Results Act: Observations on CFTC's Annual Performance Plan (Testimony,
10/08/98, GAO/T-GGD-99-10).

GAO discussed the Commodity Futures Trading Commission's (CFTC) fiscal
year (FY) 2000 annual performance plan, focusing on five areas in which
CFTC could improve its performance plan.

GAO noted that: (1) the annual performance plans can be an invaluable
tool for making policy decisions, improving program management,
enhancing accountability, and communicating to both internal and
external audiences on how the long-term strategic directions outlined in
strategic plans is translated into the day-to-day activities of managers
and staff; (2) successful implementation of a performance-based
management system, as envisioned by the Government Performance and
Results Act, represent a significant challenge requiring sustained
agency attention; (3) while opportunities exist to improve CFTC's Year
2000 performance plan, actions to date clearly show a good faith effort
by CFTC to comply with the Results Act and the Office of Management and
Budget (OMB) guidance in developing its plan; (4) in GAO's discussions
with CFTC staff, it found CFTC fully committed to meeting both the
requirements of the Act and congressional expectations that the plan
inform Congress and the public about CFTC performance goals, including
how the agency will accomplish these goals and measure results; (5) in
addition, the areas in which CFTC could improve its plan are the same
areas in which GAO found that many other federal agencies, including
federal financial regulators, could improve their plans; and (6)
specifically, CFTC could improve its plan in the following five areas:
(a) performance goals, measures, and targets could provide a clearer
picture of intended performance; (b) mission, goals, and activities
could be better connected to more fully demonstrate how CFTC will chart
annual progress toward achieving its long-term strategic goals; (c)
crosscutting efforts could be addressed more fully if CFTC worked with
the affected federal agencies to develop performance goals and measures
that reflect the nature and extent of their common efforts; (d)
strategies and resources used to achieve goals could be discussed in
greater detail to better enable congressional and other decisionmakers
to judge their reasonableness; and (e) the means for verifying and
validating that performance information is sufficiently complete,
accurate, and consistent as well as the extent to which such information
and the means for collecting, maintaining, and analyzing it are reliable
should be discussed.

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

 REPORTNUM:  T-GGD-99-10
     TITLE:  Results Act: Observations on CFTC's Annual Performance Plan
      DATE:  10/08/98
   SUBJECT:  Strategic planning
             Agency missions
             Data integrity
             Internal controls
             Accountability
             Congressional/executive relations
             Regulatory agencies
             Commodities exchanges
             Reporting requirements
             Interagency relations
IDENTIFIER:  GPRA
             Government Performance and Results Act
             
******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO report.  Delineations within the text indicating chapter **
** titles, headings, and bullets are preserved.  Major          **
** divisions and subdivisions of the text, such as Chapters,    **
** Sections, and Appendixes, are identified by double and       **
** single lines.  The numbers on the right end of these lines   **
** indicate the position of each of the subsections in the      **
** document outline.  These numbers do NOT correspond with the  **
** page numbers of the printed product.                         **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
** A printed copy of this report may be obtained from the GAO   **
** Document Distribution Center.  For further details, please   **
** send an e-mail message to:                                   **
**                                                              **
**                                            **
**                                                              **
** with the message 'info' in the body.                         **
******************************************************************


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


Before the Subcommittee on Risk Management and
Specialty Crops, Committee on Agriculture
House of Representatives

For Release on Delivery
Expected at
9:00 a.m., EDT
on Thursday
October 8, 1998

RESULTS ACT - OBSERVATIONS ON
CFTC'S ANNUAL PERFORMANCE PLAN

Statement of Richard J.  Hillman, Associate Director
Financial Institutions and Markets Issues
General Government Division

GAO/T-GGD-99-10

GAO/GGD-99-10t


(233588)


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


RESULTS ACT:  OBSERVATIONS ON
CFTC'S ANNUAL PERFORMANCE PLAN
====================================================== Chapter Summary

The House Subcommittee on Risk Management and Specialty Crops, House
Committee on Agriculture, asked GAO to assess the fiscal year 2000
annual performance plan of the Commodity Futures Trading Commission
(CFTC) for compliance with the Government Performance and Results Act
of 1993 (Results Act).  Under the Results Act, executive agencies are
required to prepare annual performance plans to set out measurable
goals that define what will be accomplished during a fiscal year. 
The performance plan is to reinforce the connection between the
long-term strategic goals outlined in the agency's strategic plan and
the daily activities of program managers and staff. 

On the basis of its review, GAO found that CFTC actions clearly show
a good faith effort to comply with the Results Act.  However, as
discussed below, GAO identified several areas in which CFTC could
improve its performance plan. 

  -- Performance goals, measures, and targets could provide a clearer
     picture of intended performance. 

  -- Mission, goals, and activities could be better connected to more
     fully demonstrate how CFTC will chart annual progress toward
     achieving its strategic goals. 

  -- Crosscutting efforts could be addressed more fully if CFTC
     worked with the affected federal agencies to develop performance
     goals and measures that reflect the nature and extent of their
     common efforts. 

  -- Strategies and resources used to achieve goals could be
     discussed in greater detail to better enable congressional and
     other decisionmakers to judge their reasonableness. 

  -- The means for verifying and validating that performance
     information is sufficiently complete, accurate, and consistent,
     as well as the extent to which such information and the means
     for collecting, maintaining, and analyzing it are reliable,
     should be discussed. 

Although opportunities exist for CFTC to improve its performance
plan, the areas for improvement are some of the same areas in which
we found that many other federal agencies, including federal
financial regulators, could improve their plans.  It is also
important to recognize that the Results Act anticipates that the
process of developing an effective planning process and plans could
take several planning cycles. 


RESULTS ACT:  OBSERVATIONS ON
CFTC'S ANNUAL PERFORMANCE PLAN
==================================================== Chapter STATEMENT

Mr.  Chairman and Members of the Subcommittee: 

I am pleased to be here today to assist the Subcommittee in its
review of the Commodity Futures Trading Commission's (CFTC) fiscal
year 2000 annual performance plan.  Hearings like this one and the
one you held last year on CFTC's 1997-2002 strategic plan continue to
be an important means of ensuring that the intent of the Government
Performance and Results Act of 1993 (Results Act) is met. 

As you know, annual performance plans can be an invaluable tool for
making policy decisions, improving program management, enhancing
accountability, and communicating to both internal and external
audiences on how the long-term direction outlined in strategic plans
is translated into the day-to-day activities of managers and staff. 
Successful implementation of a performance-based management system,
as envisioned by the Results Act, represents a significant challenge
requiring sustained agency attention. 

My testimony today focuses on five areas in which CFTC could improve
its performance plan to make it a more useful tool for congressional
and executive branch decisionmakers.  Although opportunities exist to
improve CFTC's fiscal year 2000 performance plan, CFTC actions to
date clearly show a good faith effort to comply with the Results Act
and the Office of Management and Budget (OMB) guidance in developing
its plan.  In our discussions with CFTC staff, we found CFTC fully
committed to meeting both the requirements of the Act and
congressional expectations that the plan inform Congress and the
public about CFTC performance goals, including how the agency will
accomplish these goals and measure results.  In addition, the areas
in which CFTC could improve its plan are some of the same areas in
which we found that many other federal agencies, including federal
financial regulators, could improve their plans. 

Specifically, CFTC could improve its plan in the following five
areas: 

  -- Performance goals, measures,\1 and targets could provide a
     clearer picture of intended performance. 

  -- Mission, goals, and activities could be better connected to more
     fully demonstrate how CFTC will chart annual progress toward
     achieving its long-term strategic goals. 

  -- Crosscutting efforts could be addressed more fully if CFTC
     worked with the affected federal agencies to develop performance
     goals and measures that reflect the nature and extent of their
     common efforts. 

  -- Strategies and resources used to achieve goals could be
     discussed in greater detail to better enable congressional and
     other decisionmakers to judge their reasonableness. 

  -- The means for verifying and validating that performance
     information is sufficiently complete, accurate, and consistent,
     as well as the extent to which such information and the means
     for collecting, maintaining, and analyzing it are reliable,
     should be discussed. 

My comments today apply to the fiscal year 2000 annual performance
plan that CFTC prepared for OMB in September 1998.  Our assessment of
CFTC's plan was based on knowledge of the agency's operations and
programs; past reviews of CFTC, including a review of its 1997-2002
strategic plan; results of work on other agencies' performance plans
and the Results Act; discussions with CFTC staff; and other
information available at the time of our assessment.  The criteria we
used to determine whether CFTC's plan complied with the requirements
of the Results Act were the Results Act itself; OMB guidance on
preparing strategic and performance plans (OMB Circular A-11, Part
2); and GAO guidance on assessing agency performance plans.\2


--------------------
\1 CFTC's plan uses the term "performance indicator" instead of
"performance measure" to refer to the measures used to assess
progress toward achieving performance goals. 

\2 See The Results Act:  An Evaluator's Guide to Assessing Agency
Annual Performance Plans (GAO/GGD-10.1.20, Apr.  1998). 


   BACKGROUND
-------------------------------------------------- Chapter STATEMENT:1

CFTC, an independent agency created by Congress in 1974, administers
the Commodity Exchange Act (CEA), as amended.\3

The principal purposes of the CEA are to protect the public interest
in the proper functioning of the market's price discovery and
risk-shifting functions.  In administering the CEA, CFTC is
responsible for fostering the economic utility of the futures market
by encouraging its efficiency, monitoring its integrity, and
protecting market participants from abusive trade practices and
fraud. 

The Results Act seeks to improve the management of federal programs,
as well as their effectiveness and efficiency, by establishing a
system under which agencies set goals for program performance and
measure their results.  The Results Act is intended to shift the
focus of government decisionmaking and accountability away from a
preoccupation with activities--such as the number of market
surveillance reports prepared--to a focus on the results of those
activities, such as protecting the economic functioning of the
commodity futures and option markets. 

Under the Results Act, strategic plans are the starting point for
setting goals and measuring progress towards them.  The Results Act
requires virtually every executive agency to develop a strategic
plan, covering a period of at least 5 years forward from the fiscal
year in which the plan is submitted.  In September 1997, CFTC
formally submitted its fiscal years 1997-2002 strategic plan to
Congress and OMB.  This plan established three strategic goals:  (1)
protect the economic functions of the commodity futures and option
markets; (2) protect market users and the public; and (3) foster
open, competitive, and financially sound markets. 

The Results Act also requires a federal agency to prepare an annual
performance plan covering the program activities set out in its
budget.  In establishing the requirement for a performance plan, the
Results Act establishes the first statutory link between an agency's
budget request and its performance planning efforts.  The performance
plan is to reinforce the connections between the long-term strategic
goals outlined in the agency's strategic plan and the daily
activities of program managers and staff. 

Finally, the Results Act requires executive agencies to prepare
annual reports on program performance for the previous fiscal year. 
The performance reports are to be issued by March 31 each year, with
the first (for fiscal year 1999) to be issued by March 31, 2000.  In
each report, the agency is to compare its performance against its
goals, summarize findings of program evaluations completed during the
year, and describe the actions needed to address any unmet goals. 


--------------------
\3 7 U.S.C.  ï¿½ï¿½ 1-25. 


   PERFORMANCE GOALS, MEASURES,
   AND TARGETS COULD BE IMPROVED
-------------------------------------------------- Chapter STATEMENT:2

The Results Act requires that annual performance plans establish
performance goals that (1) define the levels of performance to be
achieved; (2) express these goals in an objective, quantifiable, and
measurable form; (3) establish performance indicators to be used in
measuring or assessing progress toward achieving the goals; and (4)
provide a basis for comparing actual program results with the
established goals.  CFTC's performance plan makes great strides in
addressing these requirements.  However, the performance plan could
provide a clearer picture of intended performance and be of greater
use in assessing progress toward achieving intended performance if
performance goals, measures, and targets were improved. 
Specifically, the plan could be improved if (1) performance goals and
measures were more results-oriented, and goals were provided for all
measures and internal management challenges; (2) some performance
goals were made self-measuring\4 and others were made more objective;
(3) certain performance measures were replaced, restated, or deleted;
and (4) baselines were established against which annual targets could
be compared. 


--------------------
\4 Self-measuring goals are expressed objectively and quantifiably
and thus do not require the use of additional measures. 


      GOALS AND MEASURES COULD BE
      MORE RESULTS-ORIENTED AND
      COMPLETE
------------------------------------------------ Chapter STATEMENT:2.1

Results-oriented, or outcome, goals and measures provide the clearest
picture of intended and actual performance.  However, most of CFTC's
performance goals and measures focus on program outputs--such as the
number of meetings attended and number of research projects or
reports completed.  In our testimony before this Subcommittee last
year, we highlighted a similar problem with CFTC's strategic plan.\5

Although we recognize that establishing outcome measures is
particularly challenging for regulatory agencies as they move from a
focus on the activities they undertake to the results they are trying
to achieve, a key shortcoming of CFTC's performance plan is that it
relies on output measures that describe completed activities, not
program results.  Also, these measures are weighted toward measuring
the quantity of completed activities, rather than the quality, cost,
or timeliness of performance outcomes.  As mentioned earlier, the
Results Act is intended to shift the focus of government
decisionmaking and accountability away from a preoccupation with
completed activities to a focus on the results of such activities. 

The focus of CFTC's performance plan on output measures appears to
flow from its strategy of deriving performance goals from program
activities.  For example, one performance goal is to aggressively
identify, investigate, and take action against individuals engaged in
fraudulent Internet and media activities.  This goal is associated
with the program activity of monitoring the Internet and other media
for fraudulent activities and other possible violations of the CEA. 
The measure for the goal is the number of referrals to enforcement
authorities generated from Internet and media monitoring--an output
of the activity, not an outcome of a program. 

CFTC could refer to the narrative sections of its performance plan
that discuss CFTC's fiscal year 1998 accomplishments to identify more
results-oriented performance goals.  For example, the Enforcement
Program accomplishment section discusses the effectiveness of its
quick-strike ability--the ability to file injunctive actions quickly
after detecting fraud--to, among other things, obtain timely
injunctive relief and enhance the possibility that customer funds
will be recovered.  This accomplishment section describes cases,
filed within days or weeks of CFTC's discovering an illegal activity,
that stopped fraud at an early stage and preserved customer funds. 
CFTC's performance measures could be made more results-oriented by
replacing measures, such as reports on activities related to bringing
injunctive actions and sanctioning violators, with more
outcome-related measures, such as the percentage of quick-strike
cases filed within a certain number of days of starting an
investigation that resulted in sanctions and the percentage of funds
recovered. 

CFTC could also learn from the plans of other federal financial
regulators that are attempting the transition to results-oriented
goals.  For example, the National Credit Union Administration is
developing new outcome performance goals.  One outcome goal of the
National Credit Union Administration is to ensure that federally
insured credit unions are adequately capitalized.  A performance goal
is to reduce the percentage of federally insured credit unions that
are undercapitalized by 10 percent, from 372 to 335. 

CFTC's plan could also be improved if performance goals were provided
for all activities and performance targets as well as for internal
management challenges.  Currently, the plan has 16 activities for
which no performance goals exist.  For example, no performance goal
exists for the activity of reviewing and overseeing self-regulatory
organization audit and financial practices.  Without a performance
goal, it is not clear what performance is expected.  Also, CFTC's
strategic plan identifies several internal management challenges that
the performance plan does not address.  These challenges include
diminishing resources, recruiting and retaining qualified
professionals, remaining abreast of current technology, and remaining
educated and informed as innovation changes the industry.  To better
respond to the intent of the Results Act, CFTC could add agencywide
performance goals to the plan to address these challenges or
incorporate these challenges in existing performance goals and
measures. 


--------------------
\5 Results Act:  Observations on CFTC's Strategic Plan
(GAO/T-GGD-98-17, Oct.  22, 1997). 


      SOME GOALS COULD BE MADE
      SELF-MEASURING, AND OTHERS
      COULD BE MADE MORE OBJECTIVE
------------------------------------------------ Chapter STATEMENT:2.2

Although not required by the Results Act, CFTC could redefine some
performance goals so that they are self-measuring, thereby reducing
the complexity of the plan.  Currently, all but 2 of CFTC's 31
performance goals are stated as abstract goals--that is, as goals
requiring that specific performance measures be defined to assess
progress toward their achievement. 

Performance goals that can be redefined so that they are
self-measuring generally have one measure or two or more measures
that can be combined.  For example, the performance goal for the
activity of reviewing the adequacy of self-regulatory organization
disciplinary actions might be restated in the following way:  On an
annual basis, review a certain percentage of self-regulatory
organization disciplinary actions to ensure compliance with CFTC
standards.  This approach, which has been taken by other federal
financial regulators, such as the National Credit Union
Administration and Federal Deposit Insurance Corporation, clearly
defines performance expectations.  For example, the Federal Deposit
Insurance Corporation has the following performance goal:  Market 80
percent of a failing financial institution's assets based on book
value at the time of resolution or within 90 days. 

CFTC's performance plan could also be improved by reducing the extent
to which performance goals require interpretation.  To the extent
possible, goals should not require subjective considerations to
dominate measurement.  For example, one performance goal is defined
as follows:  Bring important cases (including matters involving
ongoing conduct and complex transactions) aggressively.  The
performance goal does not define what an important case is or what it
means to aggressively bring a case. 


      CERTAIN PERFORMANCE MEASURES
      COULD BE REPLACED, RESTATED,
      OR DELETED
------------------------------------------------ Chapter STATEMENT:2.3

CFTC's performance plan has 31 performance goals with 228 performance
measures to address them.  CFTC could replace, restate, or delete
performance measures for certain performance goals to strike a better
balance between too few and too many measures and to enhance its
ability to assess the progress made in achieving performance goals. 

First, CFTC could replace certain performance measures to better
capture key aspects of the performance they are trying to assess. 
For example, one of the plan's performance goals is to review every
designation application and rule change request within 10 to 45 days. 
This goal's performance measures are the number of designation
applications processed and the number of contract market rule changes
processed.  Because neither measure captures the amount of time it
takes to process applications or changes, they could be replaced with
one measure that captures the percentage of applications and changes
processed in 45 days or less. 

Second, CFTC could restate or delete certain performance measures,
because they do not appear to be clearly related to their performance
goals and/or appear to be unduly affected by external factors.  For
example, the number of active futures and option markets is used to
measure, in part, two goals:  (1) identify traders who can influence
futures prices and (2) determine whether traders are influencing
futures prices.  The number of active futures markets is determined
by futures exchanges and other external factors and has little direct
bearing on the two goals.  As a result, the measure could be deleted. 

Third, CFTC could restate or delete certain performance measures,
because they may have limitations that preclude them from accurately
capturing intended performance and may promote unintended
consequences.  For example, one of the plan's performance goals is to
conduct important investigations and refer potential violations to
other authorities as appropriate.  The performance measures for this
goal include the number of documents obtained through subpoena or
inspection, number of witnesses from whom testimony was taken, and
number of witnesses interviewed.  These output-oriented measures
could provide an incentive for staff to conduct more interviews, take
more testimonies, and obtain more documents than necessary, which
could add cost and time to investigations without necessarily
contributing commensurately to their success. 


      BASELINES COULD BE
      ESTABLISHED AGAINST WHICH TO
      COMPARE ANNUAL TARGETS
------------------------------------------------ Chapter STATEMENT:2.4

Although CFTC's performance plan includes annual targets for
performance goals, it could make such information more useful by
providing baselines, or a context, for assessing the reasonableness
and appropriateness of such targets.  As we recently reported,
agencies that go beyond the requirements of the Results Act and
include baseline or trend data for their goals provide a more
informative basis for assessing expected performance. 

CFTC's performance plan provides many quantitative annual targets for
each fiscal year from 1998 through 2000.  Many are set at the same
performance level as or at a lower performance level than in prior
fiscal years without an explanation.  For example, the performance
measures for assessing sanctions under CFTC's first strategic goal
are the same in each year covered by the plan for the number of cease
and desist orders, registration sanctions, and trading prohibitions. 
However, the basis for setting the specific targets and the
contributions of these targets to the outcome objective are not
readily apparent.\6 Without this contextual information, the reader
does not know if CFTC's output-oriented performance targets are
reasonable. 


--------------------
\6 The outcome objective is to foster futures and option markets that
accurately reflect the forces of supply and demand for the underlying
commodity and are free of disruptive activity. 


   MISSION, GOALS, AND ACTIVITIES
   COULD BE BETTER CONNECTED
-------------------------------------------------- Chapter STATEMENT:3

Consistent with the Results Act, CFTC's performance plan attempts to
show the relationship between the agency's annual performance goals
and its fiscal years 1997 through 2002 mission and strategic goals. 
To do so, the plan uses tables that connect each strategic goal to
its accompanying set of performance goals, measures, and annual
targets.  The plan also ranks the agency's outcome objectives by
dollars budgeted, which is a starting point for providing useful
information about its priorities.  However, the plan could better
connect mission, goals, and activities by more fully demonstrating
how CFTC will chart annual progress toward achieving its long-term
strategic goals. 

As we found with other agency performance plans, CFTC's plan
associates one performance goal with multiple program activities and
strategic goals.  Such associations make it difficult to determine
whether all activities are substantially covered or to understand how
specific program activities are intended to contribute to CFTC's
strategic goals.  For example, the performance goal--assess sanctions
that are remedial and deter violators--is associated with three
different program activities and three different strategic goals. 
Moreover, the measures and targets for this performance goal differ
with each program activity and strategic goal. 

Similarly, the performance plan's presentation of many separate
program areas, program activities, and performance goals, measures,
and targets makes it difficult to link CFTC's mission and strategic
goals to performance goals across the entire agency.  The plan's 31
performance goals and 228 performance measures support 3 strategic
goals and 9 strategic objectives, covering 5 program areas.  Although
the plan's ranking of outcome objectives offers a useful perspective
on CFTC's priorities, given the high level of complexity, it is
difficult to (1) identify the agency's key priorities among the many
goals and measures, (2) differentiate efforts to meet these
priorities, and (3) understand what will be achieved if all the
performance goals are met. 


   CROSSCUTTING EFFORTS COULD BE
   MORE FULLY ADDRESSED
-------------------------------------------------- Chapter STATEMENT:4

The Results Act seeks to ensure that crosscutting goals of federal
programs are consistent; strategies are mutually reinforcing; and, as
appropriate, progress is assessed through the use of common
performance measures.  OMB guidance tasks performance plans with
identifying those performance goals that are being mutually
undertaken with other federal agencies in support of programs or
activities of a crosscutting nature.\7 CFTC's plan recognizes the
need to address crosscutting efforts.  However, it could more fully
address such efforts if the agency worked with the cognizant federal
agencies to develop performance goals and measures that better
reflect the nature and extent of their common efforts. 

CFTC's performance plan could be expanded to include performance
goals and measures to more adequately address crosscutting efforts,
such as those identified in its budget justification that accompanied
its performance plan to OMB.  These include CFTC's participating in
the President's Working Group on Financial Markets;\8 sharing
information with other financial regulators; working with the U.S. 
Department of Agriculture on a risk management education program;
contributing to a Department of the Treasury initiative that
encourages global financial stability; as well as cooperative
enforcement efforts with the Department of Justice, the Federal
Bureau of Investigation, the Federal Reserve Board, the Federal Trade
Commission, the Securities and Exchange Commission, and the U.S. 
Postal Inspection Service. 

CFTC's performance plan briefly discusses CFTC's need to work with
other U.S.  financial regulators through, among other means, the
President's Working Group on Financial Markets.  However, the related
performance goals and measures do not directly address the type of
crosscutting performance that the Working Group was created to
address.  For example, CFTC's performance goal covering the Working
Group is for CFTC to contribute to the performance of the group.  The
measure for this goal is the number of meetings attended, and the
fiscal year 2000 target is two meetings. 

As supported by OMB guidance, CFTC could strengthen its performance
plan by participating with the members of the Working Group and other
federal regulators involved in crosscutting programs to develop
common performance goals and measures.  For example, the continued
growth and development of the over-the-counter (off-exchange)
derivatives market has raised a number of potential regulatory
concerns that affect CFTC and other members of the Working Group.  In
addition, the potential need to develop a financial markets
contingency plan to address the "Year 2000" computer dating problem\9
could involve coordination among CFTC and other federal financial
regulators. 


--------------------
\7 OMB Circular A-11 guidance states that, at a minimum, the
performance plan should indicate those programs or activities that
are being undertaken with other agencies to achieve a common purpose
or objective.  An agency should also review the performance plans of
other agencies participating with it in a crosscutting program or
activity to ensure that goals and indicators are consistent and
harmonious. 

\8 The President's Working Group on Financial Markets was created
following the October 1987 stock market crash to address issues
concerning the competitiveness, integrity, and efficiency of the
financial markets.  The Secretary of the Treasury chairs the group,
and other members include the chairs of CFTC, the Federal Reserve
System, and the Securities and Exchange Commission. 

\9 The Year 2000 computer dating problem relates to the need for
computer systems to be changed to accommodate dates beyond the year
1999. 


   STRATEGIES AND RESOURCES USED
   TO ACHIEVE GOALS COULD BE
   DISCUSSED IN GREATER DETAIL
-------------------------------------------------- Chapter STATEMENT:5

CFTC's plan provides important information on how strategies and
resources will be used to achieve goals.  However, expanding this
discussion could better enable congressional and other decisionmakers
to judge the reasonableness of CFTC's strategies and anticipated
resource deployment. 

Consistent with the Results Act and OMB guidance, CFTC's performance
plan attempts to address the strategies that CFTC will use to achieve
its performance goals.  Although this discussion should cover
operational processes, skills, and technologies, CFTC's discussion
focuses on the agency's operational processes and, to a much lesser
extent, on skills and technologies.  Aligning its discussion with
CFTC's strategic goals, the plan briefly describes the major
activities of each program in relation to its performance goals and
measures.  In a few cases, the plan also discusses skills or
technologies that programs will use in relation to performance goals
and measures.  The plan could be made more useful by providing
additional information on the skills and, if appropriate,
technologies used in connection with operational processes to achieve
program goals. 

Also, consistent with the Results Act, CFTC's performance plan
discusses the resources that will be applied to achieve the agency's
performance goals.  Using tables and graphics, the plan shows the
amount of budget funding and the number of full-time equivalent
employees that will be needed to achieve each strategic goal and the
individual outcome objectives covering each strategic goal.  CFTC's
plan could be further improved by describing the resources required
to achieve each performance goal. 


   THE MEANS FOR VERIFYING AND
   VALIDATING PERFORMANCE
   INFORMATION SHOULD BE DESCRIBED
-------------------------------------------------- Chapter STATEMENT:6

Although required by the Results Act and OMB guidance, CFTC's fiscal
year 2000 performance plan does not describe the procedures that the
agency will use to verify\10 and validate\11 that performance
information is sufficiently complete, accurate, and consistent.  Nor
does the plan discuss the extent to which the performance information
and the means for collecting, maintaining, and analyzing it are
reliable.  CFTC's performance plan should be expanded to address
these requirements. 

In addition, to assess progress toward achieving its goals, CFTC will
need to collect information on the over 200 performance measures in
its plan.  For some of these measures, the amount of information to
be collected is voluminous and covers activities across CFTC
headquarters and regional offices.  Errors can occur in collecting,
maintaining, processing, and reporting such information--potentially
introducing bias and resulting in inaccurate estimates of program
performance.  As a result, CFTC should have procedures for ensuring
that its performance information is free of significant levels of
error and that bias is not introduced.  Such procedures can include
internal controls over data collection, maintenance, and entry, as
well as audits, evaluations, and peer reviews. 


--------------------
\10 Verify means to check or test performance data to reduce the risk
of using data that contains significant errors. 

\11 Validate means to test the data to ensure that errors do not
create significant bias. 


------------------------------------------------ Chapter STATEMENT:6.1

In summary, Mr.  Chairman, it is important to recognize that although
CFTC's performance planning can be further improved, the Results Act
anticipated that the process of developing an effective planning
process and plans could take several planning cycles.  We look
forward to continuing to work with Congress and CFTC to ensure that
the requirements of the Results Act are met. 

Mr.  Chairman, this concludes my prepared statement.  My colleagues
and I would be pleased to answer any questions that you or Members of
the Subcommittee may have. 

*** End of document. ***