Forest Service: Lack of Financial and Performance Accountability Has
Resulted in Inefficiency and Waste (Testimony, 03/26/98,
GAO/T-RCED/AIMD-98-135).

Pursuant to a congressional request, GAO discussed the management of the
Forest Service, focusing on: (1) GAO's prior and ongoing work on the
agency's financial and operational management; and (2) actions that need
to be taken to hold the Forest Service accountable for its expenditures
and performance.

GAO noted that: (1) forgone revenue, inefficiency, and waste throughout
the Forest Service's operations and organization have cost taxpayers
hundreds of millions of dollars; (2) the agency's financial statements
are unreliable, and expenditures of significant amounts cannot be
accounted for; (3) furthermore, the Forest Service's weak contracting
practices have exposed appropriated dollars to an increased risk of
fraud, waste, and abuse; (4) these and other findings have led GAO, the
Department of Agriculture's Inspector General, and Forest Service task
forces to make numerous recommendations to improve performance; (5) the
agency has not acted on some, has studied and restudied others without
implementing them, and has left the implementation of others to the
discretion of its independent and autonomous regional offices and
forests with mixed results; (6) to improve its operational efficiency
and effectiveness, the Forest Service must be accountable for its
expenditures and performance; (7) specifically, the Forest Service has
identified the actions required to correct known accounting and
financial reporting deficiencies and has established a schedule to
attain financial accountability within the next few years; (8) in
addition, the agency has taken an important first step toward becoming
accountable for its performance by making clear that its overriding
mission and funding priority, consistent with its existing legislative
framework, has shifted from producing goods and services to maintaining
and restoring the health of the lands entrusted to its care; (9)
however, it has not identified the actions required to correct
decade-old problems with its data, measurement, and reporting; addressed
new challenges resulting from its changed priorities; or established a
schedule to achieve accountability for its performance by a certain
date; and (10) strong leadership within the agency and sustained
oversight by Congress will be needed to ensure that the actions required
to hold the agency accountable for its performance are identified and
that the Forest Service adheres to schedules to achieve both performance
and financial accountability.

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

 REPORTNUM:  T-RCED/AIMD-98-135
     TITLE:  Forest Service: Lack of Financial and Performance 
             Accountability Has Resulted in Inefficiency and Waste
      DATE:  03/26/98
   SUBJECT:  Accountability
             Financial management
             Federal agency accounting systems
             Internal controls
             Forest management
             National forests
             Budget administration

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


Before the Committee on Resources, Committee on the Budget, and
Subcommitteee on Interior and Related Agencies, Committee on
Appropriations, House of Representatives

For Release
on Delivery
Expected at
11 a.m.  EST
Thursday
March 26, 1998

FOREST SERVICE - LACK OF FINANCIAL
AND PERFORMANCE ACCOUNTABILITY HAS
RESULTED IN INEFFICIENCY AND WASTE

Statement of Barry T.  Hill,
Associate Director,
Energy, Resources, and Science Issues,
Resources, Community, and Economic
Development Division

GAO/T-RCED/AIMD-98-135

GAO/RCED/AIMD-98-135T


(141172)


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


============================================================ Chapter 0

Messrs.  Chairmen and Members of the Committees: 

We are pleased to be here today to discuss the management of the
Department of Agriculture's Forest Service.  Our testimony will
summarize (1) our prior and ongoing work on the agency's financial
and operational management and (2) actions that need to be taken to
hold the Forest Service accountable for its expenditures and
performance. 

Our comments are based primarily on two reports issued within the
last year that, together, cap over a decade of work and over 45 GAO
products on the Forest Service.\1 Our testimony also draws on
recently issued reports on the status of the agency's progress toward
financial accountability\2 and the preliminary results of our work to
date for you and other requesters on forest health, contracting
practices, and budget reform. 

In summary, our prior reports, reinforced by our ongoing work, have
led us to observe the following: 

  -- Forgone revenue, inefficiency, and waste throughout the Forest
     Service's operations and organization have cost taxpayers
     hundreds of millions of dollars.  For example, as we have
     previously reported, the Forest Service has often not obtained
     fair market value for goods or recovered costs for services when
     authorized by the Congress and has not always acted to reduce or
     contain costs as requested by the Congress.  The agency's
     financial statements are unreliable, and expenditures of
     significant amounts cannot be accounted for.  Furthermore, as
     our ongoing work is showing, the Forest Service's weak
     contracting practices have exposed appropriated dollars to an
     increased risk of fraud, waste, and abuse.  These and other
     findings have led us, Agriculture's Inspector General, and
     Forest Service task forces to make numerous recommendations to
     improve performance.  The agency has not acted on some, has
     studied and restudied others without implementing them, and has
     left the implementation of others to the discretion of its
     independent and autonomous regional offices and forests with
     mixed results. 

  -- To improve its operational efficiency and effectiveness, the
     Forest Service must be accountable for its expenditures and
     performance.  While the agency has, in recent years, made some
     progress, it is still years away from achieving financial
     accountability and possibly a decade or more away from being
     accountable for its performance.  Specifically, the Forest
     Service has identified the actions required to correct known
     accounting and financial reporting deficiencies and has
     established a schedule to attain financial accountability within
     the next few years.  In addition, the agency has taken an
     important first step toward becoming accountable for its
     performance by making clear that its overriding mission and
     funding priority, consistent with its existing legislative
     framework, has shifted from producing goods and services to
     maintaining and restoring the health of the lands entrusted to
     its care.  However, it has not identified the actions required
     to correct decade-old problems with its data, measurement, and
     reporting; addressed new challenges resulting from its changed
     priorities; or established a schedule to achieve accountability
     for its performance by a certain date.  Strong leadership within
     the agency and sustained oversight by the Congress will be
     needed to ensure that the actions required to hold the agency
     accountable for its performance are identified and that the
     Forest Service adheres to schedules to achieve both performance
     and financial accountability. 


--------------------
\1 See Forest Service Decision-Making:  A Framework for Improving
Performance (GAO/RCED-97-71, Apr.  29, 1997) and Forest Service: 
Barriers to Generating Revenue or Reducing Costs (GAO/RCED-98-58,
Feb.  13, 1998). 

\2 Forest Service:  Status of Progress Toward Financial
Accountability (GAO/AIMD-98-84, Feb.  27, 1998), Financial
Management:  Forest Service's Progress Toward Financial
Accountability (GAO/AIMD-97-151R, Aug.  29, 1997), and Forest Service
(GAO/AIMD-97-11R, Dec.  20, 1996). 


   OPPORTUNITIES EXIST FOR THE
   FOREST SERVICE TO OPERATE MORE
   EFFICIENTLY AND EFFECTIVELY
---------------------------------------------------------- Chapter 0:1

Reports that we have issued during the last decade have identified
numerous opportunities for the Forest Service to generate more
revenue or to operate more efficiently and effectively.  However, few
of our recommended improvements have been implemented, and many of
the agency's processes and programs remain broken and in need of
repair. 

For instance, when the Congress has given the Forest Service the
authority to obtain fair market value for goods or recover costs for
services, the agency often has not done so.  It has not obtained fair
market fees for commercial activities on the national
forests--including resort lodges, marinas, and guide services--or for
special noncommercial uses--such as private recreational cabins and
special group events--or recovered the costs incurred in reviewing
and processing applications for special-use permits.  The Forest
Service also (1) has not charged fair market value for rights-of-way
for oil and gas pipelines, power lines, and communications lines on
its lands and (2) has not used sealed bids for certain timber sales,
relying instead on oral bids, which generate lower revenue.  As a
result, the agency forgoes at least $50 million in revenue annually. 

Internal and external reviews of the Forest Service's processes and
procedures have identified opportunities for the agency to operate
more efficiently at virtually every organizational level.  According
to a November 1995 Forest Service report, inefficiencies within the
agency's decision-making process cost up to $100 million a year at
the individual project level alone.  Factors contributing to
increased costs within the agency's decision-making process include
the following: 

  -- The Forest Service is not held accountable for developing forest
     plans in a timely, orderly, and cost-effective manner.  For
     example, the agency spent about 10 years and $13 million
     revising the plan for the Tongass National Forest in
     southeastern Alaska. 

  -- The agency has historically failed to live up to its own
     monitoring requirements.  Because it has not obtained needed
     information, federal regulatory agencies and other stakeholders
     continue to insist that it prepare increasingly time-consuming
     and costly detailed environmental analyses and documentation
     before making a decision--effectively front-loading the process
     and perpetuating a cycle of inefficiency. 

  -- Noncompliance with environmental and planning requirements is
     also time-consuming and costly.  Because some forests have not
     satisfied or complied with these requirements, timber sales
     contracts have been suspended or canceled. 

  -- For timber sales contracts that are canceled, the agency has not
     developed new regulations and a new timber sales contract that
     would limit the government's liability and redistribute the risk
     between the Forest Service and the purchaser. 

  -- Limitations in data and systems, which hindered the adequacy and
     implementation of many of the agency's early forest plans,
     persist over a decade later and continue to hinder the
     development of revised plans, result in legal challenges to
     plans and projects, and limit the implementation of efforts to
     improve the timeliness of decisions. 

Inefficiency and waste are not limited to the Forest Service's
decision-making process.  Preliminary results in a soon-to-be-issued
GAO report to the Chairman of the House Committee on Agriculture on
the Forest Service's contracting practices indicate that, in fiscal
year 1996, the agency's weak contracting practices made $443 million
in appropriated funds vulnerable to fraud, waste, and abuse.  Many of
the principal elements of an effective procurement system--including
routine supervision of its contracting officers and monitoring and
evaluation of the contractors' progress and performance--are absent
in the Forest Service, and the internal controls that are used--such
as limits on the authority of contracting officers--are not
consistently applied or effectively implemented.  Moreover, the
agency has not required its field offices to comply with
governmentwide regulations intended to reduce hurried and unnecessary
procurements, enhance competition, and reduce costs, and it has not
complied with Department of Agriculture-wide requirements intended to
improve performance.  Forest Service managers told us that they
believe that the agency's contracting officers are well trained to
perform their duties and that their spending authority is limited on
the basis of their education and experience.  Therefore, Forest
Service managers "trust" the contracting officers to perform
competently and ethically. 

Inefficiency within the Forest Service's business processes is
accompanied by numerous shortcomings in the agency's accounting and
financial data and information systems that preclude the Forest
Service from presenting accurate and complete financial information. 
For example, in reporting its fiscal year 1995 financial results, the
Forest Service could not identify how it spent $215 million of its
$3.4 billion in operating and program funds.  In addition, the $7.8
billion value reported for assets--including property, plant, and
equipment--was erroneous because the records for these assets were
not consistently prepared, regularly updated, or supported by
adequate documentation. 

Because of these and other deficiencies, Agriculture's Inspector
General concluded that the agency's financial statements for fiscal
year 1995 were unreliable.  In addition, in 1996, we reported that
the inaccuracy of the financial statement data precluded the Forest
Service and the Congress from using these data to help make informed
decisions about future funding for the agency and raised questions
about the reliability of the agency's program performance measures
and certain budget data.  For instance, the Forest Service's current
system for maintaining cost data does not enable the agency to
associate the costs incurred in generating revenue from various
forest uses.  As a result, the Forest Service is unable to provide
data showing the costs and revenue of management activities being
carried out on each of the national forests. 


      RECOMMENDED IMPROVEMENTS
      HAVE NOT BEEN IMPLEMENTED
-------------------------------------------------------- Chapter 0:1.1

Over the years, we, Agriculture's Inspector General, and internal
Forest Service task forces have made numerous recommendations to
improve the Forest Service's financial and operational performance
and to obtain a better return on the American taxpayers'
multibillion-dollar annual investment in the agency.  However, the
agency has not acted on some recommended improvements and has studied
and restudied others without establishing a clear sequence or
schedule for reaching closure. 

When improvements are adopted by the agency's leadership, their
implementation is often left to the discretion of regional offices
and forests with uneven and mixed results.  The Forest Service has
consistently operated under the principle that its independent and
autonomous regional offices and forests can determine how best to
manage their lands and resources.  As a result, the agency has given
its field managers broad discretion in decision-making.  Although
accountability should be the price that these managers pay for the
freedom to make choices, the Forest Service has given them broad
discretion in complying with financial and performance accountability
requirements as well as in implementing efforts to operate more
efficiently and effectively. 

For example, in a 1980 report on the Forest Service's then relatively
new planning process, we identified the need for a complete inventory
of the national forests' natural resources and noted that without
such an inventory, forest plans were bound to be inadequate.  Over a
decade later, we found that these deficiencies persisted throughout
the agency, and the Forest Service has conceded that, regrettably,
delays of 2 years or more must still be expected when some forest
plans are revised because "realistically, many forests do not have
fully updated inventories."

Similarly, Agriculture's Deputy Assistant Inspector General recently
testified that the Forest Service's reported maintenance backlog of
between $7.3 billion and $8.3 billion is "outdated, inconsistent,
inflated, and not readily supported."\3 To correct these
deficiencies, we had recommended in 1991 that the Forest Service (1)
require that data on maintenance needs be collected and (2) install
internal controls to ensure the accuracy of the reported maintenance
backlog.  The agency agreed with our recommendations; however, 3
years later, the Inspector General followed up on the recommendations
and found that little or no corrective action had been taken.  Four
more years later, the Inspector General again reported that the
Forest Service had not established a comprehensive, systematic method
to collect and report information on the backlog, nor could it ensure
the reliability of the data that had been reported.  Once again, the
agency generally agreed to implement corrective action. 

The Forest Service has also failed to sustain the management
attention needed to implement operational improvements recommended by
the agency's own task forces.  For instance, a February 1994 report
by a Forest Service task force on accountability set forth a
seven-step process to strengthen accountability and made
recommendations to help the agency change its behavior.  The concepts
in the task force's report were adopted by the Forest Service's
leadership team and distributed agencywide.  However, the task
force's recommendations were never implemented throughout the agency. 

Similarly, in November 1995, a Forest Service reengineering team made
recommendations to streamline and improve the process for conducting
project-level environmental analyses.  However, the agency has not
acted on these recommendations or on proposals from other
initiatives, many of which were identified as "high priority."
Instead, it has simply rolled them over from year to year. 

Lack of sustained management attention has also characterized the
Forest Service's response to requests by the Congress for the agency
to contain costs.  For example, concerned with the escalating costs
of the Forest Service's timber program, the Congress, in fiscal year
1991, asked the agency to develop a multiyear program to reduce the
costs of its timber program by not less than 5 percent per year.  The
Forest Service responded to these and other concerns by undertaking a
cost-reduction study and issuing a report in April 1993.  However,
the agency left the implementation of the field-level action items to
the discretion of each of its nine regional offices, and while some
regions rapidly pursued the goal of becoming cost-efficient, others
did not.  In April 1997, the Forest Service was preparing to
undertake the third major examination of its timber program in the
last 4 years.  Meanwhile, the costs associated with preparing and
administering timber sales remain higher than in fiscal year 1991
when the Congress first voiced its concern. 


--------------------
\3 Forest Service Maintenance Backlog, U.S.  Department of
Agriculture, Office of Inspector General, Feb.  4, 1998. 


   STRONG LEADERSHIP WITHIN THE
   FOREST SERVICE AND SUSTAINED
   OVERSIGHT BY THE CONGRESS WILL
   BE NEEDED TO ENSURE CORRECTIVE
   ACTION
---------------------------------------------------------- Chapter 0:2

To improve its operational efficiency and effectiveness, the Forest
Service must be held accountable for its expenditures and
performance.  Although the agency has promised to improve its
accountability for the last 10 years, it has not done so.  In the
interim, the Forest Service has asked for, and the Congress has
provided, increased discretion in fiscal decision-making. 
Specifically, the Congress has simplified the agency's budget
structure and significantly increased its spending flexibility to
ensure that funds are available when and where they are needed. 

During the past 2 years, the Forest Service has taken steps to
achieve financial accountability.  It has (1) identified the actions
needed to correct known accounting and financial reporting
deficiencies and (2) established a schedule to achieve financial
accountability by the end of fiscal year 1999.  The Forest Service
has not, however, (1) identified the actions needed to correct
decade-old performance-related deficiencies or to address new
problems that have arisen or (2) established a schedule to achieve
accountability for its performance by a certain date. 


      THE FOREST SERVICE HAS NOT
      KEPT ITS PROMISES TO THE
      CONGRESS TO IMPROVE
      ACCOUNTABILITY
-------------------------------------------------------- Chapter 0:2.1

In 1987, the Forest Service proposed a quid pro quo to the Congress. 
If the Congress would increase the agency's flexibility in fiscal
decision-making, the Forest Service would improve its accountability
in budget execution through better accounting for its expenditures
and performance. 

During the intervening decade, the Congress has given the Forest
Service virtually all of the flexibility in fiscal decision-making
that it requested.  For fiscal year 1995, the Congress (1) simplified
the Forest Service's budget structure by consolidating budget line
items and extended budget line items and (2) expanded the agency's
reprogramming authority, giving the Forest Service greater latitude
in shifting funds between and within the line items.  In addition,
the Congress, beginning in fiscal year 1997, made all of the agency's
discretionary appropriations available for an unlimited number of
years (no-year appropriations).  However, the Forest Service has not
improved its accountability as it promised, and, beginning in fiscal
year 1998, the Congress began to reduce the agency's latitude to
shift funds between and within budget line items. 


      THE FOREST SERVICE MAY NOT
      MEET ITS GOAL OF ACHIEVING
      FINANCIAL ACCOUNTABILITY BY
      SEPTEMBER 30, 1999
-------------------------------------------------------- Chapter 0:2.2

Since Agriculture's Inspector General reported in July 1996 that the
Forest Service's financial statements for fiscal year 1995 were
unreliable, the agency has taken steps to achieve financial
accountability.  In its report, the Inspector General identified
shortcomings in the Forest Service's accounting and financial data
and information systems that preclude it from presenting accurate and
complete financial information.  Forest Service officials determined
that corrective actions could not be completed in time to improve the
agency's fiscal year 1996 data.  As a result, the Forest Service did
not prepare financial statements for fiscal year 1996. 

Instead, the Forest Service, the Inspector General, and Agriculture's
Office of the Chief Financial Officer identified the actions that
would be required to correct the deficiencies and have established a
schedule to do so by the end of fiscal year 1999.  Implementation of
a new financial accounting system for the agency is a joint
responsibility of the Forest Service and the Office of the Chief
Financial Officer.  The Forest Service is also responsible for
implementing other corrective measures that are required to achieve
financial accountability. 

The Forest Service has taken some positive steps to address its
accounting deficiencies.  However, serious problems have been
encountered in attempting to implement the agency's new financial
accounting system.  Additional accounting problems--such as the lack
of reliable account balances for lands, buildings, and roads and the
lack of detailed records to substantiate amounts that the agency
either owes or is owed by others--continue to hamper the Forest
Service's ability to produce reliable financial information.  In
addition, the new financial accounting system to be implemented
departmentwide--purchased by Agriculture's Office of the Chief
Financial Officer in December 1994--is not Year 2000 compliant. 

According to several agency officials responsible for implementing
the new financial accounting system or taking other corrective
measures, the Forest Service is unlikely to achieve its goal of
financial accountability by the end of fiscal year 1999 if the
serious problems with the new financial accounting system are not
corrected.  Thus, the earliest that the Congress may have assurance
that the agency's financial statements are reliable may be when
Agriculture's Inspector General reports on the Forest Service's
fiscal year 2000 statements sometime in fiscal year 2001. 


      THE FOREST SERVICE HAS NO
      GOAL OR SCHEDULE FOR
      ACHIEVING ACCOUNTABILITY FOR
      ITS PERFORMANCE
-------------------------------------------------------- Chapter 0:2.3

On the basis of our work, we believe that the Forest Service's
statements of performance are also unreliable and that numerous
shortcomings in its inventory data, accomplishment measures, and
reporting systems preclude it from presenting accurate and complete
performance information.  Although the Forest Service has known of
these problems for over a decade, it has not (1) identified the
actions needed to correct the deficiencies or (2) established a
schedule to achieve accountability for its performance by a certain
date.  In addition, new performance-related problems have arisen as
the agency attempts to (1) shift its emphasis from consumption
(primarily producing timber) to conservation (primarily sustaining
wildlife and fish) and (2) move from managing individual resources,
such as wildlife, recreation, timber, range, and water, to a more
comprehensive approach to land management (ecosystem management) that
considers the interaction among management activities and programs. 

In a March 1988 report,\4 we stated that before the Forest Service
could be held accountable for its performance, it would need to
accurately charge costs to accounts, identify useful program output
targets, accurately record and report target accomplishments, and
relate useful oversight targets to forest plans.  The report noted
that the Forest Service was, at the time, addressing all of these
problems.  Today, 10 years later, the agency is still addressing
these problems. 

New problems have also arisen as the Forest Service has shifted its
emphasis from consumption to conservation and from managing
individual resources to managing natural systems.  As the agency has
made clear in several recent documents--including its September 30,
1997, strategic plan prepared under the Government Performance and
Results Act of 1993 (the Results Act), its proposed fiscal year 1999
budget, its first annual performance plan developed under the Results
Act, and the Chief's March 1998 natural resource agenda for the 21st
century--its overriding mission and funding priority, consistent with
its existing legislative framework, is to maintain or restore the
health of the lands entrusted to its care.  The agency intends to
limit goods and services on national forests--including recreational
experiences, commercial sawtimber and other forest products, and
livestock and wildlife forage--to the types, levels, and mixes that
the lands are capable of sustaining.  The documents also make clear
that the agency intends to fulfill this responsibility primarily by
maintaining and restoring the health of aquatic, forested, and
rangeland ecosystems. 

By clarifying its central mission and funding priority, the Forest
Service has taken a significant first step toward establishing
accountability for its performance.  However, before the agency can
be held accountable for its performance, other components of its
planning, budgeting, and reporting processes and systems must be
aligned with its strategic goals and objectives.  Currently, there is
no clear link between the Forest Service's ecosystem-based goals and
objectives and its budget line items, funding allocation criteria,
and performance measures. 

For example, the fiscal year 1995 budget reforms were intended to
improve efficiency and accountability by, among other things,
consolidating the funding for a project or an activity in one
program.  Thus, all activities in support of a timber sale--including
expenditures for a watershed survey, wildlife habitat mitigation,
and/or an inventory of archaeological sites--were to be consolidated
in and paid for by the timber program.  However, under the Forest
Service's integrated approach to natural resources management, which
emphasizes maintaining and restoring the health of aquatic, forested,
and rangeland ecosystems, the timber program is often no longer the
program that primarily benefits from a timber sale.  Rather, the sale
is used as a "tool" for achieving a land stewardship objective that
requires manipulating the existing vegetation.  Such objectives
include promoting the forests' health, creating desired wildlife
habitat, and reducing fuels and abnormally dense undergrowth that
have increased the threat of unnaturally catastrophic fires. 

Since the Forest Service's current budget structure remains highly
fragmented along the lines of individual program functions, it works
against an integrated approach to natural resources management.  For
example, an analysis linking the strategic objectives of the agency
with its budget structure for fiscal year 1999 identified at least 23
funding sources that could be used to restore or protect a forested
ecosystem, indicating that consolidation for strategic planning,
efficiency, and accountability purposes has not been accomplished. 

The fiscal year 1995 budget reforms were also intended to improve
accountability by providing a better link between expenditures and
performance.  However, 12 of the 23 potential funding sources for
forested ecosystems--including those for forest health, forest
stewardship, wildlife habitat management, timber sales management,
timber salvage sales, and wildland fire preparedness and
operations--also fund one or more other objectives, making it
difficult to determine the effects of different funding levels on
forest-health-related outputs and outcomes. 

In addition, to be most useful to congressional and executive branch
decisionmakers, performance information needs to be consolidated with
the financial and program cost data in financial statements. 
However, it is not clear how costs will be charged to accounts so
that the agency's financial accounting system can identify and link
costs to each objective. 

Many of the Forest Service's criteria for allocating funds to its
regions and forests are also not clearly linked to its strategic
objectives.  While the Forest Service's objectives focus on
maintaining and restoring aquatic, forested, and rangeland ecosystems
and on improving the delivery of goods and services, the agency's
funding allocations are based, not on need, but rather on factors
such as numbers of acres, forests, or endangered species and on prior
years' funding. 

Developing data and measures to gauge performance toward meeting
long-term and annual goals has also become more problematic for the
Forest Service.  Revenue and commodity outputs are now contingent on
healthy aquatic, forested, and rangeland ecosystems, and the focus of
the agency's strategic goals and objectives is tending toward a
system of dynamic, interrelated objectives--frequently called
"desired future conditions"--rather than a set of discrete objectives
for individual programs or resources, such as the volume of timber
offered or sold.  However, the agency does not know the condition of
many of these ecosystems.  In addition, it has not developed
objective, verifiable accomplishment measures and criteria that focus
on actual improvements and gauge longer-term (5- to 10-year) trends
in the condition of specific resources or attributes of environmental
quality, such as sediment loads in streams or the percentage of trail
miles meeting a specific standard. 

In its February 1998 annual performance plan developed under the
Results Act, the Forest Service acknowledged that inventories of 40
percent of the aquatic ecosystems on its lands are inadequate to
determine their condition and that the boundaries of many of these
ecosystems have not been systematically delineated.  Similarly,
descriptions of the condition of forested ecosystems within the
national forests are generally based on estimates, and the criteria
for determining their condition and prioritizing needed actions have
not been developed. 

In its June 1990 Critique of Land Management Planning,\5 the Forest
Service stated that "meaningful production goals for recreation,
water, wildlife, and fisheries have yet to be established, even in
theory, and reported accomplishments would be nearly impossible to
evaluate objectively or even verify independently." Our work
indicates that, in the intervening 8 years, the agency has not made a
serious, systematic attempt to undertake this admittedly daunting
task.  Establishing such goals is, however, essential to being able
to predict with any reasonable degree of certainty what levels of
goods and services the national forests can produce. 

Therefore, identifying objective and independently verifiable
measures of the health of aquatic, forested, and rangeland ecosystems
must be the Forest Service's first focus in developing a schedule to
achieve performance accountability.  If such measures cannot be
developed, then the Congress and the American public will not have an
objective basis for evaluating the agency's performance or for
assessing the benefits derived from the yearly investment in the
Forest Service. 


--------------------
\4 Forest Service:  Evaluation of "End-Results" Budgeting Test
(GAO/AFMD-88-45, Mar.  31, 1988). 

\5 Critique of Land Management Planning, Vol.  2, National Forest
Planning:  Searching for a Common Vision, Forest Service (FS-453,
June 1990). 


-------------------------------------------------------- Chapter 0:2.4

In conclusion, Messrs.  Chairmen, we recognize that the Forest
Service is not a private firm and that its stewardship
responsibilities and conservation mandates constrain its ability to
generate revenue and provide goods and services.  We also recognize
that protecting "public goods," like endangered and threatened
species and their habitats, increases management costs on the
national forests.  However, we believe that the agency is also
responsible for spending taxpayers' dollars wisely and providing
taxpayers with a complete and accurate accounting of how funds are
spent and what is accomplished with the money. 

Forgone revenue, inefficiency and waste, increased vulnerability to
fraud and abuse, and lack of financial and performance accountability
indicate to us that the American public is not receiving a fair
return for its annual investment in the Forest Service.  Unlike the
management of national forests, compliance with the requirements for
financial and performance accountability cannot be left to choice,
and strong leadership within the agency and sustained oversight by
the Congress will be needed to ensure corrective action.  We believe
that, at a minimum, the agency must replace its decade-old promises
to improve with firm schedules to correct identified management
deficiencies and to achieve both financial and performance
accountability.  Finally, we believe that future years' funding
should be based, in part, on the Forest Service's demonstrated
progress toward developing and implementing these schedules. 

Messrs.  Chairmen, this concludes our prepared statement.  We will be
pleased to respond to any questions that you or the Members of the
Committees may have. 


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