The Results Act: Observations on VA's August 1997 Draft Strategic Plan
(Testimony, 09/18/97, GAO/T-HEHS-97-215).

GAO discussed the draft strategic plan developed by the Department of
Veterans Affairs (VA), pursuant to the Government Performance and
Results Act of 1993.

GAO noted that: (1) VA has made substantial progress in its strategic
planning, based in part on consultations with the Congress; (2) however,
as with many other agencies, VA's process of developing a plan that
meets the requirements of the Results Act is an evolving one that will
continue well after the September 30, 1997, deadline for submitting its
first strategic plan to the Congress and the Office of Management and
Budget (OMB); (3) the August 15, 1997, draft that VA submitted to OMB
for review is an improvement over the June 1997 version, because it is
easier to follow, places more emphasis on results and less on process,
and fills in some major gaps in the June 1997 draft; (4) however, the
latest draft strategic plan continues to lack some of the key elements
expected under the Results Act; and (5) as with the June 1997 draft, the
August 15, 1997, draft lacks results-oriented goals for several major VA
programs, lacks a program evaluation schedule, and contains inadequately
developed discussions of external factors and the need to coordinate
with other federal agencies.

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

 REPORTNUM:  T-HEHS-97-215
     TITLE:  The Results Act: Observations on VA's August 1997 Draft 
             Strategic Plan
      DATE:  09/18/97
   SUBJECT:  Strategic planning
             Agency evaluation
             Interagency relations
             Agency missions
             Financial management systems
             Management information systems
             Public administration
             Information resources management
             Congressional/executive relations
             Veterans benefits
IDENTIFIER:  VA National Cemetery System
             VA Decision Support System
             VA Activity Based Costing System
             Government Performance and Results Act
             GPRA
             State Cemetery Grant
             
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Cover
================================================================ COVER


Before the Subcommittee on Oversight and Investigations, Committee on
Veterans' Affairs, House of Representatives

For Release on Delivery
Expected at 9:30 a.m.  EST
Thursday, September 18, 1997

THE RESULTS ACT - OBSERVATIONS ON
VA'S AUGUST 1997 DRAFT STRATEGIC
PLAN

Statement of Cynthia M.  Fagnoni, Associate Director
Veterans' Affairs and Military Health Care Issues
Health, Education, and Human Services Division

GAO/T-HEHS-97-215

GAO/HEHS-97-215T


(105758)


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

  DSS - x
  OMB - x
  VA - X
  VBA - x
  VHA - x

THE RESULTS ACT:  OBSERVATIONS ON
VA'S AUGUST 1997 DRAFT STRATEGIC
PLAN
============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

We are pleased to be here today to provide our views on the draft
strategic plan developed by the Department of Veterans Affairs (VA),
pursuant to the Government Performance and Results Act of 1993 (the
Results Act).  As you know, the Results Act was one of the major
steps the Congress has taken in recent years to fundamentally change
the way federal agencies go about their work.  The Results Act
requires agencies to clearly define their missions, set goals,
measure performance, and report on their accomplishments.  One of the
act's major milestones--submission to the Congress by federal
agencies of strategic plans that define their missions and set
goals--is less than 2 weeks away. 

With fiscal year 1996 spending of over $38 billion, VA is responsible
for administering laws that provide numerous types of benefits to
many of the nation's 26 million veterans and their dependents and
survivors.  These benefits include medical care, disability
compensation, pensions, rehabilitation assistance, education
benefits, home loan benefits, insurance coverage, and burial
benefits.  My statement today will address the progress VA has made
in developing its strategic plan and the challenges VA continues to
face in implementing the Results Act.  My observations are based on
our review of VA's June 1997 draft strategic plan and have been
updated to reflect revisions VA made between June 1997 and its latest
version, dated August 15, 1997.\1

In summary, VA has made substantial progress in its strategic
planning, based in part on consultations with the Congress.  However,
as with many other agencies, VA's process of developing a plan that
meets the requirements of the Results Act is an evolving one that
will continue well after the September 30, 1997, deadline for
submitting its first strategic plan to the Congress and the Office of
Management and Budget (OMB).  The August 15, 1997, draft that VA
submitted to OMB for review is an improvement over the June 1997
version, because it is easier to follow, places more emphasis on
results and less on process, and fills in some major gaps in the June
1997 draft.  However, the latest draft strategic plan continues to
lack some of the key elements expected under the Results Act.  As
with the June 1997 draft, the August 15, 1997, draft lacks
results-oriented goals for several major VA programs; lacks a program
evaluation schedule; and contains inadequately developed discussions
of external factors and the need to coordinate with other federal
agencies. 

VA is aware that it has much work to do to fully implement the
Results Act and considers its strategic planning--including
conducting program evaluations and developing results-oriented
goals--to be a long-term effort.  Some of this work is identified in
the current draft strategic plan.  VA's success in implementing the
Results Act will depend on how successful it is in ensuring that its
strategic plan focuses on results and how well it integrates its plan
with the plans of other federal agencies.  The Congress will continue
to play an important role in consulting with VA in developing
results-oriented goals and overseeing VA's efforts to successfully
implement the Results Act. 


--------------------
\1 The Results Act:  Observations on VA's June 1997 Draft Strategic
Plan (GAO/HEHS-97-174R, July 11, 1997).  On August 1, 1997, VA
provided a new draft strategic plan, revised from the June 1997
version.  On August 15, 1997, VA provided another version that
contains some additional material supporting the goals stated in the
August 1 version.  Unless specifically noted, our comments on the
August 15 version also apply to the August 1 version. 


   PURPOSE AND REQUIREMENTS OF THE
   RESULTS ACT
---------------------------------------------------------- Chapter 0:1

The Results Act is the centerpiece of a statutory framework to
improve federal agencies' management activities.\2 The Results Act
was designed to focus federal agencies' attention from the amounts of
money they spend or the size of their workloads to the results of
their programs.  Agencies are expected to base goals on their
results-oriented missions, develop strategies for achieving their
goals, and measure actual performance against the goals. 

The Results Act requires agencies to consult with the Congress in
developing their strategic plans.  This gives the Congress the
opportunity to help ensure that their missions and goals are focused
on results, are consistent with programs' authorizing laws, and are
reasonable in light of fiscal constraints.  The products of this
consultation should be clearer guidance to agencies on their missions
and goals and better information to help the Congress choose among
programs, consider alternative ways to achieve results, and assess
how well agencies are achieving them. 

The Results Act requires VA and other agencies to complete their
first strategic plans and submit them to the Congress and OMB by
September 30, 1997.  OMB requested that agencies provide it with
advance copies of their strategic plans by August 15, 1997, for
review and interagency coordination.  In addition, the Results Act
requires agencies to submit their first annual performance plans to
the Congress after the President submits his fiscal year 1999 budget
to the Congress.  OMB requested that agencies integrate, to the
extent possible, their annual performance plans into their fiscal
year 1999 budget submissions, which were due to OMB by September 8,
1997.  OMB, in turn, is required to include a governmentwide
performance plan in the President's fiscal year 1999 budget
submission to the Congress.  As required by the Results Act, GAO
reviewed agencies' progress in implementing the act, including the
prospects for agency compliance.\3


--------------------
\2 Other parts of the framework include the Chief Financial Officers
Act of 1990, the Paperwork Reduction Act of 1995, and the
Clinger-Cohen Act of 1996. 

\3 The Government Performance and Results Act:  1997 Governmentwide
Implementation Will Be Uneven (GAO/GGD-97-109, June 2, 1997). 


   IMPROVEMENTS AND REMAINING
   CHALLENGES IN VA'S AUGUST 1997
   DRAFT STRATEGIC PLAN
---------------------------------------------------------- Chapter 0:2

VA's August 15, 1997, draft strategic plan represents a significant
improvement over the June 1997 draft.  The latest version is clearer
and easier to follow, more complete, and better organized to focus
more on results and less on process.  At the same time, VA has still
not fully addressed some of the key elements required by the Results
Act; the draft plan has

  -- a lack of goals focused on the results of VA programs for
     veterans and their families, such as assisting veterans in
     readjusting to civilian life;

  -- limited discussions of external factors beyond VA's control that
     could affect its achievement of goals;

  -- a lack of program evaluations to support the development of
     results-oriented goals; and

  -- insufficient plans to identify and meet needs to coordinate VA
     programs with those of other federal agencies. 

The draft strategic plan, acknowledging that three of these four
elements (results-oriented goals, program evaluations, and agency
coordination) have not been fully addressed, does plan to address
them.  VA has indicated that it views strategic planning as a
long-term process and intends to continue refining its strategic plan
in consultation with the Congress, veterans service organizations,
and other stakeholders. 

Another challenge for VA is to improve its financial and information
technology management, so that the agency's ongoing planning efforts
under the Results Act will be based on the best possible information. 
VA's draft strategic plan addresses several financial and information
technology issues, such as the need for cost accounting systems for
VA programs and the need to improve VA's capital asset planning. 


      IMPROVEMENTS FROM THE JUNE
      1997 DRAFT STRATEGIC PLAN
-------------------------------------------------------- Chapter 0:2.1

We found that VA's June 1997 draft strategic plan was confusing,
because of numerous layers of goals, objectives, and strategies. 
Also, it contained significant gaps where goals were missing and
lacked a clear focus on results.  VA officials indicated that, based
on consultations with staff from the House and Senate Veterans'
Affairs committees, which included input from GAO, the draft
strategic plan would be revised to make it clearer, more complete,
and more results-oriented.  The August 15, 1997, version reflects
significant progress in these areas. 

Instead of presenting four overall goals, three of which were
process-oriented, VA has reorganized its draft strategic plan into
two sections.  The first section, entitled ï¿½Honor, Care, and
Compensate Veterans in Recognition of Their Sacrifices for America,ï¿½
is intended to incorporate VA's results-oriented strategic goals. 
The second section, entitled ï¿½Management Strategies,ï¿½ incorporates
the three other general goals, related to customer service, workforce
development, and taxpayer return on investment.  In addition, VA has
filled significant gaps in the discussions of program goals.  The
largest gap in the June 1997 draft was the lack of goals for four of
the five major veterans benefit programs.  The current plan includes
goals for each of these programs, stating them in terms of ensuring
that VA benefit programs meet veterans' needs.  Finally, the
reorganized draft plan increases the emphasis on results.  The June
1997 draft appeared to make such process-oriented goals as improving
customer service and speeding claims processing equivalent to more
results-oriented goals such as improving veterans' health care.  In
the August 1997 version, the process-oriented goals remain but have
been placed in their own process-oriented section supplementing the
plan's results orientation. 

At the same time, VA believes that the process-oriented portions of
the plan are important as a guide to VA's management.  It considers
customer service very important because VA's focus is on providing
services to veterans and their families.  The Assistant Secretary for
Policy and Planning, in written comments on a draft of our July 1997
letter, stated that VA continues to believe ï¿½that processes and
operations are important to serving veterans and [VA] will continue
to place appropriate emphasis on the areas of customer service,
workforce development, and management issues.ï¿½ VA also contends that
the Results Act does not preclude process-oriented goals from its
strategic plan.  We agree that many of the process issues VA raises
are important to its efficient and effective operation and can be
included in VA's strategic plan as long as they are integrated with
the plan's primary focus on results. 


      LACK OF RESULTS-ORIENTED
      GOALS FOR MAJOR VA PROGRAMS
-------------------------------------------------------- Chapter 0:2.2

Perhaps the most significant deficiency in VA's draft strategic plan,
in both the June 1997 and current versions, is the lack of
results-oriented goals for major VA programs, particularly for
benefit programs.  While discussions of goals for benefit programs
have been added to the current version, they are placeholders for
results-oriented goals that have not yet been developed.  The general
goals for 4 of the 5 the major benefit program areas--compensation
and pensions, education, vocational rehabilitation, and housing
credit assistance--are stated in terms of ensuring that VA is meeting
the needs of veterans and their families.  The objectives supporting
VA's general goal for its compensation and pension area are to (1)
evaluate compensation and pension programs to determine their
effectiveness in meeting the needs of veterans and their
beneficiaries; and (2) modify these programs, as appropriate.  For
the three other major benefit program areas, the objectives suggest
possible results-oriented goals and are supported by strategies aimed
at evaluating and improving programs.  For example, the objectives
under vocational rehabilitation include increasing the number of
disabled veterans who acquire and maintain suitable employment and
are considered to be rehabilitated.  The strategies under this
objective include evaluating the vocational rehabilitation needs of
eligible veterans and evaluating the effect of VA's vocational
rehabilitation program on the quality of participants' lives. 

VA has noted that developing results-oriented goals will be difficult
until program evaluations have been completed.  Given the program
evaluation time periods stated in the draft strategic plan, which
calls for evaluations to continue through fiscal year 2002,
results-oriented goals may not be developed for some programs for
several years.  Another difficulty VA has cited is that, for many VA
programs, congressional statements of the program purposes and
expected results are vague or nonexistent.  VA officials cited VA's
medical research and insurance programs as examples of programs with
unclear purposes.  This is an area where VA and the Congress can make
progress in further consultations. 


      INCOMPLETE DISCUSSION OF
      EXTERNAL FACTORS
-------------------------------------------------------- Chapter 0:2.3

Another observation we made about VA's June 1997 draft strategic plan
was that VA's discussion of external factors that could affect its
strategic planning was incomplete.  Discussions of external factors
were often limited to whether the Congress would appropriate
sufficient funds or make substantive legislative changes. 
Assessments of factors outside VA's control, such as economic,
social, and demographic changes, are also important in setting VA's
goals and in assessing VA's progress in meeting them.  However, the
discussions of external factors related to the plan's individual
goals generally did not link demographic changes in the veteran
population to VA's goals. 

VA's current draft has added discussions of the implications of
demographic changes on VA programs.  For example, VA notes that the
death rate for veterans is increasing, which will lead VA to explore
various options for meeting increased demands for burials in VA and
state veterans' cemeteries.  Meanwhile, the goal to ensure that VA's
burial programs meet the needs of veterans and their families is
accompanied by a detailed list of specific cemetery construction and
land acquisition projects and by a specific target for expanding
burials in state veterans' cemeteries.  The discussion of external
factors related to this goal focuses on the Congress' willingness to
fund VA's proposed projects and the cooperation of the states in
participating in the State Cemetery Grants Program.  What is missing
in the draft is a link between the projected increase in veteran
deaths and the proposed schedule of specific cemetery projects. 
Similarly, we recently reported that National Cemetery System
strategic planning does not tie goals for expanding cemetery capacity
to veterans' mortality rates and their preferences for specific
burial options.\4


--------------------
\4 National Cemetery System:  Opportunities to Expand Cemeteries'
Capacities (GAO/HEHS-97-192, Sept.  10, 1997). 


      LACK OF PROGRAM EVALUATIONS
-------------------------------------------------------- Chapter 0:2.4

We noted that the goals in VA's June 1997 draft strategic plan were
not supported by formal program evaluations.  Evaluations can be an
important source of information for helping the Congress and others
ensure that agency goals are valid and reasonable, providing
baselines for agencies to use in developing performance measures and
performance goals, and identifying factors likely to affect agency
performance.  As noted above, VA cites the lack of completed
evaluations as a reason for not providing results-oriented goals for
many of its programs. 

The first general goal of VA's plan is to conduct program evaluations
over a period of several years.  VA plans to identify distinct
programs in each of its 10 major program areas and then prioritize
evaluations of these programs in consultation with the Congress,
veterans' service organizations, and other stakeholders.  VA expects
to complete this prioritization sometime in fiscal year 1998,
complete the highest-priority evaluations by the end of fiscal year
2000, and complete at least one evaluation in each of the 10 major
program areas by fiscal year 2003. 


      LACK OF COORDINATION WITH
      OTHER FEDERAL AGENCIES
-------------------------------------------------------- Chapter 0:2.5

In our comments on the June 1997 draft strategic plan, we noted that
VA has not clearly identified the areas where its programs overlap
with those of other federal agencies, nor has it coordinated its
strategic planning efforts with those of other agencies.  Three areas
where such coordination is needed (and the relevant key federal
agencies) are

  -- employment training (Department of Labor),

  -- substance abuse (departments of Education, Health and Human
     Services, and Housing and Urban Development), and

  -- telemedicine (Department of Defense). 

In addition, we noted that VA relies on other federal agencies for
information; for example, VA needs service records from the
Department of Defense to help determine whether veterans have
service-connected disabilities and to help establish their
eligibility for Montgomery G.I.  Bill benefits. 

VA's current draft strategic plan addresses the need to improve
coordination with other federal agencies and state governments.  This
will involve (1) identifying overlaps and links with other federal
agencies, (2) enhancing and improving communications links with other
agencies, and (3) keeping state directors of veterans' affairs and
other state officials apprised of VA benefits and programs and of
opportunities for collaboration and coordination. 


      FINANCIAL AND INFORMATION
      TECHNOLOGY IMPROVEMENT GOALS
      IN VA'S DRAFT STRATEGIC PLAN
-------------------------------------------------------- Chapter 0:2.6

As we noted in our comments on VA's June 1997 draft strategic plan,
VA has made progress in financial management and information
technology.  Like other federal agencies, VA needs accurate and
reliable information to support executive branch and congressional
decision-making.  The "Management Strategies" section of VA's current
draft strategic plan addresses some financial management and
information technology issues.  Since VA has identified the need to
devote a portion of its strategic plan to process-oriented goals, it
is appropriate that some of these goals should focus on improving its
management in these areas. 

VA's current draft plan includes a goal to establish an effective
departmentwide cost accounting system.  For example, a cost
accounting system could allow a Veterans Health Administration (VHA)
medical facility to appropriately price excess services for sale to
the private sector or other federal agencies.  Also, a cost
accounting system could allow a Veterans Benefits Administration
(VBA) regional office to determine how much of its costs were
attributable to each of the benefit programs it administers. 
According to the plan, this system would include two cost accounting
systems already in development:  VHA's Decision Support System (DSS)
and VBA's Activity Based Costing (ABC) system. 

Another goal in the current draft plan is to establish a VA capital
policy that ensures that capital investments, including capital
information technology investments, reflect the most efficient and
effective use of VA's resources.  Achieving this goal involves
developing a VA-wide Agency Capital Plan and establishing a VA
Capital Investment Board to generate policies for capital investments
and to review proposed capital investments based on VA's mission and
priorities. 

Still another goal is designed to address the need for VA-wide
information technology management to facilitate VA's ability to
function as a unified department.  Achieving of this goal involves
developing a VA-wide information technology strategic plan and a
portfolio of prioritized information technology capital investments. 
In addition, the plan calls for the promotion of crosscutting VA
information technology initiatives in order to improve services to
veterans. 

The draft plan's discussion of information technology addresses one
of the information technology issues we have identified as high-risk
throughout the federal government--the year-2000 computer problem.\5
Unless corrections are made by January 1, 2000, VA's computers may be
unable to cope with dates in 2000, which could prevent VA from making
accurate and timely benefit payments to veterans.\6 VA's draft plan
includes as a performance goal that full implementation and testing
of compliant software (that is, software capable of processing dates
beyond 1999) will be completed by October 1999. 


--------------------
\5 High-Risk Series:  Information Management and Technology
(GAO/HR-97-9, Feb.  1997). 

\6 Veterans Benefits Computer Systems:  Risks of VBA's Year-2000
Efforts (GAO/AIMD-97-79, May 30, 1997). 


-------------------------------------------------------- Chapter 0:2.7

Mr.  Chairman, this completes my testimony this morning.  I would be
pleased to respond to any questions you or Members of the
Subcommittee may have. 


*** End of document. ***