Results Act: Observations on the U.S. Department of Agriculture's Fiscal
Year 2000 Performance Plan (Letter Report, 06/07/1999, GAO/RCED-99-187).

Pursuant to a congressional request, GAO reviewed the Department of
Agriculture's (USDA) performance plan for fiscal year (FY) 2000,
focusing on the extent to which the plan: (1) provides a clear picture
of intended performance across the Department; (2) discusses the
strategies and resources USDA will use to achieve its goals; and (3)
provides confidence that the performance information will be credible.

GAO noted that: (1) USDA's performance plan for FY 2000 should be a
somewhat useful tool for decisionmakers; (2) overall, the plan provides
a general picture of intended performance across the Department, a
general discussion of the strategies and resources the Department will
use to achieve performance goals, and limited confidence that its
performance information will be credible; (3) USDA's FY 2000 performance
plan represents a moderate improvement over the FY 1999 plan in that it
indicates some progress in addressing the weaknesses that GAO identified
in its assessment of the FY 1999 plan; (4) among the improvements in the
FY 2000 plan are: (a) better efforts to identify programs that
contribute to similar results; (b) more consistent use of goals and
measures that address program results and performance; and (c) improved
linkages between program activities and performance goals; (5) USDA's
plan still needs improvement in a number of areas, particularly in: (a)
identifying strategies to mitigate external factors; (b) describing
efforts to verify and validate performance data; and (c) discussing data
limitations; (6) for example, the Rural Utilities Service's performance
plan lists several performance goals and indicators for the Service's
electric program; (7) however, the plan's discussion concerning the
verification and validation of data relating to these goals and
indicators is limited primarily to stating that: (a) the data are
available in records from the Service's automated systems, from the
Service's borrower-reported statistics, and from USDA's Economic
Research Service (ERS); and (b) the Service has had long experience with
its internal data and is highly confident of its accuracy as well as the
reliability of ERS' data; (8) the plan does not discuss the basis for
its confidence in the data's accuracy and reliability nor how data
limitations could adversely affect its ability to assess performance;
and (9) furthermore, the plan makes no mention of actions that the Rural
Utilities Service will take to compensate for any unavailable or
low-quality data.

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

 REPORTNUM:  RCED-99-187
     TITLE:  Results Act: Observations on the U.S. Department of
	     Agriculture's Fiscal Year 2000 Performance Plan
      DATE:  06/07/1999
   SUBJECT:  Performance measures
	     Congressional/executive relations
	     Agricultural industry
	     Data integrity
	     Accountability
	     Agency missions
	     Reporting requirements
	     Strategic planning
IDENTIFIER:  GPRA
	     Government Performance and Results Act

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Cover
================================================================ COVER

Report to Congressional Requesters

June 1999

RESULTS ACT - OBSERVATIONS ON THE
U.S.  DEPARTMENT OF AGRICULTURE'S
FISCAL YEAR 2000 PERFORMANCE PLAN

GAO/RCED-99-187

USDA's Fiscal Year 2000 Performance Plan

(150137)

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

  AMS - Agricultural Marketing Service
  APHIS - Animal and Plant Health Inspection Service
  ARS - Agricultural Research Service
  CSREES - Cooperative State Research, Education and Extension
     Service
  ERS - Economic Research Service
  FNS - Food and Nutrition Service
  FSA - Farm Service Agency
  FSIS - Food Safety and Inspection Service
  GAO - General Accounting Office
  GIPSA - Grain Inspection, Packers and Stockyards Administration
  HHS -
  IT - Information Technology
  OIG - Office of Inspector General
  OMB - Office of Management and Budget
  NASS - National Agricultural Statistics Service
  RMA - Risk Management Agency
  RUS - Rural Utilities Service
  USDA - Department of Agriculture
  USDA/FNS
  USDA/OIG

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

B-282658

June 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.  By reinforcing the
linkages between the agencies' long-term strategic goals and their
day-to-day program activities, the plans are intended to provide a
basis for establishing accountability for results. 

The U.S.  Department of Agriculture's (USDA) performance plan for
fiscal year 2000, which includes 29 componentsï¿½28 agency, office, and
bureau plans and a departmental overview plan\1 ï¿½was submitted to the
Congress in March 1999.  To facilitate your use of the plan, you
asked us to summarize our observations on the plan's usefulness to
decisionmakers.  In that regard, our report provides information on
the extent to which USDA's performance plan (1) provides a clear
picture of intended performance across the Department, (2) discusses
the strategies and resources USDA will use to achieve its goals, and
(3) provides confidence that the performance information will be
credible.  For each of these areas, we also provide information on
the degree to which USDA's fiscal year 2000 performance plan
represents an improvement over its fiscal year 1999 plan.  Finally,
the report provides our observations on USDA's implementation of
performance-based management and the challenges it faces in becoming
performance-based. 

--------------------
\1 Although the plan includes 29 components, we limited our review to
the plans of the 17 agencies most directly responsible for
accomplishing USDA's mission and the Offices of the Chief Financial
Officer and the Chief Information Officer (2 plans).  See app.  II
for a list of the agencies and offices whose annual performance plans
we reviewed. 

   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

The Department of Agriculture's performance plan for fiscal year 2000
should be a somewhat useful tool for decisionmakers.  Overall, the
plan provides a general picture of intended performance across the
Department, a general discussion of the strategies and resources the
Department will use to achieve performance goals, and limited
confidence that its performance information will be credible.  Figure
1 highlights the plan's major strengths and key weaknesses. 

                                Figure 1
                
                 Major Strengths and Key Weaknesses of
                     USDA's Fiscal Year 2000 Annual
                            Performance Plan

----------------------------------------------------------------------
Major strengths

Uses goals and measures that address program results and performance

Uses intermediate outputs to show progress toward intended results

Explains how proposed capital assets and management systems support
the achievement of program results

Key weaknesses

Does not consistently include strategies for mitigating external
factors

Does not adequately describe efforts to verify and validate data

Does not consistently discuss the impact of data limitations
----------------------------------------------------------------------
USDA's fiscal year 2000 performance plan represents a moderate
improvement over the fiscal year 1999 plan in that it indicates some
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 adequately (1) explain how USDA agencies are
coordinating crosscutting issues within and outside the Department;
(2) discuss mitigation strategies for significant external factors
that may interfere with the achievement of performance goals; (3)
describe the procedures that will be used to ensure that the data
needed to measure progress in meeting performance goals are complete,
accurate, and credible; and (4) identify what, if any, limitations
exist with respect to the data used for measuring performance.\2

Among the improvements in the fiscal year 2000 plan are (1) better
efforts to identify programs that contribute to similar results, (2)
more consistent use of goals and measures that address program
results and performance, and (3) improved linkages between program
activities and performance goals.  For example, the improved use of
goals and measures was demonstrated in USDA's Grain Inspection,
Packers and Stockyards Administration's plan.  For its performance
goal of increasing the efficiency of grain inspection and weighing
processes, the plan provides two measures:  (1) the percentage of
evaluations completed to maintain critical methodology and (2) the
number of new and/or improved methods or tests.  These measures
replaced the fiscal year 1999 measure ï¿½number of export facilities
equipped with automated grain inspection systemsï¿½ because the agency
considered it to be an internal measure of process rather than of
output or outcome. 

The Department's plan, however, still needs improvement in a number
of areas, particularly in (1) identifying strategies to mitigate
external factors, (2) describing efforts to verify and validate
performance data, and (3) discussing data limitations.\3 For example,
the Rural Utilities Service's performance plan lists several
performance goals and indicators for the Service's electric program. 
However, the plan's discussion concerning the verification and
validation of data relating to these goals and indicators is limited
primarily to stating that (1) the data are available in records from
the Service's automated systems, from the Service's borrower-reported
statistics, and from USDA's Economic Research Service (ERS) and (2)
the Service has had long experience with its internal data and is
highly confident of its accuracy as well as the reliability of ERS'
data.  The plan does not, however, discuss the basis for its
confidence in the data's accuracy and reliability nor how data
limitations could adversely affect its ability to assess performance. 
Furthermore, the plan makes no mention of actions that the Rural
Utilities Service will take to compensate for any unavailable or
low-quality data. 

--------------------
\2 Observations on USDA's Annual Performance Plan (GAO/RCED-98-212R,
June 11, 1998). 

\3 The areas listed are those we believe to be the major areas of
weakness in USDA's fiscal year 2000 performance plan.  Other areas
needing improvement are noted elsewhere in this report. 

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

The Government Performance and Results Act of 1993 seeks to improve
the effectiveness, efficiency, and accountability of federal programs
by establishing a system for agencies to set goals for program
performance and to measure results.  Under the act, agencies'
performance plans are to (1) establish performance goals to define
the levels of performance to be achieved; (2) express those goals in
an objective, quantifiable, and measurable form; (3) briefly describe
the strategies and resources to meet the goals; (4) establish
performance indicators for assessing or measuring relevant outputs,
service levels, and outcomes of each program activity; (5) provide a
basis for comparing results with performance goals; and (6) describe
the means to verify and validate information used to report on
performance.  USDA submitted to the Office of Management and Budget
(OMB) and the Congress performance plans for fiscal years 1999 and
2000. 

   USDA'S PERFORMANCE PLAN
   PROVIDES A GENERAL PICTURE OF
   INTENDED PERFORMANCE ACROSS THE
   DEPARTMENT
------------------------------------------------------------ Letter :3

Overall, USDA's performance plan provides a general picture of
intended performance across the Department.  USDA's plan often
includes performance goals and quantifiable measures that address
program results.  In addition, to show progress toward achieving
these results, the plan often includes intermediate outputs linked to
program results as well as baseline data for past performance. 
However, the plan could be improved by more consistently (1)
identifying crosscutting programs and coordination strategies for
those programs and (2) describing how the Department will address the
management challenges it faces, including how it will address certain
information technology and financial management challenges identified
by us and its Office of Inspector General (OIG). 

      PERFORMANCE GOALS AND
      MEASURES
---------------------------------------------------------- Letter :3.1

USDA's plan often includes goals and measures that address program
results and the important aspects of program performance.  Through
its fairly consistent use of goals and measures that are expressed in
a quantifiable and measurable manner, the Department should be able
to gauge its progress toward achieving desired program results.  For
example, the National Agricultural Statistics Service's (NASS) plan
includes a performance goal of providing all market participants with
timely and impartial agricultural statistics that promote an
economically viable and competitive agricultural production system. 
One of its four performance measures for achieving this goal is the
percentage of NASS reports that are complete, meet scheduled release
dates, and contain no data errors.  The plan provides target levels
for each of its performance measures to enable NASS to assess its
progress in meeting its performance goals. 

      OUTPUTS LINKED TO OUTCOMES
      AND PROGRAM RESULTS
---------------------------------------------------------- Letter :3.2

Frequently, the Department's plans include intermediate outputs
linked to and showing progress toward intended program results.  For
example, USDA's Farm Service Agency's (FSA) plan has four strategic
goals, each containing associated performance goals and measures. 
One of the strategic goals is to assist agricultural producers and
landowners in achieving a high level of stewardship of soil, water,
air, and wildlife resources on America's farms and ranches.  This
strategic goal includes four performance goals with multiple
quantifiable measures that enable FSA to assess its progress toward
achieving its goals.  For example, one of FSA's performance goals is
to reduce soil erosion by establishing conservation cover and/or
installing priority practices on enrolled conservation reserve
program acreage.  This goal is accompanied by eight performance
measures, including the number of acres of highly erodible land
retired. 

      BASELINE AND TREND DATA
---------------------------------------------------------- Letter :3.3

Similarly, USDA's plan often includes baseline and trend data so that
anticipated performance can be compared with past performance.  For
example, in order for the Food Safety and Inspection Service (FSIS)
to have a baseline for measuring progress toward its desired outcome
of a 25-percent reduction in the number of foodborne illnesses
associated with meat, poultry, and egg products by the year 2000, the
agency--in cooperation with several academic and federal
organizations--established a baseline of about 5 million as the
current annual number of foodborne illnesses. 

      CROSSCUTTING PROGRAMS
---------------------------------------------------------- Letter :3.4

While USDA's plan often identifies programs and agencies that
contribute to similar results or with which the Department's agencies
will need to coordinate to achieve their goals, the plan does not as
consistently discuss coordination strategies or goals and measures
that are being jointly undertaken to support crosscutting programs. 
For example, the Animal and Plant Health Inspection Service's (APHIS)
plan states that APHIS works with partners of the Federal Inspection
Services\4 to improve service to international travelers without
compromising the health of U.S.  plants and animals.  However, the
plan does not address how APHIS will coordinate its activities with
these organizations or the role of APHIS and these organizations in
providing service to international travelers. 

Similarly, the Cooperative State Research, Education, and Extension
Service's (CSREES) plan states that one of CSREES' activities
relating to its goal of enhancing economic opportunities and the
quality of life among families and communities will be to ï¿½encourage
multi-state, multi-disciplinary and integrated research and education
strategies to improve the quality of life in citizensï¿½in cooperation
with HHS, USDA/FNS, Department of Education, etc.ï¿½ However, the plan
makes no mention of how it will work with these agencies to develop
the needed strategies. 

--------------------
\4 The Federal Inspection Services include the U.S.  Customs Service,
the Immigration and Naturalization Service, and the Animal and Plant
Health Inspection Service. 

      EFFORTS TO ADDRESS
      MISSION-CRITICAL MANAGEMENT
      PROBLEMS
---------------------------------------------------------- Letter :3.5

While USDA's plan includes performance goals and strategies to
resolve some of the mission-critical management problems identified
by us and/or USDA's OIG,\5 in many instances the plan does not
adequately address these critical problems.  (See app.  I.) For
example, we reported that USDA spends more than $200 million annually
for its telecommunications systems and services and that it relies on
these systems to effectively administer federal programs and serve
millions of its constituents.  However, USDA has wasted millions of
dollars each year paying for unused, unnecessary, or uneconomical
services because it has not cost effectively managed and planned
these substantial investments.  While USDA's Office of the Chief
Information Officer's plan mentions the need to improve
departmentwide telecommunications management as one of its six
critical issue areas, it does not provide an objective for addressing
this critical issue or discuss performance goals or corresponding
strategy. 

Regarding financial management issues, we reported that USDA has a
long-standing history of deficiencies in its accounting and financial
management systems.  We further noted that USDA's ability to comply
with report requirements for budgetary and financial statements was
severely hampered by its lack of adequate financial systems. 
However, while the Office of the Chief Financial Officer's plan
should assist decisionmakers in that it addresses overall financial
management and systems issues, it does not provide sufficient detail
with regard to certain troublesome financial management issues that
should be resolved in order to accomplish the key goal of achieving
financial accountability.  These issues include the need to comply
with credit reform reporting requirements and to accurately account
for property, plant, and equipment.  At a minimum, a specific
performance goal or indicator for each of these two issues would
improve the Office's plan. 

--------------------
\5 See Major Management Challenges and Program Risks:  Department of
Agriculture (GAO/OCG-99-2, Jan.  1999) and Synopsis of Major USDA
Program Issues (USDA/OIG, Dec.  1998).  OMB Circular A-11, part 2,
directs federal agencies to address mission-critical management
challenges in their annual performance plans. 

      COMPARISON WITH THE FISCAL
      YEAR 1999 PLAN
---------------------------------------------------------- Letter :3.6

The fiscal year 2000 performance plan shows moderate improvement in
addressing the weaknesses that we identified in our assessment of the
fiscal year 1999 performance plan as it relates to providing a clear
picture of intended performance across the agency.  In our review of
the fiscal year 1999 plan, we observed that the plan could be
improved by more consistently describing how agencies are
coordinating crosscutting issues both within and outside the
Department.  Among the improvements in the fiscal year 2000 plan is
that it more often identifies crosscutting programs and agencies that
are working towards similar results.  However, the plan could be
further improved by a more comprehensive discussion of planned
strategies for coordinating these programs and resources. 

   USDA'S PERFORMANCE PLAN
   PROVIDES A GENERAL DISCUSSION
   OF THE STRATEGIES AND RESOURCES
   THE DEPARTMENT WILL USE TO
   ACHIEVE ITS GOALS
------------------------------------------------------------ Letter :4

USDA's performance plan provides a general discussion of the
strategies and resources the Department will use to achieve
performance goals.  Although USDA's plan generally associates funding
levels with performance goals, some of the Department's component
plans were less clear than others in showing how program activities
related to performance goals.  In particular, for the plans of the
Agricultural Marketing Service (AMS), FSA, and the three agencies
constituting the Rural Development mission area, it is not clear how
the program activities listed in the plans correspond to those in the
President's proposed $90 billion budget for fiscal year 2000. 

USDA's component plans follow a Department-wide format that includes
a listing of objectives, program activities, and funding levels
linked to departmental strategic goals and agency performance goals. 
For example, the Agricultural Research Service's (ARS) plan lists for
each of its five strategic goals (1) the program activities
associated with each goal and their associated funding levels for
fiscal year 1997 through fiscal year 2000; (2) an objective based on
statutory languageï¿½specifically, section 801 of the Federal
Agriculture Improvement and Reform Act of 1996; and (3) a series of
performance goals using alternative forms of measurement.\6

In addition to listing objectives, program activities, and funding
levels, USDA's plan often provides ample descriptions of how specific
strategies and/or programs will contribute toward accomplishing
performance goals.  A case in point is the Risk Management Agency's
(RMA) plan that describes in detail how its key strategies--expanding
risk management tools available for producers, increasing producers'
awareness of risk management alternatives, increasing the number of
producers who use risk management alternatives, and reducing program
vulnerabilities--will support the achievement of its overall goal of
strengthening the safety net for agricultural producers through sound
risk management programs and education.  For example, in order to
increase the agricultural producers' awareness of risk management
alternatives, RMA plans to provide a strategy to institutionalize a
risk management education program and enhance its outreach to
underserved areas, producers, and members of the agricultural
community. 

While USDA's plan frequently explains how proposed capital assets and
management systems will support the achievement of program results,
it does so less consistently for human capital.  For example, AMS'
plan describes how a proposed funding increase will provide for the
modernization and the replacement of its Processed Commodities
Inventory Management System.  This system, which supports activities
such as planning, procurement, and accounting for more than $1
billion of domestic and $562 million of foreign commodities annually,
is critical to the missions of three agencies.  The plan further
notes that studies have indicated that a modernized system will
generate considerable efficiency improvements and cost savings. 

However, AMS' plan limits its discussion of human capital primarily
to a management initiative that states that AMS will create and
maintain a vital workforce with appropriate skills and
characteristics for serving its diverse base of customers.  The sole
performance goal for this initiative is to increase the
representation of women, minorities, and people with disabilities by
fiscal year 2000.  While this is an important goal, in order to make
the plan more useful to decisionmakers, AMS should elaborate on how
it will build, maintain, and marshal the human capital it needs to
achieve the agency's goals. 

USDA's fiscal year 2000 performance plan represents little
improvement over the fiscal year 1999 performance plan as it relates
to providing a specific discussion of strategies and resources the
agency will use to achieve performance goals.  Specifically, the
fiscal year 2000 performance plan does not appear to consistently
recognize the weakness that we identified in our assessment of the
fiscal year 1999 performance planï¿½that is, that the plan could be
improved by more consistently describing strategies to leverage or
mitigate external factors.  For the most part, descriptions of
strategies to mitigate external factors were lacking in the fiscal
year 2000 plan.  However, a few of the agencies' plans showed
improvement in this area.  In particular, the fiscal year 1999 Grain
Inspection, Packers and Stockyards Administration's (GIPSA) plan did
not identify any external factors; however, in its fiscal year 2000
plan, GIPSA identifies several important external factors and
provides mitigation strategies to address them.  For example, GIPSA
plans to increase the efficiency of grain marketing by streamlining
grain inspection and weighing processes and by providing objective
measurers of, among other things, grain quality.  GIPSA maintains
that unusual crop quality is the leading external factor affecting
inspections; it plans to rely on a national quality assurance and
control program to mitigate this factor. 

--------------------
\6 With OMB's concurrence, ARS was able to use narrative descriptions
of intermediate outcome indicators. 

   USDA'S PERFORMANCE PLAN
   PROVIDES LIMITED CONFIDENCE
   THAT THE PERFORMANCE
   INFORMATION WILL BE CREDIBLE
------------------------------------------------------------ Letter :5

The Department's fiscal year 2000 performance plan provides limited
confidence that the Department's performance information will be
credible.  While USDA's plan sometimes describes how it will verify
and validate performance data, it rarely discusses the implications
of data limitations or identifies planned actions to compensate for
unavailable or low-quality data.  As a result, the Department has
little assurance that performance information is complete, accurate,
and consistent for documenting performance and supporting decisions
on how to best manage programs. 

A case in point is the Rural Utilities Service's (RUS) performance
plan.  Its discussion of the verification and validation of data
relating to performance goals and indicators for its electric program
is limited primarily to stating that (1) the relevant data are
available in records from RUS' automated systems, RUS'
borrower-reported statistics, and USDA's ERS; (2) the Service has had
long experience with its internal data and is highly confident of its
accuracy; and (3) it considers ERS' data to be very reliable. 
However, RUS does not discuss the basis for its confidence in its or
ERS' data accuracy and reliability nor how data limitations could
adversely affect its ability to assess performance.  Furthermore, the
plan makes no mention of actions that RUS will take to compensate for
any unavailable or low-quality data. 

For the most part, USDA's fiscal year 2000 performance plan does not
appear to recognize the weaknesses that we identified in our
assessment of the fiscal year 1999 performance plan as it relates to
providing full confidence that the agency's performance information
will be credible.  In reviewing the Department's fiscal year 1999
plan, we observed that the plan fell short in (1) describing the
procedures that will be used to ensure that the data needed to
measure progress in meeting performance goals are complete, accurate,
and credible and (2) identifying what, if any, limitations exist with
respect to the data used for measuring performance.  The fiscal year
2000 plan still does not consistently discuss the implications of
data limitations and the actions the Department plans to take to
compensate for unavailable or low-quality data.  In addition, while
we found some improvement in the Department's description of efforts
to verify and validate the accuracy of its data, further improvement
is needed in this area to ensure the credibility of performance
information. 

   OTHER OBSERVATIONS ON USDA'S
   IMPLEMENTATION OF
   PERFORMANCE-BASED MANAGEMENT
------------------------------------------------------------ Letter :6

USDA is making some progress in setting results-oriented goals,
developing measures to show progress, and establishing strategies to
achieve its goals.  However, the plan provides only limited
confidence that the Department's financial management performance
information will be credible and only a limited picture of intended
performance for improving its management of information technology. 

A major challenge that USDA faces in implementing performance-based
management is the lack of accountability for its financial
activities.  Because some of the Department's financial systems are
unable to provide accurate and timely accounting and financial
reporting, it is not always possible to know how well or poorly
USDA's component agencies have performed in the area of financial
management.  In fact, serious longstanding accounting and financial
reporting weaknesses at the Forest Service led us to designate the
Service's financial management as a high-risk area.  For the
Department as a whole, the inadequacies of USDA's financial systems
have been a key reason for USDA's Inspector General's disclaimer of
opinion on the consolidated financial statements for the past 5
years.\7 This lack of accurate, reliable, and consistent financial
information hinders Department officials' ability to make informed
decisions when the need for such information is a crucial factor in
managing the Department's $122 billion in assets.  The Department
recognizes the serious limitations of its financial systems and has
set a goal of achieving an unqualified audit opinion on its fiscal
year 2000 financial statements. 

Other major challenges that USDA faces in implementing performance
management are ensuring that (1) its mission-critical automated
information systems will work beyond 1999ï¿½that is, they will be Year
2000 compliantï¿½and (2) USDA's network and information technology (IT)
resources are made less vulnerable to illegal and malicious
penetration by internal and external sources. 

Regarding the first issue, in January 1999, we reported that while
USDA has begun to address the Year 2000 problem,\8 it still faces
significant challenges in renovating and replacing all of its
mission-critical systems in time and taking the necessary steps to
ensure that vital public services are not disrupted.  In response to
our comments on its fiscal year 1999 plan, the Office of the Chief
Information Officer added to its fiscal year 2000 performance plan
the specific objective of ensuring that USDA's mission-critical
systems nationwide are Year 2000 compliant by March 31, 1999.\9 The
plan also describes USDA's strategy for achieving Year 2000
compliance and the time frames and measures for doing so. 
However--as we found in our review of the Department's fiscal year
1999 performance plan--performance goals, measures, and time frames
for addressing the Year 2000 issue are still not discussed in the
fiscal year 2000 performance plans of all of USDA's component
agencies.  Moreover, while the Office's fiscal year 2000 plan states
that every agency has prepared business continuity and contingency
plans to address unforeseen Year 2000 failures, according to USDA
officials, such plans have not been fully developed and tested. 
Likewise, the Office's plan includes no time frames for identifying
when USDA expects to complete this essential and time-critical work. 

Regarding information security, the lack of any planned actions to
address this high-risk issue was noted in our review of the Office of
the Chief Information Officer's fiscal year 1999 performance plan. 
While the Office's fiscal year 2000 plan recognizes USDA's intention
to strengthen its information systems security program as part of
developing and implementing a departmentwide architecture, no
performance goals or measures are provided.  Instead, the plan states
that performance goals and indicators will be included in the
critical infrastructure protection plan USDA is developing in
response to Presidential Decision Directive 63.  However, although
this plan was due to be released in early February 1999, as of March
31, 1999, it had not yet been issued. 

--------------------
\7 A disclaimer of opinion means that the auditor is unable to form
an opinion on the financial statements.  A disclaimer results when a
pervasive material uncertainty exists, or there is a significant
restriction on the scope of the audit. 

\8 Major Management Challenges and Program Risks:  Department of
Agriculture (GAO/OCG-99-2, Jan.  1999). 

\9 On March 31, 1999, USDA reported that 338 of its 352
mission-critical systems were Year 2000 compliant. 

   AGENCY COMMENTS
------------------------------------------------------------ Letter :7

We provided the Department of Agriculture with the information in
this report for review and comment.  We met with USDA's Chief
Financial Officer; the Director, Planning and Accountability
Division; and other USDA officials from the Office of the Chief
Financial Officer and the Office of Budget and Program Analysis. 
Overall, the Department concurred with our observations, describing
them as fair and balanced.  However, USDA noted that two issues cited
in the management challenges table in appendix I of the draft report
were addressed in performance plans that were outside the scope of
our review.\10 In response to USDA's comments, we reviewed the plans
it cited and made changes to the table as appropriate.  (See app. 
I.) In addition, USDA provided clarifying comments and technical
corrections to the report, which we have incorporated as appropriate. 

--------------------
\10 The two annual performance plans are those of the Support
Services Bureau and Departmental Administration. 

   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :8

To evaluate whether the plan (1) provides a clear picture of intended
performance across the agency; (2) discusses the strategies and
resources USDA will use to achieve its goals; and (3) provides
confidence that the performance information will be credible, we used
criteria from our published guide on performance goals and measures,
strategies and resources, and verification and validation.\11 This
guide was developed from the Results Act requirements for agency
performance plans; guidelines contained in OMB Circular A-11, part 2;
and other relevant documents.  In addition, we relied on our
knowledge of USDA's operations and programs stemming from our
numerous reviews of the Department. 

To determine the extent of improvement over its previous plan, we
compared the Department's fiscal year 2000 performance plan with our
observations on its fiscal year 1999 plan.  This comparison involved
reviewing each of the plans of 17 USDA component agencies and the
Offices of the Chief Financial Officer and the Chief Information
Officer and comparing them with their prior year's plans to identify
areas of improvement.  To determine whether the plan covered
mission-critical management issues identified by us and USDA's
OIG,\12 we reviewed the plans for goals, indicators, and measures
specifically addressing these issues as well as general management
and capacity-building goals. 

We conducted our work from March through May 1999 in accordance with
generally accepted government auditing standards. 

--------------------
\11 The Results Act:  An Evaluator's Guide to Assessing Agency Annual
Performance Plans (GAO/GGD-10.1.20, Apr.  1998). 

\12 Major Management Challenges and Program Risks:  Department of
Agriculture (GAO/OCG-99-2, Jan.  1999) and USDA OIG's report entitled
Synopsis of Major USDA Program Issues (USDA/OIG, Dec.  1998). 

---------------------------------------------------------- Letter :8.1

As arranged with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this report
until 30 days from the date of this report.  At that time, we will
provide copies of this report to Representatives Larry Combest,
Chairman, and Charles Stenholm, Ranking Minority Member, House
Committee on Agriculture; Senators Richard G.  Lugar, Chairman, and
Tom Harkin, Ranking Minority Member, Senate Committee on Agriculture;
the Honorable Joseph Lieberman, Ranking Minority Member, Senate
Committee on Governmental Affairs; the Honorable Henry Waxman,
Ranking Minority Member, House Committee on Government Reform; the
Honorable Daniel Glickman, Secretary of Agriculture; the Honorable
Jacob Lew, Director, Office of Management and Budget; and other
interested parties.  We will also make copies available upon request. 

If you or your staff have any questions about this report, please
call me at (202) 512-5138.  Major contributors to this report are
listed in appendix III. 

Lawrence J.  Dyckman
Director, Food and
  Agriculture Issues

List of Congressional Requesters

The Honorable Bob Goodlatte
Chairman
The Honorable Eva Clayton
Ranking Minority Member
Subcommittee on Department Operations,
Oversight, Nutrition, and Forestry
Committee on Agriculture
House of Representatives

The Honorable Dick 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

MANAGEMENT CHALLENGES
=========================================================== Appendix I

In January 1999, we reported on major performance and management
challenges that have limited the effectiveness of the U.S. 
Department of Agriculture (USDA) in carrying out its mission.\13 In
December 1998, USDA's Office of Inspector General (OIG) issued a
similar report on the Department.\14 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 USDA

                                             Applicable goals and measures in the fiscal
Management challenge                         year 2000 annual performance plan
-------------------------------------------  --------------------------------------------
USDA's field structure for managing its      USDA's fiscal year 2000 performance plan
farm programs is obsolete and inefficient.   provides an update on USDA's plan to
(GAO)                                        collocate county-based agencies in service
                                             centers, as well as on the current and next
                                             fiscal year plans. USDA anticipates that by
                                             the end of fiscal year 1999 it will have
                                             reached its target of 2,567 service centers.
                                             Administrative streamlining continues,
                                             including the updating of computer and
                                             telecommunications resources. The fiscal
                                             year 2000 plan includes targets and
                                             performance measures for these goals. For
                                             example, the new telecommunications system
                                             will be fully implemented in fiscal year
                                             1999. To date, [it] has been installed in
                                             more than 1,800 service centers. Other goals
                                             include reengineering service center
                                             business processes and reducing customer
                                             paperwork.

Fundamental changes are needed to improve    The Food Safety and Inspection Service's
food safety. The increasing incidence of     fiscal year 2000 performance plan
foodborne illness has heightened concerns    concentrates on HACCP systems
about the federal government's               implementation, although the President's
effectiveness in ensuring food safety. The   Council on Food Safety is also addressed.
current federal food safety system is        Four of the agency's six goals pertain to
highly fragmented--as many as 12 different   various aspects of HACCP planning and
federal agencies oversee food safety. (GAO)  implementation. USDA-wide, the Department's
                                             plan calls for spending an additional $35
The OIG plans to monitor Hazard Analysis     million on food safety, a total of $151
and Critical Control Point (HACCP)           million, in fiscal year 2000. This includes
implementation. (OIG)                        funding for providing research, training,
                                             and emergency response and establishing
                                             baseline data.

Inefficiency and waste throughout the        None. While the Forest Service has a goal to
Forest Service's operations and              ensure organizational effectiveness, the
organization have cost the taxpayers         management initiative to achieve this goal
hundreds of millions of dollars. (GAO and    is oriented toward ensuring diversity in the
OIG)                                         workforce and equal access to service.

USDA continues to carry a high level of      The Farm Service Agency's fiscal year 2000
delinquent farm loan debt and to write off   performance plan includes performance goals
large amounts of unpaid loans held by        to reduce loan delinquencies on direct
problem borrowers. (GAO)                     loans, reduce losses on these loans, and to
                                             maintain the guaranteed loan loss rate at or
Management of the $21 billion farm loan      below 2 percent. The plan also includes a
portfolio is of major importance to the      goal to increase the number of loans to
Department, including providing assistance   beginning and socially disadvantaged farmers
to beginning and socially disadvantaged      and ranchers as well as a goal to process 80
farmers/ranchers. In addition to civil       percent of all requests for loan servicing
rights issues, other emphases include loan   within 60 days.
servicing (ownership and operating loans)
and shared appreciation agreements. (OIG)

Millions of dollars in overpayments in the   The Food and Nutrition Service's fiscal year
Food Stamp Program occur because eligible    2000 plan includes four performance goals to
persons are paid too much or because         improve the integrity of the food stamp
ineligible individuals improperly            program. These goals are to maintain payment
participate in the program. (GAO and OIG)    accuracy in the delivery of program
                                             benefits; increase claims collections;
                                             maintain the baseline number of sanctions
                                             against violating stores; and increase the
                                             percentage of authorized stores that meet
                                             all requirements to accept food stamps.

USDA lacks financial accountability over     USDA's fiscal year 2000 overview states that
billions of dollars in assets. (GAO)         improved financial management is a
                                             departmental priority. The overview asserts
Financial management in USDA has not been    that better response to OIG audits and
sufficient to provide assurance that its     addressing Federal Manager's Financial
consolidated financial statements are        Integrity Act (FMFIA) internal control
reliable and presented in accordance with    deficiencies will improve management
federal accounting standards. (GAO and OIG)  controls. The Office of the Chief Financial
                                             Officer's fiscal year 2000 performance plan
                                             includes various goals and measures to
                                             promote financial accountability throughout
                                             the Department. The Office's plan includes
                                             performance goals and measures to respond to
                                             OIG audit findings and FMFIA material
                                             weaknesses.

USDA can save millions of dollars by better  None. The Office of the Chief Information
managing its telecommunications              Officer's fiscal year 2000 performance plan
investments. Among other things, USDA has    mentions the need to improve departmentwide
not consolidated and optimized               telecommunications management as one of its
telecommunications or established sound      six critical issue areas, but no objectives
management practices to ensure that          are provided for addressing this critical
telecommunications resources are             issue and no performance goals or
effectively managed and payments for         corresponding strategies are discussed.
unused, unnecessary, or uneconomical
services are terminated. (GAO)

Significant weaknesses in USDA's             These weaknesses are not directly addressed
multibillion-dollar modernization of         in the Office of the Chief Information
service center information technology raise  Officer's performance plan. However, two
concerns regarding the extent to which this  goals included in the plan could indirectly
effort will achieve an adequate return on    begin to address aspects of these
investment or significantly improve          weaknesses, such as the goal to ensure that
customer service. These risks include (1)    service center IT is driven by business
acquiring new information technology (IT)    needs and processes and the goal to
without first determining how it will        establish a methodology for project
operate to provide required service, (2)     management. Neither, however, discusses how
not managing the IT projects as              the risks we identified will be addressed
investments, and (3) not developing a        prior to acquiring new IT for the service
comprehensive plan and management            center implementation. Completing a
structure. USDA also needs to develop a      comprehensive plan for the service center
concept of operations and new mission-       program or managing the IT projects as an
critical business processes for providing    investment are not addressed.\a
one-stop service to better ensure the
success of its IT modernization efforts.
(GAO)

USDA faces serious Year 2000 computing       USDA's overview highlights Year 2000
challenges correcting, testing, and          compliance as one of the most important
implementing its mission-critical automated  challenges facing USDA during fiscal year
information systems to work beyond           1999. The Office of the Chief Information
1999ï¿½that is to become Year 2000 compliant-  Officer's performance plan includes an
-in time. While USDA has begun to address    objective for addressing the Department's
its Year 2000 problem, it still faces        Year 2000 problems and the need to ensure
significant challenges renovating and        that USDA's mission-critical systems are
replacing all its mission-critical systems   compliant by March 31, 1999. While the plan
in time and taking the necessary steps to    does not identify a specific performance
ensure that vital public services are not    goal for Year 2000 compliance, it describes
disrupted. (GAO and OIG)                     USDA's strategy and gives time frames and
                                             measures. While the plan mentions that every
                                             agency has prepared business continuity and
                                             contingency plans to address unforeseen Year
                                             2000 failures, such plans are not fully
                                             developed and tested, and no time frames and
                                             milestones are given for when USDA expects
                                             to complete this essential work. Moreover,
                                             despite being called one of USDA's most
                                             important challenges, performance goals,
                                             measures, and time frames for addressing the
                                             Year 2000 issue are not discussed in the
                                             plans of all of USDA's component agencies.

Crop insurance has become a major USDA       The Risk Management Agency's fiscal year
ï¿½farmer safety net.ï¿½ USDA/OIG audits have    2000 performance plan includes an objective
identified areas where crop insurance        for the crop insurance program to improve
programs need to be strengthened:            program integrity and protect taxpayers'
--oversight by reinsured companies and the   funds. The plan does not specifically
Risk Management Agency;                      address the OIG audit findings. However, the
--conflicts of interest;                     plan does include performance goals and
--verification by loss adjusters;            measures to complete audit findings and to
--yield and total liability;                 correct FMFIA deficiencies.
--insurance availability to all producers.
(OIG)

Under the Conservation Reserve Program,      FSA's fiscal year 2000 performance plan does
producers receive annual payments from the   provide goals to establish conservation
Farm Service Agency (FSA) to take erodible   cover, rehabilitate damaged acreage, and
land out of production and establish a       improve site remediation. However, the plan
vegetative cover on it. There have been      does not provide specific goals and measures
inconsistencies in how the states have       to address the OIG's concerns.
valued the cover. (OIG)

The Child and Adult Care Food Program is     The Food and Nutrition Service's (FNS)
intended to ensure that children and adults  fiscal year 2000 performance plan includes
in day care receive nutritious meals.        an objective to improve the integrity of the
Widespread breakdowns in controls have been  Child and Adult Care Food Program. FNS'
found in the program and resulted in many    performance goal is to have state agencies
abuses. A Presidential initiative was begun  do better targeted and higher-quality
to eliminate these abuses. (OIG)             program reviews of sponsors and providers.
                                             The plan does not provide any criteria,
                                             measures, or data by which to determine
                                             improvement.

There have been issues raised regarding      USDA's overview acknowledges that
USDA agencies' use of funds intended for     agricultural activities have deleterious
pollution cleanup and abatement and          effects on the environment and outlines $191
management practices to avert future         million in USDA budgetary authority
liabilities. (OIG)                           scheduled to be spent on environmental
                                             protection. In addition, the Departmental
                                             Administration plan includes performance
                                             goals to measure progress toward pollution
                                             cleanup and abatement and to extend quality
                                             management practices for reducing any
                                             adverse environmental effects of USDA
                                             activities.\b

There have been concerns about the way       None. Taken together, the Research,
research funds are distributed and the       Education, and Economics mission area
conformity of funding decisions to the       agencies proposed ambitious research agendas
needs of the agricultural and forestry       in their fiscal year 2000 performance plans.
communities. The Congress has determined     However, there is no mention of a process to
that the Department needs a process to       (1) ensure that the agendas support the
ensure that high-risk agricultural issues    needs of the agricultural and forestry
are covered and assurances that research     communities and (2) set priorities for
funds are used for their intended purposes.  research projects and ensure that funds are
(OIG)                                        spent for intended purposes.

There has been a backlog of over 1,000       None. Although USDA's fiscal year 2000
complaints regarding the civil rights        performance plan does not address the
process and treatment of minority farmers    backlog issue, FSA, which is responsible for
when they applied for farm loans or loan     the farm loan program, includes a management
servicing. The OIG reported on problems as   initiative in its plan to enhance the
to why this backlog was not being resolved   ability of small, limited-resource, and
at a faster rate. (OIG)                      socially disadvantaged family farmers/
                                             ranchers to operate successfully.

There has been a history of fraud and abuse  None. Almost all of the Rural Rental Housing
in the Rural Housing Service's Rural Rental  Program's performance goals relate to
Housing Program. Owners and management       providing either additional units of housing
companies have also shown indifference       or financial assistance for housing. There
toward the health and safety of low-income   are no performance goals relating to program
and elderly tenants. (OIG)                   integrity.
-----------------------------------------------------------------------------------------
\a The Department noted that service center information technology
issues are discussed in the Support Services Bureau performance plan,
which was not in the scope of our review.  In response to the
Department's comments, we reviewed the Bureau's plan and found that
while it discusses USDA's modernization of service center information
technology, the planï¿½as was the case with the Office of the Chief
Information Officer's plan--does not include goals, objectives, time
frames, or resources for addressing the specific risks that we
identified as being associated with this multibillion-dollar service
center information technology modernization.  As a result, we made no
changes to this section of the table. 

\b The Department noted that its plans to address the use of funds
for pollution cleanup and abatement are discussed in the Departmental
Administration performance plan, which was not in the scope of our
review.  In response to the Department's comments, we reviewed the
relevant sections of the Departmental Administration plan and changed
this section of the table to reflect the relevant performance goals. 

--------------------
\13 Major Management Challenges and Program Risks:  Department of
Agriculture (GAO/OCG-99-2, Jan.  1999). 

\14 Synopsis of Major USDA Program Issues (USDA/OIG, Dec.  1998). 

USDA AGENCIES AND OFFICES WHOSE
ANNUAL PERFORMANCE PLANS GAO
REVIEWED
========================================================== Appendix II

We reviewed the fiscal year 2000 performance plans for each of the 19
agencies and offices listed below.\15

Agricultural Marketing Service
Agricultural Research Service
Animal and Plant Health Inspection Service
Cooperative State Research, Education, and Extension Service
Economic Research Service
Farm Service Agency
Food and Nutrition Service
Food Safety and Inspection Service
Foreign Agricultural Service
Forest Service
Grain Inspection, Packers and Stockyards Administration
Office of the Chief Financial Officer
Office of the Chief Information Officer
National Agricultural Statistics Service
Natural Resources Conservation Service
Risk Management Agency
Rural Businessï¿½Cooperative Service
Rural Housing Service
Rural Utilities Service

--------------------
\15 In addition, in response to USDA's comments on a draft of this
report, we reviewed relevant sections of the Departmental
Administration and the Support Services Bureau performance plans. 

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

RESOURCES, COMMUNITY, AND ECONOMIC
DEVELOPMENT DIVISION

Jerilynn Hoy, Assistant Director
Natalie Herzog, Evaluator-in-Charge
Eugene Wisnoski

ACCOUNTING AND INFORMATION
MANAGEMENT DIVISION

Heather McIntyre
Lou Schuster
Steve Schwartz
Mark Shaw
McCoy Williams

*** End of document. ***