year.  DOE's Acting
Director of Strategic Planning, Budget and Program Evaluation
explained that the annual performance plan does not provide this
level of specificity because the plan links resources to the
Department's strategic goals and objectives and that the annual
performance goals can be linked to resources by reviewing the goals
in the agency's detailed budget request.  GAO attempted to do so, but
found, with the exception of the Office of Defense Programs' budget
request, that it could not link the annual performance goals and
measures from the annual performance plan with the resources required
in the budget request.  An initiative undertaken by the Office of
Environmental Management holds promise as a way to link budgetary
resources and performance levels throughout DOE. 

Although DOE's management and operating contracts include performance
goals and incentive fees to enhance the contractors' performance, the
approved goals and incentive fees were not incorporated in the
contracts when work began for fiscal year 1998.  As part of its
recent contract reform effort, DOE made these performance goals and
incentive fees a primary feature of its new management and operating
contracts.  However, for 16 of 20 contracts, the fiscal year 1998
performance goals and incentive fees were not incorporated in the
contracts until after the start of the fiscal year and could not be
used to enhance the performance of the contractors on their completed
work.  This practice is incompatible with the principles of
performance-based contracting. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 0:5

GAO makes several specific recommendations to the Secretary of Energy
directed at seeking opportunities to conform DOE's organization to
its strategic plan business lines, linking subordinate strategic and
multiyear plans to the departmental strategic plan, eliminating
unnecessary strategic and multiyear plans, linking annual performance
goals with required resources to fulfill those goals, and
streamlining the process for including performance goals and
incentive fees in management and operating contracts.  (See chs.  2
and 3.)


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 0:6

GAO provided copies of a draft of this report to the Department of
Energy for its review and comment.  DOE generally agreed with the
findings and recommendations.  DOE also provided comments clarifying
its position on some of the specific statements and recommendations
in the report.  In this regard, DOE (1) commented that the Strategic
Management System was not meant to be a prescriptive document and
that detailed direction cannot take the place of basic, sound
management; (2) acknowledged, as pointed out in the draft report,
that it may take several planning cycles to perfect the strategic
planning processes and linkages; (3) explained that it is currently
working on a "mapping" effort that will better show the linkage
between its annual performance plan and the budget request; and (4)
stated that it has ongoing efforts to meet several of the report's
recommendations.  DOE also offered several technical corrections that
were incorporated.  DOE's comments appear in appendix II. 


INTRODUCTION
============================================================ Chapter 1

Noting that congressional and federal managers' decision-making was
often hampered by the lack of good information on the results of
federal programs, the Congress passed the Government Performance and
Results Act of 1993.  By passing the Results Act, the Congress
intended to change the focus of federal management and
decision-making from the performance of tasks to the results of those
tasks.  To do this, the act established a system to set goals for
programs' performance and to measure the results of that performance. 

In part to fulfill the requirements of the Results Act, the
Department of Energy (DOE) announced the development of its Strategic
Management System in 1996.  The system is intended to be a managerial
framework for DOE's interrelated strategic planning, budgeting,
performance-based contracting, and program evaluation processes for
the Department's varied missions and numerous organizations. 


   THE RESULTS ACT OF 1993
   PROVIDES DIRECTION FOR
   PERFORMANCE MANAGEMENT
---------------------------------------------------------- Chapter 1:1

The Congress passed the Results Act to have federal agencies clarify
their missions, set their program goals, and measure their
performance toward achieving those goals.  The Congress had found,
among other things, that

  -- waste and inefficiency in federal programs undermined the
     confidence of the American people in their government and
     reduced the government's ability to address vital public needs
     adequately;

  -- federal managers were seriously disadvantaged in their efforts
     to improve program efficiency and effectiveness because
     programs' goals had not been articulated sufficiently and
     information on programs' performance was inadequate; and

  -- congressional policy-making, spending decisions, and program
     oversight were seriously handicapped by insufficient attention
     to programs' performance and the results. 

The Congress intended the Results Act to improve the effectiveness of
federal programs by fundamentally shifting management and
decision-making away from a preoccupation with staffing and activity
levels to a wider focus on the results of federal programs.  The
framework the act established for such a shift requires executive
agencies to prepare multiyear strategic plans, annual performance
plans, and annual performance reports. 


      STRATEGIC PLANS ARE THE
      STARTING POINT FOR
      PERFORMANCE MANAGEMENT
-------------------------------------------------------- Chapter 1:1.1

The Results Act requires executive agencies to develop strategic
plans that cover a period of at least 5 years and to update those
plans at least every 3 years.\1 Agencies were required to submit
their first strategic plans to the Congress by September 30, 1997. 
Strategic plans are to (1) include agencies' mission statements; (2)
identify long-term general goals and objectives; (3) describe
agencies' plans to achieve those goals through their activities and
through their human, capital, information, and other resources; and
(4) explain the key external factors that could significantly affect
the achievement of those goals.  Additionally, the strategic plans
are to explain how the agencies' strategic goals and objectives are
related to the performance goals in their annual performance plans. 
Hence, the strategic plan is the starting point for the agencies'
system of performance management.  In January 1998, we reported on
our reviews of 24 major agency strategic plans, including the one
prepared by DOE.\2


--------------------
\1 The Results Act applies to agencies as defined in 5 U.S.C. 
306(f), which generally covers executive departments, government
corporations, and independent establishments. 

\2 Managing for Results:  Agencies' Annual Performance Plans Can Help
Address Strategic Planning Challenges (GAO/GGD-98-44, Jan.  30,
1998). 


      ANNUAL PERFORMANCE PLANS
      LINK THE LONG-TERM GOALS TO
      THE DAILY WORK
-------------------------------------------------------- Chapter 1:1.2

The Results Act requires executive agencies to develop annual
performance plans that cover their performance for a single fiscal
year.  The first annual performance plans were to be submitted to the
Congress with the President's budget in February 1998 and were to
cover the agencies' performance in fiscal year 1999.  The annual
performance plan is to contain an agency's strategic goals and annual
performance goals, which the agency is to use to gauge its progress
toward accomplishing its strategic goals.  The annual performance
plan also is to include the measures of performance that the agency
will use to gauge its progress toward achieving its annual goals and
the resources the agency will need to meet its goals.  Finally, the
plan is to discuss how the agency will verify the resulting
performance data. 


      ANNUAL PROGRAM PERFORMANCE
      REPORTS PROVIDE FEEDBACK ON
      PROGRAM RESULTS
-------------------------------------------------------- Chapter 1:1.3

The Results Act further requires executive agencies to prepare annual
reports on program performance for the previous fiscal year.  The
first annual performance reports will describe agencies' results for
fiscal year 1999 and are due to the Congress and the President no
later than March 31, 2000.  Subsequent reports are due annually by
March 31.  In each report, an agency is to review and discuss its
performance compared with the performance goals it established in its
annual performance plan. 


      THE COST OF PERFORMANCE
      MEASUREMENT SHOULD NOT BE A
      SIGNIFICANT NEW COST
-------------------------------------------------------- Chapter 1:1.4

The Senate Committee on Governmental Affairs, in its report on the
Results Act, explained that it is important that performance
measurement not be a major additional cost or paperwork burden
imposed on federal programs.\3 In stressing its concerns about the
cost of performance measurement, the Committee cited our report on
federal agencies' use and collection of performance data.\4 In that
report, we pointed out that a great deal of data collection was
already going on in federal programs and that this activity could be
redirected, coordinated, and the data better reported and used. 


--------------------
\3 S.  Rep.  No.  103-58 (1993). 

\4 Program Performance Measures:  Federal Agency Collection and Use
of Performance Data (GAO/GGD-92-65, May 4, 1992). 


      RESULTS WILL TAKE TIME
-------------------------------------------------------- Chapter 1:1.5

The Congress recognized the significance of converting a
task-oriented government to a performance-oriented government and
phased the implementation of the Results Act over a 7-year period. 
For example, in its report on the Results Act, the Senate Committee
on Governmental Affairs recognized that the reforms of the Results
Act are a major undertaking and noted that comprehensive program
goal-setting and performance measurement and reporting on a
governmentwide basis will not be accomplished easily. 

In 1997, in our review of agencies' pilot projects under the Results
Act, we reported that agencies were confronting a variety of
difficult challenges.  These challenges included developing strategic
plans; generating the results-oriented performance information needed
to set goals and assess progress; instilling a results-oriented
organizational culture within agencies; and linking performance plans
to the budget process.  The experiences of pilot agencies and related
efforts by other agencies suggest that these challenges will not be
quickly or easily resolved.\5


--------------------
\5 The Government Performance and Results Act:  1997 Governmentwide
Implementation Will Be Uneven (GAO/GGD-97-109, June 2, 1997). 


   DOE'S STRATEGIC MANAGEMENT
   SYSTEM PROVIDES A FRAMEWORK FOR
   COMPLYING WITH THE RESULTS ACT
---------------------------------------------------------- Chapter 1:2

On March 4, 1996, DOE announced its Strategic Management System,
which seeks to align planning with strategic intent, ensure that
planning drives resource allocation, and provide feedback on
performance results.  The system provides a general explanation of
how strategic planning, annual planning, budget formulation,
performance-based contracting, and program evaluation are to be
linked. 

Within the Strategic Management System, DOE's departmental strategic
plan provides the goals and strategies that will shape DOE's future
budgets.  DOE's strategic plan aligns DOE's work into four business
lines--energy resources, national security, environmental quality,
and science and technology.  To help ensure the success of its
business lines, DOE's strategic plan also includes a section on
corporate management, which cuts across the business lines.  Because
DOE's organizational structure does not mirror its business lines,
the business lines include crosscutting issues within the agency that
require different parts of the Department to work together to achieve
the desired results. 

DOE's Assistant Secretary for Policy and International Affairs is
responsible for coordinating the preparation of the departmental
strategic plan.  Preparation of the strategic plan is managed by the
Assistant Secretary's Office of Strategic Planning, Budget and
Program Evaluation.  The strategic plan is to be reflected throughout
all DOE organizations as missions, goals, and activities at every
level are to be aligned with national energy and security policies. 
Among its objectives, the Strategic Management System intends to
ensure that all DOE plans add value and are consistent with other DOE
planning documents. 

The Strategic Management System states that annual performance plans
are to include the results that DOE expects to deliver for the budget
being requested and must be closely linked to the goals contained in
the departmental strategic plan.  The Strategic Management System
also notes that DOE's performance-based management contracts, a form
of contract that is used to manage and operate DOE facilities, are a
critical force in turning DOE's annual plan and commitments into
actions and results.  Performance goals for these contracts are to be
consistent with the commitments made in DOE's annual performance
plan. 


      DOE'S MANAGEMENT SYSTEM WILL
      NEED TO INTEGRATE DIVERSE
      MISSIONS AND ORGANIZATIONS
-------------------------------------------------------- Chapter 1:2.1

To work effectively, the Strategic Management System will need to
integrate DOE's complex mission structure and organization.  DOE was
created in 1977 from several diverse functions, including those of
the Federal Energy Administration, the Energy Research and
Development Administration, and the Federal Power Commission. 
Moreover, DOE's missions have changed focus over the years.  For
example, whereas DOE was once geared toward the production of nuclear
weapons, it is now focused on restoring the environment at the
facilities contaminated by that nuclear production.  DOE's diverse
missions include

  -- environmental restoration of its facilities and the management
     of hazardous wastes created during the nuclear research and
     production process;

  -- management of the nation's nuclear weapons complex;

  -- nuclear arms control;

  -- development of energy policy;

  -- research and development on both energy and basic science;

  -- management of five power marketing administrations, such as the
     Bonneville Power Administration; and

  -- development and operation of a civilian nuclear waste
     repository. 

These changing missions have had a significant impact on DOE's
various programs.  For example, in 1996, we reported that DOE
undertook 80 major system acquisitions from 1980 to 1996 and that
only 15 of them were ever completed.  Thirty-one of the major systems
were terminated prior to completion.  One of the causes of this poor
performance was DOE's unclear or changing missions.\6

DOE uses management and operating contractors (M&O) to carry out the
bulk of its statutory responsibilities at its facilities.  In fiscal
year 1997, about 70 percent ($13.8 billion) of the Department's total
fiscal year obligations were for M&O contractors.  These contractors
employ about 107,000 employees, compared with the approximately
11,000 federal workers employed by DOE. 


--------------------
\6 Department of Energy:  Opportunity to Improve Management of Major
System Acquisitions (GAO/RCED-97-17, Nov.  26, 1996). 


   OBJECTIVES, SCOPE, AND
   METHODOLOGY
---------------------------------------------------------- Chapter 1:3

The Chairman of the House Committee on Commerce, noting the
importance of the Results Act, requested that we review DOE's early
efforts to implement the act.  Specifically, we evaluated how well
(1) DOE's program and field units linked their subordinate plans to
the departmental strategic plan and (2) DOE linked the goals of its
strategic plan to its annual performance plan and the goals for its
performance-based management and operating contracts. 

We conducted our review at DOE program offices, field organizations,
and facilities managed by M&O contractors.  The program offices we
chose for our review--the Office of Defense Programs, the Office of
Energy Research, and the Office of Environmental Management--are the
largest in DOE's budget.  The field organizations we reviewed were at
DOE's offices in Albuquerque, New Mexico; Argonne, Illinois; Oak
Ridge, Tennessee; Rocky Flats, Colorado; and Savannah River, South
Carolina.  The facilities managed by M&O contractors we reviewed were
at the Argonne National Laboratory in Illinois; the Oak Ridge
Reservation in Tennessee; the Rocky Flats Environmental Technology
Site in Colorado; the Sandia National Laboratories in New Mexico; and
the Savannah River Site in South Carolina.  At the field offices and
individual facilities, we focused on programmatic activities and not
on the operational activities of those organizations. 

To evaluate how DOE linked its various organizations' strategic plans
to DOE's departmental strategic plan, we requested strategic and/or
multiyear plans from DOE's Albuquerque, Chicago, Rocky Flats, Oak
Ridge, and Savannah River offices.  We analyzed the plans and
attempted to link the programmatic work supporting Defense Programs,
Energy Research, and Environmental Management that was specified in
those plans to DOE's departmental strategic plan.  We then asked DOE
personnel at these offices to separately identify linkages between
their plans and DOE's departmental strategic plan.  We discussed the
planning activities of these offices with staff from their planning
and budget offices.  Additionally, we discussed DOE's strategic
planning activities with staff of the Office of Policy and
International Affairs, the Office of Defense Programs, the Office of
Energy Research, and the Office of Environmental Management.  We
discussed DOE's strategic planning with staff of the Office of
Management and Budget (OMB).  Finally, we reviewed the Results Act;
the Senate Committee on Governmental Affairs' report on the Results
Act; OMB's guidance on the Results Act; and DOE's guidance on its
Strategic Management System. 

To evaluate the linkage between DOE's annual performance plan for
fiscal year 1999 and its departmental strategic plan, we compared the
1999 annual performance plan with the departmental strategic plan to
determine if we could identify links among goals, objectives, and
measures.  We also analyzed the 1999 annual performance plan to
determine if the levels of performance identified in it could be
linked to the budgetary resources requested for those levels of
performance.  However, we did not evaluate the extent to which
individual performance goals and measures will enable DOE to
effectively achieve its goals and objectives. 

To evaluate the links between DOE's strategic goals and the work of
its M&O contractors, we discussed the performance goals and incentive
fees for the contracts for the Argonne National Laboratory and the
Rocky Flats Environmental Technology Site with officials from DOE's
Chicago and Rocky Flats offices.  However, as of February 1998,
performance goals and incentive fees for fiscal year 1998 had not
been completed and made a part of the contracts.  As a result, we
could not evaluate the linkage of the contracts to the departmental
strategic plan.  We also discussed these contracts with staff of the
Office of Procurement and Assistance Management and requested
information to determine if the late inclusion of performance goals
and fees was a systemic problem within DOE. 

We performed our review from June 1997 through March 1998 in
accordance with generally accepted government auditing standards. 


DOE'S ORGANIZATIONS DO NOT LINK
THEIR PLANS CLEARLY TO THE
DEPARTMENTAL STRATEGIC PLAN
============================================================ Chapter 2

DOE's strategic plan focuses on its broad missions and not on the
Department's programs or organizational structure.  As a result,
DOE's programs, field offices, and contractors have often prepared
their own subordinate plans.  However, we found that it was difficult
to link the subordinate plans of DOE's programs, field offices, and
contractors to the Department's strategic goals, objectives, and
strategies.  DOE has not provided specific guidance on the nature or
extent of these subordinate plans.  As a result, organizations
throughout DOE have developed subordinate plans even though some of
the plans appear to be duplicative. 


   THE STRUCTURE OF DOE'S
   STRATEGIC PLAN DIFFERS FROM THE
   STRUCTURE OF THE ORGANIZATION
---------------------------------------------------------- Chapter 2:1

DOE's strategic plan is structured according to business lines, but
DOE's organizational structure is quite different.  As we pointed out
in June 1996, organizations' activities should be aligned to support
their mission and outmoded organizational structures should be
changed.\1

DOE's strategic plan includes a mission statement that is short and
overarching, but the substance of its missions is described in four
business lines:  energy resources, national security, environmental
quality, and science and technology.  The strategic plan also
includes a functional section on corporate management that cuts
across the four business lines.  But DOE itself is not organized into
four business lines.  It has three large headquarters program
offices, many smaller individual headquarters offices, operations and
field offices, and a number of contractors that manage and operate
DOE facilities across the country. 

Because the business lines in DOE's strategic plan are not aligned
with the organizational structure, more than one DOE organization
contributes to the same business line.  For example, DOE's three main
headquarters program offices are Defense Programs, Energy Research,
and Environmental Management.  Both the Office of Defense Programs
and the Office of Environmental Management contribute to the
environmental quality business line as do two smaller headquarters
offices.  Similarly, the Office of Defense Programs and five other
headquarters offices contribute to the national security business
line. 

The relationships among programs and business lines become more
complicated when the field-level structure is considered.  DOE's
field structure includes 10 major operations and field offices and
several area offices.  Each of these offices may contribute to the
business lines through various headquarters offices.  For example,
the Oak Ridge Operations Office performs work for each of the three
main headquarters program offices as well as for other headquarters
offices and, in doing so, performs work for all four business lines. 
Because Oak Ridge conducts its work through the contractors that
manage its facilities, the performance of the work for the business
lines is broken down further and accomplished at organizations below
the operations office level.  In the end, the business lines are
simply a summation of the basic types of work that DOE is to
accomplish through the various parts of its complex organization. 


--------------------
\1 Executive Guide:  Effectively Implementing the Government
Performance and Results Act (GAO/GGD-96-118, June 1996). 


   SUBORDINATE PLANS ARE PREPARED
   IN MANY DOE ORGANIZATIONS
---------------------------------------------------------- Chapter 2:2

In addition to DOE's strategic plan, various programs and offices
prepare subordinate plans that are defined as being strategic or
multiyear or both.  These include plans at different levels within
DOE's programs, field offices, and M&O contractors that are developed
to meet various requirements, including those of federal laws, DOE
orders, and total quality management initiatives.  However, little
guidance exists within the Department to define the need for planning
below the departmental level.  Appendix I provides a list of more
than 2 dozen strategic and multiyear plans that we identified and an
explanation of these plans. 


      STRATEGIC PLANS ARE BEING
      PREPARED BY PROGRAM OFFICES
-------------------------------------------------------- Chapter 2:2.1

DOE's Environmental Management, Defense Programs, and Energy Research
programs are developing their own strategic plans.  The planning
processes for Environmental Management and Defense Programs are aimed
at integrating their program goals with the goals at the field and
operations office levels.  According to Energy Research officials,
they are revising the program's previous strategic plan and believe
that each subprogram office also should have separate plans to guide
the facilities that perform work within the program. 

The Environmental Management Program, in June 1997, issued a
discussion draft of its planning effort called Accelerating Cleanup: 
Focus on 2006.  After receiving feedback from the program and field
levels on this draft, Environmental Management officials plan to
develop a draft national plan by early 1998.\2 Although the goals of
the plan are not final, the basic direction is to (1) clean up as
many DOE sites with environmental problems as possible by the year
2006, acknowledging that cleanup at some sites will not be completed
by then; (2) reduce costs and increase productivity during the
cleanup process; and (3) comply with all regulatory requirements. 
These program goals, together with program performance measures, are
being used at the field level to develop site plans and individual
project plans at the sites. 

In 1996, DOE's Office of Defense Programs released the Stockpile
Stewardship and Management Plan, also referred to as the Green
Book.\3 This plan, which the Office of Defense Program officials
considered a strategic plan but also referred to as an implementation
plan, outlines the program's strategic goals and implementation
objectives for current and future years.  Defense Program officials
told us that this plan minimizes the need for subordinate strategic
plans.  However, the officials acknowledged that offices may still
develop strategic or multiyear plans to provide more detail or
direction, or to market or publicize specific programs and projects. 
Currently, at least one subprogram in Defense Programs has a
multiyear plan--the Accelerated Strategic Computing Initiative--but
other subprograms are developing their own multiyear plans to meet
their specific needs. 

In 1995, DOE's Office of Energy Research published its first
strategic plan to guide DOE facilities that perform work within the
program.  It is now working on an updated strategic plan.  The Office
of Energy Research officials told us that DOE's departmental
strategic plan is too broad to serve as a meaningful "road map" for
the Energy Research programs.  The Energy Research subprograms will
be expected to develop subordinate plans linked to the Energy
Research strategic plan.  These plans will then be used to guide
facilities that perform work for the program.  Additionally,
according to an official, the Office of Fusion Energy Sciences has
prepared strategic plans in response to congressional interest.  For
example, the Strategic Plan for the Restructured Fusion Energy
Sciences Program was done in response to the Conference Report
accompanying the Energy and Water Appropriations Act of 1996. 


--------------------
\2 This Accelerating Cleanup:  Focus on 2006 plan is supported by a
business management process called the Integrated Planning,
Accountability, and Budgeting System.  This system is to be used for
the purposes of planning, preparing budget requests, setting annual
performance goals, and reporting on how well goals are being
achieved. 

\3 The Green Book, a classified document, is prepared annually and
identifies the goals to be achieved during the year in addition to
multiyear goals.  First released by the Office of Defense Programs in
1996, the Green Book is based on the goals described in the May 1995
Stockpile Stewardship and Management Program Report.  The National
Defense Authorization Act for Fiscal Year 1998 now requires DOE to
provide a plan for maintaining the nuclear weapons stockpile to the
Congress by March 15 of each year, beginning in fiscal year 1998. 


      FIELD-LEVEL ORGANIZATIONS
      PREPARE THEIR OWN
      SUBORDINATE PLANS
-------------------------------------------------------- Chapter 2:2.2

Each field office we visited either had or was updating some form of
a strategic or multiyear plan.  The Albuquerque and Savannah River
operations offices, each of which participated in more than one
program, had their own field-level strategic plans, while the Oak
Ridge Operations Office intended to develop a site-level strategic
plan.  At the Savannah River Site, we found a site program office
with its own strategic plan.  Multiyear and strategic plans also were
prepared for individual laboratories by the contractors that operated
them and for the contractors' own organizations. 

In addition, because all of the field offices we visited performed
work for the Environmental Management program, they had prepared
their own site-specific plans under the Accelerating Cleanup:  Focus
on 2006 program.  At Savannah River, the operations office had
prepared a strategic plan that included a goal and several objectives
for environmental management.  The operations office's Environmental
Restoration Office had also prepared a strategic plan with goals and
objectives for the environmental restoration program.  This was in
addition to the site-level Accelerating Cleanup:  Focus on 2006 plan
that included the program's goals. 

The Albuquerque Operations Office, which works with the Office of
Defense Programs on the Stockpile Stewardship and Management Program,
has its own strategic plan that provides a corporate vision and focus
areas that include Albuquerque's contributions to the U.S.  nuclear
weapons program.  However, defense planning officials in Albuquerque
told us that they rely on the Green Book, and not on the Albuquerque
strategic plan, to develop the weapons program at the Albuquerque
Operations Office.  Although Albuquerque planning officials
acknowledged that their strategic plan added little to the
programmatic aspects of planning, they said that it does provide a
corporate vision and defines the mission of the Albuquerque
Operations Office. 

In contrast to the field offices at Albuquerque and Savannah River,
the Chicago Operations Office's strategic planning focused solely on
the office's administrative and oversight functions.  Finance and
planning officials there explained that their office does not address
the programmatic work being done at the Argonne National Laboratory
because programmatic guidance for the laboratory's basic research
activities is provided directly by the Office of Energy Research and
its subprograms. 

Finally, in addition to the plans prepared by DOE, we found that
multiyear and strategic plans also were prepared for DOE laboratories
and some other facilities by the contractors who operated them.  For
example, each of the laboratories in our review prepared an
institutional plan.  DOE guidance explains that institutional plans
provide a means to consider each laboratory as an institution rather
than as a collection of programs and to review its mission, its
health as an institution, and its plans for the future.  Although the
Sandia National Laboratories had an institutional plan, it also had
prepared a separate strategic plan.\4 We found that the contractors
at both Savannah River and Oak Ridge also prepared strategic plans
for their own operations.  The Oak Ridge Reservation contractor had
prepared an internal strategic plan for its operations that included
a vision, business strategy, and objectives.  The Savannah River Site
contractor had developed a strategic plan in 1994 to prepare itself
for the new direction and strategy defined by the Secretary of
Energy. 


--------------------
\4 The Argonne National Laboratory's Science and Technology Strategic
Plan is a part of Argonne's Institutional Plan, FY 1998-2003. 


   SUBORDINATE PLANS ARE NOT
   CLEARLY LINKED TO DOE'S
   STRATEGIC PLAN
---------------------------------------------------------- Chapter 2:3

While extensive planning is going on at different levels of DOE, it
is not clear how all of the plans prepared by the programs, field
offices, and contractors are linked to DOE's departmental strategic
plan.  According to DOE, the departmental strategic plan "is the
highest level tier of planning for the Department." The plan itself
notes that performance is the common link that ties the planning
system together throughout the Department.  However, DOE's Strategic
Management System does not provide specific directions on how to link
the goals of subordinate strategic and multiyear plans to the goals,
objectives, and strategies of the departmental strategic plan. 


      SUBORDINATE STRATEGIC PLANS
      DO NOT EXPLAIN THEIR LINKAGE
      TO THE DOE DEPARTMENTAL
      STRATEGIC PLAN
-------------------------------------------------------- Chapter 2:3.1

DOE's strategic plan lists the departmental goals, objectives, and
strategies.  The goals are long term, broad, and outcome-oriented,
and they are supported by objectives and strategies that are nearer
term.  However, the subordinate strategic and multiyear plans we
reviewed that were developed by the programs, field offices, and
contractors did not show how their goals will contribute to the
departmental strategic plan's goals, objectives, and strategies.  For
example, DOE's strategic plan has one goal for its environmental
quality business line that is supported by seven objectives.  The
business line goal states that DOE is to

     "[a]ggressively clean up the environmental legacy of nuclear
     weapons and civilian nuclear research and development programs,
     minimize future waste generation, safely manage nuclear
     materials, and permanently dispose of the Nation's radioactive
     wastes."

But the goal in the Savannah River site-level strategic plan is to
"demonstrate excellence in environmental stewardship." This goal is
supported by several site objectives.  In addition to the site-level
strategic plan, the site's Environmental Restoration Program has its
own strategic plan with five goals and multiple objectives.  The
goals of this plan are

  -- focus on remediation,

  -- demonstrate safety excellence,

  -- meet or expedite regulatory requirements,

  -- maximize deployment of innovative technologies, and

  -- demonstrate cost-effectiveness. 

While one can argue that the two different Savannah River plans have
goals that can be encompassed in the environmental quality business
line goal, neither of the subordinate strategic plans explains
whether its goals and objectives are to fulfill a departmental
strategic goal, objective, or strategy.  As a result, we believe the
significance of Savannah River's contribution to the DOE strategic
plan, as expressed in its own various strategic plans, is not clear. 

While the various plans did not show clear linkage to DOE's strategic
plan, planning officials from headquarters' program and field offices
told us that they believed that the goals in their plans were linked
to the goals in the departmental strategic plan.  In some cases,
however, they noted that it was easy to show a linkage because the
DOE strategic plan's goals were so vague.  For example, the budget
and program officials in DOE's Albuquerque Operations Office said
they found it relatively easy to show the linkages among the Sandia
National Laboratories' contract documents, the Albuquerque Operations
Office's strategic plan, DOE's departmental strategic plan, and the
Office of Defense Programs' Green Book even though we had difficulty
discerning the linkage.  They said the goals of DOE's strategic plan
and the Green Book were sufficiently broad for them to easily show a
linkage. 

One of the features of the Environmental Management program's new
Accelerating Cleanup:  Focus on 2006 strategic plan is that it is
clearly linked with the field level plans.  While the Environmental
Management program's strategic plan was not yet complete, planning
staff from the program office told us that they were seeking to
integrate the program's goals with the goals of the field offices by
requiring these offices to develop their plans based on the program's
goals.  The June 1997 draft plan provides several program goals that,
when final, should provide clear and direct links between the goals
of the program and the field offices.  In addition to the program
goals, the plan lists program performance measures to be achieved at
the field level.  Because the field offices are required to use the
program's goals and performance measures in the development of their
site plans, the site-level goals and measures should be linked to the
program's goals and measures. 

We discussed our difficulty in linking subordinate plans to the
departmental strategic plan with the Acting Director of Strategic
Planning, Budget and Program Evaluation, who explained that many of
the linkages are more implicit than explicit for two important
reasons.  First, the DOE strategic plan required by the Results Act
was only published in September 1997.  Hence, there has not been
enough time for all levels of DOE to fully adjust their plans to show
explicit linkage.  Second, DOE's Strategic Management System has not
yet matured and will need several planning cycles to produce the
desired results.  While we do not disagree with the Acting Director's
comments, we also found that subordinate plans were not clearly
linked with DOE's 1994 strategic plan. 


      THE NEED FOR ALL STRATEGIC
      AND MULTIYEAR PLANS MAY BE
      QUESTIONED
-------------------------------------------------------- Chapter 2:3.2

DOE's Strategic Management System requires that only a minimum number
of plans be published.  However, it does not state which plans should
be prepared or whether they should be strategic or operational plans. 
According to DOE guidance, strategic plans are to address what is to
be done and the operational plans are to address how it is to be
done.  According to the Strategic Management System,

  -- only a minimum number of plans are to be published;

  -- plans should be consolidated and redundancies eliminated
     wherever possible; and

  -- only plans that are required by laws, directives, or plans that
     contribute to effective management should be published. 

DOE's guidance further explains that published plans should identify
their purpose and their relationship to the Strategic Management
System, which seeks to mesh the Department's interrelated strategic
planning.  Determining which plans are unnecessary and which
represent a "minimum" of plans is a difficult task.  However, in some
cases, it was apparent that planning staff were not sure if all plans
were used or needed, as the following examples show: 

  -- The Albuquerque Operations Office included a section for Defense
     Programs in its strategic plan, but officials there told us that
     they do not use it in the development of the Sandia National
     Laboratories' defense projects. 

  -- Planning officials at the Office of Defense Programs told us
     that the Green Book is the primary plan for the office's
     program; however, as discussed above, at least one subprogram
     within the office has produced its own plan to meet its specific
     needs and others are being developed on a case-by-case basis. 

  -- The Sandia National Laboratories had both an institutional plan,
     which included a strategic plan, and a second, separate
     strategic plan. 

  -- The Savannah River Operations Office's strategic plan includes a
     section for environmental management; the site's Environmental
     Restoration Program has its own strategic plan; and the site
     also prepared a site-level Focus on 2006 plan for the
     Environmental Management program. 

We discussed the proliferation of strategic and multiyear plans with
the Acting Director of Strategic Planning, Budget and Program
Evaluation, who explained that his office does not dictate the number
of strategic plans that are appropriate or what the plans should look
like.  Currently, the number and appearance of strategic plans are
left up to the individual headquarters program offices. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 2:4

We believe DOE has an opportunity to increase the integration and
cohesiveness of its programs by aligning its organization with its
business lines and providing specific direction on how plans should
be linked, from the lowest-level strategic and multiyear plans to the
departmental strategic plan.  Currently, DOE's strategic plan focuses
the Department's activities in four business lines, but DOE itself is
organized more traditionally with multiple programs and related
headquarters and field offices that in turn are supported by
contractors that operate DOE facilities.  We recognize that changing
DOE's organizational structure may not be easy.  However, as DOE
becomes more outcome oriented, it may find that its organizational
structure is outmoded and must be changed to better fulfill its
strategic missions and goals. 

Furthermore, DOE's strategic planning is not being done with the
benefit of a well-defined road map.  The Strategic Management System
lays out a program, but it does not provide sufficient detail to make
strategic planning work efficiently or effectively.  As a result,
different ideas about strategic planning are emerging in DOE's
program and field offices.  To develop a systematic, cohesive, and
comprehensive strategic planning process, DOE needs to provide its
offices with clear direction on strategic planning.  Such direction
should lay out which plans are needed and whether they should be
strategic or operational plans. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 2:5

We recommend that the Secretary of Energy take the following actions: 

  -- Review the Department's organizational structure and seek
     opportunities to better align the organization with its
     strategic plan's business lines. 

  -- Direct the Office of Strategic Planning, Budget and Program
     Evaluation to develop specific procedures that state how
     subordinate strategic and multiyear plans are to relate to the
     departmental strategic plan.  In developing these procedures,
     the office should consider whether the goals and objectives of
     the subordinate plans should be linked to the departmental
     strategic goals, objectives, or strategies. 

  -- Direct the Office of Strategic Planning, Budget and Program
     Evaluation to review DOE's requirements for subordinate
     strategic and multiyear plans and modify or eliminate those
     requirements that produce superfluous strategic and multiyear
     plans. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 2:6

DOE generally agreed with our findings and recommendations and
provided comments to clarify its position.  DOE pointed out that its
Strategic Management System was designed as a framework for
implementing the Results Act and was not meant to be a prescriptive
directive that would replace basic, good management.  DOE also
reiterated that it may take several planning cycles to perfect its
strategic planning process.  Finally, DOE stated that its ongoing
efforts seek to implement our recommendations. 


ANNUAL PERFORMANCE PLAN COULD BE
IMPROVED AND INCORPORATION OF
CONTRACTORS' ANNUAL GOALS COULD BE
MORE TIMELY
============================================================ Chapter 3

The Results Act envisions that federal agencies will achieve their
strategic goals by meeting the performance goals in their annual
performance plans.  In addition, agencies' plans are to serve as a
means of showing how budgetary resources will be used to achieve
annual performance goals.  Although DOE's annual performance plan for
fiscal year 1999 broadly conforms to this vision, it does not
allocate the requested budgetary resources to its annual performance
goals.  Such a linkage would show the Congress the budgetary
resources DOE intends to apply to provide the level of performance
indicated by the performance goals and measures in the agency's
annual performance plan.  In another matter related to performance,
DOE was late in providing annual contract goals and incentive fees
for its performance-based management contracts for the fiscal year
that began October 1, 1997.  As a result, the contractors managing
DOE's facilities began their work before approved goals and incentive
fees were made a part of their contracts. 


   PERFORMANCE AND STRATEGIC GOALS
   ARE LINKED, BUT REQUESTED
   BUDGETARY RESOURCES COULD BE
   MORE CLOSELY LINKED TO ANNUAL
   PERFORMANCE GOALS
---------------------------------------------------------- Chapter 3:1

The performance goals in DOE's 1999 annual performance plan are
linked to the agency's strategic goals and objectives.  Although this
linkage of goals and objectives meets the Results Act's requirement
that annual performance plans be consistent with strategic plans, the
annual performance plan does not directly link requested budgetary
resources to the level of performance that is to be achieved during
the fiscal year.  An initiative undertaken by the Office of
Environmental Management holds promise as a way to systematically
link required budgetary resources to performance levels throughout
DOE. 


      1999 ANNUAL PERFORMANCE
      GOALS COULD BE LINKED BETTER
      TO REQUESTED BUDGETARY
      RESOURCES
-------------------------------------------------------- Chapter 3:1.1

In its first annual performance plan under the Results Act, DOE met
the act's requirement that an agency's performance plan be consistent
with the agency's strategic plan by aligning the performance plan's
goals and measures with those in its strategic plan.  However, DOE
could improve its annual performance plan and address another of the
Results Act's expectations by identifying the budgetary resources
required to meet its annual performance goals. 

Although DOE associated its program activities\1 with its strategic
goals and objectives, the annual performance plan could indicate more
clearly the relationship between requested budgetary resources and
program results.  This relationship could be established by linking
the funding levels from each of the program activities in its budget
request to each of its annual performance goals in the annual
performance plan.  DOE does provide matrices for each business line
that show the program activities and resource requests that
contribute to the performance of its strategic objectives.  However,
these matrices do not show the amount of funds requested for each
strategic objective.  Because many of the program activities are
associated with more than one strategic goal and many strategic goals
are funded by several program activities, it is not clear how much
DOE intends to spend to achieve any of its annual performance goals. 
Furthermore, the strategic goals are broadly written and do not
explain the specific level of performance to be accomplished during
the fiscal year.  For example, the strategic goal for the energy
resources business line states: 

     "The Department of Energy and its partners promote secure,
     competitive, and environmentally responsible energy systems that
     serve the needs of the public."

This broad goal is not something that can be accomplished within 1
year.  But the annual performance goals and measures that are aligned
with these broad strategic goals, to varying degrees, do define the
level of performance to be achieved during fiscal year 1999.\2 For
example, one annual performance goal and measure under that
particular strategic goal requires that during fiscal year 1999 DOE
will be

     "demonstrating four advanced production enhancement technologies
     that could ultimately add 190 million barrels of domestic
     reserves, including 30 million barrels during fiscal year 1999."

If DOE's annual performance plan presented the requested budgetary
resources with this specific annual performance goal, the annual
performance plan could be used to evaluate the anticipated
performance in light of the funds requested to support it. 

According to DOE's Acting Director of Strategic Planning, Budget and
Program Evaluation, the annual performance plan does not provide this
level of specificity because DOE's budget request is
performance-based.  The Acting Director explained that the annual
performance plan links DOE's programs and their requested budget
amounts to the strategic objectives to which they contribute.  The
Acting Director further explained that by reviewing the budget
request for those programs, it was possible to identify the annual
performance goals and the funds requested to achieve those goals. 

We attempted to link DOE's annual performance goals and measures from
the annual performance plan to the budget request to see if it was
possible.  The budget request for the Office of Defense Programs did
include a matrix that listed the performance goals and measures from
the annual performance plan and identified the funds being requested
to achieve those goals and measures.\3 However for the budgets of the
offices of Energy Research and Environmental Management, and several
smaller offices that we looked at, the same clear linkage was not
present.  For example, for several performance goals and measures
from the annual performance plan, it was possible to find the same or
similar goals listed in various sections of the budget request. 
However, the funds to achieve these goals were not identified
specifically with the individual goals.  Furthermore, while the
Office of Defense Programs' budget request included a matrix with the
goals and the funds requested in one place, the other programs listed
goals throughout the various sections of the budget request but did
not include, in all cases, the associated resources.  DOE can make
the performance goals in its performance-based budget more useful by
clearly linking them to the annual performance goals and measures in
the annual performance plan. 


--------------------
\1 The term "program activity" refers to the listings of projects and
activities in the appendix portion of the Budget of the United States
Government.  Program activity structures are intended to provide a
meaningful representation of the operations financed by a specific
budget account. 

\2 In Results Act:  Observations on the Department of Energy's Draft
Strategic Plan (GAO/RCED-97-199R, July 11, 1997), we noted that many
of DOE's annual performance goals and measures were process-oriented
as opposed to results-oriented and that they needed to be more
action-oriented. 

\3 In a September 1997 memorandum, the Office of Defense Programs
requested that its field offices develop a matrix to show the funds
associated with DOE's performance measures. 


      ENVIRONMENTAL MANAGEMENT'S
      ACCELERATING CLEANUP:  FOCUS
      ON 2006 LINKS PLANNING,
      BUDGETING, AND REPORTING
-------------------------------------------------------- Chapter 3:1.2

A key feature of the Office of Environmental Management's planning
and budgeting process described in its draft plan, Accelerating
Cleanup:  Focus on 2006, is an electronic management system.  This
system is intended to tie budgetary resources to the expected level
of performance for the program, field offices, sites, and individual
projects. 

The system covers several hundred individual environmental management
projects--each documented in a project baseline summary.  The project
baseline summaries provide information such as the overall scope of
work, schedule, estimated cost, and performance measures.  These
project baseline summaries will be used in the formulation of the
annual budget and in the identification of the proposed levels of
performance that are to meet the overall Environmental Management
program's performance goals and measures.  Finally, the project
baseline summaries are used to track actual performance.  As a
result, the Office of Environmental Management should have the
information it will need to prepare future budget requests
identifying the budgetary resources needed to achieve specific
performance goals and measures in its annual performance plans. 
Because this information is based on the project baseline summaries,
the office's budget requests will link the amount of resources needed
with the expected level of performance and the related measures of
that performance by the program, field office, site, and individual
project involved.  The office also expects to evaluate performance at
these same organizational levels. 

Although this planned system may succeed in providing specific links
between the program's performance goals and required resources, we do
not know if it is directly transferrable to DOE's other programs.  As
it is currently constructed, the system is designed to work for
site-specific activities but may require some modification for
programs that carry out single missions at several sites.  For
example, while the Environmental Management program is primarily
measuring the individual performance of various sites, the Office of
Defense Programs' planning officials explained that the Stockpile
Stewardship and Management Program requires measuring the performance
of several sites working together to accomplish the program's goals. 


   DOE WAS LATE IN ESTABLISHING
   GOALS AND INCENTIVE FEES THAT
   LINK CONTRACTORS' PERFORMANCE
   TO DOE'S STRATEGIC GOALS
---------------------------------------------------------- Chapter 3:2

In 1994, DOE adopted performance-based management contracts as part
of its contract reform effort for the companies and universities that
manage its facilities.  While performance-based contracts can help
DOE implement the Results Act by translating annual program
performance goals into goals specific to particular contractors, the
Department did not reach closure with its contractors on their annual
goals and incentive fees before they began work under their contracts
for fiscal year 1998. 

In 1995, we reported that the contract for the Idaho National
Engineering and Environmental Laboratory, one of DOE's first
performance-based management contracts, was awarded without
performance goals and incentive fees being included.\4 In 1997, DOE's
Inspector General also reported that performance measures had not
been incorporated in the support contract for DOE's Nevada Operations
Office until after the fiscal year had started.  Specifically, the
Inspector General noted that

     "for two of the measures, the Department's requirements had not
     been established in advance of contractor performance.  .  .  . 
     As the fiscal year progressed, milestones were established that
     identified the work to be performed for Bechtel to earn its
     incentive fee.  However, many of the milestones were added after
     the work had already been accomplished by Bechtel."\5

The Inspector General concluded that

     "performance milestones established after the fact do not
     incentivize future contractor performance.  This practice
     created a retroactive, artificial basis to support the payment
     of contractor fees and was incompatible with the basic
     principles of performance-based contracting."

In light of the implementation and other problems identified by us,
DOE's Inspector General, and DOE's Office of Procurement and
Assistance Management, the Office of Procurement and Assistance
Management, on August 28, 1997, required all performance objectives
and associated incentive fees to be submitted to it for review and
approval prior to the start of negotiations with the contractor. 

DOE, in its performance-based management contracts, seeks to have
performance goals and incentive fees incorporated in the contracts by
the start of the fiscal year.  However, for 16 of the 20 contractors,
annual performance goal and incentive fee agreements were not
approved until after the fiscal year began on October 1, 1997.  Of
these 16, 6 were approved in November 1997, 3 were approved in
December 1997, 6 were approved in January 1998, and 1 was approved in
March 1998.  Several of the goal and incentive fee agreements were
resubmitted after the beginning of the fiscal year because of budget
uncertainties.  Table 3.1 lists the dates on which the Office of
Procurement and Assistance Management received the goals and
incentive fees for review from the contracting offices and the dates
on which it approved the plans so that negotiations could begin with
the contractors.\6



                               Table 3.1
                
                     Receipt and Approval Dates of
                  Performance-Based Incentives, Fiscal
                               Year 1998

                                     Received from         Approved by
Contract                                   field\a      headquarters\b
------------------------------  ------------------  ------------------
Kansas City Plant                          10/2/97            11/18/97
Waste Isolation Pilot Project              10/2/97            11/25/97
Strategic Petroleum Reserves               9/16/97            11/18/97
Pacific Northwest National                  9/5/97             1/23/98
 Laboratory
Richland Management and                   12/19/97             3/20/98
 Integrating Contractor
Richland Environmental                    12/11/97             1/23/98
 Restoration Management
 Contractor
Pantex Plant                               10/2/97            11/16/97
Lawrence Livermore National                9/24/97                  \c
 Laboratory
Lawrence Berkeley National                 9/24/97                  \c
 Laboratory
Los Alamos National Laboratory             9/24/97                  \c
Argonne National Laboratory                9/24/97             1/15/98
Fermi Laboratory                           9/24/97             1/15/98
National Civilian Radioactive              9/26/97                  \c
 Waste Program
Rocky Flats Environmental                 10/27/97            11/24/97
 Technology Site
Oak Ridge Reservation                     11/12/97              1/7/98
Fernald Site                               8/18/97            11/24/97
Mound Plant                                8/28/97            12/19/97
West Valley Project                         9/8/97              1/7/98
Savannah River Site                        10/7/97            12/15/97
Nevada Test Site                           8/26/97             12/2/97
----------------------------------------------------------------------
\a The date shown is the date that a contract's performance-based
incentives plan was initially received for review, regardless of the
adequacy or completeness of the plan. 

\b The date shown is the date that the Office of Procurement and
Assistance Management sent a letter to the contracting office
formally approving the plan. 

\c The performance objectives and associated fee structure were
submitted after they were incorporated into the contract. 
Accordingly, review was conducted for the purposes of providing
lessons learned for subsequent evaluation/performance periods. 

Source:  DOE's Office of Procurement and Assistance Management. 

Once the performance goals and incentive fees are approved,
additional time may be required to negotiate the final agreements
with the contractors.  For example, the fiscal year 1998 performance
goals and incentive fees for the Argonne National Laboratory contract
were approved on January 15, 1998.  However, the DOE contracting
office in Chicago did not plan to begin fee negotiations with the
contractor until late February 1998.  Similarly, the fiscal year 1998
performance goals and incentive fees for the Rocky Flats
Environmental Technology Site were approved on November 24, 1997. 
But after considerable negotiation, the Rocky Flats field office and
the contractor had not, as of February 5, 1998, reached final
agreement on the amount of incentive fees to be allocated to each
individual goal.  As a result of these delays, contractors were
performing fiscal year 1998 work before DOE finalized the approved
contractors' fiscal year 1998 annual performance goals and
incentives. 

DOE officials at the Chicago and Rocky Flats offices told us that the
Office of Procurement and Assistance Management's new review process
had contributed to the delays.  A Rocky Flats planning official also
noted that delays were attributable to his office's own efforts to
perfect the performance goals and incentive fees before submitting
them to headquarters for review and to the difficult negotiations his
office had with the contractor.  However, the Rocky Flats official
acknowledged that his office could improve its own planning process
and develop draft performance goals further in advance of receiving
its final appropriations. 


--------------------
\4 Federal Research:  Information on Fees for Selected Federally
Funded Research and Development Centers (GAO/RCED-96-31FS, Dec.  8,
1995). 

\5 Audit of the Contractor Incentive Program at the Nevada Operations
Office (DOE/IG-0412, Oct.  20, 1997). 

\6 For some contracts, the field offices actually began negotiations
with their contractors before the Office of Procurement and
Assistance Management issued its requirement on August 28, 1997, that
goals and incentive fees be submitted to it for review before
negotiations commenced. 


   CONCLUSIONS
---------------------------------------------------------- Chapter 3:3

The Congress, in passing the Results Act, intended to improve the
information that it receives from federal agencies for its policy-
and decision-making.  One of the Congress's goals was to get
information on the level of agency performance to be expected for the
amount of funds requested in the agency's budget request.  For fiscal
year 1999, DOE's annual performance plan did associate the funds
requested with its broad strategic goals.  However, if DOE explicitly
identified its requested budgetary resources with the performance
goals and measures in the annual performance plan, the Department
would provide the Congress with an enhanced understanding of the
budget requested to meet planned program results.  Although the
Office of Environmental Management's system for planning, budgeting,
and reporting is not yet in final form, we believe that it shows
promise in directly relating the required budgetary resources to
expected levels of performance.  This is an important and necessary
feature of any annual planning system. 

Moreover, incorporating performance goals and incentive fees in
performance-based management contracts after contractors have already
begun the work reduces the effectiveness of these contracts.  Because
these incentive fees are provided to enhance the contractors' efforts
to meet the specified goals, adding the goals and incentive fees to
contracts after work starts is contrary to the concepts of
performance-based contracting. 


   RECOMMENDATIONS
---------------------------------------------------------- Chapter 3:4

We recommend that the Secretary of Energy take the following actions: 

  -- Direct the Office of Strategic Planning, Budget and Program
     Evaluation to work with DOE's various programs to develop
     integrated management systems that directly link required
     budgetary resources to the level of performance that is
     identified in the annual performance plans. 

  -- Modify the agency's contracting process to ensure adequate time
     is available to incorporate performance goals and fees in
     contracts for the start of the fiscal year's work. 


   AGENCY COMMENTS
---------------------------------------------------------- Chapter 3:5

DOE generally agreed with our findings and recommendations and
provided comments to clarify its position.  DOE explained that it is
currently working on a "mapping" effort that will better show the
linkage of its annual performance plan to its budget request. 
Additionally, DOE stated that its ongoing efforts seek to implement
our recommendations. 


EXAMPLES OF STRATEGIC AND
MULTIYEAR PLANS
=========================================================== Appendix I

The plans listed in table I.1 were developed by organizations within
DOE and, like the departmental strategic plan, cover more than a
single year.  During our review, we noted that planning staff from
the various organizations referred to multiyear plans as strategic,
multiyear, operational, and implementing plans.  In some cases, staff
from the same organization used these different terms to refer to the
same document.  The table lists plans that we identified and may not
be an all-inclusive list of the plans at these DOE organizations. 



                                        Table I.1
                         
                         Strategic and Multiyear Plans Developed
                               by Various DOE Organizations

                    Strategic or
Office or facility  multiyear plan      Explanation of plan
------------------  ------------------  -------------------------------------------------
Office of Defense Programs organizations
-----------------------------------------------------------------------------------------
Office of Defense   Stockpile           This plan, referred to as the Green Book, is the
Programs            Stewardship and     office's strategic plan and is also referred to
                    Management Plan     as an implementation plan. It was released in
                                        1996 in response to the Department of Defense's
                                        concerns about the reliability of the nuclear
                                        stockpile. In 1997, section 3151 of the National
                                        Defense Authorization Act for Fiscal Year 1998
                                        required that such a plan be submitted to the
                                        Congress on an annual basis, no later than March
                                        15 each year.

Stockpile Life      Stockpile life      Now in draft form, this multiyear plan is being
Extension Program   extension program   developed to address concerns about an aging
                    draft plan          stockpile by defining current work and future
                    (currently being    requirements for the nuclear weapons complex.
                    developed)

Accelerated         ASCI Program Plan   Although the ASCI program is covered by the Green
Strategic                               Book, this multiyear plan further defines the
Computing                               ASCI program and, according to some DOE
Initiative (ASCI)                       officials, publicizes the program.


Office of Energy Research organizations
-----------------------------------------------------------------------------------------
Office of Energy    Energy Research     The Office of Energy Research was not formally
Research            Strategic Plan      required to develop this strategic plan but did
                    (August 1995)       so to support DOE's total quality management
                                        efforts. A replacement for this strategic plan is
                                        being developed at the request of the office's
                                        Director.

Office of Fusion    Strategic Plan for  The strategic plan was developed in response to
and Energy          the Restructured    the Conference Report accompanying the Energy and
Sciences            Fusion Energy       Water Development Appropriations Act of 1996.
                    Sciences Program    According to a DOE official, the report directed
                    (August 1996)       DOE, in cooperation with others, to prepare a
                                        strategic plan to implement a restructured fusion
                                        energy sciences program.

Office of Fusion    Strategic Plan for  According to a DOE official, the Office of Fusion
and Energy          International       and Energy Sciences is preparing this strategic
Sciences            Collaborations on   plan to respond to an FY 1998 House Science
                    Fusion Science and  Committee report (H. Rep. No. 105-67), which
                    Technology          requested an answer to the question, "What
                    Research            international collaborations will the fusion
                    (currently being    program pursue in the 1998-2001 time frame?"
                    developed)          Information developed by a working group of the
                                        fusion research community will serve as the
                                        technical basis for this plan.

Office of Fusion    Multiyear Program   This document is being prepared as part of the
and Energy          Plan                office's normal program management and oversight
Sciences            (currently being    responsibilities. It will be an implementation
                    developed)          plan that ties the program goals described in the
                                        Office of Fusion and Energy Sciences Strategic
                                        Plan to the actual work that will be done during
                                        the next 5 years.


Office of Environmental Management organizations
-----------------------------------------------------------------------------------------
Office of           Accelerating        Referred to as the National 2006 Plan, this plan
Environmental       Cleanup: Focus on   is the overall planning document for the office.
Management          2006                The plan, currently being developed, will include
                    (currently being    the long-term strategies for DOE's Environmental
                    developed)          Management program, but is expected to be
                                        continually revised.


Albuquerque Operations Office organizations
-----------------------------------------------------------------------------------------
Albuquerque         Strategic Plan      This plan was developed as a result of quality
Operations Office   Fiscal Year 1997    management and strategic planning initiatives.
                    Update


Sandia National     Institutional       The plan was required by DOE Order 5000.1B,
Laboratories        Plan, FY 1997-      Institutional Planning by Multiprogram
                    2002                Laboratories, which established DOE's policies
                                        regarding institutional planning for multiprogram
                                        laboratories.

Sandia National     Strategic Plan      Updated in 1996 to add new strategic objectives,
Laboratories        1994                this plan originated with Sandia's first
                                        strategic planning efforts in 1989.


Chicago Operations Office organizations
-----------------------------------------------------------------------------------------
Chicago Operations  Strategic Plan,     According to Chicago Operations Office officials,
Office              1996-2001 (July     they were not formally required to prepare this
                    1996)               plan, but did so to implement DOE's higher-level
                                        objectives. The plan focuses on the office's
                                        administrative and oversight responsibilities and
                                        does not address programmatic work done by the
                                        national laboratories within the office's
                                        jurisdiction. The plan is closely linked to the
                                        corporate management section of DOE's strategic
                                        plan. This plan also serves as a framework for
                                        the annual business plans required in the
                                        office's nine administrative groups.

Argonne National    Institutional       This plan was required by DOE Order 5000.1B,
Laboratory          Plan, FY 1998-      Institutional Planning by Multiprogram
                    2003 (July 1997)    Laboratories, which established DOE's policies
                                        regarding institutional planning for multiprogram
                                        laboratories. The Institutional Plan includes the
                                        Laboratory's Science and Technology Strategic
                                        Plan, which is supported by 22 planning units at
                                        the laboratory.


Oak Ridge Operations Office organizations
-----------------------------------------------------------------------------------------
Oak Ridge           Update of 1995      The office is currently updating its 1995
Operations Office   strategic plan      strategic plan as a result of a quality
                                        initiative.

Oak Ridge National  Institutional       This plan was required by DOE Order 5000.1B,
Laboratory          Plan, 1997-2002     Institutional Planning by Multiprogram
                    (October 1996)      Laboratories, which established DOE's policies
                                        regarding institutional planning for multiprogram
                                        laboratories.

Oak Ridge           Institutional       This plan was required by DOE Order 5000.1B,
Institute for       Plan, 1997-2002     Institutional Planning by Multiprogram
Science and         (December 1996)     Laboratories, which established DOE's policies
Education                               regarding institutional planning for multiprogram
contractor                              laboratories.

Thomas Jefferson    Institutional       This plan was required by DOE Order 5000.1B,
National            Plan, 1996-2002     Institutional Planning by Multiprogram
Accelerator         (May 23, 1996)      Laboratories, which established DOE's policies
Laboratory                              regarding institutional planning for multiprogram
                                        laboratories.

Lockheed-Martin     Lockheed-Martin     The plan was required internally. It includes a
                    Energy Systems      vision, business strategy, and objectives.
                    Strategic Plan


Rocky Flats Environmental Technology Site/Rocky Flats Field Office
-----------------------------------------------------------------------------------------
Rocky Flats         Final Rocky Flats   This is the tripartite agreement among DOE, the
Environmental       Cleanup Agreement   State of Colorado's Department of Public Health
Technology Site     (July 19, 1996)     and Environment, and the U.S. Environmental
                                        Protection Agency regarding the cleanup
                                        requirements at Rocky Flats. Although it was not
                                        written as a strategic plan, this document
                                        provides terms and conditions for strategic
                                        planning purposes. It also provides a vision and
                                        specific strategies and milestones on cleanup
                                        tasks during the multiyear process of closing the
                                        site.

Rocky Flats         Accelerating        The document was prepared to support DOE's Office
Environmental       Cleanup: Focus on   of Environmental Management's plan, Accelerating
Technology Site/    2006, discussion    Cleanup: Focus on 2006, discussion draft.
Rocky Flats Field   draft (June 1997)
Office

Rocky Flats         Accelerating        The Rocky Flats Field Office released this draft
Environmental       Cleanup: Path to    plan to synthesize existing strategic plans,
Technology Site/    Closure, Rocky      linking them with baseline, benchmark, and budget
Rocky Flats Field   Flats               documents, and then to provide a scenario for
Office              Environmental       DOE's long-term, continuing mission at the site.
                    Technology Site,
                    draft (February
                    1998)



Savannah River Operations Office organizations
-----------------------------------------------------------------------------------------
Savannah River      Strategic plan,     The plan was prepared for various reasons,
Operations Office   draft               including the Results Act, DOE strategic planning
                    (September 1997)    initiatives, and quality improvement initiatives.

Savannah River      Site strategic      The plan was prepared for the new direction and
Site                plan                strategic agenda defined by the Secretary of
                    (1994)              Energy and DOE's 1994 Strategic Plan.

Savannah River      Savannah River      The plan was prepared to support DOE's Office of
Operations          Accelerating        Environmental Management's plan, Accelerating
Office's            Cleanup: Focus on   Cleanup: Focus on 2006, discussion draft, June
Environmental       2006                1997.
Management Program  (June 1997)

Savannah River      Savannah River      The plan was prepared to provide direction to the
Operations          Environmental       Savannah River Site's environmental restoration
Office's            Restoration         program.
Environmental       Program Strategic
Restoration         Plan (1997)
Program


Energy Information Administration
-----------------------------------------------------------------------------------------
Energy Information  1998-2002           This plan was prepared to meet the internal needs
Administration      Strategic Plan      of the administration.
                    (1997)
-----------------------------------------------------------------------------------------



(See figure in printed edition.)Appendix II
COMMENTS FROM THE DEPARTMENT OF
ENERGY
=========================================================== Appendix I



(See figure in printed edition.)


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================= Appendix III

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION

Jeffrey E.  Heil, Assistant Director
Robert M.  Antonio
Robert E.  Sanchez
Linda Chu
Gene M.  Barnes
Gary M.  Malavenda
Leslie Albin

OFFICE OF THE GENERAL COUNSEL

Kathleen A.  Gilhooly

RELATED GAO PRODUCTS

Managing for Results:  Agencies' Annual Performance Plans Can Help
Address Strategic Planning Challenges (GAO/GGD-98-44, Jan.  30,
1998). 

Results Act:  Observations on the Energy Information Administration's
September 1997 Strategic Plan (GAO/RCED-98-66R, Jan.  27, 1998). 

Federal Management:  Overview of Major Management Issues Facing
Executive Agencies (GAO/OCG-98-1R, Jan.  1998). 

Results Act:  Observations of the Department of Energy's August 15,
1997, Draft Strategic Plan (GAO/RCED-97-248R, Sept.  2, 1997). 

Results Act:  Observations on the Department of Energy's Draft
Strategic Plan (GAO/RCED-97-199R, July 11, 1997). 

Department of Energy:  Contract Reform Is Progressing, but Full
Implementation Will Take Years (GAO/RCED-97-18, Dec.  10, 1996). 


*** End of document. ***