PROGRESS IMPLEMENTING THE PRESIDENT'S MANAGEMENT AGENDA

Overall Progress

    Progress implementing the President's Management Agenda has been significant in many agencies but has not been uniform. NASA is leading the government in its implementation of the five government-wide initiatives; the Departments of Commerce, Education, Energy, Labor and the Treasury, as well as the Office of Personnel Management and Small Business Administration are also progressing very well.

    On the other hand, a small number of departments and agencies have not yet made significant progress in one or more initiatives. For example, the Department of Agriculture has three red progress scores, the Corps of Engineers has two red progress scores, while the Departments of the Interior, Department of Transportation, Agency for International Development, and the Smithsonian each have one initiative in which they have not yet made much progress.

    With few exceptions, departments and agencies have developed sound plans for long-term success. They have passed to the critical time when planning gives way to execution. Thus far, agencies have made a successful transition to implementation in about half of the cases. Successful execution will require a relentless, disciplined effort, and include adjustments to plans as experience is gained.

    Indeed, in order to achieve genuine "breakthrough"—not simply marginal—improvement in performance, agencies will have to set the bar high, aiming at what is theoretically possible. That means seeking results that are not predicated on past performance, but rather pushing for order of magnitude improvements to levels not previously contemplated. An example is the Department of the Treasury which has succeeded in having all of its bureaus "close their books" within three days after the end of the month (most agencies are not even able to close on a monthly basis). Another citizen-centered example is the Govbenefits website which enables someone in need to go to a single point to access the government's 85 major social service programs without having to search agency by agency.

    Two critical ingredients for success emerge from early efforts: an integrated strategy, and clear assignment of responsibility for its implementation.

• Integrated strategy. To maximize effectiveness, successful implementation requires each agency to have a sound strategy to take advantage of the interconnections and common purpose among the five government-wide initiatives. Success in each area not only supports, but depends on the others. Thus for example, it is not by accident that National Science Foundation (NSF) has been successful in both financial performance and E-government. NSF improved its financial management by embracing advanced information technologies and operating in a paperless environment. So too at the Department of Education, which found it needed to redesign its initial human capital and competitive sourcing plans after recognizing how each affects the other. Education's "One-ED" plan defines a process for simultaneously performing human capital restructuring with competitive sourcing reviews.

• Clear assignment of responsibility. To make their strategies work, departments and agencies must clearly identify the official responsible for integration and implementation of all five elements of the Agenda, and hold that person strictly accountable.

    Good progress also is being made with respect to most of the nine program initiatives. Privatization of Military Housing, Reform of Food Aid Programs, and Coordination of Veterans Affairs and Defense Programs and Systems, in particular, are doing well.

The President's Management Agenda

    The President's Management Agenda ¹ is a coordinated strategy to reform federal management and improve program performance. The Agenda targets the government's most apparent deficiencies in core management capabilities where the opportunity to improve performance is the greatest. Five mutually reinforcing government-wide initiatives apply to every department and agency. These initiatives share a common purpose of government reform that is citizen-centered and focused on delivering results that matter to the American public. Together they form a strategy to achieve breakthrough, not simply marginal, improvement in:

• Strategic Management of Human Capital;

• Competitive Sourcing;

• Improved Financial Performance;

• Expanded Electronic Government; and

• Budget and Performance Integration.

    In addition, nine program initiatives apply to one or more agencies:

• Faith-Based and Community Initiative;

• Privatization of Military Housing;

• Better Research and Development Investment Criteria;

• Elimination of Fraud and Error in Student Aid Programs and Deficiencies in Financial Management;

• Housing and Urban Development Management and Performance;

• Broadened Health Insurance Coverage through State Initiatives;

• A "Right-Sized" Overseas Presence;

• Reform of Food Aid Programs; and

• Coordination of Veterans Affairs and Defense Programs and Services.

    The management agenda was launched just before Labor Day 2001. The following is a mid-year update on how well the departments and agencies are executing the management initiatives since last reported in the budget earlier in the year.

GOVERNMENT-WIDE MANAGEMENT INITIATIVES

    In developing the initiatives, the Administration established an Executive Branch Management Scorecard to track how well the departments and major agencies are executing the five government-wide management initiatives and to strengthen a sense of accountability. This scorecard presents an updated assessment of "status" and, for the first time, an assessment of "progress" being made to address the initiatives.

    "Status" is assessed against the standards for success ² developed for each initiative and published in the 2003 Budget as follows:

    Green: Meets all of the standards for success,

    Yellow: Achieved some, but not all, of the criteria, and

    Red: Has any one of a number of serious flaws.

    For example, in financial management, an agency is "red" if its books are in such poor shape that auditors cannot express an opinion on the agency's financial statements, if an agency has a history of spending more money than given to it in law by the Congress, or the agency head is unable to provide an unqualified assurance statement as to the systems of management, accounting and administrative controls. The scorecard in the President's 2003 Budget was an initial baseline evaluation as of 2001. This scorecard is an update as of June 30, 2002. An arrow up or down indicates a change in "status" and from the 2001 baseline.

    "Progress" is assessed on a case-by-case basis against the deliverables and time lines established for the five initiatives that have been agreed upon with each agency as follows:

    Green: Implementation is proceeding according to plans;

    Yellow: Some slippage or other issues requiring adjustment by the agency in order to achieve the initiative objectives on a timely basis; and

    Red: Initiative in serious jeopardy. Unlikely to realize objectives absent significant management intervention.

    (The Executive Branch Management Scorecard follows at the end of this chapter.)

Significant Developments

    Since the 2001 baseline evaluation, the Department of Energy improved its "status" on strategic management of human capital from red to yellow by addressing skill gaps in mission-critical occupations such as contract and project management, actively implementing its workforce restructuring plan, and effectively using available personnel tools and flexibilities (including buyouts and early retirement) to rebuild its workforce.

    The Department of Labor has improved its status on financial management from red to yellow. Since the 2001 baseline evaluation, all of Labor's financial management systems have met federal financial management systems requirements and applicable federal accounting and transaction standards. The department received an unqualified and timely audit opinion on its 2001 annual financial statement and has no material internal control weaknesses.

    The National Science Foundation now has two green "status" scores. It met the standards for success in E-government by meeting all core criteria and developing a process to implement corrective action plans for program level information technology security weaknesses.

    The Social Security Administration improved its status to yellow on the budget and performance integration initiative. SSA released a request for vendor bids to assist in developing systems requirements to better link performance with budgeting and enhanced the agency's performance tracking system by making data available on its Intranet.

    On the negative side, two baseline evaluations for financial management were revised to reflect poor 2001 year-end audits. At NASA, new auditors expressed a disclaimer of opinion for 2001 after seven years of unqualified audit opinions. At the Small Business Administration, the Administrator determined that the agency is not in compliance with the Federal Financial Management Improvement Act (FFMIA) and auditors were unable to provide complete, reliable, timely, and consistent financial management information.

Strategic Management of Human Capital

    Departments and agencies are responding in a variety of positive ways to the Administration's human capital initiative. The Department of Labor has overhauled its performance appraisal system and created its own internal "human capital" scorecard that monitors agency implementation of reforms on a quarterly basis. The Department of Energy has established a new career intern program, revitalized succession planning with senior executive service (SES) mentoring and candidate development programs, and taken steps to restructure department components in a coordinated, integrated fashion. SSA re-deployed 200 staff support positions to frontline, customer service positions. EPA has implemented an innovative SES mobility program to rotate managers' throughout the agency in an effort to expand program knowledge and transfer skills. The Department of Education has developed a process ("One-Ed") to review, assess and optimize the deployment of personnel within the department. The Department of Defense, while prosecuting the war on terrorism, is also aggressively addressing its long-term human capital problems created by a decade of workforce downsizing. Each military service developed plans to restructure its organization to improve efficiency, to ensure critical skills are maintained, and to better motivate and reward its employees.

    Government-wide, OPM has introduced a model to streamline the SES hiring process from six months to six weeks and is linking SES performance to the management agenda. OPM is reviewing federal compensation to determine its relevance to the current labor market. At the same time, OPM is the managing partner for five E-government reforms: Recruitment One-Stop, e-Training, e-Clearance, Enterprise Human Resources Integration, and e-Payroll. These systems will allow for the integration of data, information sharing and faster, paperless processing.

    Further, OPM is focused on increasing agency understanding and awareness of all the flexibilities that can be used under existing law and regulations. OPM is providing assistance to departments and agencies with "strike forces" to meet emergency needs and with a team of "desk officers" who work in collaboration with OMB budget examiners on agency specific assessments as agencies implement their human capital transformation.

Competitive Sourcing

    We are seeing tangible forward progress in competitive sourcing. The Department of Defense has conducted the largest competitive sourcing program in the federal government, and the military services are already meeting their 2002 goals by conducting studies of 30,000 positions performing a diverse set of commercial activities. Competitions as well as conversions are focusing the military on mission and more efficient logistics and military base operations to help improve force mobility. In addition, the services are improving the living conditions of military families through privatization of military housing.

    The Department of Energy is looking at information technology functions across bureaus, one of the only times a department has ever undertaken such a coordinated initiative. The Federal Emergency Management Agency (FEMA) and the Small Business Administration have developed plans to use the private sector to create rapid response temporary workforces to handle emergency disaster needs. At the Department of Commerce, the Bureau of the Census is conducting a major public-private cost comparison and competition. The study is scheduled for completion by February 15, 2003, and involves 225 full-time-equivalent positions that perform a variety of clerical and administrative support functions on a temporary basis.

    On a government-wide basis, the 50-year old process for public-private competition is undergoing an overhaul. The new process will be easier, faster to use, and fair to both public employees and interested private sector bidders. The proposed changes will go out for notice and public comment in the very near future.

Improved Financial Performance

    The Administration has set aggressive criteria to measure department and agency success toward the improved financial performance initiative's goal of producing accurate and timely information to support operating, budget, and policy decisions. This year, all agencies produced timely interim financial statements for the period ending March 31, 2002. In order to produce more timely financial information, departments and agencies will accelerate the date by which they produce audited financial statements from February 27th in 2001 to November 15th in 2004. In addition, they are combining Performance and Accountability Reports, which will contain the audited financial statements and performance information, thus providing a more complete picture of an agency's progress and results achieved.

    For 2001, the Departments of Justice and Transportation joined 16 other departments and major agencies receiving "clean" audit opinions on their financial statements. The Departments of Agriculture and Education, along with the Agency for International Development, also showed substantial improvement over previous years. NASA and FEMA, however, showed slippage from 2000.

    The magnitude of the financial management challenges at the Departments of Defense and Agriculture are central to the General Accounting Office's current inability to render an opinion on the government-wide financial statements. The Department of Defense is aggressively working to reengineer business processes and consolidate/replace the more than one thousand financial management systems that exist at present throughout the Department, a project that will take a number of years.

    The Department of Agriculture has similar challenges. Although four of five of the Department's stand alone audits received unqualified opinions, a significant improvement from the past, auditors were again unable to express an opinion on the Department's 2001 financial statements, citing seven material weaknesses. In addition, the Secretary was unable to give assurance that the Department's systems and internal controls were compliant with financial and other management statutes.

    The improved financial performance initiative is also aimed at reducing the billions in erroneous payments made by federal programs each year. Medicare reported a reduction in its erroneous payment rate from 6.8 percent in 2000 to 6.3 percent in 2001. Likewise, the Food Stamp program reduced its national error rate from 8.9 percent in 2000 to 8.7 percent in 2001. Reducing these error rates prevented the waste of almost $1 billion.

    To improve its administration of the Food Stamp program, the Department of Agriculture will make states like California and Michigan, which have error rates of 17.4 percent and 13.9 percent, respectively, pay cash sanctions when their error rates greatly exceed the national average. Most agencies have plans in place to meet the budget requirement to estimate the extent of erroneous payments and set targets for reducing them.

Expanded E-Government

    The expanded E-government initiative is making government services easier to use and more responsive. E-government is not about putting thousands of government forms or reams of information online. Rather, it is about government making better use of technology to better serve citizens and improve government efficiency, cutting government's time to make decisions from weeks or months to hours or days. The E-government initiative requires agencies to focus IT spending on improving mission performance, reducing duplication, ensuring information security, and cooperating across traditional agency silos. Federal agencies are taking a two-pronged approach for improving efficiency and quality of service, with one prong being modernization of their infrastructure and the other prong being their active involvement in development of cross-agency citizen-centered initiatives.

    Agencies are making progress both in agency-specific efforts and 24 cross-agency initiatives, celebrating several major successes since February, 2002. The redesigned Firstgov website now offers citizens "three clicks" to service. As a result, the number of visitors has increased 50 percent, making it one of Yahoo's 50 "Most incredibly useful websites." In addition, the June 2002 United Nations report Benchmarking E-Government: A Global Perspective rated the United States as the world leader in E-government on the basis of achievements over the last year.

    A new multi-agency social services portal, Govbenefits, was launched to provide citizens with a tool to quickly locate federal assistance programs relevant to their needs. After its launch in April, USA Today added the site to its list of "Hot Sites", stating that "Govbenefits gives you an easy way to see if there are funds, training, or other benefits available for you." Govbenefits receives 50,000 visitors per week.

    Sixteen agencies made significant progress in accomplishing the goals of expanded E-government, leveraging information technology to become citizen-centered, and results oriented. The Office of Personnel Management is using E-government to streamline human resources processes and better serve employees, from recruiting to retirement. The National Science Foundation which currently receives 99 percent of its annual proposals on-line is a small agency model for successful E-government.

    Agencies continue to be challenged by E-government requirements for joining fragmented service delivery operations. To become fully successful in this initiative, more agencies must actively partner to simplify government processes and integrate IT investments around citizen needs.

Budget and Performance Integration

    The Administration has taken unprecedented steps to reform the budget process by establishing a systematic, consistent process for developing program performance ratings and then using that information to make budget decisions. While agencies expend considerable time and effort developing and updating their Government Performance and Results Act (GPRA) plans and reports, this information typically has been of little relevance to the budget process.

    To enhance the practical use of performance information, OMB, in collaboration with other federal agencies, has developed draft Program Assessment Rating Tools (PARTs), comprised of assessment criteria on program performance and management. The PART ³ establishes a high, "good government" standard of performance and will be used to rate programs in an open, public fashion. Ratings for 20 percent of programs will be published in the 2004 Budget, and the basis for the rating will be made available to the public. Draft tools were developed in April, tested in May and June, and were revised based on the test results, feedback, and extensive consultation with the President's Management Council, agencies, and outside groups. OMB also convened a Performance Management Advisory Council of outside experts to advise on the rating process.

    As a complementary effort in support of the budget and performance integration initiative, agencies and OMB are developing common performance measures in seven cross-cutting areas. The uniform evaluation metrics allow comparison of selected programs with similar goals, such as job training and employment, and flood mitigation. While these comparisons are not determinative, they will help identify potential efficiencies and program improvements.

    Achieving the standards of success in this initiative is particularly challenging since it requires a fundamental change in how budgeting is approached. It asks departments and agencies to present a "performance budget" requesting resources based on the results they plan to achieve. Some, including Justice and VA, are restructuring their entire budgets in support of such a presentation; others are starting with specific bureaus. Transportation, for example, is developing a department-wide performance presentation, in order to consider what format would best help them to budget and manage for results. To assist agencies, the Chief Financial Officers Council developed "Getting to Green" guidance identifying concrete steps that agencies can take to meet the goals of the initiative.

Progress by Department/Agency

    Department of Agriculture (USDA)—USDA has not advanced on the human capital, competitive sourcing, and budget and performance integration initiatives, but has shown significant progress in financial management and E-government. USDA is the second largest component of the government's balance sheet, and, therefore, is a significant barrier to the government receiving a clean audit opinion. USDA's recent efforts have resulted in receiving unqualified opinions on four of five stand-alone audits. Targeting efforts to improve the Forest Service's audit results should enable USDA to obtain a clean opinion on the combined USDA financial statement.

    In E-government, USDA has developed 28 successful business cases and is developing an enterprise architecture. USDA is working on 18 of the 24 government-wide E-government initiatives, including Recreation One-Stop, which will provide a searchable database of recreation areas nationwide, with online mapping and integrated transactions like campground reservations and the purchase of recreational passes. To improve in the areas of human capital, competitive sourcing, and budget and performance integration, USDA needs to increase its commitment and show actual progress towards meeting these goals.

    Department of Commerce—Commerce has made good progress on implementing the President's Management Agenda. The department should exceed the preliminary targets for competitive sourcing in 2003. The Census Bureau is currently studying 225 positions that perform a variety of clerical and administrative functions on a temporary basis, including secretarial duties, data entry, photocopying, filing, and preparing mailings. Financial performance is improving with continued implementation of Commerce's integrated financial system. With the National Oceanic and Atmospheric Administration implementing the system ahead of schedule this fall, most of the department will be using the new system. In the human capital area, the Economic Development Administration has completed a workforce restructuring plan and is seeking buyout authority from Congress.

    Department of Defense (DoD)—While prosecuting the war on terrorism has been DoD's principal focus since September 11th, the Department has made a major effort to address the President's Management Agenda. DoD took a significant step in addressing its longstanding financial management problem by recently hiring IBM to develop a Defense-wide financial management enterprise architecture and to standardize data and processes. Implementation of this architecture will ensure that DoD's financial statements are more accurate and satisfy a critical need to help the department make more effective decisions.

    In addition, DoD has conducted the largest competitive sourcing program in the federal government, and is planning to compete 15 percent of those positions not deemed inherently governmental by 2003. Competitions are spread out over a wide array of military base functions, including communications, computing, and maintenance and repair.

    With respect to human capital management, the department has produced strategic plans for both civilian and military human resources. The civilian plan is an important first step in addressing workforce imbalances created by downsizing over the last decade.

    Within the information technology area, DoD is actively engaged in four E-government efforts, taking steps to improve its IT security, and increasing visibility into its IT investment process. Finally, DoD is in the early stages of developing metrics to correlate program performance with budgeting decisions for the 2004 budget.

    Department of Education—Education has made significant progress implementing the management agenda. Through the "One-ED" plan, the department has developed a framework for improving the efficiency of every major business function by identifying human capital deficiencies and competitive sourcing opportunities. In addition, Education has strengthened its information technology investment review process through significant improvements to its business case analyses. For example, the business case in support of the department's performance-based data management initiative is being used by other agencies as a "best practice" model.

    The Department's management team tracks progress on approximately 200 action items tied to meeting the management agenda standards for success. The Deputy Secretary, who chairs the President's Management Council committee on budget and performance integration, heads this team and conducts weekly meetings to ensure that key personnel are carrying out the management agenda.

    Department of Energy—DOE made significant progress in addressing the President's management agenda. Status on the human capital initiative improved due to DOE's aggressive development and implementation of its workforce restructuring plan. DOE has crucial top level support for this initiative. The department has restructured large programs such as the Office of Environmental Management to de-layer and improve accountability. DOE's continuing progress hinges in part on its ability to maintain strong central oversight and coordination of the major management, information, and budgetary operations of its diverse programs.

    One of the Department's more significant accomplishments is that it identified more than 1,000 positions for competitive sourcing studies. Instead of selecting positions for competitive analysis on a bureau by bureau basis, DOE is selecting functional areas for review across the department, such as financial services, human resources training, and information technology (IT). It plans to conduct a full-scale study of all IT activities, which include a variety of functions at multiple sites including both contracted and federal positions.

    Environmental Protection Agency (EPA)—EPA continues to improve its workforce restructuring plan and has implemented an innovative senior executive service mobility program, which rotates managers' assignments in order to expand program knowledge and transfer executive skill sets. EPA accelerated its competitive sourcing program and will identify positions to be competed to meet both 2002 and 2003 goals by the end of the year. As part of the agency's E-government efforts, EPA is working with States and tribes on such projects as the National Environmental Information Exchange Network and the related Central Data Exchange to reduce reporting burdens to make data collection and access more efficient.

    Health and Human Services (HHS)—Although HHS struggles with a historically decentralized organizational structure, the department is working to strengthen internal coordination of management agenda efforts. HHS has provided strong E-government leadership on e-Grants, contributing both staff and first-year funding for the project. This important initiative will simplify and unify government grant systems, particularly through the establishment of a single grantee identifier. In addition, the department's new CIO will focus the department on establishing an enterprise architecture and strengthening information technology security, as described in the information technology five-year plan.

    In the area of human capital, HHS has finalized a recruitment and retention strategy and instituted performance-based employment contracts for top managers. To strengthen financial performance, the department has a comprehensive corrective action plan to resolve material weaknesses, and has begun assessment of payment risks in key programs and implementation of a Unified Financial Management System. Finally, in budget and performance integration, a departmental performance plan linking budget and performance information will be developed and various program-specific efforts are underway.

    Housing and Urban Development (HUD)—HUD is working to correct long-standing material weaknesses that have reduced its effectiveness and wasted resources. Positive steps include HUD's reassigning more than 300 employees to higher priority work after implementing a new resource allocation system. HUD also developed proposed legislation to help it identify all sources of tenant income to correctly determine the amount of subsidies due—legislation that could reduce the over $1 billion each year in overpaid rent subsidies. HUD improved its capital planning and project management for major information technology investments. For instance, it integrated FHA's many separate financial systems into one system. An enhanced intern program is bringing new talent into the Department as a critical element of a new strategy to address human capital weaknesses, including the potential retirement of up to 49 percent of its workforce within the next three years.

    Department of the Interior—Interior is making progress in addressing the President's Management Agenda, but is struggling to approach the agenda from a department-wide perspective. Some of the struggle is due to Interior's complex, multi-mission organization and structure, with everything from vast lands and national parks to island trust territories within its areas of responsibility. Interior recognizes the challenges it faces and is putting substantial time and resources into improving performance. Specifically, Interior has established a Center for Competitive Sourcing Excellence to begin implementing its plans to study direct conversion and public-private competitions of 3,345 positions, including maintenance workers, gardeners, and engineers. Interior has also applied an internal management scorecard to focus senior managers on the President's Management Agenda. Interior needs to continue to aggressively pursue its management agenda for human capital, E-government, and budget and performance integration. However, the Department's failure to make progress on the financial performance agenda item is of the most concern.

    Department of Justice—The Department's leadership is now giving attention to the management agenda after some initial delay following the events of September 11th. Justice has revised its strategic plan to align it with its strengthened counterterrorism mission, and is developing a proposed budget structure consistent with the strategic plan and linked to performance. The development of a human capital strategy is proceeding on schedule, with emphasis on overcoming cultural barriers to improvement and refocusing department resources on the enhanced counterterrorism mission. In addition, Justice has achieved passing grades for business cases supporting all major information technology investments and—with Treasury and FEMA—is taking the lead for the wireless E-government initiative (Project SAFECOM) which will ensure that public safety personnel at all levels of government can communicate and share information as they respond to emergency incidents.

    Department of Labor—Labor has demonstrated a sustained commitment to implementation of the management agenda and is making good progress. A key component of the department's success is its Management Review Board, which monitors progress by regularly reviewing department-wide reform implementation. With the correction of deficiencies in its financial systems, Labor's financial management "status" has been upgraded to "yellow." The department is developing a new performance measure to reduce Unemployment Insurance erroneous payments, which could save hundreds of millions annually. In the human capital area, the department overhauled its performance appraisal system. To align resources and performance, Labor is completely redesigning its 2004 Budget. Labor was the leader in the government-wide development of Govbenefits, an online tool to help citizens determine their eligibility for federal assistance programs. The Deputy Secretary of Labor is chairing the President's Management Council committee on E-government.

    Department of State—After a slow start, the outlook for State has improved. The department submitted a final competitive sourcing management and competition plan to target for competition 234 warehousing, payroll, architectural/engineering and related services, printing and reproduction, and medical positions. The department is on schedule for a full conversion to the new Regional Financial Management System that will comply with federal requirements for financial performance by the end of 2003. Thus far, State has brought 16 posts on-line. State has improved its E-government planning efforts by integrating information technology and budget decision-making, but needs to complete an enterprise architecture and an adequate security corrective action plan. In addition, while State has improved its planning effort to strategically manage its workforce, the department must still finalize an implementation plan.

    Department of Transportation (DOT)—DOT is thus far meeting with mixed results in implementing the President's Management Agenda. Monthly, the Secretary reviews operating administrations' progress. However, DOT has made slow progress in developing a human capital strategy. It expects to complete a department-wide plan this year. DOT will not meet the 2002 competitive sourcing goal on a department-wide basis, although outsourcing is being used extensively by the Transportation Security Administration and additional competitive sourcing opportunities are being explored in the Federal Aviation Administration (FAA). DOT is deploying a new accounting system, has finalized its capital planning and investment control policy guidance, and plans to institute an enterprise architecture early next year. DOT is aggressively leading the on-line rulemaking E-government project. DOT proposed a performance-based research and capital program for the FAA for 2003 and will aggressively expand performance-based budgeting department-wide in its 2004 budget submission.

    Department of the Treasury—Treasury is making significant progress in implementing the management agenda. The department has led the government in financial management improvements. Treasury no longer prepares monthly financial statements weeks after the close of business. Instead, Treasury has succeeded in having all its bureaus "close their books" within three days of the end of the month—a practice more in line with that of private industry. In 2002 and following years, Treasury also plans to complete its financial audit by November 15, meeting the newly announced November 15 audit deadline two years prior to the mandatory 2004 government-wide effective date. Treasury also has an ambitious program to improve citizen services through expanded E-government. It recently introduced a secure, easy to use internet option for taxpayers to confirm that IRS received their tax return and to determine when to expect a refund if one is due.

    Department of Veterans Affairs (VA)—VA has moved aggressively to restructure its budget accounts to align with its business lines, addressing complex issues with all budget process stakeholders: VA staff, Treasury, OMB, and Congressional committees. VA's information technology (IT) management has made strides as the department presented an enterprise architecture implementation plan, a revised FY2004 business case development process, and an excellent corrective action plan for meeting government computer security requirements. One setback has been the delay in improving financial systems. VA began testing a new financial and logistical system at several sites and identified additional requirements: more legacy systems in need of replacement, further changes needed to business processes, and gaps in the IT infrastructure.

    U.S. Agency for International Development (USAID)—Historically, USAID has had significant difficulties managing its thousands of projects in over eighty countries because of obsolete and ineffective management systems. As a result, the agency faces serious challenges in improving management given the low starting point for each agenda item and the wide range and complexity of programs it operates. For example, USAID has financial management systems that are unable to produce auditable financial statements. Its management information systems cannot produce basic information, such as real-time obligations data, in a timely manner. The agency does not have a comprehensive workforce planning model for its multiple personnel systems. Nor does it yet have competitive sourcing plans.

    Since September 2001, USAID has primarily focused on developing plans to achieve full compliance with the Agenda, and it has taken some concrete steps to improve its performance. The agency is completely reevaluating business processes to achieve successful deployment of the financial management system to the field as efficiently as possible. It has adopted some automated tools to improve performance in human resources and procurement functions. USAID is also taking steps to link its resource allocation decisions more closely to performance, but has not yet developed a plan to implement competitive sourcing.

    Corps of Engineers—The Corps has made only modest progress on the management agenda initiatives overall. It has been most successful in the E-government arena, which is being coordinated effectively by the Corps' Chief Information Officer. The Corps is working to improve its capital planning process for information technology investments and to develop a robust plan for an enterprise architecture. Less progress has been made on other agenda items. In particular, the Corps is a year behind schedule in meeting government-wide competitive sourcing targets, and it is not clear whether the human capital plan that it is developing will meet acceptable criteria. The Corps is making some progress resolving financial management issues regarding computer security and property and construction records, and has begun to engage on crafting suitable program performance criteria and revising its strategic plan.

    Federal Emergency Management Agency (FEMA)—FEMA is working to address workforce skill and competency gaps. The agency is also exploring whether its National Processing Servicing Center activities and other commercial activities could be performed by commercial entities with greater efficiency. With respect to financial management, FEMA has launched a balanced program to address deficiencies that resulted in a qualified opinion on its 2001 financial statements. FEMA is also working to make federal disaster programs more citizens centered and will develop a single internet-based portal that will save time and money during the application and disbursement process. FEMA is also promoting interoperability through shared wireless communications networks designed to ensure that public safety personnel, throughout all levels of government, can communicate and share information as they respond to emergencies.

    General Services Administration (GSA)—GSA is replacing its core accounting system to improve funds management capabilities and controls. Although GSA experienced difficulties moving the project forward, deliberate planning and leadership helped get the project back on track for implementation by the end of the fiscal year. Furthermore, through a collaborative, interagency approach, GSA is leading the e-Travel initiative, which will provide agencies with a common customer-centric, web-based travel management service. GSA has completed a comprehensive review of its senior executive allocation criteria to ensure that the right leadership is in the appropriate places. Finally, GSA revised its strategic plan and is developing an automated measurement system to monitor its performance.

    National Aeronautics and Space Administration (NASA)—NASA has made notable progress in each area of the management agenda. For example, NASA has developed its first strategic human capital plan; completed a pilot of its first agency-wide human resources tracking system; increased the number of positions that could be open to competition by 70 percent over its 2000 FAIR Act inventory; and developed an interim plan for competing up to 40 percent of the commercial positions on its 2000 inventory. While NASA's financial performance "status" deteriorated because of a disclaimer of opinion on its 2001 audit after a change of auditors, since then NASA has worked with its new auditor to develop an action plan and expects resolution of all outstanding issues by the end of July. In terms of E-government, NASA has strengthened the role of its Chief Information Officer and is improving its capital planning and investment control process and IT security tracking. Finally, NASA has aligned its budget structure with program outputs and prepared for full cost and performance budgeting in 2004.

    National Science Foundation—NSF has achieved a green "status" rating in E-government that joins its green "status" for financial performance. NSF did so by making significant progress in fixing identified information security problems. NSF is taking a systemic view of the management agenda, understanding that the five initiatives are intrinsically linked. It developed an Administration and Management Strategic Plan that addresses all five initiatives. This plan includes a comprehensive, multi-year business analysis, which will inform progress in each of the initiatives and will ultimately result in an organization that does business in more efficient ways. Since the initial results of its business analysis will not be available until 2003 at the earliest, NSF is developing near-term plans for addressing the management initiatives. As such, limited progress has been made on the competitive sourcing and budget and performance integration initiatives.

    Office of Management and Budget (OMB)—OMB is undertaking an analysis of its human capital requirements and is developing a human capital plan. It has already changed its performance evaluation system and plans to enhance orientation for new employees this summer. In the area of E-government, OMB has redesigned its website to make it more attractive and easier to use. It is leading the way toward on-line rulemaking, thereby improving citizen access to the regulatory process.

    Office of Personnel Management (OPM)—OPM has demonstrated measurable progress toward achieving the management agenda's standards for success. Using input from its workforce and employee unions, external customers (like federal agencies and retirees) and the public at large, OPM is restructuring itself to better deliver needed services. OPM is using market-based competition to improve performance and reduce costs by competitively sourcing facilities maintenance, financial system programming and computer operations activities.

    OPM is the lead agency on a number of E-government initiatives that will make finding, selecting and keeping good people faster, easier and cheaper. The e-Clearance project lets agencies save time and money by electronically sharing background investigation data. The e-Payroll project will standardize payroll processing across government and eliminate redundant investments. The Retirement System Modernization project is using technology to improve customer service delivery and payment accuracy, while eliminating 120,000 square feet of storage space for paper records and associated storage costs. The OPM Director chairs the President's Management Council's committee on human resources.

    Small Business Administration (SBA)—SBA has made significant progress towards achieving the President's Management Agenda. Leading SBA's list of accomplishments is the completion of a plan which rationalizes its field structure by consolidating redundant functions and service centers. SBA is also exploring options to convert clerical work performed by temporary federal workers to commercial entities, which is cost-effective and will provide the agency with additional flexibility. In addition, SBA is implementing a loan-monitoring system to improve lender oversight and is participating in ten government-wide information technology initiatives, including e-Loans, e-Grants, Disaster Management and Crisis Response, and the Business Compliance One-Stop, which includes eight federal partners and three states and will help make SBA programs more citizen-centered.

    Smithsonian Institution—The Smithsonian has significant work to complete before it can improve its baseline ratings. An overarching issue is that internal cultural barriers and agency history have hindered an institution-wide approach to management improvements. For example, the Smithsonian has hired a contractor to perform a workforce analysis and have canvassed employees at twenty-five percent of the agency's units. The agency is also implementing a replacement of its financial management system to replace its current inadequate system. The new system is on schedule for initial deployment in October 2002. The Smithsonian is aggressively addressing its significant information technology shortcomings. A recent Inspector General report identified several concerns with information security activities, which the Smithsonian does not contest and currently is developing a corrective action plan.

    Social Security Administration—SSA has made progress towards achieving the President's Management Agenda. In the area of budget and performance integration, SSA is developing a new budget formulation system that will interface with its financial management systems and have modeling capabilities to formulate and execute budgets in order to better link performance and budgeting. In addition, SSA has moved 200 staff support positions to front-line customer service positions and has developed a new five-level performance appraisal system for senior executive service candidates. SSA continues to make progress in integrating its financial and performance management systems and addressing payment accuracy issues. Furthermore, SSA has committed to building an electronic disability process by the end of 2004.

SPECIFIC PROGRAM INITIATIVES

    In addition to the five government-wide management initiatives, the President's Management Agenda includes nine agency-specific reforms. These initiatives provide an opportunity to make a dramatic and material difference in federal management program performance in one or more agencies.

    (The Executive Branch Program Initiatives Scorecard follows at the end of this chapter.)

Faith-Based and Community Initiative

    Existing regulatory and administrative barriers to the full participation of grassroots faith-based and community organizations (FBO/CBOs) in the delivery of social services have not yet been eliminated. However, the five agencies that are the focus of the Presidential Executive Order on the Faith-Based and Community Initiative—Education, Health and Human Services, Housing and Urban Development, Justice and Labor—have made significant progress in eliminating some unwarranted regulatory barriers and in providing affirmative statements of FBO/CBO eligibility for federal programs. Additional efforts are needed to eliminate the remaining administrative barriers. These agencies are working to provide technical assistance to FBOs and CBOs, but further work is needed to ensure that these initiatives are coordinated and address the needs of small and novice grant applicants.

Privatization of Military Housing

    The Department of Defense is tackling the problem of inadequate housing by demolishing dilapidated units, renovating existing houses, and building new homes. Increasingly, DoD relies on the private sector, which has the expertise to manage real property and can increase the quality of DoD-owned housing at less cost and faster than the government. By the end of 2002, DoD is expected to privatize 28,053 units, of which 18,188 are inadequate and will be improved. So far in 2002, DoD has privatized four projects, two of which are at large military locations in Ft. Lewis, Washington, and Ft. Meade, Maryland. In 2003, DoD plans to privatize approximately another 35,600 units. The Army and the Navy plan to meet DoD's goal of eliminating inadequate housing units by 2007. The Air Force plans, however, are still focused on 2010.

Better Research and Development Investment Criteria

    Across government, agencies use inconsistent and incomplete data and methods to assess and justify R&D programs. The goal of this initiative is to develop objective investment criteria for federal research and development (R&D) programs and use the criteria in formulating the 2004 Budget for applicable programs across the government. Improving the process for budgeting, selecting, and managing R&D programs will increase the productivity of the federal R&D portfolio, the return on taxpayer investment, and better ensure the investments are in areas of national significance. Based on a pilot implementation at the Department of Energy as part of the 2003 Budget, OMB revised the criteria for broader applicability and sent them to agency heads as part of joint OMB-Office of Science and Technology Policy guidance on R&D. OMB has been working with the agencies to implement the criteria, identifying appropriate reporting levels and systems to address the criteria. For example, DOE is developing a database to collect and present data on its R&D projects, and NASA is recasting its strategic plan, budget justification, and other documents to directly tie to the criteria.

Elimination of Fraud and Error in Student Aid Programsand Deficiencies in Financial Management

    The Secretary of Education has launched a major effort to resolve issues preventing the department from achieving an unqualified audit opinion on its financial statements and to have student financial assistance programs removed from GAO's high risk list by successfully addressing management deficiencies. The Department of Education's progress on this initiative has been positive. Working with the Department of the Treasury, Education drafted and submitted to Congress a legislative proposal that would amend the Internal Revenue Code to allow Education to match student applicant data with IRS data for the purpose of verifying applicant eligibility for student financial assistance. The proposed match, if enacted and fully implemented, would eliminate hundreds of millions in erroneous payments in student aid programs. Moreover, Education has improved financial management through deployment of a new general ledger system and significant reductions in unreconciled cash items. While Education has worked to improve default management and prevention strategies, more work needs to be accomplished in assuring compliance with laws and regulations. Business process and system enhancements have yielded improvements in technical assistance to schools, but program monitoring needs more management attention.

Housing and Urban Development Management and Performance

    As part of the President's Management Agenda, HUD has committed to tackling long-standing management problems that leave some subsidized families trapped in substandard housing, expose home buyers to fraudulent practices, and result in HUD's paying excessive rent subsidies that otherwise could be used to help additional families. HUD has made progress over the past year, but much remains to be done. The physical condition of subsidized properties has improved. The Administration is asking Congress to help by authorizing a major reform that would use private mortgage financing to recapitalize viable public housing and let tenants move from a troubled project without giving up their subsidy. HUD is making substantial progress toward reducing the multiple types of errors that contribute to over $3 billion in gross annual erroneous rent subsidy payments. It is testing an expert computer system to reduce the 60 percent error rate in calculating subsidies, and it has developed proposed legislation for limited income data matching authority to enable a more efficient and effective means of verifying tenants' income upon which subsidies are based. HUD's Federal Housing Administration has taken steps to protect home buyers from a fraudulent practice known as property flipping, and made a successful start to reduce risk in its financial systems. Finally, HUD is working closely with the states and communities receiving block grants to reduce meaningless compliance burdens and develop a better reporting tool.

Broadened Health Insurance Coverage through State Initiatives

    HHS released the Health Insurance Flexibility and Accountability (HIFA) Demonstration Initiative on August 4, 2001. This guidance outlined the Administration's goal of increasing health insurance coverage by coordinating currently available Medicaid and State Children's Health Insurance Program (SCHIP) funding with private insurance. HHS has conducted extensive briefings on the project and HIFA is frequently included in policy discourse on how to improve health insurance coverage among lower income Americans. To date, the Administration has approved HIFA demonstrations in Arizona and California. Both of these demonstrations will extend health insurance coverage to lower income parents of children enrolled in Medicaid or SCHIP. Arizona's demonstration will also cover low income uninsured childless adults. Six State HIFA proposals are currently under review at HHS. The low number of approvals is primarily due to the time required for States to develop programmatic ideas and submit applications. Some review time is also required to work with States to resolve programmatic and budget concerns.

A "Right-Sized" Overseas Presence

    The goal of this initiative is to analyze and review U.S. presence overseas and develop a credible and comprehensive overseas staffing allocation process. This will provide the Administration with a means to link overseas assignment with overall U.S. government policy, funding, and agency construction planning. The Administration's interagency rightsizing initiative is moving from recommendations to concrete steps that will have an impact on how resources of all federal agencies are deployed overseas.

    On a practical level, OMB, State, and other federal agencies have been working to ensure that a proposed new interagency regional center in Frankfurt, Germany is developed from the outset to serve country-specific and regional needs. State and OMB are analyzing the current staff federal agencies have in Frankfurt as well as some functions federal agencies perform across Europe, to determine which functions could be regionalized in Frankfurt or performed from the United States. A more extensive pilot project on interagency rightsizing is underway to examine all posts within the European and Eurasia Bureau. This pilot effort will involve OMB and interagency cooperation and build upon the rightsizing work of GAO to consider how to conduct rightsizing on a larger scale.

    Finally, State and OMB are working to develop a cost sharing mechanism that would apply to all federal agencies to finance the construction of new embassies. If properly designed, a cost sharing mechanism for capital costs could be a powerful on-going incentive to right-size future presence at new posts.

Reform of Food Aid Programs

    The Administration announced the results of its interagency process to reform federal food aid programs in conjunction with release of the 2003 Budget. The reforms were designed to address the ad hoc process of funding international food aid, target funding to feeding hungry people, and ensure consistency in USDA and USAID management of food aid programs. The main objectives of the reforms are being accomplished on schedule. By terminating a USDA program that funded food aid through unpredictable surplus commodities and requesting an additional $335 million for a USAID program funded through annual appropriations, the initiative is providing a more reliable method of funding for food aid, while still feeding approximately the same number of hungry people once the reforms are fully implemented. The House Appropriations Agriculture Subcommittee has provided funding consistent with this approach. The Administration is working to conform this initiative with recent changes to farm legislation.

Coordination of Veterans Affairs and Defense Programs and Systems

    This initiative is designed to enhance coordination and delivery of veterans benefits and services by VA and DoD. At the release of the President's Budget, VA/DoD sharing of services was given a red score because of lack of a national focus on coordination. Since then, VA and DoD have created an Executive Council that is actively pursuing a national coordination strategy. One area of great progress is the development of a joint plan for an interoperable patient record for use in the VA and DoD health care systems, and VA's assessment of how it will use DoD's enrollment system. These will allow for greater coordination of care potentially increasing the safety, satisfaction, and quality of care for VA and DoD patients and the seamless transition of enrollment status as active duty members become veterans.

    In addition, VA and DoD have agreed to establish a single regionally adjusted discounted rate structure for DoD/VA medical sharing agreements. Using a single regionally adjusted rate simplifies negotiations among facilities, clarifies reimbursement issues, accounts for local cost differences, and will increase opportunities for resource sharing. DoD and VA are also discussing potential savings associated with the joint use of aeromedical evacuation resources and joint training for health care providers.

Executive Branch Management Scorecard

Executive Branch Program Initiatives Scorecard