Managing For Results: Observations on Agencies' Strategic Plans
(Testimony, 02/12/98, GAO/T-GGD-98-66).

GAO discussed its assessment of the strategic plans that executive
agencies produced last September under the Government Performance and
Results Act of 1993 and the current stage of the Results Act's
implementation, annual performance planning and measurement, focusing
on: (1) the extent to which agencies' strategic plans met statutory
requirements; (2) critical planning challenges that remain to be
addressed; and (3) a discussion of how GAO's recent congressional guide
for agencies' annual performance plans can facilitate congressional use
of those plans and thereby advance the implementation of the Results
Act.

GAO noted that: (1) the Results Act requires that strategic plans
include six broad elements-mission statements, general goals and
objectives, approaches (or strategies) for achieving goals, a
description of the relationship between general goals and annual
performance goals, key external factors, and a description of the actual
use and planned use of program evaluations; (2) although all of the
strategic plans that GAO reviewed contained at least some discussion of
each element required by the Results Act, GAO found that critical
planning challenges remain; (3) the strategic plans often lacked clear
articulation of the agencies' strategic direction, a sense of what they
were trying to achieve, and how they would achieve it; (4) a focus on
results, as envisioned by the Results Act, implies that federal programs
that contribute to the same or similar results should be closely
coordinated to ensure that goals are consistent and, as appropriate,
program efforts are mutually reinforcing; (5) uncoordinated program
efforts can waste scarce funds, confuse and frustrate program customers,
and limit the overall effectiveness of the federal effort; (6) this
suggests that federal agencies are to look beyond their organizational
boundaries and coordinate with other agencies to ensure that their
efforts are aligned and complementary; (7) GAO's previous work has shown
that for agencies to set realistic goals, they need to have reliable
data during their planning efforts; (8) they also need reliable data,
later, as they gauge the progress they are making toward achieving those
goals; (9) GAO found serious shortcomings in agencies' ability to
generate reliable and timely data to measure their progress in achieving
goals and to provide the analytic capacity to use those data; (10) GAO
developed a guide to assist the congressional consultations on the
development of agencies' strategic plans; (11) the guide is organized
around three core questions that correspond to the Act's requirements
for performance plans; (12) the answers to the questions are intended to
facilitate a complete assessment of agencies' performance plans and
address concerns that are likely to be common across a variety of
congressional users; and (13) although agencies have generally met the
statutory requirements of the Results Act in their first cycle of
strategic planning, federal strategic planning; and Results Act's
implementation in general-is still very much a work in progress.

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

 REPORTNUM:  T-GGD-98-66
     TITLE:  Managing For Results: Observations on Agencies' Strategic 
             Plans
      DATE:  02/12/98
   SUBJECT:  Strategic planning
             Data collection
             Internal controls
             Information resources management
             Congressional/executive relations
             Agency missions
             Congressional oversight
             Interagency relations
             Program evaluation
IDENTIFIER:  Government Performance and Results Act
             GPRA
             
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Cover
================================================================ COVER


Before the Subcommittee on Government
Management, Information and Technology
Committee on Government Reform and Oversight
House of Representatives

For Release on Delivery
Expected at
10:00 a.m.  EST
Thursday
February 12, 1998

MANAGING FOR RESULTS -
OBSERVATIONS ON AGENCIES'
STRATEGIC PLANS

Statement of J.  Christopher Mihm
Associate Director
Federal Management and Workforce Issues
General Government Division

GAO/T-GGD-98-66

GAO/GGD-98-66T


(410266)


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


MANAGING FOR RESULTS: 
OBSERVATIONS ON AGENCIES'
STRATEGIC PLANS
==================================================== Chapter STATEMENT

Mr.  Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss our assessment of the
strategic plans that executive agencies produced last September under
the Government Performance and Results Act of 1993 (Results Act) and
the current stage of Results Act implementation--annual performance
planning and measurement. 

The approach to performance-based management and accountability
envisioned by the Results Act is a dynamic and iterative process in
which one stage builds on and reinforces the progress made at earlier
stages.  As you know, under the Results Act, agencies first are to
prepare long-term strategic plans that set the general direction for
their efforts.  They submitted the first cycle of their strategic
plans to Congress and the Office of Management and Budget (OMB) in
September 1997.  Agencies then are to use these plans to prepare
annual performance plans that lay out how the day-to-day activities
of managers and staff are to achieve long-term strategic goals. 

Agencies' first annual performance plans are due to Congress after
the submission of the President's fiscal year 1999 budget.  A number
of agencies already have provided their annual performance plans to
Congress, and the rest are generally expected to do so before the end
of the month.  OMB also is to prepare a federal government
performance plan, which is based on agencies' plans and which OMB is
to submit to Congress with the President's budget.  That first
federal government performance plan was provided to Congress on
February 2.  Finally, the Act requires that each agency report
annually on the extent to which it is meeting annual performance
goals and the actions needed to achieve or modify those goals that
have not been met. 

In the report that is being released today, we conclude that the
strategic plans that agencies produced in September 1997 provide a
workable foundation for Congress to use in helping to fulfill its
appropriations, budget, authorization, and oversight responsibilities
and for agencies to use in setting a general direction for their
efforts.\1 After having reviewed both agencies' draft and September
strategic plans, it was clear to us that the active engagement of
Members and congressional staff contributed significantly to the
progress agencies made in their strategic plans.  Much of this
contribution was due to the congressional consultations that the Act
requires as agencies develop their strategic plans, which--for the
first cycle of strategic plans--took place last spring and summer. 

My comments are based on our large body of work in recent years on
the Results Act, in particular our assessment of the draft and
September 30, 1997, strategic plans of the 24 agencies covered by the
Chief Financial Officers (CFO) Act; our recently issued congressional
guide;\2 and our continuing work with congressional committees on
Results Act issues.  On the basis of that work, my statement will
focus on (1) the extent to which agencies' strategic plans met
statutory requirements, (2) critical planning challenges that remain
to be addressed, and (3) a discussion of how our recent congressional
guide for agencies' annual performance plans can facilitate
congressional use of those plans and thereby advance the
implementation of the Results Act. 


--------------------
\1 Managing for Results:  Agencies' Annual Performance Plans Can Help
Address Strategic Planning Challenges (GAO/GGD-98-44, Jan.  30,
1998). 

\2 Agencies' Annual Performance Plans Under the Results Act:  An
Assessment Guide to Facilitate Congressional Decisionmaking, Version
1 (GAO/GGD/AIMD-10.1.18, Feb.  1998). 


   AGENCIES' STRATEGIC PLANS
   GENERALLY MET STATUTORY
   REQUIREMENTS
-------------------------------------------------- Chapter STATEMENT:1

The Results Act requires that strategic plans include six broad
elements--mission statements, general goals and objectives,
approaches (or strategies) for achieving goals, a description of the
relationship between general goals and annual performance goals, key
external factors, and a description of the actual use and planned use
of program evaluations.  In that regard, the strategic plans that
agencies submitted in September represent a significant improvement
over the draft plans we reviewed last summer.  For example, we found
that all but six of the draft plans were missing at least one element
required by the Results Act and about a third were missing two of the
six required elements.  In contrast, all 24 of the September plans we
reviewed contained at least some discussion of each element required
by the Act.  And in many cases, those elements that had been included
in the draft plans were substantially improved.  For example,

  -- the Department of Transportation explained more clearly how its
     mission statement is linked to its authorizing legislation;

  -- the Small Business Administration clarified how it would assess
     progress toward its strategic goals by stating when it would
     meet specific performance objectives;

  -- the Nuclear Regulatory Commission better explained the scope of
     its crosscutting functions by identifying major crosscutting
     functions and interagency programs and its coordination with
     agencies, such as the Department of Energy and the Environmental
     Protection Agency; and

  -- the Agency for International Development improved its discussion
     of external factors, such as political unrest and natural
     disasters, that could affect its achievement of strategic goals
     and that are beyond its control by describing those factors and
     the way they can be offset by agency field missions. 


   CRITICAL PLANNING CHALLENGES
   REMAIN TO BE ADDRESSED
-------------------------------------------------- Chapter STATEMENT:2

Although all of the strategic plans that we reviewed contained at
least some discussion of each element required by the Results Act, we
found that critical planning challenges remain.  Among these planning
challenges are the need to demonstrate (1) a clearly articulated
strategic direction, (2) the coordination of crosscutting program
efforts, and (3) reliable data systems and analytic capacity. 


      A CLEARLY ARTICULATED
      STRATEGIC DIRECTION
------------------------------------------------ Chapter STATEMENT:2.1

We found that the strategic plans often lacked clear articulation of
the agencies' strategic direction, a sense of what they were trying
to achieve, and how they would achieve it.  For example, we found
that the goals and objectives in many agencies' strategic plans could
be more results oriented and stated in a way to better enable the
agency to make a future assessment of whether goals and objectives
were being achieved.  In addition, the plans often did not establish
linkages among planning elements, such as goals, objectives, and
strategies for achieving those goals and objectives. 

Another weakness of agencies' strategic plans was incomplete and
underdeveloped strategies for achieving long-term strategic goals and
objectives.  Specifically, we found that agencies did not always
provide an adequate discussion of the resources needed to achieve
goals.  In particular, the role that information technology played,
or can play, in achieving agencies' long-term strategic goals and
objectives was generally neglected in agencies' strategic plans.  For
example, most of the Department of Defense's (DOD) goals and
objectives rely on the effective use of information technology to
obtain a given goal as well as to measure progress toward its
achievement.  DOD's strategic plan would be significantly enhanced if
it more explicitly linked its strategic goals to a strategy for
improving management and oversight of information technology
resources.  In addition, DOD's strategic plan--as well as the plans
of other agencies--did not fully recognize the dramatic impact the
Year 2000 problem will likely have on DOD's operations.\3

The Department of State's strategic plan also does not specifically
address the serious deficiencies in its information and financial
accounting systems.  Rather, the plan notes, in more general terms,
that it will take several years for State to develop performance
measures and related databases in order to provide sufficient
information on the achievement of its long-term goals.  We believe
that information technology issues deserve attention in strategic
plans so as to provide assurance that agencies are (1) addressing the
federal government's long-standing information technology problems
and (2) better ensuring that technology acquisition and use are
targeted squarely on program results. 

Agencies can continue to address the critical planning challenges
associated with setting a strategic direction as they develop their
annual performance plans.  Building on the decisions made as part of
the strategic planning process, the Results Act requires executive
agencies to develop annual performance plans covering each program
activity set forth in the agencies' budgets.\4 Each plan is to
contain an agency's annual performance goals and associated measures. 
If successfully developed, those annual performance goals can
function as a bridge between long-term strategic planning and
day-to-day operations, thereby assisting agencies in establishing
better linkages among planning elements.  For example, agencies can
use performance goals to show clear and direct relationships in two
directions--to the goals in the strategic plans and to operations and
activities within the agency. 

By establishing those relationships, agencies can (1) provide
straightforward road maps that show managers and staff how their
daily activities can contribute to attaining agencywide strategic
goals, (2) hold managers and staff accountable for contributing to
the achievement of those goals, and (3) provide decisionmakers with
information on their annual progress in meeting the goals.  As
agencies gain experience in developing these annual performance
goals, they likely will become better at identifying and correcting
misalignment among strategic goals, objectives, and strategies within
both their strategic and annual plans. 


--------------------
\3 On January 1, 2000, many computer systems, if not adequately
modified, will either fail to run or malfunction simply because the
equipment and software were not designed to accommodate the change of
the date to the new millennium. 

\4 The term "program activity" refers to the listings of projects and
activities in the appendix portion of the Budget of the United States
Government.  Program activity structures are intended to provide a
meaningful representation of the operations financed by a specific
budget account. 


      COORDINATED CROSSCUTTING
      PROGRAM EFFORTS
------------------------------------------------ Chapter STATEMENT:2.2

A focus on results, as envisioned by the Results Act, implies that
federal programs that contribute to the same or similar results
should be closely coordinated to ensure that goals are consistent
and, as appropriate, program efforts are mutually reinforcing.\5 We
have found that uncoordinated program efforts can waste scarce funds,
confuse and frustrate program customers, and limit the overall
effectiveness of the federal effort.\6

This suggests that federal agencies are to look beyond their
organizational boundaries and coordinate with other agencies to
ensure that their efforts are aligned and complementary. 

Agencies' strategic plans better described crosscutting programs and
coordination efforts than their draft plans did.  Some of the
strategic plans we reviewed contained references to other agencies
that shared responsibilities in a crosscutting program area or
discussed the need to coordinate their programs with other agencies. 
These presentations provide a foundation for the much more difficult
work that lies ahead--undertaking the substantive coordination that
is needed to ensure that those programs are effectively managed. 
However, although agencies have begun to recognize the importance of
coordinating crosscutting programs, it is important that they
undertake the substantive coordination that is needed for the
effective management of those programs.  For example, in an
improvement over its draft plan, the Department of Labor's plan
refers to a few other agencies with responsibilities in the area of
job training programs and notes that the agency plans to work with
them.  But the plan contains no discussion of what specific
coordination mechanism Labor will use to realize efficiencies and
implement possible strategies to consolidate job training programs to
achieve a more effective job training system. 

Our work has shown that the performance planning and measurement
stage of the Results Act's implementation will offer a structured
framework to address crosscutting issues.\7 For example, the Act's
emphasis on results-based performance measures as part of the annual
performance planning process should lead agencies to more explicit
discussions concerning the contributions and accomplishments of
crosscutting programs.  Furthermore, if agencies and OMB use the
annual planning process to highlight crosscutting program efforts and
provide evidence of joint planning and coordination of those efforts,
the individual agency performance plans and the governmentwide
performance plan should help provide Congress with the information
needed to identify agencies and programs addressing similar missions. 

Once these programs are identified, Congress can consider the
associated policy, management, and performance implications of
crosscutting program efforts and whether individual programs make a
sufficiently distinguishable contribution to a crosscutting national
issue.  This information should also help identify the performance
and cost consequences of program fragmentation and the implications
of alternative policy and service delivery options.  These options,
in turn, can lead to decisions concerning department and agency
missions and the allocation of resources among those missions.\8


--------------------
\5 Managing for Results:  Using the Results Act to Address Mission
Fragmentation and Program Overlap (GAO/AIMD-97-146, Aug.  29, 1997). 

\6 The Government Performance and Results Act:  1997 Governmentwide
Implementation Will Be Uneven (GAO/GGD-97-109, June 2, 1997). 

\7 GAO/AIMD-97-146, August 29, 1997. 

\8 GAO/AIMD-97-146, August 29, 1997. 


      RELIABLE DATA SYSTEMS AND
      ANALYTIC CAPACITY
------------------------------------------------ Chapter STATEMENT:2.3

Our previous work has shown that for agencies to set realistic goals,
they need to have reliable data during their planning efforts.  They
also need reliable data, later, as they gauge the progress they are
making toward achieving those goals.\9 To provide such reliable data,
agencies need a strong performance measurement system.  In addition,
to provide feedback on how well activities and programs contributed
to achieving goals and to identify ways to improve performance,
agencies need a strong program evaluation capacity.\10 However, our
work has found serious shortcomings in agencies' ability to generate
reliable and timely data to measure their progress in achieving goals
and to provide the analytic capacity to use those data. 

The absence of both sound program performance and cost data and the
capacity to use those data to improve performance is a critical
challenge that agencies must confront if they are to effectively
implement the Results Act.  Efforts under the CFO Act have shown that
most agencies still have a substantial amount of work to do before
they are able to generate the reliable, useful, relevant, and timely
financial information that is urgently needed to make our government
fiscally responsible.  The widespread lack of available program
performance information is equally troubling.  For example, in our
June report on the implementation of the Results Act, we included the
results of a survey of managers in the largest federal agencies.  Our
survey results indicated that fewer than one-third of those managers
said that results-oriented performance measures existed to a great or
very great extent for their programs.\11

Moreover, our work has shown that in agency after agency, efforts to
generate reliable data for measuring cost and results have been
disappointing.\12 As this Subcommittee is well aware, the federal
government has had chronic problems harnessing the full potential of
its vast expenditures in information technology.  Further
complicating efforts to collect reliable performance information is
that many agencies must rely on data collected by parties outside the
federal government.  In a recent report, we noted that the fact that
data were largely collected by others was the most frequent
explanation offered by agency officials for why determining the
accuracy and quality of performance data was a challenge.\13

Under the Results Act, strategic plans are to contain discussions of
how agencies used and planned to use program evaluations that are to
provide feedback on how well an agency's activities and programs
contributed to the achievement of its goals and to assess the
reasonableness and appropriateness of those goals.  Although all of
the strategic plans we reviewed included some discussion of program
evaluations, we found weaknesses in those discussions.  For example,
many agencies did not discuss how they planned to use evaluations in
the future to assess progress or did not offer a schedule for future
evaluation as required by the Results Act.  In contrast, the National
Science Foundation's strategic plan represents a noteworthy
exception.  The plan discusses how the agency used evaluations to
develop key investment strategies, action plans, and its annual
performance plan.  It also discusses plans for future evaluations and
provides a general schedule for their implementation. 

Agencies are also to discuss in their annual performance plans how
they will verify and validate the performance information that they
plan to use to show whether goals are being met.  Verified and
validated performance information, in conjunction with augmented
program evaluation efforts, will help ensure that agencies are able
to report progress in meeting goals and identify specific strategies
for improving performance. 


--------------------
\9 GAO/GGD-97-109, June 2, 1997. 

\10 Managing for Results:  Analytic Challenges in Measuring
Performance (GAO/HEHS/GGD-97-138, May 30, 1997). 

\11 GAO/GGD-97-109, June 2, 1997. 

\12 High-Risk Series:  Information Management and Technology
(GAO/HR-97-9, Feb.  1997). 

\13 GAO/HEHS/GGD-97-138, May 30, 1997. 


   OUR GUIDE IS INTENDED TO ASSIST
   CONGRESS IN USING AGENCY
   PERFORMANCE PLANS
-------------------------------------------------- Chapter STATEMENT:3

At the request of the Chairmen of the House Committees on Government
Reform and Oversight, Appropriations, and the Budget, in May 1997, we
developed a guide to assist the congressional consultations on the
development of agencies' strategic plans.\14 As we entered the annual
performance planning and measurement stage of the Act, those
Chairmen, the Speaker of the House, the House Majority Leader, the
Chairman of the House Committee on Science, and the Chairmen of the
Senate Committees on the Budget and Governmental Affairs asked us to
develop a guide to help congressional decisionmakers both elicit the
information that Congress needs from agencies' annual performance
plans and assess the quality of those plans.  That guide was issued
last week.\15

Our guide to facilitate congressional decisionmakers' use of
agencies' performance plans is organized around three core questions
that correspond to the Act's requirements for performance plans.  For
each core question, we identify issues that need to be addressed and
present key assessment questions that can help congressional users
elicit the cost and performance information that is relevant to their
decisionmaking from agencies' performance plans: 

  -- The first core question is--To what extent does the agency's
     performance plan provide a clear picture of intended performance
     across the agency?  This question has three related issues: 
     defining expected performance; connecting mission, goals, and
     activities; and recognizing crosscutting efforts. 

  -- The second core question is--How well does the performance plan
     discuss the strategies and resources the agency will use to
     achieve its performance goals?  This question has two related
     issues:  connecting strategies to results and connecting
     resources to strategies. 

  -- The third core question is--To what extent does the agency's
     performance plan provide confidence that its performance
     information will be credible?  This question also has two
     related issues:  verifying and validating performance and
     recognizing data limitations identified in the plan. 

The answers to the questions are intended to facilitate a complete
assessment of agencies' performance plans and address concerns that
are likely to be common across a variety of congressional users. 


--------------------
\14 Agencies' Strategic Plans Under GPRA:  Key Questions to
Facilitate Congressional Review, Version 1 (GAO/GGD-10.1.16, May
1997). 

\15 GAO/GGD/AIMD-10.1.18, February 1998. 


------------------------------------------------ Chapter STATEMENT:3.1

In summary, Mr.  Chairman, although agencies have generally met the
statutory requirements of the Results Act in their first cycle of
strategic planning, federal strategic planning--and Results Act
implementation in general--is still very much a work in progress. 
Some critical planning challenges remain before the type of
performance-based management and accountability envisioned by the
Results Act becomes the routine way of doing business in the federal
government.  As they develop their annual performance plans, agencies
will likely need to revisit and improve upon their strategic planning
efforts.  The annual performance plans offer the opportunity for
Congress and the agencies together to sustain the momentum of the
implementation of the Results Act and of performance-based
management. 

We are pleased that Congress has turned to us to assist in the
implementation of the Results Act.  Over the last few years, we have
issued a number of products on the key steps and practices needed to
improve the management of the federal government.\16

These key steps and practices are based on best practices in private
sector and public sector organizations.  We look forward to
continuing to support Congress' efforts to better inform its
decisionmaking, improve the management of the federal government, and
strengthen accountability. 

This concludes my prepared statement.  I would be pleased to respond
to any questions you or other Members of the Subcommittee may have. 

RELATED GAO PRODUCTS

Agencies' Annual Performance Plans Under the Results Act:  An
Assessment Guide to Facilitate Congressional Decisionmaking, Version
1 (GAO/GGD/AIMD-10.1.18, Feb.  1998). 

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

Managing for Results:  The Statutory Framework for Performance-Based
Management and Accountability (GAO/GGD/AIMD-98-52, Jan.  28, 1998). 

Managing for Results:  Building on Agencies' Strategic Plans to
Improve Federal Management (GAO/T-GGD/AIMD-98-29, Oct.  30, 1997). 

Managing for Results:  Critical Issues for Improving Federal
Agencies' Strategic Plans (GAO/GGD-97-180, Sept.  16, 1997). 

Managing for Results:  Using the Results Act to Address Mission
Fragmentation and Program Overlap (GAO/AIMD-97-146, Aug.  29, 1997). 

Managing for Results:  The Statutory Framework for Improving Federal
Management and Effectiveness (GAO/T-GGD/AIMD-97-144, June 24, 1997). 

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

Agencies' Strategic Plans Under GPRA:  Key Questions to Facilitate
Congressional Review, Version 1 (GAO/GGD-10.1.16, May 1997). 

Performance Budgeting:  Past Initiatives Offer Insights for GPRA
Implementation (GAO/AIMD-97-46, Mar.  27, 1997). 

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

--------------------
\16 See, for example, Executive Guide:  Effectively Implementing the
Government Performance and Results Act (GAO/GGD-96-118, June 1996);
Financial Management:  Momentum Must Be Sustained to Achieve the
Reform Goals of the Chief Financial Officers Act (GAO/T-AIMD-95-204,
July 25, 1995); and Executive Guide:  Improving Mission Performance
Through Strategic Information Management and Technology
(GAO/AIMD-94-115, May 1994). 


*** End of document. ***