Managing for Results: The Statutory Framework for Improving Federal
Management and Effectiveness (Stmnt. for the Rec., 06/24/97,
GAO/T-GGD/AIMD-97-144).
GAO discussed how Congress can use the statutory framework that it
enacted, in particular the Government Performance and Results Act, to
help identify and address some of the key management challenges that are
undermining the effectiveness and responsiveness of federal agencies.
GAO noted that: (1) Congress has put in place a statutory framework with
the essential ingredients needed to address long-standing weaknesses in
federal management and to create a federal government that is more
responsive and cost-effective; (2) the key now is for agencies to
implement that framework and for the executive branch and Congress to
use it to help make decisions and ensure accountability; (3) given the
experiences of the foreign and state governments that have been seeking
to instill a more results-oriented approach to management for some years
now, the implementation of the Results Act, and of the other key parts
of the framework, has not been, and will not be, quick or easy; (4)
moreover, addressing some of the challenges that GAO has highlighted,
such as addressing crosscutting program efforts and balancing competing
priorities, will raise significant policy issues for Congress and the
administration to consider, some of which will likely be very difficult
to resolve; (5) the Results Act's success or failure should not be
judged on whether contentious policy issues are fully resolved; and (6)
judgment of the success or failure of the act should turn on the extent
to which the information produced through the required goal-setting and
performance measurement practices, once those practices are successfully
implemented, helps inform policy decisions and improve government
management and performance.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-GGD/AIMD-97-144
TITLE: Managing for Results: The Statutory Framework for Improving
Federal Management and Effectiveness
DATE: 06/24/97
SUBJECT: Congressional/executive relations
Congressional oversight
Agency missions
Mission budgeting
Strategic planning
Accountability
Financial management
Federal agency reorganization
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Cover
================================================================ COVER
Before the Committee on Appropriations and
Committee on Governmental Affairs
U.S. Senate
For Release on Delivery
Expected at
10:00 a.m., EDT
Tuesday
June 24, 1997
MANAGING FOR RESULTS - THE
STATUTORY FRAMEWORK FOR IMPROVING
FEDERAL MANAGEMENT AND
EFFECTIVENESS
Statement of
James F. Hinchman
Acting Comptroller General
GAO/T-GGD/AIMD-97-144
GAO/GGD/AIMD-97-144T
(410154)
Abbreviations
=============================================================== ABBREV
CFO - Chief Financial Officers (Act)
DOE - Department of Energy
EDA - Economic Development Administration
EPA - Environmental Protection Agency
FASAB - Federal Accounting Standards Advisory Board
GMRA - Government Management Reform Act of 1994
GPRA - Government Performance and Results Act
OMB - Office of Management and Budget
SSA - Social Security Administration
MANAGING FOR RESULTS: THE
STATUTORY FRAMEWORK FOR IMPROVING
FEDERAL MANAGEMENT AND
EFFECTIVENESS
==================================================== Chapter STATEMENT
Messrs. Chairmen and Members of the Committees:
It is a pleasure to appear before you today to discuss how Congress
can use the statutory framework that it enacted to help provide the
more responsive and cost-effective government that the American
people are demanding.
There has been a groundswell movement in recent years toward
performance-based management in public sector organizations. The
federal government, as well as state, local, and foreign governments,
have grappled with how best to improve effectiveness and service
quality while limiting costs.\1 In response, these governments have
implemented reform agendas that have tended to include a common
recognition that improved management was a critical part of the
answer to meeting demands for a government that accomplishes more
while economizing on resources.
A part of this common recognition was the widespread acceptance of
the need to shift the focus of government decisionmaking and
accountability away from a preoccupation with the activities that are
undertaken--such as grants or inspections made--to a focus on the
results of those activities--such as real gains in employability,
safety, responsiveness, or program quality. The key concepts of this
performance-based management are the need to define clear agency
missions, set results-oriented goals, measure progress toward the
achievement of those goals, and use performance information to help
make decisions and strengthen accountability.\2
Congress, too, has recognized the need for improved federal
management and a greater focus on results and has put in place a
statutory framework for achieving those ends. This framework
includes the Chief Financial Officers (CFO) Act and information
technology reform legislation, in particular the Clinger-Cohen Act of
1996 and the Paperwork Reduction Act of 1995. The Government
Performance and Results Act--commonly know as "GPRA" or "the Results
Act"--is the centerpiece of the framework. As agencies implement
this framework, Congress also intended for the acts to be useful to
Members by providing information pertinent to a broad range of
management-related decisions in their capacities as Members of
budget, authorization, oversight, and appropriations committees.
The purpose of my testimony today is to provide an overview of this
statutory framework and discuss how Congress can use the framework,
in particular the Results Act, to help identify and address some of
the key management challenges that are undermining the effectiveness
and responsiveness of federal agencies. I will also highlight the
key implementation issues associated with linking the benefits of
this statutory reform framework with the budget process. Finally, I
will suggest how this framework, if fully implemented, can be used by
Congress to strengthen its decisionmaking and oversight and better
assure that the public gets the efficient and responsive government
that is being demanded.
My comments today are based on a wide range of reports and
testimonies we have done in recent years on the federal management
issues associated with federal program performance, financial
management, and information technology. These reports include, most
recently, our overall assessment on the prospects for governmentwide
implementation of the Results Act.\3 That report, mandated by the
Results Act, included among its addressees the Chairmen and Ranking
Minority Members of the Committees holding today's hearing.
--------------------
\1 See, for example, Managing for Results: Experiences Abroad
Suggest Insights for Federal Management Reform (GAO/GGD-95-120, May
2, 1995); Managing for Results: State Experiences Provide Insights
for Federal Management Reforms (GAO/GGD-95-22, Dec. 21, 1994); and
Government Reform: Goal-setting and Performance
(GAO/AIMD/GGD-95-130R, Mar. 27, 1995).
\2 Executive Guide: Effectively Implementing the Government
Performance and Results Act (GAO/GGD-96-118, June 1996).
\3 The Government Performance and Results Act: 1997 Governmentwide
Implementation Will Be Uneven (GAO/GGD-97-109, June 2, 1997).
CONGRESS HAS ENACTED A
STATUTORY FRAMEWORK FOR
IMPROVING FEDERAL MANAGEMENT
AND DECISIONMAKING
-------------------------------------------------- Chapter STATEMENT:1
Congress' desire to enhance agencies' accountability for their
performance is at the heart of the statutory framework that Congress
has put in place to reform federal management. Congress enacted the
CFO Act--as expanded by the Government Management Reform Act of 1994
(GMRA)--to remedy decades of serious neglect in federal financial
management by establishing chief financial officers across the
government and requiring the preparation and audit of annual
financial statements. The information technology reform legislation
is based on the best practices used by leading public and private
organizations to more effectively manage information technology.\4
Under these laws, agencies are to better link their technology plans
and information technology use to their programs' missions and goals.
Finally, in crafting the Results Act, Congress recognized that
congressional policymaking, spending decisions, and oversight all had
been severely handicapped by lack of sufficiently precise program
goals and adequate program performance information. The Act sought
to remedy that situation by requiring agencies to set multiyear
strategic goals and corresponding annual goals, measure performance
toward the achievement of those goals, and report on their progress.
This statutory framework seeks to create a more focused,
results-oriented management and decisionmaking process within both
Congress and the executive branch. It seeks to improve federal
management by responding to a need for accurate, reliable information
for congressional and executive branch decisionmaking, information
that has been badly lacking in the past, as much of our work had
demonstrated. The framework provides a powerful opportunity to
develop fully integrated information about agencies' missions and
strategic priorities, the results-oriented performance goals that
flow from those priorities, performance data to show the achievement
(or not) of those goals, the relationship of information technology
investments to the achievement of performance goals, and accurate and
audited financial information about the costs of achieving mission
results.
Our work has shown that when an agency adopts a disciplined approach
to setting results-oriented goals, measuring its performance, and
using performance information to improve effectiveness, significant
performance improvements occur. For example, we have reported on how
the Coast Guard reexamined its mission and shifted the focus of its
marine safety program from regulation to one that includes
education.\5 This change contributed to a significant decline in the
towing industry fatality rate--from 91 per 100,000 industry employees
in 1990 to 27 per 100,000 in 1995.
Similarly, the Veterans Health Administration improved services to
veterans by more rigorously assessing the results of the medical care
it provides to the nation's veterans. In particular, the Veterans
Health Administration reported that it used performance information
to target the most important improvement opportunities and thereby
lowered the mortality rate for cardiac procedures by an average of 13
percent over the last 8 years.
In another example, involving the Social Security Administration's
(SSA) national toll-free 800 telephone number to handle citizen
inquiries, SSA used customer satisfaction and other performance
information to identify and make program changes, including providing
additional staff to handle phone calls from the public. As a result,
the busy rate decreased from 49 to 34 percent, and the percentage of
calls answered within 5 minutes increased from 74 to 83 percent from
fiscal year 1995 to fiscal year 1996.\6
--------------------
\4 Executive Guide: Improving Mission Performance Through Strategic
Information Management and Technology--Learning from Leading
Organizations (GAO/AIMD-94-115, May 1994).
\5 GAO/GGD-96-118, June 1996.
\6 Social Security Administration: Significant Challenges Await New
Commissioner (GAO/HEHS-97-53, Feb. 20, 1997) and Social Security
Administration (GAO/HEHS-97-79, June 11, 1997).
IMPROVING FEDERAL MANAGEMENT IS
KEY TO INCREASING EFFECTIVENESS
AND REDUCING COSTS
-------------------------------------------------- Chapter STATEMENT:2
Although the Coast Guard, Veterans Health Administration, SSA, and
other performance improvements are noteworthy, the reported examples
of substantial performance improvements are still relatively few. In
fact, our work has long identified serious weaknesses in federal
management and has pinpointed the actions that need to be taken to
address those weaknesses.\7 In many cases, the effective
implementation of the Results Act will be an essential part of any
successful effort to improve federal management, and active
congressional input into the executive branch strategic planning
process is an important first step in that effort. Our recent guide,
intended to help facilitate congressional review of agencies'
strategic plans, provided suggested questions for each of the key
elements of a strategic plan and for a plan as a whole.\8
As I noted earlier, the information generated under the Results Act
can be useful to Congress in making a wide range of congressional
decisions to address the public demand for a more efficient and
better managed government. Today, I would like to highlight four key
areas where our work suggests that congressional attention could pay
particularly significant dividends in creating a more effective and
less costly government. These areas are (1) ensuring a coordinated
response to national needs across agency and program lines, (2)
giving agencies a clear sense of direction, (3) sustaining a
systematic focus on results, and (4) ensuring sound and realistic
agency strategies.
--------------------
\7 See, most recently, High Risk Series (GAO/HR-97-20SET, Feb.
1997).
\8 Agencies' Strategic Plans Under GPRA: Key Questions to Facilitate
Congressional Review (GAO/GGD-10.1.16, Version 1, May 1997).
A COORDINATED RESPONSE TO
NATIONAL NEEDS
------------------------------------------------ Chapter STATEMENT:2.1
First, although federal programs have been designed for different
purposes or targeted for different population groups, coordination
among federal programs with related responsibilities is essential to
efficiently and effectively meet national concerns. Uncoordinated
program efforts can waste scarce funds, confuse and frustrate program
customers, and limit the overall effectiveness of the federal effort.
A focus on results, as envisioned by the Results Act, implies that
federal programs contributing to the same or similar results should
be closely coordinated to ensure that goals are consistent and that,
where appropriate, program efforts are mutually reinforcing. This
suggests that federal agencies should look beyond their
organizational boundaries and coordinate with other agencies to
ensure that their efforts are aligned.
Our work has shown that, as the federal government has responded over
time to new needs and problems, many federal agencies have been given
responsibilities for addressing the same or similar national
issues.\9 Of the 18 national mission areas displayed in the federal
budget, 14, including health, international affairs, and justice,
involved more than 1 executive branch department or major agency in
fiscal year 1996.\10 Six of the national mission areas, including
education, income security, and commerce and housing credit, were
addressed by six or more executive branch departments and major
agencies. Of course, some of this shared responsibility was
intended, recognizing that addressing some issues from a national
perspective necessarily involves more than one federal agency or more
than one approach.
However, in many program areas--such as food safety, employment
training, early childhood development, at-risk and delinquent youth
programs, federal land management, and national laboratories--our
work suggests that significant overlap and fragmentation existed in
the federal response to national needs and problems.\11 For example,
in 1995 we testified on the Department of Education's programs that
provided loans and grants to students to help finance their higher
education.\12 We found that, although the student loan and Pell grant
programs provided the majority of federal financial aid to students
for postsecondary education, another 22 smaller programs were
targeted to specific segments of the postsecondary school population,
such as prospective students from disadvantaged families or women and
minorities, who are underrepresented in graduate education.
These 22 programs were collectively funded at $1.1 billion for fiscal
year 1995. We concluded that these smaller grant programs could be
considered candidates for consolidation--with other larger programs
or among themselves--with no adverse impact on students' access to
postsecondary education, and that the federal government could
anticipate administrative savings of 10 percent each year, or a total
of $550 million in budget authority (adjusted for inflation) over 5
years.\13
Similarly, we reported in 1995 on the federal programs that assisted
urban communities and their residents through a complex system
involving multiple federal agencies.\14 We found that the
government's Catalog of Federal Domestic Assistance listed over 340
federal economic development-related programs administered by 13
agencies. These were in the areas of housing, economic development,
and social services. We reported that, considered individually, many
of these programs may have made sense. However, the proliferation of
federal programs and the lack of coordination among agencies could
impose a burden on local organizations that attempted to piece
together programs to serve their communities. In particular, the
neighborhood organizations we studied found it burdensome to manage
multiple programs with individual funding streams, application
requirements, and reporting expectations.
The Results Act requires that agencies consult with Congress as they
develop strategic plans. These consultations are under way now as
agencies prepare to issue their plans by September 30, 1997, as
required by the Act. As Congress provides input to agencies'
strategic plans, it can insist that agencies show how their programs
are aligned with related efforts in other agencies. Congress can
also use the planning process to seek opportunities to streamline
government by comparing the effectiveness of similar program efforts
carried out by different agencies.
--------------------
\9 Government Restructuring: Identifying Potential Duplication in
Federal Missions and Approaches (GAO/T-AIMD-95-161, June 7, 1995).
\10 Budget Issues: Fiscal Year 1996 Agency Spending by Budget
Function (GAO/AIMD-97-95, May 13, 1997).
\11 Government Reorganization: Issues and Principles
(GAO/T-GGD/AIMD-95-166, May 17, 1995); At-Risk and Delinquent Youth:
Multiple Federal Programs Raise Efficiency Questions (GAO/
HEHS-96-34, Mar. 6, 1996); Federal Land Management: Streamlining
and Reorganization Issues (GAO/T-RCED-96-209, June 27, 1996); and
Federal R&D Laboratories (GAO/RCED/NSIAD-96-78R, Feb. 29, 1996).
\12 Department of Education: Information on Consolidation
Opportunities and Student Aid (GAO/ T-HEHS-95-130, Apr. 6, 1995) and
Department of Education: Opportunities to Realize Savings
(GAO/T-HEHS-95-56, Jan. 18, 1995).
\13 Addressing The Deficit: Budgetary Implications of Selected GAO
Work for Fiscal Year 1998 (GAO/OCG-97-2, Mar. 14, 1997).
\14 Economic Development Programs (GAO/RCED-95-251R, July 28, 1995)
and Community Development: Comprehensive Approaches and Local
Flexibility Issues (GAO/T-RCED-96-53, Dec. 5, 1995).
A CLEAR SENSE OF AGENCY
DIRECTION
------------------------------------------------ Chapter STATEMENT:2.2
Closely related to the issue of ensuring a coordinated response to
national needs, is the issue of each agency having a clear sense of
direction in terms of what it is in business to accomplish.
Sustained congressional input into agencies' strategic planning
efforts is vital, both to ensure that missions are based in statute
and to identify cases where statutory requirements need to be
modified or clarified due to changed circumstances.
Over the years, our work has identified instances where an agency's
effectiveness was hampered by the lack of a clearly defined mission
and goals--a concrete sense of why the organization exists and what
it is to accomplish. For example, our work has shown that the
Department of Energy (DOE) needs to reevaluate its basic mission.\15
DOE's responsibilities and priorities have changed dramatically over
time. The DOE of today is a very different organization from what it
was in 1977, when as a newly created agency, its mission was to
respond to a perceived national energy crisis. Thus, while energy
research, conservation, and policymaking dominated early DOE
priorities, national defense and environmental cleanup now overshadow
those areas.
Meanwhile, new DOE mission areas in science and industrial
competitiveness have emerged and are pressing for priority attention.
To each new phase, DOE leadership responded with a vastly different
agenda concerning DOE's basic responsibilities and how the agency
should be managed. We have reported that these shifts have
contributed to uneven performance in many mission areas. For
example, during the time that DOE emphasized nuclear weapons
production, it gave little attention to the environmental
consequences. Partly as a result of this inattention, environmental
cleanup will now cost between $189 and $265 billion by DOE's
estimate.
In another example, the Environmental Protection Agency (EPA) was
established in 1970 under a presidential reorganization plan in
response to concerns over protecting public health, as well as air,
water, and land resources. Subsequently, as environmental threats
were identified, Congress gave EPA responsibility for implementing
over a dozen environmental laws. We reported in May 1995 that,
because it did not have an overarching legislative mission and its
environmental responsibilities had not been integrated, EPA had not
been able to target its resources to reduce the greatest risks to
human health and the environment.\16 EPA has been working with state
governments, industry, environmental groups, and other interested
parties since 1992 to select the most appropriate national
environmental goals. Building on these goals, EPA is also ranking
the relative risk of environmental problems to help identify the most
appropriate goals for the agency.
Congress can also use the Results Act to work with the executive
branch to clarify its expectations for the goals that agencies should
seek to achieve. Federal agencies often face a variety of competing
priorities that require them to strike balances among a variety of
competing policy goals. Multiple priorities, which in many cases are
a natural by-product of the need to build a legislative majority and
are frequently built into the intent and design of an agency or
program, constitute one of the primary challenges to government
management and performance. For example, agencies often must weigh
the demands of program customers for responsive services against the
cost of providing those services. These and other competing
priorities continually need to be weighed against one another;
otherwise, one or two priorities may be inappropriately
overemphasized at the expense of others.
--------------------
\15 Department of Energy: A Framework for Restructuring DOE and Its
Missions (GAO/RCED-95- 197, Aug. 21, 1995).
\16 Managing for Results: EPA's Efforts to Implement Needed
Management Systems and Processes (GAO/T-RCED-97-133, Apr. 15, 1997);
and Environmental Protection: Current Environmental Challenges
Require New Approaches (GAO/T-RCED-95-190, May 17, 1995).
A SYSTEMATIC FOCUS ON
RESULTS
------------------------------------------------ Chapter STATEMENT:2.3
A third critical area where Congress can use the Results Act is in
better ensuring that agencies are managing to achieve results rather
than just focusing on activities or processes. Many agencies have a
difficult time moving from measuring program activities to
establishing results-oriented goals and performance measures. The
fundamental reason that this is so difficult is that, to manage on
the basis of results, agencies must move beyond what they
control--that is, their activities--to focus on what they merely
influence--their results.
The often limited or indirect influence that the federal government
has in determining whether a desired result is achieved complicates
efforts to measure program performance. Our work has shown that
measuring the federal contribution can be particularly challenging
for regulatory programs; scientific research programs; and programs
that deliver services to taxpayers through third parties, such as
state and local governments.
For example, isolating the effectiveness of the federal government's
economic development programs is a daunting challenge. Numerous
external forces, including broad national economic trends and
assistance communities may receive from state and local governments
and the private sector, contribute to local economic development.
Despite the challenge, a focus on results is critical to providing
decisionmakers with potentially vital information needed to assess
the value of the federal effort.
We reported in 1996 that a study of the effectiveness of the
Department of Commerce's Economic Development Administration (EDA)
programs found that income in the counties that received EDA funding
grew significantly faster than income in the counties that received
no aid.\17 However, when the researchers simultaneously considered
EDA's programs and factors unrelated to EDA, they found that EDA's
programs had a very small effect on income growth rates during the
period that the aid was received and had no significant effects in
the 3 years after the aid ceased. EDA's programs thus could explain
only a small part of the difference in the growth rates between the
two groups of counties.
Congressional input into agencies' strategic planning efforts may be
needed to ensure that agencies gather the performance information and
conduct the evaluations necessary to assess the worth of the federal
investment in programs. For example, we reported in April 1997 that
although an extensive body of literature exists on Head Start--a
program that over the last 30 years has served over 15 million
children at a total cost of $31 billion--the research is inadequate
for drawing conclusions about the impact of the national program in
any area in which Head Start provides services, such as school
readiness or health-related services.\18 We found that the Department
of Health and Human Service's planned research will focus on new and
innovative service delivery strategies and demonstrations but will
provide little information on the impact of regular Head Start
programs. We concluded that the size and costs of the Head Start
program appear to warrant an investment in the research needed to
provide information on the results of the program.
--------------------
\17 Economic Development: Limited Information Exists on the Impact
of Assistance Provided by Three Agencies (GAO/RCED-96-103, Apr. 3,
1996).
\18 Head Start: Research Provides Little Information on Impact of
Current Program (GAO/HEHS-97-59, Apr. 15, 1997).
SOUND AND REALISTIC AGENCY
STRATEGIES
------------------------------------------------ Chapter STATEMENT:2.4
Finally, the effective implementation of the Results Act can help
Congress and the executive branch ensure that agencies have in place
the programs and strategies that will best achieve results. As the
example of the Coast Guard that I mentioned earlier suggests, once an
agency begins to focus on results and understand how its programs
affect the degree to which desired results occur, the agency often
makes significant program changes to better achieve those desired
results.
Moreover, Congress should rightfully expect that each agency's plans
and programs will make efficient use of budgetary resources and that,
if reductions need to be made, those resources will be used in a way
that maintains, to the fullest extent possible, the agency's ability
to carry out its mission. Our work has shown that many agencies are
currently struggling to develop coherent strategies for restructuring
their organizations, workforces, and operations to meet
results-oriented goals in a cost-effective manner.
This need for a coherent strategy is particularly true in the area of
information technology.\19 The sound application and management of
information technology to support strategic goals must be an
important part of any serious attempt to improve agency mission
performance, cut costs, and enhance responsiveness to the public. We
have noted that the successful implementation of information
technology reform legislation--which, among other things, requires
that agencies have a strategy that links technology investments to
achieving programmatic results--is critical to ensuring the wise use
of the billions of dollars the government is investing in information
systems.\20
We also have found that agencies need to do a better job of designing
mission-based strategies to improve efficiency and reduce costs. For
example, we recently reported that the Department of State does not
have a comprehensive strategy to restructure its operations to adjust
to today's needs.\21 State's vast network of embassies and
consulates, together with the way they are configured and operated,
has remained largely unchanged despite communications and
transportation advances, geopolitical changes, and new budget
realities. State has not been able to make hard choices about
resource priorities for its wide range of locations and functions, or
to fundamentally rethink the way that it does business, in order to
reduce its operating costs.
--------------------
\19 For further information see: Information Technology Investment:
Agencies Can Improve Performance, Reduce Costs, and Minimize Risks
(GAO/AIMD-96-64, Sept. 30, 1996); Information Management Reform:
Effective Implementation Is Essential for Improving Federal
Performance (GAO/T-AIMD-96-132, July 17, 1996); and GAO/AIMD-94-115,
May 1994.
\20 Information Management and Technology (GAO/HR-97-9, Feb. 1997).
\21 State Department: Options for Addressing Possible Budget
Reductions (GAO/NSIAD-96- 124, Aug. 29, 1996).
INTEGRATING PERFORMANCE
INFORMATION WITH BUDGET AND
APPROPRIATIONS DECISIONS IS A
KEY IMPLEMENTATION ISSUE
-------------------------------------------------- Chapter STATEMENT:3
Ultimately, achieving the kinds of performance and management
improvement discussed today will require close linkage with the
federal government's budget and appropriations process. While
providing needed tools and approaches for agency managers, these
statutory reforms will also generate new information and perspectives
that can be particularly useful to the process of allocating scarce
resources among competing national priorities. Although many factors
appropriately influence appropriations decisions, effective
implementation of the Results Act will add critical information about
what citizens and the nation are receiving for each dollar spent,
thereby helping to restore public confidence at a time when
increasingly more difficult resource decisions must be made.
As we recently reported, the Results Act is a significant break from
previous federal initiatives that sought to more closely "connect
resources with results."\22 Under the Results Act, agencies are
required to plan and measure performance using program activity
structures that are the basis for agencies' budget requests.
Previous initiatives tended to devise unique planning structures,
and, not surprisingly, congressional interest and use quickly waned
as performance information reflecting the new planning structures
could not be directly tied to familiar oversight categories and
patterns.
The Results Act aims to provide systematic information on the
performance of government programs and to link this information with
current budget presentations. While this approach should improve
prospects for use within budgetary processes, it also presents a
challenge. An agency's program activity structure is often the
product of longstanding negotiated agreements between individual
appropriations subcommittees and the executive branch. As such,
program activity structures represent a variety of organizational,
process, project, or other orientations. For example, the "space
station" program activity in the National Aeronautics and Space
Administration's budget is a discrete program. In contrast, the
"park service management" program activity under the National Park
Service's budget represents process and/or functional efforts.
Because of the wide variability across program activities, the
suitability of the current program activity structures for the
Results Act's performance planning and measurement also will vary.
Consequently, over time, some modifications may be needed in program
activity structures to achieve the intended results-based
orientation.
--------------------
\22 Performance Budgeting: Past Initiatives Offer Insights for GPRA
Implementation (GAO/AIMD-97-46, Mar. 27, 1997).
INTEGRATED PERFORMANCE, COST,
AND MANAGEMENT REPORTS PROVIDE
BASIS FOR IMPROVED
DECISIONMAKING AND OVERSIGHT
-------------------------------------------------- Chapter STATEMENT:4
If effectively implemented, the statutory framework that Congress has
put in place will result in a wealth of program performance and cost
information not previously available to decisionmakers and the
public. The program performance information that agencies are to
generate under the Results Act will be a valuable new resource for
Congress to use in its program authorization, oversight, and
appropriations responsibilities. To be most useful in these various
contexts, the information needs to be consolidated with critical
financial and program cost data in financial statements, which
agencies are to produce and have audited under the CFO Act.\23
To promote the needed consolidation, and building on the requirements
of the Results Act and the CFO Act, reporting concepts and standards
developed by the Federal Accounting Standards Advisory Board (FASAB)
are intended to provide congressional and other decisionmakers for
the first time with annual "report cards" on the costs, management,
and effectiveness of federal agencies.\24 The new reporting model for
federal agencies is geared to providing users with information about
budgetary integrity, operating performance, stewardship, and systems
and controls.
As authorized by GMRA, OMB is piloting accountability reports that
are consistent with the FASAB accountability reporting concept. OMB
worked with six agencies to pilot the development of accountability
reports for fiscal year 1995 and added an additional eight agencies
to the pilot test in fiscal year 1996. According to OMB, additional
agencies will produce accountability reports for fiscal year 1997.
By consolidating and integrating the separate reporting requirements
of the Results Act, the CFO Act, and other specified acts, the
accountability reports are to show the degree to which an agency met
its goals, at what cost, and whether the agency was well run.\25 We
have suggested that these accountability reports could serve as a
basis for annual or at least biennial comprehensive oversight
hearings on each department and major independent agency.\26
FASAB's new cost accounting standards are intended to further
strengthen federal decisionmaking by requiring agencies to provide
relevant and reliable cost information that can be used, for example,
to relate the costs of various programs and activities to their
performance outputs. The FASAB concepts and standards underpin OMB's
guidance to agencies on the form and content of their agencywide
financial statements. Moreover, under the Federal Financial
Management Improvement Act of 1996, agencies' financial management
systems are to, among other things, comply with FASAB standards
beginning with fiscal year 1997.
--------------------
\23 Financial Management: Continued Momentum Essential to Achieve
CFO Act Goals (GAO/T-AIMD-96-10, Dec. 14, 1995).
\24 FASAB was created in October 1990 by the Secretary of the
Treasury, the Director of OMB, and the Comptroller General to
consider and recommend accounting principles for the federal
government.
\25 Managing For Results: Using GPRA to Assist Congressional and
Executive Branch Decisionmaking (GAO/T-GGD-97-43, Feb. 12, 1997).
\26 Managing for Results: Achieving GPRA's Objectives Requires
Strong Congressional Role (GAO/T-GGD-96-79, Mar. 6, 1996).
------------------------------------------------ Chapter STATEMENT:4.1
In summary, Messrs. Chairmen, Congress has put in place a statutory
framework with the essential ingredients needed to address
long-standing weaknesses in federal management and to create a
federal government that is more responsive and cost-effective. The
key now is for agencies to implement that framework and for the
executive branch and Congress to use it to help make decisions and
ensure accountability. Given the experiences of the foreign and
state governments that have been seeking to instill a more
results-oriented approach to management for some years now, the
implementation of the Results Act, and of the other key parts of the
framework, has not been, and will not be, quick or easy.
Moreover, addressing some of the challenges that I have highlighted
today, such as addressing crosscutting program efforts and balancing
competing priorities, will raise significant policy issues for
Congress and the administration to consider, some of which will
likely be very difficult to resolve. The Results Act's success or
failure should not be judged on whether contentious policy issues are
fully resolved; rather, judgment of the success or failure of the Act
should turn on the extent to which the information produced through
the required goal-setting and performance measurement practices--once
those practices are successfully implemented--helps inform policy
decisions and improve government management and performance.
This concludes my prepared statement. I would be pleased to answer
any questions.
*** End of document. ***