Budget Issues:

Agency Implementation of Capital Planning Principles Is Mixed

GAO-04-138: Published: Jan 16, 2004. Publicly Released: Jan 16, 2004.

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In fiscal year 2002, the federal government spent nearly $100 billion on capital investments intended to yield long-term benefits for its own operations. Interested in ensuring that good investment decisions are made, the Chairman and Ranking Minority Member, Subcommittee on Government Efficiency and Financial Management, House Committee on Government Reform, asked GAO to evaluate agency experiences with the capital planning principles embodied in the Office of Management and Budget's (OMB) Capital Programming Guide and GAO's Executive Guide on leading state, local, and private sector capital investment practices. This report examines selected agencies' implementation of this guidance and OMB's use of long-term capital planning data.

VA, the Park Service, BOP, and NOAA have had mixed success with implementing the planning phase principles found in OMB's Capital Programming Guide and GAO's Executive Guide. The agencies' capital planning processes generally link to their strategic goals and objectives, and they all consider a range of alternatives to bridge an identified performance gap--including nonownership options where appropriate. Most have established processes to review and select from competing project proposals--including the use of senior-level review boards and established criteria to rank project proposals--strongly emphasizing linkage to strategic goals. However, case study agencies have had limited success with using agencywide asset inventory systems and data on asset condition to identify performance gaps. Also, none of them prepares an agencywide long-term capital investment plan. Some have long-term capital planning documents that could serve as a base for development of a comprehensive agencywide plan. While two case study agencies indicated plans to develop agencywide asset inventories and condition data--one of these making substantial progress--only one plans to develop a comprehensive agencywide long-term capital plan. OMB resource management office (RMO) staff varied in their expectations about agency use of OMB's Capital Programming Guide. The RMO staff for the four case study agencies consider numerous factors in reviewing agency requests for capital funding, including strategic plans, obligation rates, and the overall budget request. OMB does not require long-term capital plans from agencies, but RMOs receive various documents for individual capital projects.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: The Secretary of Veterans Affairs should continue to emphasize and support the timely development and implementation of Capital Asset Management System currently under way agencywide. Decision makers should use the asset inventory and condition information as an integral part of VA's capital planning process when both determining a need for a new capital asset and considering options for filling a performance gap.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: In September 2004, VA completed implementation of the Capital Asset Management System. VA's capital asset inventory data base includes facility condition assessment information. This information was used during VA's Capital Asset Realignment for Enhanced Services (CARES) process to identify the space that required renovation and the associated estimated cost. The data helped determine what the best course of action or alternative (lease, build new, renovate, or contract out) VA should pursue to best meet veterans health care delivery needs.

    Recommendation: The Director of the National Park Service should ensure that asset inventory and current asset condition data from Facilities Management Software System are available to assist capital planners and decision makers when determining future capital needs and alternatives to bridging identified performance gaps.

    Agency Affected: Department of the Interior: National Park Service

    Status: Closed - Implemented

    Comments: The Facilities Management Software System is deployed and is providing meaningful condition assessments and asset priority index numbers that are being used as part of the overall asset evaluation when making decisions about investments.

    Recommendation: The Director of the Bureau of Prisons should require that studies be undertaken to determine the relationship between different levels of overcrowding and problems with managing prison populations, and that such studies be used in determining needs.

    Agency Affected: Department of Justice: Bureau of Prisons

    Status: Closed - Implemented

    Comments: According to a senior BOP official, in discussions related to BOP's PART evaluations, OMB told BOP to take action on this recommendation by undertaking a study to determine the optimum level of overcrowding. This study is underway. Part of it is a literature search and part of it also includes working with the American Correctional Association on evaluating maximum levels of overcrowding.

    Recommendation: The Under Secretary for Oceans and Atmosphere, Department of Commerce, (NOAA Administrator) should resume regularly scheduled asset condition assessments for real property assets and develop a standard process for assessing the condition of personal property assets.

    Agency Affected: Department of Commerce: National Oceanic and Atmospheric Administration

    Status: Closed - Implemented

    Comments: According to NOAA's Chief Administrative Officer, in 2005 NOAA implemented an annual Integrated Facility Inspection Program to assess facility conditions for NOAA-owned facilities and safety and environmental issues at NOAA-leased facilities. NOAA can use this information to properly identify current capabilities and the actual gaps between its current and needed capabilities.

    Recommendation: The Secretary of Veterans Affairs should continue to emphasize the importance of efforts currently under way to develop a departmentwide long-term agency capital plan that will reflect all VA longterm capital investment decisions and results of the asset-restructuring plans developed by VHA networks under the Capital Asset Realignment for Enhanced Services process. The Secretary should make the long-term plan available to OMB and congressional decision makers.

    Agency Affected: Department of Veterans Affairs

    Status: Closed - Implemented

    Comments: VA has submitted two long-term plans since the issuance of GAO-04-138. The FY 2004-2009 plan was submitted to Congress in June 2004. An updated FY 2005-2010 Capital Plan was submitted shortly after the FY 2006 budget submission in February 2005. Both plans were approved by OMB and sent to VA's authorizing and appropriations committees.

    Recommendation: The Director of the Bureau of Prisons should require the development of a long-term agency capital plan in the form of a single, central document that defines long-term investment decisions of the bureau and includes a clear discussion of the basis for any long-term performance gap leading to proposals for the construction of new prison facilities. The Director should make the long-term plan available to OMB and congressional decision makers.

    Agency Affected: Department of Justice: Bureau of Prisons

    Status: Closed - Implemented

    Comments: According to a senior BOP official, the Capacity Planning Branch, BOP, has pulled together the long-term agency capital plan in the form of a single, central document defining long-term investment decisions and including a discussion of the basis for long-term performance gaps that could lead to proposals for new prison construction. The long-term plan was made available to OMB. OMB considers it predecisional and did not release it to congressional decision makers. However, BOP incorporates the long-term Status of Construction exhibit and the future population, capacity, and crowding forecast in its submission to Congress.

    Recommendation: The Director of the National Park Service should require that the 5-year construction plan be expanded to include a narrative description of the performance gap that a planned project would fulfill and the analysis leading to its inclusion in the 5-year plan. The Director should make the long-term plan available to congressional decision makers.

    Agency Affected: Department of the Interior: National Park Service

    Status: Closed - Implemented

    Comments: The 5-year plan has not been expanded because they are trying to keep it in a concise format, while providing separately information on the performance gap and analysis. NPS provides DOI and OMB with supporting data sheets addressing the justification, performance gap, and project needs/benefits analysis for each project in the 5 year plan. The analysis and supporting documentation for projects in the 5 year plan are shared with congressional staff. Starting for fiscal year 2006, the construction section of the budget submission was expanded to include the 5 year plan.

    Recommendation: The Under Secretary for Oceans and Atmosphere, Department of Commerce (NOAA Administrator), should require the development of a long-term agency capital plan that defines the capital investment decisions for all of NOAA's line offices and program offices and make it available to OMB and congressional decision makers.

    Agency Affected: Department of Commerce: National Oceanic and Atmospheric Administration

    Status: Closed - Implemented

    Comments: According to NOAA's Chief Administrative Officer, in April 2005 NOAA established and promulgated a corporate facility capital planning process (NOAA Administrative Order 217-104: Facility Capital Planning and Project Management Policy). As a part of this process, NOAA developed a long-range facility modernization plan that provides an assessment of NOAA's facility portfolio and identifies the strategies underlying NOAA's long-term capital planning, as well as investment opportunities and challenges related to supporting NOAA's current and future mission. NOAA can use this plan to guide the implementation of organizational goals and objectives and help decision makers establish priorities over time.

    Recommendation: The Director of the Office of Management and Budget should require that agencies comply with the principles and practices of its Capital Programming Guide. The Director should further require that long-term agency capital plans developed pursuant to the guide be submitted to OMB and provided to congressional decision makers.

    Agency Affected: Executive Office of the President: Office of Management and Budget

    Status: Closed - Implemented

    Comments: In commenting on the draft report, OMB's Assistant General Counsel said that OMB agreed with our recommendations. On March 29, 2006, an official in OMB's Office of Federal Procurement Policy told GAO that OMB considers the Capital Programming Guide to be a requirement for agencies. He said that OMB's General Counsel ?changed the minds" of those who were involved with the Guide, resulting in the Guide becoming a requirement.

    Recommendation: The Director of the Office of Management and Budget should work with agencies to update the Capital Programming Guide to address agency implementation challenges and increase its usefulness by streamlining some of the requirements so they are not so burdensome to agencies.

    Agency Affected: Executive Office of the President: Office of Management and Budget

    Status: Closed - Implemented

    Comments: In commenting on the draft report, OMB's Assistant General Counsel said that OMB agreed with our recommendations. An official in OMB's Office of Federal Procurement Policy said that OMB is working with agencies to update the Capital Programming Guide. He provided a list of 14 agencies that are actively participating in the update and emphasized that every agency will receive a copy of the updated Guide with an opportunity to comment. The update effort began in November 2005 and was completed in June 2006.

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