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entitled 'Managing For Results: Next Steps to Improve the Federal 
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United States General Accounting Office: 
GAO: 

Testimony: 

Before the Subcommittee on Government Efficiency, Financial Management 
and Intergovernmental Relations Committee on Government Reform, House 
of Representatives: 

For Release on Delivery: 
10:30 a.m. EST: 
Friday, February 15, 2002 

Managing For Results: 

Next Steps to Improve the Federal Government's Management and 
Performance: 

Statement of J. Christopher Mihm: 
Director, Strategic Issues: 
	
GAO-02-439T: 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the President's Management 
Agenda to improve the management and performance of the federal 
government. The federal government is one of the largest, most 
complex, and diverse organizations in the world, facing a wide range 
of challenges in responding to a number of key trends, such as 
globalization, changing security threats, and demographic changes. 
Especially in light of the tragic events of September 11, federal 
agencies will need to work better with other governmental 
organizations, nongovernmental organizations, and the private sector, 
both domestically and internationally, to achieve results. Focusing on 
accountable, results-oriented management can help the federal 
government use this network to deliver economical, efficient, and 
effective programs and services to the American people. 

My central point today is that the administration's plan to use the 
Executive Branch Management Scorecard to highlight agencies' progress 
in achieving management and performance improvements embodied in the 
President's Management Agenda is a promising first step. However, it 
is important to recognize that many of the challenges the federal 
government faces are long-standing and complex, and will require 
sustained attention. Therefore, as this subcommittee has emphasized by 
the topic of this hearing, the value of the scorecards is not in the 
scoring, but in the degree to which scores lead to sustained focus and 
demonstrable improvements. This will depend on continuing efforts to 
assess progress and maintain accountability to ensure that agencies 
are able to, in fact, improve their performance. 

As agreed with the subcommittee, my statement today will: 

* discuss the administration's scorecard approach to address five 
crosscutting management initiatives, 

* describe the key elements that our work suggests are particularly 
important in implementing and sustaining management improvement 
initiatives so that they genuinely take root and eventually solve the 
problems they are intended to fix, and, 

* highlight the need for transparency and congressional oversight to 
provide the continuing attention needed to improve management and 
performance across the federal government. 

The Administration's Scorecard Provides a Starting Point for Improving 
Federal Management: 

The objective of the Executive Branch Management Scorecard is to 
provide a tool that can be used to track progress in achieving the 
President's Management Agenda. Using broad standards, the scorecards 
in the president's budget grade agencies' performance regarding five 
governmentwide initiatives, which are: 

* strategic management of human capital, 

* competitive sourcing, 

* improved financial performance, 

* expanded electronic government, and, 

* budget and performance integration. 

Central to effectively addressing the federal government's management 
problems is recognition that the five governmentwide initiatives 
cannot be addressed in an isolated or piecemeal fashion separate from 
the other major management challenges and high-risk areas facing 
federal agencies.[Footnote 1] As stated in the President's Management 
Agenda, they are mutually reinforcing. More generally, the initiatives 
must be addressed in an integrated way to ensure that they drive a 
broader transformation of the cultures of federal agencies. At its 
essence, this cultural transformation must seek to have federal 
agencies become less hierarchical, process oriented, stovepiped, and 
inwardly focused; and more flat, partnerial, results oriented, 
integrated, and externally focused. 

The focus that the administration's scorecard approach brings to 
improving management and performance is certainly a step in the right 
direction. As we have seen by your example, Chairman Horn, in calling 
attention to agencies' financial management, the year 2000 computer 
concerns, and computer security issues by grading agencies on their 
progress, this approach can create an incentive to improve management 
and performance. Similarly, we have found that our high-risk list has 
provided added emphasis on government programs and operations that 
warrant urgent attention to ensure our government functions in the 
most economical, efficient, and effective manner possible. 

The President's Management Agenda focuses on important challenges for 
the federal government. The items on the agenda are consistent in key 
aspects with the federal government's statutory framework of financial 
management, information technology, and results-oriented management 
reforms enacted during the 1990s. In crafting that framework, Congress 
sought to provide a basis for improving the federal government's 
effectiveness, financial condition, and operating performance. 
[Footnote 2] Moreover, I believe it is worth noting the clear linkages 
between the five governmentwide initiatives and the nine program-
specific initiatives identified by the administration, and the high-
risk areas and major management challenges that were covered in GAO's 
January 2001 Performance and Accountability Series and High-Risk 
Update.[Footnote 3] For example, we have designated strategic human 
capital management as a governmentwide high-risk area that presents a 
pervasive challenge throughout the federal government, and this is 
also one of the president's governmentwide initiatives. Our work has 
found strategic human capital management challenges in four key areas, 
which are: 

* strategic human capital planning and organizational alignment; 

* leadership continuity and succession planning; 

* acquiring and developing staffs whose size, skills, and deployment 
meet agency needs; and; 

* creating results-oriented organizational cultures. 

In the area of improved financial performance, we have continued to 
point out that the federal government is a long way from successfully 
implementing the statutory reforms Congress enacted during the 1990s. 
Widespread financial management system weaknesses, poor recordkeeping 
and documentation, weak internal controls, and the lack of cost 
information have prevented the government from having the information 
needed to effectively and efficiently manage operations or accurately 
report a large portion of its assets, liabilities, and costs. Agencies 
need to take steps to continuously improve internal control and 
underlying financial and management information systems to ensure that 
managers and other decision makers have reliable, timely, and useful 
financial information to ensure accountability; measure, control, and 
manage costs; manage for results; and make timely and fully informed 
decisions about allocating limited resources. 

Another of the administration's initiatives is to integrate 
performance review with budget decisions, with a long-term goal of 
using information about program results in making decisions about 
which programs should continue and which to terminate or reform. The 
Office of Management and Budget (OMB) has changed the presentation of 
the president's budget to provide added focus on whether programs are 
effective, and a management focus is present throughout the budget 
document's discussions of the agencies. In our observations of 
agencies' efforts to implement the Government Performance and Results 
Act (GPRA) and the Chief Financial Officers Act, more agencies were 
able to show a direct link between expected performance, resources 
requested, and resources consumed.[Footnote 4] These linkages help 
promote agencywide performance management efforts and increase the 
need for reliable budget and financial data. However, our work has 
also shown that additional effort is needed to clearly describe the 
relationship between performance expectations, requested funding, and 
consumed resources. The uneven extent and pace of development should 
be seen in large measure as a reflection of the mission complexity and 
variety of operating environments across federal agencies. Describing 
the planned and actual use of resources in terms of measurable 
accurate results remains an essential action that will continue to 
require time and effort on the part of all agencies, working with OMB 
and Congress. 

The administration has identified areas where it believes the 
opportunity to improve performance is greater. However, as stated in 
the president's budget, "The marks that really matter will be those 
that record improvement, or lack of it, from these starting points." 
The administration has pledged to update the scores twice a year and 
to issue a mid-year report during the summer. Updates and future 
reports will be important in ensuring that progress continues as 
agencies attempt to improve their performance. It is key that rigorous 
criteria be applied to ensure that, in fact, progress has been made. 

Key Elements in Implementing and Sustaining Management Reforms: 

According to the administration, the President's Management Agenda is 
a starting point for management reform. As such, we have drawn upon 
our wide-ranging work on federal management issues to identify 
elements that are particularly important in implementing and 
sustaining management improvement initiatives. These elements include: 
(1) demonstrate leadership and accountability for change, (2) 
integrate management improvement initiatives into programmatic 
decision making, (3) use thoughtful and rigorous planning to guide 
decisions, (4) involve and empower employees to build commitment and 
accountability, (5) align organizations to streamline operations and 
clarify accountability, and (6) maintain strong and continuing 
congressional involvement (which will be covered in the next 
section).[Footnote 5] These six elements have applicability for 
individual federal agencies, and the central management agencies, each 
of which plays a fundamental part in implementing reforms and 
improving federal government performance.
	
Demonstrate Leadership and Accountability For Change: 

One of the most important elements of successful management 
improvement initiatives is the demonstrated, sustained commitment of 
top leaders to change. Top leadership involvement and clear lines of 
accountability for making management improvements are critical to 
ensuring that the difficult changes that need to be made are 
effectively implemented throughout the organization. The unwavering 
commitment of top leadership in the agencies will be especially 
important to overcoming organizations' natural resistance to change, 
marshaling the resources needed in many cases to improve management, 
and building and maintaining the organizationwide commitment to new 
ways of doing business. 

Sustaining top leadership commitment to improvement is particularly 
challenging in the federal government because of the frequent turnover 
of senior agency political officials. As a result, sustaining 
improvement initiatives requires commitment by senior career 
executives, as well as political leaders. Career executives can help 
provide the long-term focus needed to institutionalize reforms that 
political executives' often more limited tenure does not permit. 

The Office of Personnel Management's (OPM) amended regulations that 
place increased emphasis on holding senior executives accountable for 
organizational goals provide an opportunity to reinforce leadership 
and accountability for management improvement. Specifically, the 
amended regulations require agencies to hold executives accountable 
for results; appraise executive performance on those results balanced 
against other dimensions, including customer satisfaction and employee 
perspectives; and use those results as the basis for performance 
awards and other personnel decisions. Agencies were to implement their 
policies for the senior executives for the appraisal cycles that began 
in 2001. 

Although the respective departments and agencies must have the primary 
responsibility and accountability to address their own issues, leaders 
of the central management agencies have the responsibility to keep 
everyone focused on the big picture by identifying the key issues 
across the government and ensuring that related efforts are 
complementary rather than duplicative. The top leadership of OMB, OPM, 
the General Services Administration (GSA), and the Department of the 
Treasury need to continue to be involved in developing and directing 
reform efforts, and helping to provide resources and expertise to 
further improve performance. 

Integrate Management Improvement Initiatives into Programmatic 
Decision Making: 

To be successful, management improvement initiatives must be part of 
agencies' programs and day-to-day actions. Traditionally, the danger 
to any management reform is that it can become a hollow, paper-driven 
exercise where management improvement initiatives are not integrated 
into the day-to-day activities of the organization. The administration 
has recognized this danger and encouraged agency leaders to take 
responsibility for improving the day-to-day management of the 
government. Integrating management issues with budgeting is absolutely 
critical for progress in government performance and management. Such 
integration is obviously important to ensuring that management 
initiatives obtain the resource commitments needed to be successful. 
More generally, however, the budget process is the only annual process 
we have in government where programs and activities come up for 
regular review and reexamination. Integration also strengthens budget 
analysis by providing new tools to help analysts review the relative 
merits of competing agency claims and programs with the federal budget. 

The management issues in the president's agenda have both 
governmentwide and agency-specific components. Those aspects of the 
problem that are governmentwide and cut across agency boundaries 
demand crosscutting solutions as well. Interagency councils such as 
the President's Management Council, Chief Financial Officers' Council, 
the Chief Information Officers' Council, the Human Resources 
Management Council, the President's Council on Integrity and 
Efficiency, and the Joint Financial Management Improvement Program can 
play central roles in addressing governmentwide management challenges. 
As I have noted in a previous testimony, interagency councils provide 
a means to help foster communication across the executive branch, 
build commitment to reform efforts, tap talents that exist within 
agencies, focus attention on management issues, and initiate 
improvements.[Footnote 6] 

Use Thoughtful and Rigorous Planning to Guide Decisions: 

The magnitude of the challenges that many agencies face call for 
thoughtful and rigorous planning to guide decisions about how to 
improve performance. We have found, for example, that annual 
performance plans that include precise and measurable goals for 
resolving mission-critical management problems are important to 
ensuring that agencies have the institutional capacity to achieve 
results-oriented programmatic goals. On the basis of our long 
experience examining agency-specific and governmentwide improvement 
efforts, we believe the improvement plans that agencies are to develop 
in conjunction with tracking their progress in achieving the goals of 
the President's Management Agenda should establish (1) clear goals and 
objectives for the improvement initiative, (2) the concrete management 
improvement steps that will be taken, (3) key milestones that will be 
used to track the implementation status, and (4) the cost and 
performance data that will be used to gauge overall progress in 
addressing the identified weaknesses. 

While agencies will have to undertake the bulk of the effort in 
addressing their respective management weaknesses, the improvements 
needed have important implications for the central management agencies 
as well. OMB, OPM, GSA, and Treasury will need to remain actively 
engaged throughout the planning and implementation of the president's 
initiatives to ensure that agencies bring to bear the resources and 
capabilities to make real progress. 

These four agencies, therefore, need to ensure that they have the 
capabilities in place to support and guide agencies' improvement 
efforts. These capabilities will be critical in helping agencies 
identify the root causes of their management challenges and 
pinpointing specific improvement actions, providing agencies with 
tools and additional support—including targeted investments where 
needed—to address shortcomings, and assisting agencies in monitoring 
and reporting progress. For example, OMB can assist agencies in 
developing and refining useful performance measures and ensuring that 
performance information is used in deliberations and key decisions 
regarding agencies' programs. OPM can provide tools for agencies to 
use in better gauging the extent to which federal employees understand 
the link between their daily activities and agencies' results. In this 
regard, OPM has announced a major internal restructuring effort driven 
in large part by the need to provide better support and resources to 
agencies. 

Involve and Empower Employees to Build Commitment and Accountability: 

Agencies can improve their performance by the way that they treat and 
manage their people, building commitment and accountability through 
involving and empowering employees. All members of an organization 
must understand the rationale for making organizational and cultural 
changes because everyone has a stake in helping to shape and implement 
initiatives as part of agencies' efforts to meet current and future 
challenges. Allowing employees to bring their expertise and judgment 
to bear in meeting their responsibilities can help agencies capitalize 
on their employees' talents, leading to more effective and efficient 
operations and improved customer service. However, our most recent 
survey of federal managers found that at only one agency did more than 
half of the managers report that to a great or very great extent they 
had the decision-making authority they needed to help the agency 
accomplish its strategic goals. 

Effective changes can only be made and sustained through the 
cooperation of leaders, union representatives, and employees 
throughout the organization. We believe that agencies can improve 
their performance, enhance employees' morale and job satisfaction, and 
provide a working environment where employees have a better 
understanding of the goals and objectives of their organizations and 
how they are contributing to the results that American citizens want. 
In that regard, our work has identified six practices that agencies 
can consider as they seek to improve their operations and respond to 
the challenges they are facing.[Footnote 7] These are: 

* demonstrating top leadership commitment; 

* engaging employee unions; 

* training employees to enhance their knowledge, skills, and abilities; 

* using employee teams to help accomplish agency missions; 

* involving employees in planning and sharing performance information; 
and; 

* delegating authorities to front-line employees. 

Align Organizations to Streamline Operations and Clarify 
Accountability: 

Successful management improvement efforts often entail organizational 
realignment to better achieve results and clarify accountability. 
Agencies will need to consider realigning their organizations in 
response to the initiatives in the President's Management Agenda. For 
example, as competitive sourcing, e-government, financial management, 
or other initiatives lead to changes in how an agency does business, 
agencies may need to change how they are organized to achieve results. 

In recent years, Congress has shown an interest in restructuring 
organizations to improve service delivery and program results and to 
address long-standing management weaknesses by providing authority and 
sharpening accountability for management. Most recently, Congress 
chartered the Transportation Security Administration in November 2001 
and required: 

* measurable goals to be outlined in a performance plan and their 
progress to be reported annually; 

* an undersecretary who is responsible for aviation security, subject 
to a performance agreement, and entitled to a bonus based on 
performance; and; 

* a performance management system that included goals for managers and 
employees. 

Transparency and Congressional Oversight Are Necessary to Achieve 
Results: 

In implementing the President's Management Agenda, it will be 
important to ensure that information is available so that Congress, 
other interested parties, and the public can assess progress and help 
to identify solutions to enhance improvement efforts. As stated in the 
president's budget, "The Administration cannot improve the federal 
government's performance and accountability on its own. It is a shared 
responsibility that must involve the Congress." Therefore, 
transparency will be crucial in developing an effective approach to 
making needed changes. 

It will only be through the continued attention of Congress, the 
administration, and federal agencies that progress can be sustained 
and, more importantly, accelerated. Support from Congress has proven 
to be critical in sustaining interest in management initiatives over 
time. Congress has, in effect, served as the institutional champion 
for many of these initiatives, providing a consistent focus for 
oversight and reinforcement of important policies. 

Making pertinent and reliable information available will be necessary 
for Congress to be able to adequately assess agencies' progress and to 
ensure accountability for results. Key information to start with 
includes the agencies' improvement plans that are being developed to 
address the agencies' scores. Congress can use these improvement plans 
to engage agencies in discussions about progress that is being made, 
additional steps that need to be taken, and what additional actions 
Congress can take to help with improvement efforts. 

More generally, effective congressional oversight can help improve 
federal performance by examining the program structures agencies use 
to deliver products and services to ensure that the best, most cost-
effective mix of strategies are in place to meet agency and national 
goals. As part of this oversight, Congress can identify agencies and 
programs that address similar missions and consider the associated 
policy, management, and policy implications of these crosscutting 
programs. This will present challenges to the traditional committee 
structures and processes. A continuing issue for Congress to consider 
is how to best focus on common results when mission areas and programs 
cut across committee jurisdictions. 

Conclusions: 

In summary, Mr. Chairman, serious and disciplined efforts are needed 
to improve the management and performance of federal agencies. 
Highlighting attention through the President's Management Agenda and 
the Executive Branch Management Scorecards are steps in the right 
direction. At the same time, it is well recognized that consistent 
progress in implementing these initiatives will be the key to 
achieving improved performance across the federal government. In 
implementing the President's Management Agenda, the elements 
highlighted during this testimony should be considered and adapted as 
appropriate in view of the fact that experience has shown that when 
these elements are in place lasting management reforms are more likely 
to be implemented that ultimately lead to improvements. Finally, 
Congress must play a crucial role in helping develop and oversee 
management improvement efforts throughout the executive branch. 
Congress has proven to be critical in sustaining management reforms by 
monitoring implementation and providing the continuing attention 
necessary for management reform initiatives to be carried through to 
their successful completion. 

Mr. Chairman, we are pleased that you and your colleagues in Congress 
have often turned to GAO for assistance on federal management issues 
and we look forward to continuing to assist Congress and agencies in 
this regard. We have issued a large body of reports, guides, and tools 
on issues directly relevant to the President's Management Agenda. We 
will be issuing additional such products in the future that should 
prove also helpful to Congress and agencies in improving federal 
management and performance. 

This concludes my prepared statement. I would be pleased to respond to 
any questions that you or other members of the subcommittee may have. 

Contacts and Acknowledgment: 

For further contacts regarding this testimony, please contact J. 
Christopher Mihm at (202) 512-6806. Individuals making key 
contributions to this testimony included Jacqueline Nowicki, Susan 
Ragland, and Aonghas St Hilaire. 

[End of section] 
	
Footnotes: 

[1] U.S. General Accounting Office, DOD Financial Management: 
Integrated Approach, Accountability, and Incentives Are Keys to 
Effective Reform, [hyperlink, http://www.gao.gov/products/GAO-01-681T] 
(Washington, D.C.: May 8, 2001). 

[2] U.S. General Accounting Office, Managing for Results: The 
Statutory Framework for Performance-Based Management and 
Accountability, [hyperlink, 
http://www.gao.gov/products/GAO/GGD/AIMD-98-52] (Washington, D.C.: 
Jan. 28, 1998). 

[3] U.S. General Accounting Office, Performance and Accountability 
Series, [hyperlink, http://www.gao.gov/products/GAO-01-241] through 
262 (Washington, D.C.: January 2001). U.S. General Accounting Office, 
High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-01-263] (Washington, D.C.: January 
2001). 

[4] U.S. General Accounting Office, Managing for Results: Agency 
Progress in Linking Performance Plans With Budgets and Financial 
Statements, [hyperlink, http://www.gao.gov/products/GAO-02-236] 
(Washington, D.C.: Jan. 4, 2002). 

[5] U.S. General Accounting Office, Management Reform: Elements of 
Successful Improvement Initiatives, [hyperlink, 
http://www.gao.gov/products/GAO/T-GGD-00-26] (Washington, D.C.: Oct. 
15, 1999). 

[6] U.S. General Accounting Office, Government Management: 
Observations on OMB's Management Leadership Efforts, [hyperlink, 
http://www.gao.gov/products/GAO/T-GGD/AILVID-99-65] (Washington, D.C.: 
Feb. 4, 1999). 

[7] U.S. General Accounting Office, Human Capital: Practices That 
Empowered and Involved Employees, [hyperlink, 
http://www.gao.gov/products/GAO-01-1070] (Washington, D.C.: Sept. 14, 
2001). 

[End of section]