Results Act: Observations on the Department of Transportation's Fiscal
Year 2000 Performance Plan (Letter Report, 05/07/99, GAO/RCED-99-153).

Pursuant to a congressional request, GAO provided information on the
Department of Transportation's (DOT) performance plan for fiscal year
(FY) 2000, focusing on: (1) the usefulness of DOT's plan in providing a
clear picture of intended performance across the Department; (2) the
strategies and resources that DOT will use to achieve its goals; and (3)
whether DOT's performance information will be credible.

GAO noted that: (1) overall, DOT's performance plan for FY 2000 should
be a useful tool for decisionmakers; (2) it provides a clear picture of
intended performance across the Department, a specific discussion of the
strategies and resources that the Department will use to achieve its
goals, and general confidence that the Department's performance
information will be credible; (3) DOT's FY 2000 performance plan
represents a moderate improvement over the FY 1999 plan in that it
indicates some degree of progress in addressing the weaknesses that GAO
identified in an assessment of the FY 1999 plan; (4) GAO observed that
the FY 1999 plan did not: (a) sufficiently address management challenges
facing the Department; (b) consistently link strategic goals, program
activities, and performance goals; (c) indicate interagency coordination
for crosscutting areas; or (d) provide sufficient information on
external factors, the processes and resources for achieving the goals,
and the performance data; (5) among the improvements in the FY 2000 plan
are more consistent linkages among the program activities and
performance goals, additional information on external factors and
strategies for achieving the goals, and a more comprehensive discussion
of the data's quality; (6) these improvements and other activities
indicate that DOT has clearly made good progress in implementing
performance-based management; (7) for example, the plan indicates that
the Department is incorporating the performance goals into performance
agreements between the administrators of DOT's agencies and the
Secretary; (8) however, the plan still needs further improvement,
especially in explaining how certain management challenges, such as
financial management weaknesses, will be addressed; (9) for example,
DOT's Office of Inspector General (OIG) reported that the Department's
accounting system could not be used as the only source of financial
information to prepare its financial statements; (10) while the FY 2000
plan does not address this issue, the Department has recognized the
financial reporting deficiencies identified by the OIG and is taking
actions to correct them; and (11) the lack of accountability for
financial activities is a key challenge that DOT faces in implementing
performance-based management.

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

 REPORTNUM:  RCED-99-153
     TITLE:  Results Act: Observations on the Department of
	     Transportation's Fiscal Year 2000 Performance Plan
      DATE:  05/07/99
   SUBJECT:  Agency missions
	     Accountability
	     Interagency relations
	     Performance measures
	     Data integrity
	     Strategic planning
	     Reporting requirements
	     Financial management
IDENTIFIER:  FAA Airport Safety Data Program
	     GPRA
	     Government Performance and Results Act

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RESULTS ACT: Observations on the Department of Transportation's
Fiscal Year 2000 Performance Plan GAO/RCED-99-153 United States
General Accounting Office

GAO Report to Congressional Requesters

May 1999 RESULTS ACT Observations on the Department of
Transportation's Fiscal Year 2000 Performance Plan

GAO/RCED-99-153

  GAO/RCED-99-153

GAO United States General Accounting Office

Washington, D. C. 20548 Resources, Community, and Economic
Development Division

B-282558 May 7, 1999 Congressional Requesters Under the Government
Performance and Results Act of 1993 (the Results Act), federal
agencies prepare annual performance plans covering the program
activities set out in their budgets. You asked us to summarize our
observations on the Department of Transportation's (DOT)
performance plan for fiscal year 2000 to facilitate your review of
the plan, which was submitted to the Congress in February 1999.
This report provides information on the usefulness of DOT's plan
for decision- making in terms of (1) providing a clear picture of
intended performance across the Department, (2) discussing the
strategies and resources that DOT will use to achieve its goals,
and (3) providing confidence that the performance information will
be credible. For each of these areas, we also provide information
on the degree to which DOT's fiscal year 2000 performance plan
represents an improvement over the fiscal year 1999 plan. In
addition, this report provides observations on the extent to which
the Department has implemented performance- based management and
the challenges the Department faces in becoming performance-
based.

Results in Brief Overall, DOT's performance plan for fiscal year
2000 should be a useful tool for decisionmakers. It provides a
clear picture of intended performance

across the Department, a specific discussion of the strategies and
resources that the Department will use to achieve its goals, and
general confidence that the Department's performance information
will be credible. For example, the performance goal for reducing
recreational boating fatalities from 819 in fiscal year 1997 to
720 or fewer in fiscal year 2000 will be accomplished by
activities of several U. S. Coast Guard programs boating safety
grants provided to the states, regulations developed by the
Recreational Boating Safety program, and boat inspections
conducted by the Coast Guard auxiliary. Figure 1 highlights the
plan's major strengths and key weaknesses as DOT seeks to make
additional improvements to its plan.

GAO/RCED-99-153 DOT's Fiscal Year 2000 Performance Plan Page 1

B-282558

Figure 1: Major Strengths and Key Weaknesses of DOT's Fiscal Year
2000 Performance Plan Major strengths

Contains results- oriented goals and quantifiable measures.
Discusses strategies and resources for achieving intended
performance. Describes efforts to verify and validate performance
data and the data's limitations.

Key weaknesses

Does not consistently link the strategic outcomes to the
performance goals. Does not consistently explain coordination
strategies with outside organizations. Does not consistently
include goals and measures for addressing the management
challenges facing the Department.

DOT's fiscal year 2000 performance plan represents a moderate
improvement over the fiscal year 1999 plan in that it indicates
some degree of progress in addressing the weaknesses that we
identified in our assessment of the fiscal year 1999 plan. We
observed that the fiscal year 1999 plan did not (1) sufficiently
address management challenges facing the Department; (2)
consistently link strategic goals, program activities, and
performance goals; (3) indicate interagency coordination for
crosscutting areas; or (4) provide sufficient information on
external factors, the processes and resources for achieving the
goals, and the performance data. Among the improvements in the
fiscal year 2000 plan are more consistent linkages among the
program activities and performance goals, additional information
on external factors and strategies for achieving the goals, and a
more comprehensive discussion of the data's quality. These
improvements and other activities indicate that DOT has clearly
made good progress in implementing performance- based management.
For example, the plan indicates that the Department is
incorporating the performance goals into performance agreements
between the administrators of DOT's agencies and the Secretary.
However, the plan still needs further improvement, especially in
explaining how certain management challenges, such as financial
management weaknesses, will be addressed. For example, DOT's
Office of Inspector General (OIG) reported that the Department's
accounting system could not be used as the only source of
financial information to prepare its financial statements. While
the fiscal year 2000 plan does not address this issue, the
Department has recognized the financial reporting deficiencies
identified by the OIG and is taking actions to correct them. The
lack of accountability for financial activities is a key challenge
that DOT faces in implementing performance- based management.

GAO/RCED-99-153 DOT's Fiscal Year 2000 Performance Plan Page 2

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Background The Results Act requires annual performance plans to
cover each program activity set out in the agencies' budgets. The
act requires the plans to

(1) establish performance goals to define the level of performance
to be achieved by a program activity; (2) express such goals in an
objective, quantifiable, and measurable form; (3) briefly describe
the strategies and resources required to meet performance goals;
(4) establish performance indicators to be used in measuring or
assessing the relevant outputs, service levels, and outcomes of
each program activity; (5) provide a basis for comparing actual
results with the performance goals; and (6) describe the means to
verify and validate information used to report on performance. DOT
submitted to the Congress performance plans for fiscal years 1999
and 2000.

DOT's Performance Plan Provides a Clear Picture of Intended
Performance Across the Department

DOT's performance plan provides a clear statement of the
performance goals and measures that address program results.
Program goals and measures are expressed in a quantifiable and
measurable manner and define the levels of performance. However,
the plan could be improved by consistently linking the performance
goals and strategic outcomes and consistently describing
interagency coordination for crosscutting programs and the
Department's contribution to these programs. In addition, the plan
could be improved by consistently describing how the management
challenges facing the Department will be addressed, including how
the Department will address certain financial management
challenges identified by its OIG.

Performance Goals and Measures

DOT's plan includes performance goals and measures that address
program results and the important dimensions of program
performance. The goals and measures define the level of
performance and activities for specific programs. For example, the
performance goal for reducing recreational boating fatalities from
819 in fiscal year 1997 to 720 or fewer in fiscal year 2000 will
be accomplished by the core activities of several U. S. Coast
Guard programs boating safety grants provided to the states,
regulations developed by the Recreational Boating Safety program,
and boat inspections conducted by the Coast Guard auxiliary.

The plan's goals and measures are objective, quantifiable, and
measurable. For all except a few performance goals, DOT's plan
includes projected target levels of performance for fiscal year
2000; for several goals, the plan includes multiyear targets. For
goals that have no targets, an appendix to the plan explains why a
target was not included. For nearly all of the goals

GAO/RCED-99-153 DOT's Fiscal Year 2000 Performance Plan Page 3

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and measures, the plan includes graphs that show baseline and
trend data as well as the targets for fiscal years 1999 and 2000.
The graphs clearly indicate trends and provide a basis for
comparing actual program results with the established performance
goals. For example, the performance goal for hazardous materials
incidents has a graph that shows the number of serious hazardous
materials incidents in transportation from 1985 through 1997. The
graph also includes target levels for fiscal years 1999 and 2000
so a reader can conclude that this goal is not new in the fiscal
year 2000 plan. If only a fiscal year 2000 target is indicated on
a graph, the reader can assume that this is a new goal; however,
this point is not explicit. The plan could be improved by
indicating new goals that do not have a counterpart in the
previous version.

In addition, the plan includes performance goals to resolve a few
mission- critical management challenges identified by us and/ or
DOT's OIG. 1 (See app. I.) For example, we reported that the
Federal Aviation Administration (FAA) had encountered delays in
implementing security initiatives at airports. The plan includes a
performance goal to increase the detection rate of explosive
devices and weapons that may be brought aboard aircraft, which
will help measure progress in implementing the security
initiatives. However, for the majority of the management
challenges that have been identified, the plan does not include
goals and measures. For example, the plan lists several activities
to address problems with FAA's $41 billion air traffic control
modernization program, which since 1995 we have identified as a
high- risk information technology initiative. The plan could be
improved by consistently including goals and specific measures for
addressing the challenges.

In addition, the plan could be improved by more fully explaining
how the Department will address certain financial management
challenges identified by the OIG. For example, the OIG reported
that the Department's accounting system could not be used as the
only source of financial information to prepare its financial
statements. The fiscal year 2000 plan does not address this issue.
Additionally, we question whether the plan includes the most
current or complete milestones for solving long- standing
financial management weaknesses. For example, the plan states that
in fiscal year 1999, FAA's new cost accounting system will capture
financial information by project and activity for all of FAA's
projects. However, according to FAA's fiscal year 1998 audit
report, the cost accounting system

1 See our report entitled Major Management Challenges and Program
Risks: Department of Transportation (GAO/OCG-99-13, Jan. 1999) and
DOT OIG's report entitled Top Ten Management Issues: Department of
Transportation (TW- 1999- 031, Dec. 9, 1998).

GAO/RCED-99-153 DOT's Fiscal Year 2000 Performance Plan Page 4

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that was scheduled to be operational by October 1, 1998, will not
be fully implemented until March 31, 2001.

Strategic Outcomes DOT's plan includes strategic outcomes for each
of the Department's five strategic goals. 2 For example, for the
strategic goal of safety, the Department aims to achieve six
strategic outcomes such as reducing the number of transportation-
related deaths, the number and severity of transportation- related
injuries, and the number of reportable transportation incidents
and their related economic costs. The plan then lists specific
annual performance goals that the Department will use to gauge its
progress. However, in a few cases, the strategic outcomes have no
related annual performance goals. For example, a strategic outcome
related to mobility to provide preventative measures and
expeditious responses to natural and man- made disasters in
partnership with other agencies to ensure that the Department
provides for the rapid recovery of the transportation system
cannot be logically linked to any annual performance goals. The
plan could be improved by including at least one annual
performance goal for each strategic outcome.

Crosscutting Programs For each performance goal, the plan
typically mentions those federal agencies that have outcomes in
common with the Department. The plan also indicates goals and
measures that are being mutually undertaken to support
crosscutting programs. For example, the plan states that both FAA
and the National Aeronautics and Space Administration (NASA) have
complementary performance goals to decrease by 80 percent the rate
of aviation fatalities by the year 2007. However, the plan could
be improved by describing the nature of the coordination and
consistently discussing the Department's contribution to the
crosscutting programs. The plan does not discuss the roles played
by FAA and NASA and how their partnership will help reduce the
rate of aviation fatalities.

Comparison With the Fiscal Year 1999 Plan

The discussion of performance goals and measures in DOT's fiscal
year 2000 performance plan is a moderate improvement over the
discussion in the fiscal year 1999 performance plan and shows some
degree of progress in addressing the weaknesses that we identified
in the fiscal year 1999 plan. We observed that the fiscal year
1999 plan could have been improved by (1) explaining how the
management challenges are related to the rest of

2 DOT has five strategic goals relating to safety, mobility,
economic growth and trade, the human and natural environment, and
national security.

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the performance plan and by including goals and specific measures
for addressing the challenges; (2) consistently linking strategic
goals, program activities, and performance goals; and (3)
indicating interagency coordination for the crosscutting programs
and consistently discussing the Department's contribution to these
programs. Among the improvements, the fiscal year 2000 plan
describes the management challenges facing the Department,
explains activities that will be undertaken to address them, and
provides page citations for specific performance goals that
address the challenges discussed elsewhere in the plan.

DOT's Performance Plan Provides a Specific Discussion of the
Strategies and Resources the Department Will Use to Achieve Its
Goals

DOT's plan provides a specific discussion of the strategies and
resources that the Department will use to achieve its performance
goals. The plan covers each program activity in the Department's
$51 billion proposed budget for fiscal year 2000. An appendix to
the performance plan lists the Department's program activities and
proposed funding levels by strategic goal. These funds are also
mentioned in the discussions of strategic goals in the body of the
plan.

For each performance goal, the plan lists an overall strategy for
achieving it, as well as specific activities and initiatives. For
example, DOT expects to increase transit ridership through
investments in transit infrastructure, financial assistance to
metropolitan planning organizations and state departments of
transportation for planning activities, research on improving
train control systems, and fleet management to provide more
customer service.

However, our work has identified problems associated with some
strategies. The plan identifies the rehabilitation of
approximately 200 airport runways in the year 2000 as one of the
activities contributing to the performance goal concerning the
condition of runway pavement. We reported that there is a lack of
information identifying the point at which rehabilitation or
maintenance of pavement can be done before relatively rapid
deterioration sets in. As a result, FAA is not in a position to
determine which projects are being proposed at the most economical
time. 3 We have also reported on strategies for addressing the
performance goal of reducing the rate of crashes at rail- grade
crossings, some of which are included in the performance plan. For
example, the plan addresses two strategies noted in our report
closing more railroad crossings and

3 See Airfield Pavement: Keeping Nation's Runways in Good
Condition Could Require Substantially Higher Spending (GAO/RCED-
98-226, July 31, 1998).

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developing education and law enforcement programs but does not
address the installation of new technologies. 4

For each performance goal, the plan also describes external
factors, called special challenges, that can affect the
Department's ability to accomplish the goal. For example, the
performance goal for passenger vessel safety includes the external
factors of (1) the remote and unforgiving environment at sea and
human factors, which play an important role in maritime accidents;
(2) the complexity of the operation and maintenance of passenger
vessels; and (3) foreign and international standards that apply to
vessels. The plan describes how particular programs, such as the
marine safety program, will contribute to reducing the number of
casualties associated with high- risk passenger vessels. The plan
also indicates activities to address the external factors,
including conducting oversight of technologically advanced
vessels, such as high- speed ferries, and implementing and
marketing the International Safety Management Code.

In discussing corporate management strategies, the plan briefly
describes how the Department plans to build, maintain, and marshal
the resources, such as human capital, needed to achieve results
and greater efficiency in departmental operations. The corporate
strategies are broadly linked to the strategic goals. For example,
the plan states that the human resource management strategy
supports the strategic goals by ensuring that DOT's workforce has
the required skills and competencies to support program
challenges. The plan lists four key factors that will contribute
to this corporate strategy: workforce planning that will identify
the need for key occupations; managing diversity; learning and
development activities to support employees' professional growth;
and redesigning human resource management programs, such as
personnel and payroll processing.

In some cases, the plan lists specific programs under the
corporate strategies but does not consistently identify the
resources associated with them. For example, the plan discusses
the completion of all remediation or appropriate contingency plans
to make the computer systems ready for the year 2000 so that there
are no critical system disruptions. However, there is no
discussion of the resources needed to support this strategy.

The discussion of strategies and resources in DOT's fiscal year
2000 performance plan is much improved over the fiscal year 1999
plan. We

4 See Railroad Safety: DOT Faces Challenges in Improving Grade
Crossing Safety, Track Inspection Standards, and Passenger Car
Safety (GAO/T-RCED-96-114, Apr. 1, 1996).

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observed that the fiscal year 1999 plan generally did a good job
of discussing the Department's strategies and resources for
accomplishing its goals. However, we noted that the plan could
have been improved in several ways, such as by more clearly
describing the processes and resources required to meet the
performance goals and recognizing additional external factors such
as demographic and economic trends that could affect the
Department's ability to meet its goals. DOT's fiscal year 2000
plan contains such information.

DOT's Performance Plan Provides General Confidence That the
Performance Information Will Be Credible

The Department's fiscal year 2000 performance plan generally
provides a clear and comprehensive discussion of the performance
information. The plan discusses the quality control procedures for
verifying and validating data, which, it says, DOT managers follow
as part of their daily activities, as well as an overall
limitation to DOT's data a lack of timeliness and how the
Department plans to compensate for this problem. In addition, for
each performance measure, the plan provides a definition of the
measure, data limitations and their implications for assessing
performance, procedures to verify and validate data, the source
database, and the baseline measure or a reason why such
information is missing. For example, the plan defines the
performance measure for maritime oil spills the gallons spilled
per million gallons shipped as counting only spills of less than 1
million gallons from regulated vessels and waterfront facilities
and not counting other spills. The plan further explains that a
limitation to the data is that they may underreport the amount
spilled because they exclude nonregulated sources and major oil
spills. However, the plan explains that large oil spills are
excluded because they occur rarely, and, when they do occur, they
would have an inordinate influence on statistical trends. The plan
also explains that measuring only spills from regulated sources is
more meaningful for program management.

However, in some cases, we found additional problems with DOT's
data systems that could limit the Department's ability to assess
performance. For example, the performance measure for runway
pavement condition the percentage of runway pavements in good or
fair condition is collected under FAA's Airport Safety Data
Program. We reported that this information provides only a general
pavement assessment for all runways. This information is designed
to inform airport users of the overall conditions of the airports,
not to serve as a pavement management tool. We further noted that
these assessments are made by safety inspectors who receive little
training in how to examine pavement

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conditions. 5 The performance plan acknowledges our concerns and
states that FAA will update its guidance for inspecting and
reporting the condition of runway pavement and will ensure that
inspectors are aware of the guidance. However, as of March 1999,
FAA had not updated its guidance for inspectors. According to the
National Association of State Aviation Officials, which is under
contract to FAA to conduct inspections and provide data on runway
conditions, new guidance would require additional training for all
inspectors, which is not provided for in the contract. In
addition, we discuss problems with DOT's financial management
information later in this report.

The discussion of data issues in DOT's fiscal year 2000
performance plan is much improved over that in the fiscal year
1999 plan and is well on its way to addressing the weaknesses that
we identified in the fiscal year 1999 plan. We observed that the
fiscal year 1999 plan provided a general discussion of procedures
to verify and validate data, which was not linked to specific
measures in the plan. For most measures, information about the
data's quality was lacking. Among the improvements in the fiscal
year 2000 plan is detailed information about each performance
measure, which includes information on verification, validation,
and limitations.

Other Observations on DOT's Implementation of Performance- Based
Management

DOT is making good progress in setting results- oriented goals,
developing measures to show progress, and establishing strategies
to achieve those goals. However, the Department's progress in
implementing performance- based management is impeded primarily by
the lack of adequate financial management information.

Progress in Implementing Performance- Based Management

DOT has clearly made good progress in implementing performance-
based management. The Department's September 1997 strategic plan
and performance plan for fiscal year 1999 were both considered
among the best in the federal government. And, as discussed in
this report, DOT's fiscal year 2000 performance plan improves upon
the fiscal year 1999 plan. Furthermore, our work has shown that
prior to these Department- wide efforts, several of DOT's agencies
made notable efforts in becoming performance- based.

5 See Airfield Pavement: Keeping Nation's Runways in Good
Condition Could Require Substantially Higher Spending (GAO/RCED-
98-226, July 31, 1998).

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For example, in reviewing programs designated as pilots under the
Results Act, we noted the successful progress of the Coast Guard's
marine safety program. We reported that the Coast Guard's pilot
program became more performance- based, changing its focus from
outputs (such as the number of vessel inspections) to outcomes
(saving lives). The Coast Guard's data on marine casualties
indicated that accidents were often caused by human error not by
deficiencies in the vessels. Putting this information to use, the
Coast Guard shifted its resources and realigned its processes away
from inspections and toward other efforts to reduce marine
casualties. We reported that the marine safety program not only
improved its mission effectiveness for example, the fatality rate
in the towing industry declined significantly but did so with
fewer people and at lower cost. 6

Additionally, in 1997, we cited the National Highway Traffic
Safety Administration (NHTSA) as a good example of an agency that
was improving the usefulness of performance information. 7 The
agency's fiscal year 1994 pilot performance report provided useful
information by discussing the sources and, in some cases, the
limitations of its performance data. In 1998, we again cited NHTSA
as a good example of an agency that was developing performance
measures for outcome goals that are influenced by external
factors. 8 Additionally, in 1997, we reported that the Federal
Railroad Administration had shifted its safety program to focus on
results reducing railroad accidents, fatalities, and injuries
rather than the number of inspections and enforcement actions. 9

The fiscal year 2000 performance plan indicates that the
Department is taking further steps to instill performance- based
management into its daily operations. According to the plan, DOT
has incorporated all of its fiscal year 1999 performance goals
into performance agreements between the administrators of DOT's
agencies and the Secretary. At monthly meetings with the Deputy
Secretary, the administrators are expected to report progress
toward meeting these goals and program adjustments that may be
undertaken throughout the year.

6 Executive Guide: Effectively Implementing the Government
Performance and Results Act (GAO/GGD-96-118, June 1996). 7 The
Government Performance and Results Act: 1997 Governmentwide
Implementation Will Be Uneven (GAO/GGD-97-109, June 2, 1997). 8
Managing for Results: Measuring Program Results That Are Under
Limited Federal Control (GAO/GGD-99-16, Dec. 11, 1998). 9 Rail
Transportation: Federal Railroad Administration's New Approach to
Railroad Safety (GAO/RCED-97-142, July 23, 1997).

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Finally, some individual agencies in DOT have developed
performance information that includes leading indicators
associated with the Department- wide goals. For example, the
Department's fiscal year 2000 budget submission for FAA's
facilities and equipment includes 10 performance goals such as
reducing the rate of accidents or incidents in which an aircraft
leaves the pavement related to reducing the fatal accident rate
for commercial air carriers. According to DOT's performance plan,
such indicators will be used to help assess the results of DOT's
programs and provide a basis for redirecting them.

Challenges in Implementing Performance- Based Management

A key challenge that DOT faces in implementing performance- based
management is the lack of accountability for its financial
activities. In fact, serious accounting and financial reporting
weaknesses at FAA led us to designate FAA's financial management
as a high- risk area. From an overall perspective, DOT's
accounting information system does not provide reliable
information about the Department's financial performance. DOT's
OIG has consistently reported that it has been unable to express
an opinion on the reliability of DOT's financial statements
because of, among other things, problems in the Department's
accounting system. Although the fiscal year 1998 audit report
stated that FAA is making significant progress, it cited
deficiencies that include inaccurate general ledger balances and
unreconciled discrepancies between the general ledger balances
maintained in FAA's accounting system and subsidiary records. The
OIG also cited problems with the Department's accounting systems
that prevented the systems from complying with the requirements of
the Federal Financial Management Improvement Act of 1996. The OIG
concluded that for the Department's systems to comply with the
requirements of the act, the Department needs, among other things,
to modify its accounting system so that it is the only source of
financial information for the consolidated financial statements.
Concerns have also been expressed by the OIG about the number and
total dollar amount of adjusting entries made outside the
accounting system to prepare the financial statements. For
example, FAA made 349 adjustments to its accounting records, which
totaled $51 billion, in the process of manually preparing its
fiscal year 1998 financial statement.

DOT is taking actions to correct the financial reporting
deficiencies that were identified by the OIG. On September 30,
1998, the Department submitted to the Office of Management and
Budget (OMB) a plan that identified actions by DOT, especially FAA
and the Coast Guard, to correct the weaknesses reported in the
OIG's audits. For example, the plan called

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for DOT to complete physical counts of and develop appropriate
support for the valuation of property, plant, equipment, and
inventory at FAA and the Coast Guard.

Furthermore, the Department's ability to implement performance
management is limited by the lack of a reliable cost accounting
system or an alternative means to accumulate costs. As a result,
DOT's financial reports (1) may not be capturing the full cost of
specific projects and activities and (2) may lack a reliable
Statement of Net Cost, which includes functional cost allocations.
The lack of cost accounting information also limits the
Department's ability to make effective decisions about resource
needs and to adequately control the costs of major projects, such
as FAA's $41 billion air traffic control modernization program.
For example, without good cost accounting information, FAA cannot
reliably measure the actual costs of its modernization program
against established baselines, which impedes its ability to
effectively estimate future costs. Finally, the lack of reliable
cost information limits DOT's ability to evaluate performance in
terms of efficiency and effectiveness, as called for by the
Results Act.

Agency Comments We provided the Department of Transportation (DOT)
with the information contained in this report for review and
comment. The Department stated

that it appreciated our favorable review of its fiscal year 2000
performance plan and indicated that it had put much work into
improving on the fiscal year 1999 plan by addressing our comments
on that plan. DOT made several suggestions to clarify the
discussion of its financial accounting system, which we
incorporated. The Department acknowledged that work remains to be
done to improve its financial accounting system and stated that it
has established plans to do this. DOT also acknowledged the more
general need for good data systems to implement the Results Act
and indicated that it is working to enhance those systems.

Scope and Methodology

To assess the plan's usefulness for decisionmakers and maintain
consistency with our approach in reviewing the fiscal year 1999
performance plan, we used criteria from our guide on performance
goals and measures, strategies and resources, and verification and
validation. 10 This guide was developed from the Results Act's
requirements for annual performance plans; guidelines contained in
OMB Circular No. A- 11, part 2;

10 The Results Act: An Evaluator's Guide to Assessing Agency
Annual Performance Plans, Version 1 (GAO/ GGD- 10.1.20, Apr.
1998).

GAO/RCED-99-153 DOT's Fiscal Year 2000 Performance Plan Page 12

B-282558

and other relevant documents. The criteria were supplemented by
our report entitled Agency Performance Plans: Examples of
Practices That Can Improve Usefulness to Decisionmakers (GAO/ GGD/
AIMD- 99- 69, Feb. 26, 1999), which builds on the opportunities
for improvement that we identified in the fiscal year 1999
performance plans. 11 In addition, we relied on our knowledge of
DOT's operations and programs from our numerous reviews of the
Department. To determine whether the performance plan covered the
program activities set out in DOT's budget, we compared the plan
with the President's fiscal year 2000 budget request for DOT. To
determine whether the plan covered mission- critical management
issues, we assessed whether the plan included goals, measures, or
strategies to address major management challenges identified by us
or the OIG. 12 To identify the degree of improvement over the
fiscal year 1999 plan, we compared the fiscal year 2000 plan with
our observations on the previous plan. 13 We performed our review
in accordance with generally accepted government auditing
standards from February through April 1999.

We are providing the Honorable Rodney E. Slater, Secretary of
Transportation, and the Honorable Jacob J. Lew, Director, OMB,
with copies of this report. We will make copies available to
others on request. If you or your staff have any questions about
this report, please call me at (202) 512- 2834. Major contributors
to this report are listed in appendix II.

Phyllis F. Scheinberg Associate Director,

Transportation Issues 11 Managing for Results: An Agenda to
Improve the Usefulness of Agencies' Annual Performance Plans (GAO/
GGD/ AIMD- 98- 228, Sept. 8, 1998). 12 See Major Management
Challenges and Program Risks: Department of Transportation
(GAO/OCG-99-13, Jan. 1999) and DOT OIG's report entitled Top Ten
Management Issues: Department of Transportation (TW- 1999- 031,
Dec. 9, 1998).

13 Results Act: Observations on the Department of Transportation's
Annual Performance Plan for Fiscal Year 1999 (GAO/RCED-98-180R,
May 12, 1998).

GAO/RCED-99-153 DOT's Fiscal Year 2000 Performance Plan Page 13

B-282558

List of Congressional Requesters The Honorable Richard K. Armey
Majority Leader House of Representatives

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

The Honorable Fred Thompson Chairman, Committee on Governmental
Affairs United States Senate

The Honorable Richard C. Shelby Chairman, Subcommittee on
Transportation Committee on Appropriations United States Senate

The Honorable John McCain Chairman The Honorable Ernest F.
Hollings Ranking Minority Member Committee on Commerce,

Science, and Transportation United States Senate

The Honorable Frank R. Wolf Chairman, Subcommittee on
Transportation Committee on Appropriations House of
Representatives

The Honorable Bud Shuster Chairman The Honorable James L. Oberstar
Ranking Democratic Member Committee on Transportation

and Infrastructure House of Representatives

GAO/RCED-99-153 DOT's Fiscal Year 2000 Performance Plan Page 14

GAO/RCED-99-153 DOT's Fiscal Year 2000 Performance Plan Page 15

Appendix I Management Challenges

In January 1999, we reported on major performance and management
challenges that have limited the effectiveness of the Department
of Transportation (DOT) in carrying out its mission. 14 In
December 1998, the Department's Office of Inspector General (OIG)
issued a similar report on the Department. 15 Table I. 1 lists the
issues covered in those two reports and the applicable goals and
measures in the fiscal year 2000 performance plan.

Table I. 1: Management Challenges at DOT Management challenge
Applicable goals and measures in the fiscal year 2000

performance plan

Acquisition of major aviation and U. S. Coast Guard systems lacks
adequate management and planning.

The Federal Aviation Administration's (FAA) $41 billion air
traffic control modernization program has experienced cost
overruns, delays, and performance shortfalls.

The Coast Guard needs to more thoroughly address the justification
and affordability of its $9.8 billion project to replace/
modernize its ships and aircraft.

(DOT's OIG also identified air traffic control modernization as a
top priority management issue.)

None. The plan, however, acknowledges that air traffic control
modernization is a management issue that needs to be addressed.
Furthermore, the plan states that DOT has formulated activities to
address this issue.

The plan also identifies the Coast Guard's acquisition project as
a management issue and describes activities to address it.

Important challenges remain in resolving FAA's Year 2000 risks.
(The OIG also identified this area as a management issue.)

None. However, the plan's corporate management strategies include
an objective to complete all Year 2000 remediation or contingency
plans so that there are no critical system disruptions.

In addition, the plan states that the Year 2000 issue is a
management challenge that needs to be addressed and identifies
activities and milestones for addressing it.

FAA and the nation's airports face funding uncertainties. DOT and
the Congress face a challenge in reaching agreement on the amount
and source of long- term financing for FAA and airports.

(The OIG also identified this area as a management issue.) None.
However, the plan identifies financing for FAA's

activities as a major issue that the Department, the Congress, and
the aviation community need to address. The plan also lists
activities that FAA is undertaking to develop the information
needed to make financing decisions.

(continued)

14 Major Management Challenges and Program Risks: Department of
Transportation (GAO/OCG-99-13, Jan. 1999). 15 Top Ten Management
Issues: Department of Transportation (TW- 1999- 031, Dec. 9,
1998).

GAO/RCED-99-153 DOT's Fiscal Year 2000 Performance Plan Page 16

Appendix I Management Challenges

Management challenge Applicable goals and measures in the fiscal
year 2000 performance plan

Aviation safety and security programs need strengthening.
Shortcomings in aviation safety programs include the need for FAA
to improve its oversight of the aviation industry, record complete
information on inspections and enforcement actions, provide
consistent information and adequate training for users of weather
information, and resolve data protection issues to enhance the
proactive use of recorded flight data to prevent accidents.

FAA has encountered delays in implementing security initiatives at
airports. Completing the initiatives will require additional
funding and sustained commitment from FAA and the aviation
industry.

FAA's computer security of its air traffic control systems is
weak. (The OIG also identified aviation safety and transportation
security as management issues.)

The plan includes performance goals to reduce the fatal aviation
accident rate for commercial air carriers and general aviation,

reduce the number of runway incursions, a reduce the rate of
operational errors and deviations, b increase the detection rate
for explosive devices and weapons that may be brought aboard
aircraft, and

get threat information to those who need to act within 24 hours.

In addition, the plan's corporate management strategies include
objectives to

conduct vulnerability assessments on all new information
technology systems to be deployed in fiscal year 2001 that fall
under the purview of Presidential Decision Directive 63 c and

ensure that all DOT employees receive or have received general
security awareness training in fiscal years 1999 or 2000 and that
60 percent of the systems administrators receive specialized
security training by September 30, 2000.

The plan also identifies computer security as a management
challenge that needs to be addressed.

A lack of aviation competition contributes to high fares and poor
service for some communities. Increasing competition and improving
air service will entail a range of solutions by DOT, the Congress,
and the private sector.

None. The plan identifies airline competition as a management
challenge. DOT has submitted to the Congress a number of
legislative proposals to address the issue.

DOT needs to continue improving oversight of surface
transportation projects. Many highway and transit projects
continue to incur cost increases, experience delays, and have
difficulties acquiring needed funding.

(The OIG also identified this area as a management issue.) None.
The plan identifies surface transportation

infrastructure needs as a management challenge and identifies
activities to address the issue.

Amtrak's financial condition is tenuous. Since it began operations
in 1971, Amtrak has received $22 billion in federal subsidies.
Because there is no clear public policy that defines the role of
passenger rail in the national transportation system and because
Amtrak is likely to remain heavily dependent on federal
assistance, the Congress needs to decide on the nation's
expectations for intercity rail and the scope of Amtrak's mission
in providing that service.

(The OIG also identified this area a management issue.) None. The
plan identifies the financial viability of Amtrak

as a management challenge and states that, as a member of Amtrak's
Board, DOT will work to address the issue.

(continued)

GAO/RCED-99-153 DOT's Fiscal Year 2000 Performance Plan Page 17

Appendix I Management Challenges

Management challenge Applicable goals and measures in the fiscal
year 2000 performance plan

DOT's lack of accountability for its financial activities impairs
its ability to manage programs and exposes the Department to
potential waste, fraud, mismanagement, and abuse. Since 1993, the
OIG has been unable to express an opinion on the reliability of
the financial statements of certain agencies within the
Department. DOT also lacks a cost accounting system or alternative
means of accumulating the full costs of specific projects or
activities.

(The OIG also identified this area as a management issue.) None.
However, the plan's corporate management

strategies include objectives to receive an unqualified, or clean,
audit opinion on the Department's fiscal year 2000 consolidated
financial statement and stand- alone financial statements;

enhance the efficiency of the accounting operation in a manner
consistent with increased accountability and reliable reporting;
and

implement a pilot of the improved financial systems environment in
at least one operating administration.

The plan identifies financial accounting as a management challenge
facing the Department and addresses key weaknesses that should be
resolved before DOT can obtain a clean opinion in fiscal year
2000.

Other areas identified by DOT's OIG

DOT needs to address major surface transportation safety issues,
such as improving the Department's motor carrier safety program
and taking prompt and meaningful enforcement actions for
noncompliance,

increasing the level of safety of commercial trucks and drivers
entering the United States from Mexico,

increasing seat belt usage, reducing railroad grade- crossing and
trespasser accidents, improving compliance with safety regulations
by entities responsible for transporting hazardous materials, and

enhancing the effectiveness of the Federal Railroad
Administration's Safety Assurance and Compliance Program.

DOT's plan includes performance goals to reduce the rate of
fatalities involving large trucks, increase seat belt usage
nationwide, reduce the rate of grade- crossing crashes, reduce the
rate of rail- related fatalities for trespassers, reduce the
number of serious hazardous materials incidents in transportation,
and

reduce the rate of rail- related crashes and fatalities. DOT needs
to provide leadership to maintain, improve, and develop the port,
waterway, and intermodal infrastructure to meet current and future
needs. There is also a need to identify funding mechanisms to
maintain and improve the harbor infrastructure of the United
States.

DOT's plan includes performance goals to reduce the percentage of
ports reporting landside impediments to the flow of commerce and

ensure the availability and long- term reliability of the St.
Lawrence Seaway's locks and related navigation facilities in the
St. Lawrence River.

(continued)

GAO/RCED-99-153 DOT's Fiscal Year 2000 Performance Plan Page 18

Appendix I Management Challenges

Management challenge Applicable goals and measures in the fiscal
year 2000 performance plan

DOT faces several challenges in implementing the Government
Performance and Results Act. Many of DOT's performance outcomes,
such as improved safety, a reduction in fatalities and injuries,
and well- maintained highways, depend in large part on actions by
other federal agencies, states, and the transportation industry.
Their assistance will be critical in meeting DOT's goals, which
were developed under the Results Act. DOT's ability to achieve its
goals will also be influenced by the effective utilization of
human resources.

None. The plan identifies the Department's implementation of the
Results Act as a management challenge and mentions activities to
address the issue.

a A runway incursion occurs when an aircraft, ground vehicle, or
person enters or crosses a runway that is in active use for
takeoffs or landings without adequate separation from aircraft
cleared to use the runway.

b Pilots using instrument procedures rely on air traffic
controllers' instructions to guide them. When aircraft are allowed
to violate these separation standards, an operational error
occurs. When aircraft are allowed to penetrate airspace that has
not been precoordinated for that aircraft's use, an operational
deviation occurs.

c Presidential Decision Directive 63, Critical Infrastructure
Protection, requires the federal government to achieve and
maintain the ability to protect our nation's critical
infrastructure by 2003.

GAO/RCED-99-153 DOT's Fiscal Year 2000 Performance Plan Page 19

Appendix II Major Contributors to This Report

Resources, Community, and Economic Development Division

Janet Barbee Tina Kinney Lewison Lem Teresa Spisak

Accounting and Information Management Division

Laura Castro John Fretwell Elizabeth Martinez Colleen Phillips

Office of the General Counsel

Helen Desaulniers

(348166) GAO/RCED-99-153 DOT's Fiscal Year 2000 Performance Plan
Page 20

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