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entitled 'Federal Capital: Three Entities' Implementation of Capital 
Planning Principles Is Mixed' which was released on March 26, 2007. 

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Report to the Subcommittee on Federal Financial Management, Government 
Information, Federal Services, and International Security, Committee on 
Homeland Security and Governmental Affairs, U.S. Senate: 

United States Government Accountability Office: 

GAO: 

February 2007: 

Federal Capital: 

Three Entities' Implementation of Capital Planning Principles Is Mixed: 

GAO-07-274: 

GAO Highlights: 

Highlights of GAO-07-274, a report to the Subcommittee on Federal 
Financial Management, Government Information, Federal Services, and 
International Security, Committee on Homeland Security and Governmental 
Affairs, U.S. Senate 

Why GAO Did This Study: 

In fiscal year 2005, the federal government spent nearly $117 billion 
on capital investments intended to yield long-term benefits for its 
operations. Effective capital planning ensures that the sizable 
investments made by federal agencies result in the most efficient 
return to taxpayers. Accordingly, GAO evaluated (1) how well selected 
entities followed the planning phase principles of GAO’s Executive 
Guide and the Office of Management and Budget’s (OMB) Capital 
Programming Guide, (2) OMB’s actions to encourage all agencies to 
conform with capital planning principles, and (3) what capital planning 
information is received by or would be useful to congressional decision 
makers. Based on missions, asset types, and capital spending, we 
selected three entities to review within the Departments of Energy 
(DOE) and Homeland Security (DHS). 

What GAO Found: 

The selected entities—the Offices of Science (SC) and Environmental 
Management (EM) within DOE and U.S. Customs and Border Protection (CBP) 
within DHS—had mixed success with implementing the planning phase 
principles and practices described in OMB’s and our guides. We found 
that in their capital planning processes, the selected entities’ 
guidance generally requires linkage between proposed investments and 
strategic goals and they assess needs and identify performance gaps in 
a variety of ways. We also found that the selected entities’ 
evaluations of alternatives are not always apparent in their capital 
planning documentation. Each entity has established a framework to 
review and approve proposed investments and uses criteria to rank and 
select projects, but problems exist with CBP’s framework and CBP has 
only established criteria to rank and select its real property 
investments. In addition, although each entity produces some long-term 
planning documents, none has developed a comprehensive capital plan 
that defines all of its long-term investment decisions. 

Table: Selected Entities' Conformance with Capital Planning Principles: 

Planning Principle: Strategic linkage; DOE/SC: Practices conform; 
DOE/EM: Practices conform; 
DHS/CBP: Practices partially conform. 

Planning Principle: Needs assessment and gap identification; DOE/SC: 
Practices conform; 
DOE/EM: Practices conform; 
DHS/CBP: Practices partially conform. 

Planning Principle: Alternatives evaluation; DOE/SC: Practices 
partially conform; 
DOE/EM: Practices partially conform; 
DHS/CBP: Practices partially conform. 

Planning Principle: Review and approval framework with established 
criteria for selecting capital investments; DOE/SC: Practices conform; 
DOE/EM: Practices conform; 
DHS/CBP: practices partially conform. 

Planning Principle: Long-term capital investment plan; DOE/SC: 
Practices do not conform; 
DOE/EM: Practices do not conform; 
DHS/CBP: Practices do not conform. 

Source: GAO analysis of agency data. 

[End of table] 

OMB worked with agencies to update its Capital Programming Guide, which 
was released in June 2006. OMB staff also told us that OMB requires 
agencies to comply with the principles and practices in its guide. 
However, OMB does not routinely request all the information recommended 
by its guide. For example, although OMB’s guide encourages agencies to 
develop long-term capital plans, OMB staff told us they do not request 
copies of these plans, so it is not clear whether all agencies develop 
them. Instead, OMB staff said they are able to determine if an agency 
has a capital planning process based on other required documents. 
Although these documents contain some elements of a long-term capital 
plan, they do not include all expected aspects. 

Congressional staff with whom we met believed additional capital 
planning information would be useful. Specifically, those responsible 
for resource allocation for and oversight of SC, EM, and CBP told us 
they would like to receive the type of information that would be found 
in a long-term capital plan. Congressional staff said that this 
information would help Congress make better-informed appropriations and 
oversight decisions. 

What GAO Recommends: 

We recommend DOE and DHS improve conformance with capital planning 
principles at SC and EM, and CBP, respectively. We also make 
recommendations to the Director of OMB and suggest Congress make 
capital planning information more available to decision makers. DOE and 
DHS agreed with our recommendations; OMB agreed with as-needed 
submissions of capital plans but not with requiring them. We believe 
requiring these plans is important to ensure consistent conformance 
with the principles. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-274]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Susan J. Irving at (202) 
512-9142 or irvings@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Objectives, Scope, and Methodology: 

Capital Planning Principles Are Evident but Implementation Is Mixed: 

OMB Has Taken Actions to Encourage Agencies to Conform with Capital 
Planning Principles, but It Does Not Request Long-term Capital Plans: 

Congress Receives Some Capital Planning Information from Agencies but 
Additional Information Would Enhance Decision Making: 

Conclusions: 

Matter for Congressional Consideration: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Department of Energy: 

Background: 

Types of Assets: 

Capital Funding: 

Capital Planning Process: 

Appendix III: U.S. Customs and Border Protection: 

Background: 

Types of Assets: 

Capital Funding: 

Capital Planning Process: 

Appendix IV: Comments from the Department of Energy: 

GAO Comments: 

Appendix V: Comments from the Department of Homeland Security: 

GAO Comments: 

Appendix VI: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Capital Planning Principles: 

Table 2: DOE Review and Approval Authority Thresholds for Investments 
Costing $5 Million or More: 

Table 3: DHS Investment Levels for Non-IT Projects: 

Table 4: Criteria for Scoring Capital Investment Projects at CBP 
Facilities: 

Table 5: DOE Review and Approval Authority Thresholds for Investments 
Costing $5 Million or More: 

Table 6: DHS Investment Levels for Non-IT Projects: 

Table 7: Criteria for Scoring Capital Investment Projects at CBP 
Facilities: 

Figures: 

Figure 1: Selected Entities' Conformance with Capital Planning 
Principles: 

Figure 2: Summary of SC and EM Project Categories: 

Figure 3: SC Capital Asset Investments, Fiscal Year 2005: 

Figure 4: EM Capital Asset Investments, Fiscal Year 2005: 

Figure 5: SC's and EM's Conformance with Capital Planning Principles: 

Figure 6: CBP Capital Asset Investments, Fiscal Year 2005: 

Figure 7: CBP's Conformance with Capital Planning Principles: 

Abbreviations: 

AIP: accelerator improvement projects: 

ARB: Architecture Review Board: 

BES: Basic Energy Sciences: 

CAMP: Capital Asset Management Process: 

CBP: U.S. Customs and Border Protection: 

DOE: Department of Energy: 

DHS: Department of Homeland Security: 

EM: Office of Environmental Management: 

ESAAB: Energy Systems Acquisitions Advisory Board: 

FIMS: Facilities Information Management System: 

GPP: general plant projects: 

IFI: Integrated Facilities and Infrastructure Crosscut Budget: 

IRB: Investment Review Board: 

IT: information technology: 

MIE: major items of equipment: 

OIG: Office of Inspector General: 

OMB: Office of Management and Budget: 

SAP: Systems, Applications and Products: 

SC: Office of Science: 

TYSP: 10-year site plan: 

United States Government Accountability Office: 
Washington, DC 20548: 

February 23, 2007: 

The Honorable Thomas R. Carper: 
Chairman: 
The Honorable Tom Coburn: 
Ranking Member: 
Subcommittee on Federal Financial Management, Government Information, 
Federal Services, and International Security: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

In fiscal year 2005 alone, the federal government spent nearly $117 
billion on capital assets intended to yield long-term benefits for its 
own operations--a 17 percent increase from the $100 billion spent in 
2002. Both because large sums of taxpayer funds are spent on capital 
assets and because their performance affects how well agencies are able 
to achieve their missions, goals, and objectives, effective planning 
for capital investments is a very important task. The Congress, the 
Office of Management and Budget (OMB), and we have all identified the 
need for effective capital planning. In addition, budgetary pressures 
and demands to improve performance in all areas increase the need for 
agencies to make sound capital acquisition choices. 

This report responds to your request that we evaluate federal entities' 
conformance with capital planning principles embodied in our Executive 
Guide[Footnote 1] and in OMB's Capital Programming Guide--supplemental 
guidance contained in its annual Circular No. A-11. As requested, we 
evaluated (1) how well selected entities followed the planning phase 
principles in OMB's and our guides, (2) what actions OMB has taken to 
encourage all agencies' conformance with capital planning principles, 
and (3) what capital planning information is currently received by or 
would be useful to congressional decision makers. As you requested, we 
focused on noninformation technology (non-IT) capital investments at 
selected entities. Based on the diversity in their missions, the 
different types of assets they acquired, and their relatively high 
volume of capital spending, we looked at the Office of Science (SC) and 
the Office of Environmental Management (EM) within the Department of 
Energy (DOE), and U.S. Customs and Border Protection (CBP) within the 
Department of Homeland Security (DHS). In fiscal year 2005, SC, EM, and 
CBP budget authority for capital investments was $563 million, $1,027 
million, and $851 million, respectively. 

We conducted our work from February 2006 through December 2006 in 
accordance with generally accepted government auditing standards. 
Detailed information on our scope and methodology appears in appendix 
I. 

Results in Brief: 

EM, SC, and CBP have experienced mixed success with implementing the 
planning phase principles and practices described in OMB's Capital 
Programming Guide and our Executive Guide. DOE has a well-established 
capital planning process in place for higher-cost investments--largely 
based on OMB's Capital Programming Guide, according to DOE officials-- 
that both SC and EM follow; as such, SC's and EM's capital planning 
processes better conform with capital planning principles. Conversely, 
CBP's capital planning process is relatively new and untested for 
capital investments other than IT; it did not fully conform with any of 
the capital planning principles at the time of our review. We found 
that in their capital planning processes, all three selected entities' 
guidance generally requires linkage between proposed investments and 
strategic goals and objectives and they use a variety of methods to 
assess needs and identify performance gaps between current and needed 
capabilities. A lack of non-IT examples meant we were unable to verify 
implementation of these practices in CBP's process; however, we were 
able to verify these practices for a CBP project reviewed in DHS's 
capital planning process. We also found that the selected entities' 
evaluations of alternatives are not always apparent in their capital 
planning documentation. Although each entity has established a 
framework to review and approve proposed investments and uses criteria 
to rank and select projects, problems exist with CBP's framework, such 
as it does not review non-IT capital projects below $50 million, and it 
has established criteria to rank and select only its real property 
investments. None of the selected entities has developed a 
comprehensive, long-term capital plan. Each entity has some long-term 
planning documents, but none has an entitywide capital plan that 
defines all of its long-term investment decisions. 

OMB has taken steps to encourage agencies' conformance with capital 
planning principles, but it does not request long-term capital plans 
from agencies. Beginning in November 2005, OMB collaborated with 
agencies to update its Capital Programming Guide. The updated guide was 
released in June 2006 as a part of OMB's annual Circular No. A-11. In 
addition, OMB staff told us that OMB requires agencies to comply with 
the principles and practices in its guide. However, OMB does not 
routinely request all the information recommended by its guide. For 
example, although agencies are encouraged to develop long-term capital 
plans as a part of the Capital Programming Guide, OMB staff told us 
they do not request copies of these plans, so it is not clear whether 
all agencies produce them. Instead, OMB staff stated that they are able 
to determine if an agency has a capital planning process based on other 
required documents. Although these other documents contain some 
elements of a long-term capital plan, they do not include all expected 
aspects. As the principal output of an agency's capital planning 
process, a long-term capital plan should be the central document an 
agency uses to guide its capital decision making. We have previously 
recommended, and we continue to believe, that OMB should require 
agencies to develop and submit long-term capital plans to OMB and 
congressional decision makers. 

EM, SC, and CBP provide some capital planning information to Congress. 
However, congressional staff with whom we met stated that they would 
like to receive additional information. Specifically, those responsible 
for resource allocation for and oversight of the selected entities told 
us they would like to receive the type of information that would be 
found in a long-term capital plan. Congressional staff said that this 
information would help Congress make better-informed appropriations and 
oversight decisions. 

We make recommendations in this report to the Secretaries of Energy and 
Homeland Security to improve conformance with capital planning 
principles at SC and EM, and CBP, respectively. DOE and DHS agreed with 
these recommendations. 

In addition, we make recommendations to the Director of OMB and offer a 
matter for Congress to consider to enhance the availability of long- 
term capital planning information to decision makers. OMB agreed that 
there are benefits to it reviewing an agency's long-term capital plan 
on an as-needed basis. However, it did not agree that all federal 
agencies should be required to submit a long-term capital plan to OMB 
and stated that these plans should be developed by agencies and shared 
with OMB on a case-by-case basis depending on the specific issue being 
addressed. We continue to believe that requiring agencies to develop 
and submit long-term capital plans to OMB will better ensure that 
agencies have long-term capital planning processes that conform with 
established capital planning principles. 

Written comments from DOE and DHS are included and addressed in 
appendixes IV and V, respectively. OMB provided comments orally and via 
e-mail. In addition, each of the case study entities, their respective 
departments, and OMB provided technical comments. We have incorporated 
changes as a result of these comments, as appropriate. 

Background: 

Federal government spending on capital investments can be divided into 
two categories: that which provides long-term benefits to the nation as 
a whole--increasing the nation's overall capital stock for economic 
growth--and that which improves the efficiency of internal federal 
agency operations--capital investment for the government as an 
operating entity. This report focuses on the latter. OMB and we have 
defined these assets, which are acquired for the government's own use, 
as land, structures, equipment, and intellectual property (including 
software) that have an estimated useful life of 2 years of 
more.[Footnote 2] Some examples are office buildings, waste storage 
facilities, motor vehicles, aircraft, marine vessels, construction 
equipment, pieces of scientific research equipment, and scanning and 
detection equipment. 

Effective capital programming requires long-range planning and a 
disciplined decision-making process as the basis for managing a 
portfolio of assets to achieve performance goals and objectives with 
minimal risk, lowest life-cycle costs, and greatest benefits to the 
agency's business. Capital programming consists of four phases: (1) 
planning, (2) budgeting, (3) acquiring, and (4) managing assets. We 
have previously reported that the planning phase is the crux of the 
capital decision-making process.[Footnote 3] The results from this 
phase are used throughout the remaining phases of the process and 
failure to follow key practices during this phase may have 
repercussions on agency operations if poor capital investment decisions 
are made. For the planning phase, both OMB and our guidance stress the 
importance of linking capital asset investments to an organization's 
overall mission and long-term strategic goals. The guidance also 
emphasizes evaluating a full range of alternatives to bridge any 
identified performance gap, informed by agency asset inventories that 
contain condition information. Further, the guidance calls for a 
comprehensive decision-making framework to review, rank, and select 
from among competing project proposals. Such a framework should include 
appropriate levels of management review and selections should be based 
on the use of established criteria. The ultimate product of the 
planning phase is a comprehensive capital plan, which defines the long- 
term capital decisions that resulted from the agency's capital planning 
process. Both OMB and our guidance highlight the importance of this 
plan. Table 1 further elaborates on the five key capital planning 
principles contained in the guidance. 

Table 1: Capital Planning Principles: 

Planning principle: Strategic linkage; 
Description: Capital planning is an integral part of an agency's 
strategic planning process. It provides a long-range plan for the 
capital asset portfolio in order to meet the goals and objectives in 
the agency's strategic and annual performance plans. Agency strategic 
and annual performance plans should identify capital assets and define 
how they will help the agency achieve its goals and objectives. Leading 
organizations also view strategic planning as the vehicle that guides 
decision making for all spending. 

Planning principle: Needs assessment and gap identification; 
Description: A comprehensive needs assessment identifies the resources 
needed to fulfill both immediate requirements and anticipated future 
needs based on the results-oriented goals and objectives that flow from 
the organization's mission. A comprehensive assessment of needs 
considers the capability of existing resources and makes use of an 
accurate and up-to-date inventory of capital assets and facilities as 
well as current information on asset condition. Using this information, 
an organization can properly determine any performance gap between 
current and needed capabilities. 

Planning principle: Alternatives evaluation; 
Description: Agencies should determine how best to bridge performance 
gaps by identifying and evaluating alternative approaches, including 
nonphysical capital options such as human capital. Before choosing to 
purchase or construct a capital asset or facility, leading 
organizations carefully consider a wide range of alternatives such as 
contracting out, privatizing the activity, leasing, and whether 
existing assets can be used. 

Planning principle: Review and approval framework with established 
criteria for selecting capital investments; 
Description: Agencies should establish a formal process for senior 
management review and approval of proposed capital assets. The cost of 
a proposed asset, the level of risk involved in acquiring the asset, 
and its importance to achieving the agency mission should be considered 
when defining criteria for executive review. Leading organizations have 
processes that determine the level of review and analysis based on the 
size, complexity, and cost of a proposed investment or its 
organizationwide impact. As a part of this framework, proposed capital 
investments should be compared to one another to create a portfolio of 
major assets ranked in priority order. 

Planning principle: Long-term capital investment plan; 
Description: The long-term capital plan should be the final and 
principal product resulting from the agency's capital planning process. 
The capital plan, covering 5 years or more, should be the result of an 
executive review process that has determined the proper mix of existing 
assets and new investments needed to fulfill the agency's mission, 
goals, and objectives, and should reflect decision makers' priorities 
for the future. Leading organizations update long-term capital plans 
either annually or biennially. Agencies are encouraged to include 
certain elements in their capital plans, including a statement of the 
agency mission, strategic goals, and objectives; a description of the 
agency's planning process; baseline assessments and identification of 
performance gaps; and a risk management plan. 

Source: GAO analysis based on OMB's Capital Programming Guide (Version 
2.0) and GAO-04-138. 

[End of table] 

Originally released in July 1997, and recently updated in June 2006, 
OMB's Capital Programming Guide provides federal agencies a basic 
reference for establishing an effective process for making investment 
decisions. In December 1998, we issued an Executive Guide on leading 
practices for capital decision making. In addition, in January 2004, we 
reported on the implementation of capital planning concepts in four 
federal agencies: the Department of Veterans Affairs, the Bureau of 
Prisons within the Department of Justice, the National Park Service 
within the Department of the Interior, and the National Oceanic and 
Atmospheric Administration within the Department of Commerce.[Footnote 
4] We found that these agencies' capital planning processes generally 
linked investments to their strategic goals and objectives, and they 
all considered a range of alternatives to bridge any identified 
performance gap. Most had established frameworks to review and select 
from competing project proposals, but had limited success with using 
agencywide asset inventory systems and data on asset condition to 
identify performance gaps. None of the agencies we examined then had 
prepared comprehensive, agencywide, long-term capital plans. Since our 
report, most have taken actions to improve their capital planning 
processes by addressing some or all of these issues. 

As in our past report, this report reviews capital planning processes 
at selected entities. This report looks at SC, EM, and CBP, which were 
selected based on the diversity in their missions, the different types 
of assets they acquired, and their relatively high volume of capital 
spending. 

According to its 5-Year Budget Plan for Fiscal Years 2007-2011, SC's 
mission is to "deliver the discoveries and scientific tools that 
transform our understanding of energy and matter and advance the 
national, economic, and energy security of the U.S." It had a fiscal 
year 2006 budget of over $3.5 billion and manages 10 national 
laboratories as well as additional research projects at other locations 
across the country. In fiscal year 2005, budget authority for SC's 
capital investments accounted for $563 million, or 15 percent of the 
total DOE Science appropriations. Its capital spending is influenced by 
facility revitalization needs and the demand of the scientific 
community for new or improved research tools and facilities. SC invests 
in research-oriented assets such as research facilities, new 
instrumentation and components for existing facilities, and other 
pieces of scientific research equipment, as well as general-purpose 
construction, maintenance, and repair projects. 

EM's mission is to complete the safe cleanup of the environmental 
legacy from 5 decades of nuclear weapons development and government- 
sponsored nuclear energy research. It had a fiscal year 2006 budget of 
over $6.5 billion and manages over 80 environmental cleanup projects at 
25 sites across the country. In fiscal year 2005, budget authority for 
capital investments accounted for $1,027 million, or 14 percent of EM's 
total appropriations. EM capital spending is influenced by facility 
maintenance needs and the legislative and regulatory requirements that 
drive its cleanup operations as well as the current state of 
technology. EM acquires waste treatment facilities, waste storage 
facilities, vehicles, pumping equipment, and construction equipment. 
Like SC, EM also invests in general-purpose construction, maintenance, 
and repair projects. 

CBP's mission is to prevent terrorists and terrorist weapons from 
entering the United States while at the same time facilitating the flow 
of legitimate trade and travel. CBP is organized into 20 different 
offices and has a large field presence. In fiscal year 2005, budget 
authority for capital investments accounted for $851 million, or 13 
percent of the agency's total appropriations.[Footnote 5] CBP acquires 
and uses many different types of capital assets to accomplish its 
mission. Its current facilities and tactical infrastructure portfolio 
consists of CBP-owned and -leased facilities and real estate, temporary 
structures, and other tactical infrastructure, such as fences, lights, 
and barriers. CBP owns and maintains a motor vehicle fleet, a variety 
of aircraft, and different types of marine vessels. The agency also 
acquires different types of scanning and detection equipment, such as 
large-scale X-ray and gamma-imaging systems, and nuclear and 
radiological detection equipment. 

Objectives, Scope, and Methodology: 

The objectives of this study were to evaluate (1) how well selected 
entities followed the planning phase principles in OMB's and our 
guides, (2) what actions OMB has taken to encourage all agencies' 
conformance with capital planning principles, and (3) what capital 
planning information is currently received by or would be useful to 
congressional decision makers. Based on the diversity in their 
missions, the types of assets they acquired, and their relatively high 
volume of capital spending, we focused on non-IT capital investments at 
selected entities: the Office of Science (SC) and the Office of 
Environmental Management (EM) within the Department of Energy (DOE), 
and U.S. Customs and Border Protection (CBP) within the Department of 
Homeland Security (DHS). 

To accomplish our first objective, we obtained and reviewed various 
forms of agency documentation, including asset management, budget, and 
program documents; strategic plans; performance plans and other annual 
plans; and capital project proposals. We also conducted extensive 
interviews with agency officials at various levels of management, 
including planning, policy, budget, and facilities staff as well as 
program, project, and property management staff. 

To accomplish our second objective, we met with OMB staff to discuss 
what actions OMB had taken to encourage agencies' conformance with 
capital planning principles. We also obtained and reviewed various OMB 
guidance, including its Circular No. A-11 and its updated Capital 
Programming Guide. 

To accomplish our third objective, we met with staff members of several 
committees responsible for resource allocation for or oversight of the 
selected entities in order to better understand what capital planning 
data are used or would be most useful in their decision 
making.[Footnote 6] 

Capital Planning Principles Are Evident but Implementation Is Mixed: 

The selected entities have experienced mixed success with implementing 
the planning phase principles and practices described in OMB's Capital 
Programming Guide and our Executive Guide. DOE has a well-established 
capital planning process in place for higher-cost investments--largely 
based on OMB's Capital Programming Guide, according to DOE officials-- 
that both SC and EM follow; as such, SC's and EM's capital planning 
processes better conform with capital planning principles. Conversely, 
CBP's process is relatively new and untested for capital investments 
other than IT; it did not fully conform with any of the capital 
planning principles at the time of our review. We found that in their 
capital planning processes, the selected entities' guidance generally 
requires linkage between proposed investments and strategic goals and 
objectives and they use a variety of methods to assess needs and 
identify performance gaps between current and needed capabilities. A 
lack of non-IT examples meant we were unable to verify implementation 
of these practices in CBP's process; however, we were able to verify 
these practices for a CBP project reviewed in DHS's capital planning 
process. CBP officials told us that this project served as an example 
of how a project proceeds through DHS's capital planning process. We 
also found that the selected entities' evaluations of alternatives are 
not always apparent in their capital planning documentation. Although 
each entity has established a framework to review and approve proposed 
investments and uses criteria to rank and select projects, problems 
exist with CBP's framework, such as it does not review non-IT capital 
projects below $50 million, and it only has established criteria to 
rank and select its real property investments. In addition, none of the 
selected entities has developed a comprehensive, long-term capital 
plan. Each entity has some long-term planning documents, but none has a 
comprehensive capital plan that defines all of its long-term investment 
decisions. Figure 1 provides a snapshot of the degrees of conformance 
with the planning phase guidance at the examined entities. Further 
information on each entity and its capital planning process is 
contained in appendix II for SC and EM, and appendix III for CBP. 

Figure 1: Selected Entities' Conformance with Capital Planning 
Principles: 

Planning Principle: Strategic linkage; DOE/SC: Practices conform; 
DOE/EM: Practices conform; 
DHS/CBP: Practices partially conform. 

Planning Principle: Needs assessment and gap identification; DOE/SC: 
Practices conform; 
DOE/EM: Practices conform; 
DHS/CBP: Practices partially conform. 

Planning Principle: Alternatives evaluation; DOE/SC: Practices 
partially conform; 
DOE/EM: Practices partially conform; 
DHS/CBP: Practices partially conform. 

Planning Principle: Review and approval framework with established 
criteria for selecting capital investments; DOE/SC: Practices conform; 
DOE/EM: Practices conform; 
DHS/CBP: practices partially conform. 

Planning Principle: Long-term capital investment plan; DOE/SC: 
Practices do not conform; 
DOE/EM: Practices do not conform; 
DHS/CBP: Practices do not conform. 

Source: GAO analysis of agency data. 

[End of figure] 

All Three Entities' Guidance Requires Strategic Linkage: 

Both OMB and our guidance emphasize the importance of linking capital 
asset investments, funding, and management to an organization's overall 
mission and long-term strategic goals. OMB's guide describes capital 
planning as an integral part of an agency's strategic planning process 
within the framework established by the Government Performance and 
Results Act.[Footnote 7] The guide states that by linking planning and 
budgeting to procurement and the management of capital assets the 
resulting all-encompassing roadmap encourages agencies to develop a 
capital plan. This provides for the long-range planning of the capital 
asset portfolio in order to meet the goals and objectives in the 
strategic and annual performance plans. Both the strategic and annual 
performance plans should identify capital assets and define how they 
will help the agency achieve its goals and objectives. Our guide 
describes how leading organizations also view strategic planning as the 
vehicle that guides decision making for all spending. These 
organizations use their strategic planning processes to assess the 
needs of clients and constituents and the political and economic 
environment in which they are operating and to link the expected 
outcomes of projects, including capital projects, to the organization's 
overall strategic goals and objectives. 

EM, SC, and CBP have guidance that calls for linking planned capital 
acquisitions to agency strategic plans. As required by DOE's capital 
planning process for investments equal to or over $5 million--which is 
largely based on OMB's Capital Programming Guide, according to DOE 
officials--both SC and EM produce mission need statements to tie these 
higher cost investments to DOE's strategic goals. For example, an SC 
mission need statement for the National Synchrotron Light Source-II 
discusses how the proposed research facility is linked to one of SC's 
program goals, which in turn is linked to DOE's strategic goal to 
provide world-class scientific research capacity in a number of fields. 
For projects entering CBP's capital planning process, the related 
guidance directs project managers to prepare a need analysis document 
that outlines how the proposed investment links to both CBP and DHS 
strategic goals. However, we were unable to verify implementation of 
this practice for non-IT capital projects because none had yet 
completed CBP's capital planning process at the time of our review. 
CBP's major non-IT projects--those with an acquisition cost of $50 
million or more--are also reviewed and approved in DHS's capital 
planning process. DHS guidance calls for a link between the capital 
investment and DHS's mission and strategic goals in mission need 
statements. In a mission need statement for Border Patrol's aircraft 
recapitalization, the narrative explicitly ties aviation assets to the 
awareness, prevention, and protection goals in DHS's strategic plan. 
CBP officials told us that Border Patrol's aircraft recapitalization 
served as an example of how a project proceeds through DHS's capital 
planning process. This project was not reviewed in CBP's current 
capital planning process because the project began in 2003, before the 
process was implemented. 

The Selected Entities Generally Conduct Needs Assessment and Gap 
Identification: 

Conducting a comprehensive assessment of resources needed or an 
analysis of program requirements is an important first step in an 
organization's capital decision-making process. A comprehensive needs 
assessment identifies the resources needed to fulfill both immediate 
requirements and anticipated future needs based on the results-oriented 
goals and objectives that flow from the organization's mission. The 
needs assessment is results oriented in that it determines what is 
needed to obtain specific outcomes rather than what is needed to 
maintain or expand existing capital stock. A comprehensive assessment 
of needs considers the capability of existing resources and makes use 
of an accurate and up-to-date inventory of capital assets and 
facilities as well as current information on asset condition. Using 
this information, an organization can properly determine any 
performance gap between current and needed capabilities. 

The selected entities assess their needs and identify gaps in a variety 
of ways. For example, the nature of its programs leads SC to rely on 
discussion among its research programs, laboratories, advisory 
committees, and the scientific community to identify gaps in the 
capabilities of its research-oriented assets. However, for EM, needs 
assessment is driven by legal or regulatory requirements that target 
gaps between current and desired environmental safety conditions at 
cleanup sites and the current state of technology. For example, the 
need for its Sodium-Bearing Waste Treatment Project is driven by the 
Idaho Settlement Agreement between DOE, the Department of the Navy, and 
the state of Idaho, which lays out goals for treatment and disposal of 
1 million gallons of sodium-bearing waste at the Idaho National 
Engineering and Environmental Laboratory. At CBP, capital planning 
guidance requires the identification of the need for a project, a 
description of the difference in the current versus required 
capabilities, and an explanation of why existing resources are unable 
to provide the required capability. As noted, we were unable to verify 
implementation of this practice due to a lack of non-IT examples. 
However, DHS also requires this information, which is illustrated by 
the previously cited Border Patrol example. In its mission need 
statement for aircraft recapitalization, Border Patrol references its 
five mission objectives and describes how aviation assets provide 
necessary support in carrying out those objectives.[Footnote 8] Also in 
the statement, Border Patrol identifies several gaps in its current and 
future capabilities such as existing aircraft have become 
unserviceable, increasingly expensive to maintain, or have or soon will 
reach the end of their useful lives. 

CBP has also established a separate process to determine needed 
improvements for its real property investments. CBP is implementing an 
investment planning process for Border Patrol and Field Operations 
facilities that involves conducting long-range strategic resource 
assessments to assess existing facilities, predict future needs, and 
analyze space capacity. For example, a strategic resource assessment of 
the Tucson Field Operations Office found that the main building at the 
Nogales West land port of entry lacks sufficient space for CBP 
operations and is not currently configured to achieve unification of 
legacy services. 

CBP, EM, and SC all use inventories to track information on current 
assets, but data in several of these inventories are inaccurate or 
incomplete. CBP maintains an agencywide asset inventory that includes 
asset condition and other information. EM and SC report into a DOE-wide 
real property inventory. Although there is not yet a departmentwide 
personal property inventory, EM and SC maintain site-level personal 
property inventories that include condition information, as required by 
DOE.[Footnote 9] However, some data in CBP's and EM's asset inventories 
are inaccurate or incomplete. For example, CBP officials told us that 
legacy Border Patrol marine assets have not yet been transferred from 
Border Patrol cost centers to Air and Marine cost centers in the 
agency's asset inventory. In addition, in a report to the House of 
Representatives and Senate Committees on Appropriations on its Master 
Construction Planning Process, CBP cited a number of concerns with 
existing facility data, including that the data were not complete, 
contained conflicting information, or had not been updated since 
initial collection. EM officials at one site told us that they had not 
recorded all of their assets in DOE's real property inventory. 
Officials at both CBP and EM told us they are working to address these 
issues. 

The Selected Entities' Evaluation of Alternatives Is Not Always 
Apparent: 

When a performance gap between needed and current capabilities has been 
identified, it is important that organizations carefully consider how 
best to bridge the gap by identifying and evaluating alternative 
approaches, including noncapital options. OMB's guide states that once 
detailed requirements are defined, agency management should answer the 
"Three Critical Questions" before planning to acquire capital assets. 
The Three Critical Questions are: (1) does the investment in a major 
capital asset support core/priority mission functions that need to be 
performed by the federal government, (2) does the investment need to be 
undertaken by the requesting agency because no alternative private 
sector or governmental source can better support the function, and (3) 
does the investment support work processes that have been simplified or 
otherwise redesigned to reduce costs, improve effectiveness, and make 
maximum use of commercial, off-the-shelf technology? If the answer to 
all three questions is yes, according to the OMB guide, management 
should still consider options other than acquiring new assets to bridge 
the performance gap, such as meeting the objectives through regulation 
or user fees, using human capital instead of physical capital assets, 
or consider modifying existing assets. It also encourages the use of 
benefit-cost or cost-effectiveness analyses to determine if acquiring a 
new asset is the best way to reduce an identified performance gap. Our 
guide describes how leading organizations consider a wide range of 
alternatives to bridge a performance gap, including noncapital 
alternatives, before choosing to purchase or construct a capital asset 
or facility. These options include contracting out, privatizing the 
activity, nonownership options such as leasing, or engaging in joint 
venture projects with other organizations to minimize the amount 
invested and reduce the organization's risk. If it is determined that a 
capital asset is needed to bridge a performance gap, leading 
organizations first consider the use of existing assets before choosing 
to purchase or construct new assets. 

The selected entities' capital planning documents do not always capture 
an evaluation of alternatives. Of the 12 SC and EM mission need 
statements we reviewed, nine included an alternatives evaluation, but 
even when this was included, noncapital options were not always 
considered. We also reviewed related acquisition plans and strategies-
-additional required documents that are expected to fully discuss 
alternatives--for five of these investments. Although all considered 
capital alternatives, only one each of the two SC and three EM 
acquisition plans and strategies we reviewed discussed noncapital 
options. SC and EM officials told us that alternatives are sometimes 
evaluated outside of the formal DOE project management process. For 
example, an SC official told us that senior management decides which 
assets SC will acquire versus fulfilling its need through noncapital 
options. This includes providing funding to outside entities, such as a 
university, for research purposes, but such evaluations were not always 
captured in related planning documents. CBP does not require an 
evaluation of alternatives for projects below $50 million. However, CBP 
considers alternatives in its strategic resource assessments of real 
property investments and for major capital projects that are reviewed 
by DHS. In the previously cited example of the Nogales West land port 
of entry, the strategic resource assessment of the Tuscan Field 
Operations Office considered two options to improve the main building 
at the Nogales West land port of entry: addition of new space and 
reconfiguration of existing space. 

The Selected Entities Have Established Review and Approval Frameworks 
but Have Not Established Criteria to Rank and Select All Investments: 

Establishing a decision-making framework that encourages the 
appropriate levels of management review and approval is a critical 
factor in making sound capital investment decisions. A framework 
supported by the proper financial, technical, and risk analyses can 
mean capital investment decisions are made more efficiently and 
supported by better information. OMB's Capital Programming Guide states 
that each agency should establish a formal process for senior 
management review and approval of proposed capital assets. The cost of 
a proposed asset, the level of risk involved in acquiring the asset, 
and its importance to achieving the agency mission should be considered 
when defining criteria for executive review. Our Executive Guide 
describes how leading organizations use decision-making processes to 
help them assess where they should invest for the greatest benefit. 
Some organizations have processes that determine the level of review 
and analysis based on the size, complexity, and cost of a proposed 
investment or its organizationwide impact. 

As a part of this framework, proposed capital investments should be 
compared to one another to create a portfolio of major assets ranked in 
priority order. It is generally beneficial, if not necessary, to rank 
proposed projects because the number of requested projects often 
exceeds available funding. OMB's guidance suggests that agencies choose 
portfolios of capital investments that maximize return to the taxpayer 
and the government--at an acceptable level of risk. The guide provides 
one approach to devising a ranked list of projects drawn from multiple 
best practices organizations: the use of a scoring mechanism that 
assigns a range of values based on project strengths and weaknesses. 
Higher scores are given to projects that meet or exceed positive 
aspects of the decision criteria. Our Executive Guide describes 
processes used by leading organizations for ranking and selecting 
proposed capital projects. These organizations determined the 
appropriate mix of projects by viewing all proposed investments and 
existing capital assets as a portfolio. They selected projects based on 
preestablished criteria and a relative ranking of investment proposals. 
The organizations used their overall missions and strategic objectives 
as a basis for establishing decision-making criteria, such as increased 
cost savings, market growth, and link to organizational strategies, to 
rank projects. 

The entities reviewed in this study and the departments in which they 
are located have established review and approval frameworks, although 
problems exist with those at CBP and DHS. SC and EM investments with a 
cost of $5 million or more are subject to DOE's formal review and 
approval framework, which was established in October 2000. Investment 
proposals are reviewed by a board of senior executives, the composition 
of which varies depending on project costs and risk, and final approval 
rests with a designated acquisition executive. Table 2 illustrates the 
various DOE review boards and approving executives. For lower-cost 
investments--defined as those below $5 million--review and approval 
authority resides at the site level with some oversight by SC and EM. 
For example, many of SC's national laboratories have site-level 
advisory committees that review or make recommendations for lower-cost 
investments. 

Table 2: DOE Review and Approval Authority Thresholds for Investments 
Costing $5 Million or More: 

Cost threshold: $750 million[A]; 
Acquisition executive: Deputy Secretary of Energy; 
Delegated executive: Cannot be delegated; 
Review board: Energy Systems Acquisition Advisory Board (ESAAB). 

Cost threshold: $100 million to $750 million[A]; 
Acquisition executive: Under Secretary; 
Delegated executive: Head of program office (if <$400 million); 
Review board: ESAAB-equivalent board appointed by the acquisition 
executive. 

Cost threshold: $20 million to $100 million; 
Acquisition executive: Head of program office; 
Delegated executive: Program or field organization manager (except for 
mission need approval). 

Cost threshold: $5 million to $20 million; 
Acquisition executive: Determined by head of program office; 
Delegated executive: n/a. 

Source: GAO analysis of DOE Order 413.3A. 

[A] The acquisition executive may designate exceptions to this 
threshold. 

[End of table] 

In CBP's capital planning process, which was established in November 
2004, projects are to be reviewed and approved by various bodies, 
including the Architecture Review Board, the project sponsor, and CBP's 
Investment Review Board. Non-IT projects costing $50 million or more 
also are reviewed and approved by DHS. DHS's Investment Review Process 
sets forth different levels of review and approval based on the cost of 
the proposed project, as illustrated in table 3. However, although CBP 
and DHS have established review and approval frameworks, problems exist 
with both of them. For example, CBP uses DHS's threshold of $50 million 
to review and approve non-IT capital investments, which is 100 times 
greater than CBP's threshold for reviewing IT projects. As a result, no 
non-IT projects had completed this process at the time of our review. 
Non-IT projects under $50 million do not go through this review and 
approval framework, which raises questions about the decision making 
for projects under $50 million. In addition, we have previously 
identified problems with DHS's Investment Review Process, several of 
which are still unresolved. We previously reported that the process had 
been under revision for many months, guidance was unclear, and there 
was confusion about aspects of the process, such as when to submit 
information or why some submissions had been rejected.[Footnote 10] We 
found several of these problems persisted during this review. For 
example, the Investment Review Process continues to operate under 
interim guidance and officials told us that it has been revised 
repeatedly during the past 2 years. One CBP official stated that 
because the guidance changed frequently it was difficult for staff to 
know if they were using the latest version. 

Table 3: DHS Investment Levels for Non-IT Projects: 

Investment level: Level 1; 
Review and approval: Investment Review Board reviews and approves 
(after review by the Joint Requirements Council); 
Total acquisition cost: >$100 million. 

Investment level: Level 2; 
Review and approval: Joint Requirements Council reviews and approves; 
Total acquisition cost: $50 million to $100 million. 

Investment level: Level 3; 
Review and approval: Component agency (e.g., CBP) head approves; 
Total acquisition cost: $20 million to $50 million. 

Investment level: Level 4; 
Review and approval: Component agency (e.g., CBP) head approves; 
Total acquisition cost: <$20 million. 

Source: GAO analysis of DHS Management Directive 1400.1, dated 
September 26, 2006. 

[End of table] 

The selected entities have established criteria to rank and select 
some, but not all, capital investments. For example, SC officials told 
us that to compare and select among all types of capital investments, 
they use criteria such as the investment's alignment with SC's research 
goals and whether it will fill a compelling need to advance science. In 
addition, both SC and EM use DOE's Capital Asset Management Process 
(CAMP), a standardized scoring system that ranks projects based on four 
criteria.[Footnote 11] SC's Laboratory Policy and Infrastructure 
Division uses CAMP to determine the priority of general-purpose line 
item investments, whereas SC site-level committees and EM officials use 
it to score their general plant projects. For other assets, EM 
officials said that legal obligations and congressional direction on 
funding transfers establish investment priorities across sites. CBP 
developed a methodology (illustrated in table 4) to score construction 
and facility improvement projects at Field Operations land ports of 
entry and Border Patrol facilities that uses four weighted criteria to 
determine project priority. Each of the criteria is composed of 
specific factors with corresponding point values that identify and 
differentiate projects with the greatest priority; the maximum score a 
project can receive is 100 points. For example, in applying this 
methodology at the ports of entry under the Tuscon Field Operations 
Office's jurisdiction, the Nogales West land port of entry--with a 
score of 86.69--had the highest score and was listed as a first 
priority project. However, CBP does not use similar criteria for 
ranking and selecting other non-IT capital projects. Instead, officials 
told us that CBP's Investment Review Board recommends investment 
priorities, which are presented to the commissioner who makes the final 
decision. 

Table 4: Criteria for Scoring Capital Investment Projects at CBP 
Facilities: 

Criteria: Mission and operations; 
Weight: 35%. 

Criteria: Security and life safety; 
Weight: 25%. 

Criteria: Space and site deficiencies; 
Weight: 25%. 

Criteria: Personnel and workload growth; 
Weight: 15%. 

Source: CBP's Master Construction Planning Process report to Congress 
dated July 1, 2004. 

[End of table] 

The Selected Entities Lack Comprehensive, Long-term Capital Plans: 

The long-term capital plan is the final and principal product resulting 
from the various steps and stages of the planning phase of capital 
investment decision making. The capital plan, covering 5 years or more, 
should be the result of an executive review process that has determined 
the proper mix of existing assets and new investments needed to fulfill 
the organization's mission, goals, and objectives, and should reflect 
decision makers' priorities for the future. OMB's Capital Programming 
Guide encourages each agency to develop a capital plan defining the 
agency's long-term capital needs consistent with its strategic plan. 
The guide further encourages agencies to include the following elements 
in the plan: 

* a statement of the agency mission, strategic goals and objectives, 
and annual performance plans; 

* a description of the agency's planning process; 

* baseline assessments and identification of performance gaps; 

* justification of spending for proposed new capital assets; 

* the basis for the selection of proposed assets; 

* cost schedules, performance goals, and changes thereto; 

* staff requirements; 

* timing issues, if involved in multi-agency acquisitions; 

* plans for proposed capital assets once in use; and: 

* a summary of the risk management plan. 

Our Executive Guide describes how leading organizations stress the 
importance of a long-term capital plan. These organizations prepare 
long-term plans to document specific planned investments, plan for 
resource use over the long term, and establish priorities for project 
implementation. These capital plans typically cover a 5-, 6-, or 10- 
year period and are updated annually or biennially. 

None of the entities we reviewed has a comprehensive, long-term capital 
plan, although each entity has some documents that contain elements of 
such a plan. For example, as directed by the House of Representatives 
and Senate Committees on Appropriations, CBP provides out-year funding 
estimates in its Construction Spending Plan, but this requirement only 
covers several of its construction projects.[Footnote 12] CBP's Air 
Strategic Plan describes its air assets, including plans to modernize 
its fleet. However, as this plan states, it does not yet include plans 
for CBP's marine assets. CBP was unable to provide us with other 
documents that would contain long-term planning information, such as 
its Master Construction Plan or its Five-Year Investment Strategy; 
instead it provided us with descriptions of what would be included in 
them. Both SC and EM produce 5-year budget plans that consider out-year 
capital asset investments, but these plans lack detailed information, 
such as the individual projected costs of higher-cost line item 
projects and major items of equipment. SC and EM sites also produce 
multiple documents with capital planning information, such as 10-year 
site plans containing each site's investments ranked by priority and 
project baselines that include out-year investments. There are dozens 
of these documents, however, and DOE officials do not consolidate them 
into a comprehensive, long-term capital plan. 

OMB Has Taken Actions to Encourage Agencies to Conform with Capital 
Planning Principles, but It Does Not Request Long-term Capital Plans: 

OMB has taken steps to encourage agencies' conformance with capital 
planning principles. OMB staff told us that OMB requires agencies to 
comply with the principles and practices in its Capital Programming 
Guide, an action previously recommended by us.[Footnote 13] In 
addition, beginning in November 2005, OMB collaborated with agencies to 
update its guide. OMB created four interagency working groups to 
facilitate this process with each group focusing on specific components 
of the guide. The four areas of focus were: (1) performance 
measurement, (2) earned value management, (3) risk management, and (4) 
overall improvements. An OMB staff member stated that although all 
agencies were invited to participate in this effort, 14 agencies formed 
a core active group.[Footnote 14] The updated guide was released in 
June 2006 as a part of OMB's annual issuance of Circular No. A-11. 

Although OMB requires agencies to follow its guide, OMB staff told us 
that they do not always request all the information that the guide 
recommends. For example, although the Capital Programming Guide 
encourages agencies to prepare long-term capital plans, OMB staff told 
us they do not request copies of these plans, so it is not clear 
whether all agencies develop them. Instead, OMB staff stated that they 
are able to determine if an agency has a capital planning process based 
on other required documents, such as Capital Asset Plans and Business 
Case Summaries (Exhibits 300) and annual budget submissions. Although 
it is the case that these documents contain some elements of a long- 
term capital plan, they do not include all expected aspects. For 
example, Exhibits 300 focus on individual projects and do not present 
an agencywide, long-term portfolio of all planned capital projects. 

As the principal output of the planning phase, the long-term capital 
plan should be the central document an agency uses for its capital 
asset planning. Agencies would be more likely to prepare them if OMB 
collected and reviewed them. As we recommended in 2004, and OMB agreed, 
we continue to believe OMB should require long-term agency capital 
plans be developed and submitted to OMB and congressional decision 
makers.[Footnote 15] 

Congress Receives Some Capital Planning Information from Agencies but 
Additional Information Would Enhance Decision Making: 

Agencies provide some capital planning information to Congress. 
However, congressional staff with whom we met stated that they would 
like to receive additional information. Specifically, those responsible 
for resource allocation for and oversight of the selected entities told 
us they would like to receive the type of information that would be 
found in a long-term capital plan. They told us this information would 
help Congress make better-informed appropriations and oversight 
decisions. 

Agencies provide some capital planning information in response to 
requests made in congressional committee reports. For example, CBP has 
provided congressional appropriators with its Master Construction 
Planning Process--a description of the agency's process to plan for 
real property investments--and its Construction Spending Plan, which 
contains some limited out-year funding information. In response to 
requests by the House Committee on Appropriations, DOE provides the 
committee with 5-year budget plans, laboratory business plans, and an 
Integrated Facilities Infrastructure Crosscut Budget, all of which 
contain information on SC and EM capital asset investments. 

Congressional staff stated that additional information, such as that 
contained in a long-term capital plan, would enhance decision making. 
All of the congressional staff with whom we met expressed interest in 
receiving more capital planning information from agencies.[Footnote 16] 
Specifically, those responsible for resource allocation for or 
oversight of the selected entities stated they would like to receive 
priority-ranked project lists, out-year funding information, details on 
performance gaps between agency capabilities and defined mission needs, 
and a discussion of alternatives that were considered. All of this 
information would be contained in long-term capital plans. 
Congressional staff stated that the information contained in long-term 
capital plans would help them carry out their duties and provide 
greater confidence when making decisions about appropriations or 
oversight. 

In 2004, we recommended that OMB should require that long-term agency 
capital plans developed pursuant to its guide be submitted to OMB and 
provided to congressional decision makers; OMB agreed with this 
recommendation.[Footnote 17] However, some congressional staff told us 
that OMB restricts certain capital planning information Congress would 
like to receive. Several congressional staff members expressed 
frustration with OMB, stating that it has prevented agencies from 
providing some capital planning information that goes beyond the 
current budget year, such as out-year funding projections or long-term 
capital plans. For example, according to some congressional staff CBP 
offered to brief Congress on out-year issues, but OMB would not allow 
it to submit written details. 

Conclusions: 

Both because large sums of taxpayer funds are spent on capital assets 
and because their performance affects how well agencies are able to 
achieve their missions, goals, and objectives, effective planning for 
capital asset acquisitions is necessary to ensure that agencies are 
getting a good return on their investments, especially in the current 
budget environment. 

For the planning phase, both OMB and our guidance stress the importance 
of linking capital asset investments to an organization's overall 
mission and long-term strategic goals. The guidance also places great 
emphasis on evaluating a full range of alternatives to bridge any 
identified performance gap, informed by agency asset inventories that 
contain condition information. Further, the guidance calls for a 
comprehensive decision-making framework to review, rank, and select 
from among competing project proposals. Such a framework should include 
appropriate levels of management review and selections should be based 
on the use of established criteria. The ultimate product of the 
planning phase is a comprehensive capital plan, which defines the long- 
term capital decisions that resulted from the agency's capital planning 
process. Both OMB and our guidance highlight the importance of this 
plan. 

The three entities in this study had mixed success implementing capital 
planning principles and practices. SC and EM conformance with capital 
planning principles and practices is similar because both are primarily 
driven by DOE's project management directive. DOE officials told us 
that this directive is largely based on OMB's Capital Programming 
Guide, which could be indicative of DOE's commitment to good capital 
planning. On the other hand, CBP's capital planning process is 
relatively new and untested for capital investments other than IT. We 
were unable to verify implementation of capital planning principles in 
CBP's capital planning process for those non-IT projects; as such, CBP 
did not fully conform with any of the capital planning principles at 
the time of our review. 

SC generally links planned capital investments to its program goals and 
DOE's strategic goals. In addition, it assesses the need for 
investments and identifies performance gaps--for example, through 
discussions with its staff and stakeholders--and maintains data about 
its assets, including condition information, in several inventories. 
However, SC did not always include a discussion of alternatives in its 
mission need statements; when it did, it did not always consider 
noncapital alternatives. SC and DOE have established processes to 
review and approve proposed capital investments and SC uses a variety 
of criteria to rank and select among all of them. SC does not have a 
long-term capital plan, but it produces some documents, such as its 5- 
year budget plan, which contain some of the information that would be 
included in a capital plan. 

Like SC, EM generally links its planned investments to its cleanup 
goals and DOE's strategic goals. Needs assessment at EM is driven by 
legal or regulatory requirements that target gaps between current and 
desired environmental safety conditions at cleanup sites. Although it 
uses several inventories to track its assets, EM has not recorded all 
of its assets in DOE's departmentwide real property inventory. The EM 
mission need statements we reviewed discussed alternatives the entity 
considered, but they did not always include noncapital options. EM and 
DOE have established processes to review and approve proposed capital 
investments, and EM uses a standardized scoring system to rank and 
select its general plant projects. EM does not have a long-term capital 
plan, but it produces some documents, such as project baselines, which 
contain some of the information that would be included in a capital 
plan. 

Understandably, CBP's process is not as far along, as it is a newer 
agency. Although CBP's guidance for need analysis documents calls for 
project managers to link proposed investments to the agency's strategic 
goals and identify the need for each project and the capability gap it 
will fill, we were unable to verify implementation of these practices 
due to a lack of non-IT examples. In addition, CBP does not require an 
evaluation of alternatives for non-IT projects below $50 million. CBP 
maintains an agencywide asset inventory, but data quality problems 
exist, such as inaccurate and incomplete data. CBP has established a 
framework to review and approve proposed capital investments. However, 
problems exist with this framework. For example, CBP uses DHS's review 
threshold of $50 million, which is 100 times greater than CBP's 
threshold for reviewing IT projects. As a result, no non-IT projects 
had completed this process at the time of our review, which raises 
questions about the decision making for projects under $50 million. In 
addition, CBP does not use criteria to rank and select among all of its 
capital projects; it only does so for real property investments. CBP 
has some long-term capital planning documents, such as its Construction 
Spending Plan, but none contain all of the information that would be 
expected in a comprehensive capital plan. 

DHS's Investment Review Process requires the development of mission 
need statements to (1) describe the link between a proposed investment 
and DHS's strategic goals and (2) assess the need for a project by 
identifying the gap between current capabilities and future 
requirements. In addition, DHS's capital planning process requires an 
analysis of alternatives, and proposed projects are reviewed and 
approved by various members of DHS's senior management. We were able to 
verify implementation of these capital planning principles with a CBP 
project reviewed in the DHS process: Border Patrol's aircraft 
recapitalization. However, we have previously identified problems with 
DHS's capital planning process; several of which persist. For example, 
the Investment Review Process continues to operate under interim 
guidance, which has been revised repeatedly over the past 2 years. One 
CBP official told us this made it difficult for staff to know if they 
were using the most up-to-date version. Although we did not evaluate 
capital planning at other DHS component agencies, problems may exist 
with their processes given what we found at CBP and DHS. 

As part of its annual issuance of Circular No. A-11 guidance, OMB 
requires agencies to follow the capital planning principles contained 
in its recently updated Capital Programming Guide. However, OMB staff 
told us that they do not always request all the information that the 
guide recommends. In particular, OMB does not ask for copies of agency 
long-term capital plans. The guide encourages agencies to prepare long- 
term capital plans as the principal output of the planning phase. OMB 
staff stated that they are able to determine if an agency has a capital 
planning process based on other documents, such as Capital Asset Plans 
and Case Summaries (Exhibits 300) and annual budget submissions. 
Nonetheless, we believe it is notable that both this review and the one 
in 2004, we found that none of the agencies we examined had developed a 
long-term capital plan, which should be the central document that an 
agency uses for its capital asset planning. Requiring the development 
and submission of agency capital plans would ensure that assets are 
managed to achieve performance goals and objectives with minimal risk, 
lowest life-cycle costs, and the greatest benefits to the agency's 
business. 

Although Congress receives some capital planning information from 
agencies, all of the congressional staff with whom we met expressed 
interest in receiving more. Specifically, they said they would like to 
receive information that would be included in long-term capital plans, 
such as project lists ranked by priority, out-year funding information, 
details on performance gaps between agency capabilities and defined 
mission needs, and a discussion of alternatives that were considered. 
Some congressional staff expressed frustration with what they believed 
was OMB's restriction of the information agencies could provide and 
said that additional information would enhance their oversight 
capabilities. 

Matter for Congressional Consideration: 

To ensure that it is receiving the capital planning information it 
needs to make informed decisions, Congress should require agencies to 
develop comprehensive, long-term capital plans and submit them for 
congressional review. 

Recommendations for Executive Action: 

We recommend that the Secretary of Energy ensure that comprehensive 
alternatives evaluations of capital investments, including 
consideration of noncapital alternatives as appropriate, are conducted 
and discussed in agency planning documents. Further, we recommend that 
the Secretary require the development of a single, agencywide, long- 
term capital plan to reflect all long-term capital investment 
decisions. 

We recommend that the Secretary of Homeland Security direct the 
Commissioner of CBP to (1) ensure that comprehensive alternatives 
evaluations of capital investments, including consideration of 
noncapital alternatives as appropriate, are conducted and discussed in 
agency planning documents, (2) require the development of criteria to 
rank and select all capital projects, and (3) lower the dollar amount 
of the review threshold for non-IT capital projects to ensure that all 
capital projects are linked to the agency's strategic goals and 
objectives and receive an appropriate level of review. We further 
recommend that the Secretary direct the Commissioner to require the 
development of a single, agencywide, long-term capital plan to reflect 
all long-term capital investment decisions. The Secretary should also 
consider if similar changes need to be made at other DHS component 
agencies. Further, we recommend that the Secretary finalize the 
Investment Review Process and its related guidance. 

We reiterate our previous recommendation that the Director of the 
Office of Management and Budget require that agencies develop and 
submit agencywide, long-term capital plans to OMB. We further recommend 
that the Director instruct agencies to make these plans available to 
congressional decision makers. 

Agency Comments and Our Evaluation: 

We provided draft copies of this report to and requested comments from 
the Secretaries of Energy and Homeland Security, and the Director of 
OMB. We obtained comments from the entities selected for review--SC, 
EM, and CPB, the departments in which they are located (DOE and DHS), 
and OMB. 

DOE and EM, in a joint letter from the Acting Deputy Director, Office 
of Internal Review, Office of the Chief Financial Officer, concurred 
with our recommendations to undertake comprehensive alternatives 
evaluations--including the consideration of noncapital alternatives-- 
and to develop a single, agencywide, long-term capital plan. However, 
EM provided additional comments regarding our evaluation of its 
conformance with several capital planning principles--needs assessment 
and gap identification, alternatives evaluation, and a long-term 
capital investment plan. EM disagreed with a statement in our draft 
report in which we reported that EM officials told us that some of its 
sites had not recorded all assets in DOE's real property inventory. We 
have revised our statement to reflect that it was EM officials at one 
site that told us not all of their real property assets were currently 
listed in FIMS and that they were working to fix this issue. In our 
discussion on alternatives evaluation, EM asked for a further 
description of perceived shortcomings in capital planning documentation 
for EM projects. In response, we added information about the 
alternatives considered in several acquisition strategies and plans in 
which EM did not discuss noncapital options--a topic highlighted in 
both OMB's and our guidance. Additionally, EM stated that its 
documentation currently meets with OMB's and our long-term capital 
planning guidance. However, as we state in our report, EM lacks a 
central, long-term capital plan that includes all planned assets and 
out-year funding projections. In its comments, DOE provided additional 
information about its corporate-level planning processes. This 
information describes the Department's budget and strategic planning 
processes, which should be informed by the Department's capital 
planning process. DOE noted that elements of a capital plan are 
contained in other documents, such as its strategic plan and 
congressional budget request; however, this further illustrates our 
point that DOE's capital planning information is contained in multiple 
documents and is not consolidated into a comprehensive, long-term 
capital plan. DOE's complete comments and our responses are contained 
in appendix IV. 

SC provided comments in an e-mail from an audit liaison in which it 
suggested we take into account additional DOE-required planning 
documents, besides the mission need statement, that discuss 
alternatives evaluation. In response, we incorporated more information 
about alternatives that were described in SC acquisition strategies and 
plans. 

DHS agreed with all of the recommendations we made to it and said that 
it will work with CBP and its other components to ensure they better 
conform with OMB's and our capital planning guidance. In written 
comments provided by the Director, Departmental GAO/OIG Liaison Office, 
DHS points to CBP's Air Strategic Plan as another source of long-term 
capital planning information. Although this plan contains some elements 
of a long-term capital plan, like other CBP capital planning documents, 
it is not comprehensive in nature and only covers capital assets to 
support air operations. DHS's complete comments and our responses are 
contained in appendix V. 

In comments provided orally and via e-mail, OMB partially agreed with 
our recommendation regarding agency development and submission of long- 
term capital plans. OMB agreed that there are benefits from OMB review 
of agency long-term capital plans on an as-needed basis; however, it 
did not agree with our recommendation that all federal agencies should 
be required to submit a long-term capital plan to OMB. OMB stated that 
these plans should be developed by agencies and shared with OMB on a 
case-by-case basis depending on the specific issue being addressed and 
the need to view supporting materials. Agencies are encouraged to have 
on hand capital planning documents at various levels of detail, 
applying each for different purposes. For example, OMB's guide states 
that a summary might be sufficient for the authorization process in 
Congress or justifications for the appropriations committees. However, 
as we noted earlier in this report, we found in both this review and 
the one in 2004 that none of the agencies we examined had capital 
planning processes that fully conformed with OMB's and our guidance, 
nor had any of those agencies developed long-term capital plans at the 
time of our reviews. A long-term capital plan should be the principal 
product of the planning phase and the central document an agency uses 
for its capital asset planning. 

We continue to believe that requiring agencies to develop and submit 
long-term capital plans will better enable OMB to ensure that agencies 
have long-term capital planning processes that conform with established 
capital planning principles. Moreover, as expressed by congressional 
staff with whom we met, information contained in long-term capital 
plans would help Congress carry out its duties and have greater 
confidence when making decisions about appropriations or oversight. 

In addition to the comments described above, each of the case study 
entities, their respective departments, and OMB provided technical 
comments. We have incorporated changes as a result of these comments, 
as appropriate. 

As we agreed with your office, unless you publicly announce the 
contents of this report earlier, we plan no further distribution of it 
until 30 days from the date of this letter. At that time, we will send 
copies of this report to the Director of the Office of Management and 
Budget and the Secretaries of Energy and Homeland Security. We will 
also make copies available to others upon request. This report will 
also be available at no charge on the GAO Web site at 
http://www.gao.gov. 

Please contact me on (202) 512-9142 if you or your staff have any 
questions about this report. Contact points for our Office of 
Congressional Relations and Public Affairs may be found on the last 
page of this report. Other staff acknowledgments are listed in appendix 
VI. 

Signed by: 

Susan J. Irving: 
Director, Federal Budget Analysis Strategic Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

The objectives of this study were to evaluate (1) how well selected 
entities followed the planning phase principles in our Executive Guide 
and OMB's Capital Programming Guide, (2) what actions OMB has taken to 
encourage all agencies' conformance with capital planning principles, 
and (3) what capital planning information is currently received by or 
would be useful to congressional decision makers. 

This study focused on major noninformation technology (non-IT) capital 
assets acquired by the federal government primarily to benefit the 
government's own operations. OMB and we have previously defined these 
assets as land, structures, equipment, and intellectual property that 
are used by the federal government and have an estimated useful life of 
2 years or more. Capital assets exclude items acquired for resale in 
the ordinary course of operations or held for the purpose of physical 
consumption, such as operating materials and supplies. Specific capital 
assets acquired by the selected entities in this study include office 
buildings, waste storage facilities, motor vehicles, aircraft, marine 
vessels, construction equipment, pieces of scientific research 
equipment, and scanning and detection equipment. We limited the general 
scope of our work to the planning processes used to acquire and manage 
investments other than IT, so we did not address the principles and 
practices specific to IT acquisitions. We looked only at the planning 
processes used to acquire major capital assets as defined by the 
selected entities, including major modifications or enhancements to 
existing structures. 

To select our case study entities, we used character class data from 
OMB's MA[Footnote 18]X system to identify agencies with substantial 
capital expenditures over a 5-year period. We first sorted the agencies 
from highest to lowest level of average capital outlays for fiscal 
years 2000 through 2004. We extracted the top 24 agencies, whose 
capital expenditures represented 86 percent of total nondefense capital 
outlays for fiscal year 2004. To narrow down the candidate pool we 
excluded agencies from our review if (1) they had been selected in our 
previous review, (2) the majority of their capital investments was 
targeted at IT or particularly unique assets, (3) they were subject to 
unique sensitivities such as security restrictions or heightened 
activity in response to Hurricane Katrina, or (4) they relied heavily 
on nonappropriations-based funding sources. This resulted in a subset 
of nine agencies whose capital outlays represented 30 percent of 
nondefense capital outlays for fiscal year 2004. For this subset we 
examined agency characteristics, including missions, the types of 
assets acquired, control over asset acquisitions and recent related 
studies as well as our past work and other literature, organizational 
data available on the Internet, and agency strategic plans and 
performance and accountability reports. Based on this information we 
selected three entities within two departments to review: the Office of 
Science (SC) and the Office of Environmental Management (EM) within the 
Department of Energy (DOE), and U.S. Customs and Border Protection 
(CBP), an agency within the Department of Homeland Security (DHS). This 
final selection was based on our goal of having diversity in agency 
missions, the types of assets acquired, and the volume of capital 
spending. Both DOE and CBP had also exhibited recent growth in volume 
of capital spending, and this growth was expected to continue into the 
future. 

We examined policies and procedures in place at the department level as 
well as at SC, EM, and CBP. A sizable portion of SC's and EM's budget 
authority is for capital asset acquisitions. Our work at CBP focused on 
the four offices that own and acquire the bulk of the agency's capital 
assets or with a significant role in its capital planning process: the 
Office of Field Operations, the Office of Border Patrol, the Office of 
Air and Marine Operations, and the Office of Information and 
Technology. 

To accomplish our first objective, we obtained and reviewed various 
forms of agency documentation, including asset management, budget, and 
program documents; strategic plans; performance plans and other annual 
plans; and capital project proposals. We also conducted extensive 
interviews with officials at various levels of management, including 
planning, policy, budget, and facilities staff as well as program, 
project, and property management staff. 

The findings of our study and agency capital planning practices 
described in this report are based on testimonial evidence and our 
review of documentation provided by agency officials. We did not 
observe or evaluate the processes in operation, nor did we evaluate the 
effectiveness of the specific elements of agency processes or assess 
the outcomes or decisions made as the result of agency planning 
efforts. Our work documented the agency practices and whether they 
conformed to OMB guidance and the practices of leading organizations. 

To accomplish our second objective, we met with OMB staff to discuss 
what actions OMB had taken to encourage agencies' conformance with 
capital planning principles. We also obtained and reviewed various OMB 
guidance, including its Circular No. A-11 and its updated Capital 
Programming Guide. 

To accomplish our third objective, we met with staff members of several 
committees responsible for resource allocation for or oversight of the 
selected entities in order to better understand what capital planning 
data are used or would be most useful in their decision 
making.[Footnote 19] 

We held an exit briefing with each of the selected entities to convey 
our findings and requested and received comments on a draft of this 
report. We conducted our work from February 2006 through December 2006 
in accordance with generally accepted government auditing standards. 

[End of section] 

Appendix II: Department of Energy: 

Background: 

The overarching mission of the Department of Energy (DOE) is to advance 
the national, economic, and energy security of the United States; to 
promote scientific and technological innovation in support of that 
mission; and to ensure the environmental cleanup of the national 
nuclear weapons complex. DOE is a geographically dispersed, cabinet- 
level agency with a budget of over $23 billion in fiscal year 2006. DOE 
is organized into nine program offices, several semi-autonomous 
agencies, and a number of staff offices. Two program offices, the 
Office of Science (SC) and the Office of Environmental Management (EM), 
were selected for review based on their substantial real property 
holdings and high levels of capital asset investment. 

According to its 5-Year Budget Plan for Fiscal Years 2007-2011, SC's 
mission is to "deliver the discoveries and scientific tools that 
transform our understanding of energy and matter and advance the 
national, economic, and energy security of the United States." It had a 
fiscal year 2006 budget of over $3.5 billion and manages 10 national 
laboratories as well as additional research projects at other locations 
across the country. SC capital spending is influenced by facility 
revitalization needs and the demand of the scientific community for new 
or improved research tools and facilities. 

EM's mission is to complete the safe cleanup of the environmental 
legacy from five decades of nuclear weapons development and government- 
sponsored nuclear energy research. It had a fiscal year 2006 budget of 
over $6.5 billion and manages over 80 environmental cleanup projects at 
25 sites across the country. EM capital spending is influenced by 
facility maintenance needs and the legislative and regulatory 
requirements that drive its cleanup operations as well as the current 
state of technology. 

Types of Assets: 

SC and EM acquire a variety of assets. SC invests in research-oriented 
assets such as research facilities, new instrumentation and components 
for existing facilities, and other pieces of scientific research 
equipment. EM acquires waste treatment facilities, waste storage 
facilities, vehicles, pumping equipment, and construction equipment. 
Both SC and EM invest in general-purpose construction, maintenance, and 
repair projects. 

Capital asset investments at EM and SC can be divided into three major 
categories based on cost threshold and project type: (1) line item 
projects, (2) capital equipment--which includes major items of 
equipment (MIE) at SC--and (3) general plant projects (GPP). 
Additionally, SC invests in accelerator improvement projects (AIP). 
Figure 2 provides a summary of each category of capital investment. 
Different policies and practices apply to each investment category. 
Capital investments with a total project cost of $5 million or more are 
subject to DOE-wide project management directives.[Footnote 20] Other 
investments are subject to review and approval processes in place at 
the site and program levels. 

Figure 2: Summary of SC and EM Project Categories: 

[See PDF for image] 

Source: GAO analysis of DOE data. 

[End of figure] 

Capital Funding: 

A sizable portion of SC's and EM's budget authority is for capital 
asset acquisitions. In fiscal year 2005, SC's budget authority for 
capital asset investment accounted for $563 million, or 15 percent of 
DOE's total Science appropriations. As figure 3 illustrates, line item 
projects and capital equipment accounted for most of SC's capital 
funding in fiscal year 2005. For EM, budget authority for capital asset 
investment accounted for $1,027 million, or 14 percent of EM's total 
appropriations in fiscal year 2005. As figure 4 illustrates, line item 
projects accounted for most of EM's capital funding in fiscal year 
2005. 

Figure 3: SC Capital Asset Investments, Fiscal Year 2005: 

[See PDF for image] 

Source: GAO analysis of data in DOE's Fiscal Year 2007 Congressional 
Budget Request. 

[End of figure] 

Figure 4: EM Capital Asset Investments, Fiscal Year 2005: 

[See PDF for image] 

Source: GAO analysis of data in DOE's Fiscal Year 2007 Congressional 
Budget Request. 

[End of figure] 

Capital Planning Process: 

Both SC and EM have made commendable progress toward aligning their 
policies and practices with key capital planning principles. DOE 
requires capital asset investments with a cost at or over $5 million-- 
labeled higher-cost investments--to pass through a well-defined and 
documented decision-making process. The process, largely based on OMB's 
Capital Programming Guide, according to DOE officials, requires that 
mission need statements and acquisition plans and strategies be 
produced to link proposed investments to strategic goals, justify 
capital asset needs, and evaluate investment alternatives. The process 
also requires formal review and approval of both the identified need 
and the capital alternative proposed to address it. Both SC and EM have 
followed DOE's process for line item projects and qualifying MIE 
projects. They have also put site-and facility-level processes in place 
for investments below the $5 million threshold--lower-cost investments-
-which consist of GPP, AIP, and capital equipment, including MIE 
projects. Although SC and EM have put DOE and site-level capital 
planning processes into place, their evaluation of investment 
alternatives is limited and they do not produce comprehensive, long- 
term capital investment plans. 

Figure 5 shows SC's and EM's varying degrees of implementation of 
capital planning principles. SC and EM conformance with capital 
planning principles is similar because both are driven by DOE-wide 
project and real property management policies. However, each program 
office differs in how it implements these policies and the types of 
assets it manages and acquires. SC and EM sites also differ in how they 
plan for lower-cost capital investments that are not covered by DOE- 
wide policies. 

Figure 5: SC's and EM's Conformance with Capital Planning Principles: 

[See PDF for image] 

Source: GAO analysis of DOE data. 

[End of figure] 

Strategic Linkage: 

SC and EM link investments to program missions and strategic goals. 
SC's higher-cost line item and MIE investments are tied to scientific 
research goals through mission need statements produced as part of the 
DOE capital planning process. For example, the mission need statement 
for the National Synchrotron Light Source-II discusses how the proposed 
research facility need is linked to the Basic Energy Sciences (BES) 
program goal of studying material properties at the nanoscale level. 
This BES research goal is in turn linked to DOE's strategic goal to 
provide world-class scientific research capacity in a number of fields, 
including nanoscale science. EM's mission need statements tie line item 
investments to environmental cleanup goals. For example, the mission 
need statement for the 105-K Plutonium Vitrification Project discusses 
how the proposed waste treatment facility is needed to achieve a 
cleanup project's goal to dispose of 13 metric tons of plutonium. This 
objective aligns with DOE's strategic goal to cleanup contaminated 
nuclear weapon manufacturing and testing sites. GPP needs for both 
program offices are tied to department strategic goals through 10-year 
site plans (TYSP) produced by major SC and EM sites, as required under 
DOE real property management policy.[Footnote 21] Additionally, some of 
SC's lower-cost investments in AIP and capital equipment are tied to 
facility strategic plans. EM capital equipment investments are embedded 
in cleanup project plans. 

Needs Assessment and Gap Identification: 

Both program offices employ several techniques to identify performance 
gaps and determine needs. SC relies on discussion among its research 
programs, laboratories, advisory committees, and the scientific 
community to identify gaps in the current capabilities of its research- 
oriented assets. For example, new SC research facilities were selected 
through a series of presentations, internal hearings, community 
workshops, and peer reviews. EM needs assessment is driven by legal or 
regulatory requirements that target gaps between current and desired 
environmental safety conditions at cleanup sites and the current state 
of technology. For example, the need for the Sodium-Bearing Waste 
Treatment Project is driven by the Idaho Settlement Agreement between 
DOE, the Department of the Navy, and the state of Idaho, which lays out 
goals for treatment and disposal of 1 million gallons of sodium-bearing 
waste at the Idaho National Engineering and Environmental Laboratory. 

SC and EM employ a number of real and personal property asset 
inventories to support needs assessments. At the department level, DOE 
maintains a departmentwide real property inventory, the Facilities 
Information Management System (FIMS), which includes summary condition 
information. EM officials at one site told us they had not recorded all 
of their assets in FIMS but are working to correct the issue. DOE does 
not yet have a departmentwide personal property system but a DOE 
official said such a system is scheduled to be operational in fiscal 
year 2007. At the site level, individual SC and EM sites maintain their 
own real and personal property asset inventories that include condition 
information, as required by DOE. Sites use real property asset 
information and standardized project-scoring to inform selection of GPP 
and general-purpose line item projects. Although sites maintain 
personal property systems to account for other assets, including 
capital equipment, they use other information, such as discussion 
within the scientific community or regulatory requirements described 
above, to determine need. 

Alternatives Evaluation: 

SC and EM capital planning documents do not always capture an 
evaluation of the alternatives considered. In mission need statements 
we reviewed, we found that although all four of EM's higher-cost 
investments described alternatives considered, only five out of SC's 
eight did. In addition, only four SC and one EM mission need statements 
considered noncapital alternatives, such as divesting functions or 
using existing facilities. This may be attributed in part to the fact 
that alternatives evaluation was not a formal DOE requirement until 
March 2003, even though this practice has been included in OMB's 
Capital Programming Guide since 1997. However, not all of the 
investments proposed after March 2003 included a comprehensive 
alternatives evaluation. Three of the four SC mission need statements 
submitted after March 2003 considered capital and noncapital 
alternatives but one did not. Although both of the EM mission need 
statements submitted after March 2003 considered capital alternatives, 
one did not consider noncapital alternatives. 

We also reviewed related acquisition plans and strategies--additional 
required documents that are expected to fully discuss alternatives--for 
five of these investments. Although all considered alternatives, only 
one each of the two SC and three EM acquisition plans and strategies we 
reviewed discussed noncapital options. Both of the SC acquisition plans 
and strategies we reviewed discussed life-cycle costs as required by 
DOE policy, but only one of three EM acquisition plans and strategies 
provided a life-cycle cost estimate. Life-cycle costs can be an 
important factor when deciding among alternatives. For example, SC's 
Capabilities Replacement Laboratories project found potential savings 
of $53 million to $163 million when it compared the life-cycle costs of 
four possible alternatives. 

Alternatives may sometimes be evaluated outside of the formal DOE 
project management process. For example, an SC official told us that 
senior management decides which assets SC will acquire versus 
fulfilling its need through noncapital options. This includes providing 
funding to outside entities, such as a university, for research 
purposes. EM officials said that they use site-level inventories as 
well as excess facilities information from FIMS and the Energy Asset 
Disposal System when considering if an investment need can be satisfied 
by using existing assets. 

Review and Approval Framework with Established Criteria for Selecting 
Projects: 

All SC and EM investments with a cost at or above $5 million are 
subject to formal review and approval. Investment proposals are 
reviewed by a board of senior executives and final approval is given by 
a designated acquisition executive. As illustrated in table 5, the 
level of executive review and approval authority required varies 
depending on cost and other perceived investment risks. DOE officials 
said that they were unaware of any EM or SC project that has 
circumvented the DOE approval process, although they told us that MIE 
projects were difficult to track in later execution phases because of 
their low budget profiles. 

Table 5: DOE Review and Approval Authority Thresholds for Investments 
Costing $5 Million or More: 

Cost threshold: $750 million[A]; 
Acquisition executive: Deputy Secretary of Energy; 
Delegated executive: Cannot be delegated; 
Review board: Energy Systems Acquisition Advisory Board (ESAAB). 

Cost threshold: $100 million to $750 million[A]; 
Acquisition executive: Under Secretary; 
Delegated executive: Head of program office (if <$400 million); 
Review board: ESAAB-equivalent board appointed by the acquisition 
executive. 

Cost threshold: $20 million to $100 million; 
Acquisition executive: Head of program office; 
Delegated executive: Program or field organization manager (except for 
mission need approval). 

Cost threshold: $5 million to $20 million; 
Acquisition executive: Determined by head of program office; 
Delegated executive: n/a. 

Source: GAO analysis of DOE Order 413.3A. 

[A] The acquisition executive may designate exceptions to this 
threshold. 

[End of table] 

Review and approval authority for lower-cost investments resides at the 
site level with some oversight at the program level. Many of SC's 
national laboratories have site-level advisory committees that review 
or make recommendations for lower-cost capital investments--GPP, AIP, 
and capital equipment, including lower-cost MIE projects. SC research 
program officials told us that AIP and capital equipment--including 
MIE--also undergo a peer review process. Proposals for lower-cost 
investments are submitted to research programs at SC headquarters for 
additional review and approval under the budget process.[Footnote 22] 
Regarding EM, field office managers have the authority to review and 
approve GPP investments at sites. Officials did not identify any formal 
review process for capital equipment investments beyond the negotiation 
of work tasks between EM and its contractor. 

Capital investments at SC and EM are ranked and selected in a variety 
of ways. At SC, research program officials told us that to compare and 
select among all types of capital investments they use criteria such as 
the investment's alignment with SC's research goals and whether it will 
fill a compelling need to advance science. SC senior management and 
science advisory committees determine the priority of prospective 
research facilities and some higher-cost MIE projects in SC's 
Facilities for the Future of Science: A Twenty-Year Outlook. In 
addition, for general-purpose line item projects, SC's Office of 
Laboratory Policy and Infrastructure, Infrastructure Division uses 
input from a standardized scoring system, DOE's Capital Asset 
Management Process (CAMP).[Footnote 23] Site-level review committees 
also use CAMP scoring to prioritize GPP investments. Officials told us 
that they establish the priority of AIP and capital equipment, 
including MIE, through discussion between labs and facilities; some 
facilities develop formal plans to identify out-year priorities. For EM 
investments, officials said that legal obligations and congressional 
direction on funding transfers establish project priorities across 
sites. At the site level, investment priorities are generally 
determined through agreements with federal, state, or local authorities 
within the context of cleanup operations.[Footnote 24] Additionally, 
like SC, EM uses CAMP to rank and select its GPP. 

Long-term Capital Investment Plan: 

Neither SC nor EM has a comprehensive, long-term capital investment 
plan at the program office level. SC and EM budget and related 
documents satisfy some elements of long-term capital plans but not all. 
For example, these documents do not always include details on planned 
capital investments or out-year funding projections. Moreover, this 
information is contained in dozens of SC and EM site-and facility-level 
planning documents which are not consolidated into comprehensive, 
higher-level capital plans. 

Officials identified DOE budget documents as the best source of 
information for planned capital investments. Although DOE's budget 
request includes summaries of planned capital asset spending for SC and 
EM, it is limited to the current budget year. Each program office also 
produces a 5-year budget plan and laboratory business plan, as directed 
by the House of Representatives Committee on Appropriations.[Footnote 
25] Although officials said these plans consider out-year capital asset 
investments, they lack detailed information, such as projected costs of 
higher-cost line item or MIE investments.[Footnote 26] DOE officials 
said they keep two versions of the 5-year budget plans--one version for 
the congressional appropriators that is tied to OMB projections and one 
for internal use that adopts a less constrained budget profile. 

DOE program offices also produce an Integrated Facilities and 
Infrastructure Crosscut Budget (IFI) to accompany the annual budget 
request, as directed by the House of Representatives and Senate 
Committees on Appropriations.[Footnote 27] The IFI integrates 
information from SC and EM 10-year site plans (TYSP) for real property 
and provides a funding summary for facility and infrastructure. 
Although the IFI projects 5-budget years into the future, the version 
of the IFI that is provided to the appropriators is limited to the 
current budget year. Additionally, SC's IFI does not include all of the 
costs associated with capital investment in new research facilities. 
For example, the SC IFI for fiscal year 2007 does not include costs 
associated with several research facility line item projects that were 
planned or underway. Like the 5-year budget plans, the IFIs are tied to 
OMB projections. 

Site-level documents contain additional information that could be used 
as input to assemble SC-and EM-wide capital plans. Real property TYSPs 
produced by 10 SC national laboratories and eight major EM sites 
include priority-ranked lists of capital asset investments planned over 
a 10-year horizon. Budget proposals put forward by SC sites include 
capital asset investment priorities planned for out-years. Officials 
from the SC research programs we reviewed said they use this 
information when formulating their budget requests. SC research program 
officials also said that their research facilities produce their own 
capital and strategic plans that include out-year information. EM sites 
develop cost and activity baselines for each of their cleanup projects. 
Officials said that these baselines include planned capital asset 
investments but that planned capital investments under $5 million are 
embedded with noncapital costs. 

[End of section] 

Appendix III: U.S. Customs and Border Protection: 

Background: 

The mission of U.S. Customs and Border Protection (CBP), an agency 
within the Department of Homeland Security (DHS), is to prevent 
terrorists and terrorist weapons from entering the United States while 
at the same time facilitating the flow of legitimate trade and travel. 
CBP was established during the reorganization of the federal government 
that created DHS, integrating and unifying all agencies with 
significant border responsibilities into a single organization 
responsible for managing, controlling, and securing the nation's 
border. CBP consists of the inspection and frontline border enforcement 
functions previously carried out by the U.S. Customs Service, 
Immigration and Naturalization Service, including Border Patrol, and 
Animal and Plant Health Inspection Service. It also includes U.S. 
Customs Service's trade and revenue collection functions. 

Headed by a commissioner, CBP is organized into 20 separate offices and 
has a large field presence. Offices that own and acquire the bulk of 
CBP's capital assets or with a significant role in CBP's capital 
planning process include the Office of Field Operations (Field 
Operations), the Office of Border Patrol (Border Patrol), the Office of 
Air and Marine Operations (Air and Marine), and the Office of 
Information and Technology. Some of CBP's operations are geographically 
dispersed. For example, Field Operations maintains programs at 20 field 
operations offices and 327 ports of entry, of which 15 are pre- 
clearance stations in Canada and the Caribbean. Border Patrol agents 
are assigned to patrol more than 6,000 miles of the nation's land 
borders and are coordinated through 20 sectors. 

Types of Assets: 

CBP acquires and uses many different types of noninformation technology 
(non-IT) capital assets to accomplish its mission. Its current 
facilities and tactical infrastructure portfolio consists of CBP-owned 
and -leased facilities and real estate; temporary structures, such as 
modular buildings for rapid deployment and temporary base camps; and 
other tactical infrastructure, such as fences, lights, and barriers. 
CBP owns and maintains a motor vehicle fleet, a variety of aircraft 
including fixed wing aircraft, helicopters, and unmanned aerial 
vehicles, and different types of marine vessels such as hovercrafts, 
airboats, and high-speed interceptors. The agency also acquires 
different types of scanning and detection equipment, such as large- 
scale X-ray and gamma-imaging systems, nuclear and radiological 
detection equipment, as well as a variety of portable and hand-held 
devices. 

Capital Funding: 

A sizable portion of CBP's appropriations is budget authority for 
capital investments. In fiscal year 2005, budget authority for capital 
investments accounted for $851 million, or 13 percent of CBP's total 
appropriations. However, not all of CBP's capital needs are funded by 
the agency's appropriations; in particular that for facilities at ports 
of entry. For example, the majority of land ports of entry facilities 
are funded through the General Services Administration's Federal 
Buildings Fund, which receives rent payments from CBP. Nevertheless, as 
illustrated in figure 6, the investments funded by CBP's appropriations 
fell into three main categories: (1) automation modernization, (2) 
construction, and (3) Air and Marine interdiction, operations, 
maintenance, and procurement. The majority of CBP's capital funding--53 
percent--was for automation modernization. 

Figure 6: CBP Capital Asset Investments, Fiscal Year 2005: 

[See PDF for image] 

Source: GAO analysis of CBP's Budget in Brief, Fiscal Year 2007. 

[End of figure] 

Capital Planning Process: 

The capital planning process at CBP is evolving. The agency has 
established a review and approval framework that requires documentation 
to (1) describe how a proposed capital project supports the agency's 
strategic goals and (2) identify the mission need and gap between 
current and required capabilities. CBP also evaluates alternatives for 
some of its capital projects. However, CBP's process is not yet mature, 
especially for non-IT projects. CBP has adopted DHS's threshold of $50 
million to review non-IT projects, which is 100 times higher than CBP's 
review threshold for IT projects. As a result, few non-IT projects have 
been reviewed by this process and none have yet completed it. 
Therefore, CBP was unable to provide us with any examples to verify its 
conformance with capital planning principles. In addition, projects 
under the $50 million threshold are reviewed and approved through CBP's 
acquisition process, which does not fully conform with capital planning 
principles. Conversely, DHS requires major non-IT projects to be 
reviewed and approved through its capital planning process and we were 
able to verify conformance with several capital planning principles for 
a Border Patrol project reviewed in this process. In addition, CBP has 
not developed a comprehensive, agencywide, long-term capital plan, 
although it produces several documents that include some elements of 
such a plan. Figure 7 shows CBP's conformance with capital planning 
principles. 

Figure 7: CBP's Conformance with Capital Planning Principles: 

[See PDF for image] 

Source: GAO analysis of CBP data. 

[End of figure] 

Strategic Linkage: 

CBP and DHS guidance both call for capital projects to be linked to 
agency and department strategic goals. For projects entering CBP's 
capital planning process, the related guidance directs project managers 
to prepare a need analysis document that outlines how the proposed 
investment links to both CBP and DHS strategic goals. We were unable to 
verify this practice for non-IT capital projects because none had yet 
completed CBP's capital planning process at the time of our review. 
Major non-IT projects--those with an acquisition cost over $50 million-
-must also undergo review and approval by DHS. DHS's draft guidance 
calls for the development of a mission need statement, which among 
other things describes the linkage between the capital investment and 
DHS's mission and strategic goals. For example, in a mission need 
statement for Border Patrol's aircraft recapitalization, the narrative 
explicitly ties aviation assets to the awareness, prevention, and 
protection goals in DHS's strategic plan. CBP officials told us that 
Border Patrol's aircraft recapitalization served as an example of how a 
project proceeds through DHS's capital planning process. This project 
was not reviewed by CBP's current capital planning process because when 
the project began in 2003 the process was not yet implemented. 

Needs Assessment and Gap Identification: 

Agency guidance requires needs assessment and gap identification. Both 
CBP's guidance for need analysis documents and DHS's guidance for 
mission need statements require the identification of the need for a 
project and the difference in the current capability versus the 
required capability. In both documents, an explanation of why existing 
resources are unable to provide the required capability is also 
required. Again we were unable to verify this practice for CBP's 
process due to a lack of non-IT examples; however, the Border Patrol 
aircraft recapitalization proposal illustrates the needs assessment and 
gap identification done for DHS's process. In a mission need statement, 
Border Patrol cites its five mission objectives and describes how 
aviation assets provide the necessary support in carrying out those 
objectives.[Footnote 28] Border Patrol identifies several gaps in its 
current and future capabilities such as existing aircraft that have 
become unserviceable, increasingly expensive to maintain, or have or 
soon will reach the end of their useful lives. In addition, due to 
increasing and changing demands for air operations, Border Patrol 
states it has an insufficient fleet to accommodate its performance 
requirements, especially when operating over water. 

CBP has established an additional process for assessing real property 
needs. CBP is implementing an investment planning process for Border 
Patrol and Field Operations facilities that involves conducting long- 
range strategic resource assessments to assess existing facilities, 
predict future needs, and analyze space capacity. For example, a 
strategic resource assessment of the Tucson Field Operations Office 
found that the main building at the Nogales West land port of entry 
lacks sufficient space for CBP operations and is not currently 
configured to achieve unification of legacy services. 

CBP maintains an agencywide asset inventory, but the quality of its 
data is unclear. CBP officials told us that the agency maintains an 
agencywide asset inventory--Systems, Applications and Products (SAP)-- 
which includes asset condition and other information. However, there 
are issues regarding the quality of CBP's asset data. For example, 
according to agency officials, legacy Border Patrol marine assets have 
not yet been transferred from Border Patrol cost centers to Air and 
Marine cost centers in SAP. In addition, in a July 1, 2004, report to 
congressional appropriators on its Master Construction Planning 
Process, CBP cited a number of concerns about existing facility data. 
According to this report, much of the data were not complete for all 
facilities, contained conflicting information, or had not been updated 
since they were initially collected. CBP officials told us the agency 
is working to ameliorate this situation through its data collection 
efforts for strategic resource assessments. 

Alternatives Evaluation: 

CBP has no specific requirement for alternatives evaluation for non-IT 
projects below $50 million, although it does consider alternatives for 
real property investments and DHS requires this evaluation for costlier 
projects. CBP does not require an evaluation of alternatives in 
acquisition plans, which are required for projects with a cost over $5 
million. However, in its strategic resource assessments of real 
property investments, CBP considers several alternatives to meet any 
facility needs and capability gaps. In the previously cited example of 
the Nogales West land port of entry, the strategic resource assessment 
of the Tucson Field Office considered two options to improve the main 
building at the Nogales West land port of entry: addition of adequate 
space to support staff, the public, and secure space; and 
reconfiguration of interior spaces. In addition, for non-IT projects 
costing $50 million or more DHS requires an alternatives analysis. 
Again this is illustrated with Border Patrol's aircraft 
recapitalization project. Border Patrol presents seven alternatives to 
meet the identified capability gap and narrows the list to the three 
most reasonable and viable options: (1) procure replacement aircraft; 
(2) procure and lease replacement aircraft; and (3) deploy large 
amounts of technology, including unmanned aerial vehicles, along the 
borders to create an electronic "fence." In this analysis, Border 
Patrol provides explanations to support those three options and for the 
dismissal of the other four options. It concludes with Border Patrol 
recommending the most preferred alternative--to procure replacement 
aircraft. 

Review and Approval Framework with Established Criteria for Selecting 
Projects: 

CBP and DHS have both established review and approval frameworks for 
capital investments. In November 2004, CBP established its capital 
planning process, creating a review and approval framework for capital 
investments. According to an agency official, prior to this CBP had 
separate capital planning processes for IT and non-IT capital 
investments. The first phase of the current process, the Pre-Select 
Phase, begins when a business project manager in one of CBP's offices 
identifies the need and justification for a capital project in a need 
analysis document. The project is then reviewed and approved by various 
bodies within CBP: the Architecture Review Board (ARB), whose members 
include the Chief Information and Chief Technology Officers; the 
project sponsor--the head of the office requesting the project; and 
CBP's Investment Review Board (IRB), which consists of senior agency 
management. The project manager also develops a cost estimate during 
this phase. After a project is approved, it moves into the second phase 
of the process, the Select Phase, which involves identifying funding 
and for costlier projects, review by DHS. 

DHS's Investment Review Process sets forth different levels of review 
and approval based on the cost of the proposed project, as illustrated 
in table 6. For example, Level 2 projects are reviewed and approved by 
the Joint Requirements Council, whose members include senior managers 
from each of DHS's component agencies. Level 1 projects are reviewed by 
the Joint Requirements Council before being reviewed and approved by 
DHS's Investment Review Board, which consists of DHS senior management, 
such as the Deputy Secretary, the Under Secretary for Management, and 
the Chief Procurement, Financial, and Information Officers. For major 
projects--all Level 1 and 2 projects as well as Level 3 IT projects-- 
DHS guidance calls for extensive documentation including an investment 
review request with initial project information; the mission need 
statement to identify the need and capability gap and to link the 
project to DHS strategic goals; and an alternatives analysis that 
includes lifecycle costs. 

Table 6: DHS Investment Levels for Non-IT Projects: 

Investment level: Level 1; 
Review and approval: Investment Review Board reviews and approves 
(after review by the Joint Requirements Council); 
Total acquisition cost: >$100 million. 

Investment level: Level 2; 
Review and approval: Joint Requirements Council reviews and approves; 
Total acquisition cost: $50 million to $100 million. 

Investment level: Level 3; 
Review and approval: Component agency (e.g., CBP) head approves; 
Total acquisition cost: $20 million to $50 million. 

Investment level: Level 4; 
Review and approval: Component agency (e.g., CBP) head approves; 
Total acquisition cost: <$20 million. 

Source: GAO analysis of DHS Management Directive 1400.1 dated September 
26, 2006. 

[End of table] 

Although CBP has established a review and approval framework for 
capital investments it is not yet mature, especially for non-IT capital 
projects. Since its initial implementation the current process has 
undergone several changes. For example, CBP replaced a previous 
committee, the Technology Review Committee, with the ARB, added a 
voting member from Air and Marine to the IRB and gave the Office of 
Information and Technology responsibility for facilitating the process. 
In addition, the current process is not as rigorous for non-IT projects 
as it is for IT projects. For example, IT capital projects undergo 
several additional steps of review and approval by CBP's ARB and 
Enterprise Architecture Branch that are not required for non-IT 
projects. Also, CBP does not review Level 3 or 4 non-IT projects (those 
below $50 million) through its capital planning process. CBP officials 
told us that in practice they follow DHS's investment threshold and 
only review major non-IT capital projects, defined as those with an 
acquisition cost over $50 million. This figure is 100 times higher than 
the $500,000 threshold CBP has in place for IT projects and therefore 
few non-IT projects have been reviewed by this process and none have 
yet completed it. Officials told us that non-IT projects below $50 
million do not go through CBP's capital planning process, although they 
are reviewed and approved through the agency's acquisition process. 
CBP's acquisition process does not fully conform with capital planning 
principles. For example, although project managers prepare acquisition 
plans for planned acquisitions costing $5 million or more, these plans 
do not include an evaluation of alternatives. 

GAO has previously identified problems with DHS's Investment Review 
Process, several of which are still unresolved. In March 2005, we 
reported that DHS's Investment Review Process had been under revision 
for many months and officials could not provide us with a time frame 
for completion.[Footnote 29] In addition, we found unclear guidance and 
confusion about several aspects of the process. Issues we identified 
included the following: 

* Program managers were provided with only draft guidance regarding the 
information they are required to submit and the time frames for 
submissions. This draft guidance was, in some cases, unclear. 

* Some DHS officials told us that their submissions to the review board 
had been rejected on an inconsistent basis with no explanation. 

* Program managers had not received formal training on the investment 
review process. Officials told us that some program managers were 
unaware of when to submit information about their programs for review. 

Some of these problems persist. To date, the Investment Review Process 
continues to operate under interim guidance and officials told us that 
it has been revised repeatedly during the past 2 years. One CBP 
official stated that because the guidance changed frequently it was 
difficult for staff to know if they were using the latest version. 
Another CBP official told us that there were difficulties in getting 
projects reviewed and approved by DHS's Joint Resources Council and 
Investment Review Board; only projects with an urgent need were being 
placed on the agendas of these bodies. 

CBP has established and used criteria to rank and select its 
construction and facility improvement projects, but it has not done so 
for other non-IT projects. As part of its strategic resource assessment 
process, CBP developed a methodology for ranking and selecting projects 
at Field Operations land ports of entry and Border Patrol facilities, 
although this process has not been implemented for Border Patrol. CBP 
officials conduct site visits to land ports of entry and facilities to 
verify conditions and score potential projects against four main 
weighted criteria, illustrated in table 7. Each of the criteria is 
composed of specific factors with corresponding point values that 
identify and differentiate projects with the greatest priority; the 
maximum score a project can receive is 100 points. For example, the 
Tucson Field Operations Office strategic resource assessment dated 
December 2005, presents the scores of several ports of entry, ranked 
into three priority categories. The Nogales West port of entry, with a 
score of 86.69, had the highest score and was listed as a first 
priority project. However, CBP does not have similar criteria for 
ranking and selecting other non-IT capital projects. Officials told us 
that the IRB determines the priority of projects based on a spreadsheet 
it receives that presents relevant information on all approved 
projects. The IRB's recommended investment priorities are then 
presented to the commissioner who makes the final decisions. 

Table 7: Criteria for Scoring Capital Investment Projects at CBP 
Facilities: 

Criteria: Mission and operations; 
Weight: 35%. 

Criteria: Security and life safety; 
Weight: 25%. 

Criteria: Space and site deficiencies; 
Weight: 25%. 

Criteria: Personnel and workload growth; 
Weight: 15%. 

Source: CBP's Master Construction Planning Process report to Congress 
dated July 1, 2004. 

[End of table] 

Long-term Capital Investment Plan: 

CBP does not have a long-term capital plan but some agency documents 
contain elements of such a plan. In 2003, the House of Representatives 
and Senate Committees on Appropriations directed CBP to produce a 
detailed plan of its intended use of construction funding.[Footnote 30] 
However, on July 1, 2004, CBP instead provided congressional 
appropriators with its Master Construction Planning Process for CBP 
Real Property Investments, which describes the process CBP would take 
to produce such a plan. CBP did not provide an actual plan as directed. 
The process description provided to appropriators includes developing 
strategic resource assessments for each Field Operations Office and 
Border Patrol Sector to assess existing facilities, predict future 
needs, conduct space capacity analyses, evaluate alternatives, estimate 
costs for recommended options, and determine their priority. The 
projects identified by strategic resource assessments and other data 
gathering efforts are to be pulled together and prioritized in a Five- 
Year Investment Strategy. However, agency officials were unable to 
provide us with a copy of the Five-Year Investment Strategy and instead 
provided us with a description of what it would contain, as detailed in 
CBP's Capital Improvement Plan. In addition to providing congressional 
appropriators with a description of its planning process, CBP provides 
out-year funding estimates for several construction projects in its 
Construction Spending Plan, as directed.[Footnote 31] CBP's Air 
Strategic Plan describes its air assets, including plans to modernize 
its fleet. However as this plan states, it does not yet include plans 
for CBP's marine assets. Although these documents contain some elements 
of a long-term capital plan, such as priority ranked project lists and 
out-year cost data, this information is contained in multiple documents 
and does not cover all capital assets. 

[End of section] 

Appendix IV: Comments from the Department of Energy: 

Note: GAO comments supplementing those in the report text appear at the 
end of this appendix. 

Department of Energy: 
Washington, DC 20585: 

January 24, 2007: 

Ms. Susan J. Irving: 
Director, Federal Budget Analysis Strategic Issues: 
United States Government Accountability Office: 
441 G St., NW: 
Washington, D.C. 20548: 

Dear Ms. Irving: 

Thank you for examining the implementation of capital planning in the 
draft Government Accountability Office (GAO) report Three Agencies' 
Implementation of Capital Planning Principles is Mixed. The Department 
of Energy (DOE) appreciates the opportunity to review the draft report 
and would like to offer the following comments that are 1) general and 
throughout the draft report, 2) directly from the Office of 
Environmental Management (EM), and 3) provide additional information on 
corporate level activities that DOE conducts. These comments have been 
coordinated with the Office of Environmental Management, the Office of 
Program Analysis and Evaluation, and internally reviewed within the 
Office of the Chief Financial Officer. 

General: 

First, as an overall observation throughout the draft report, it is 
somewhat misleading and confusing to depict the Offices of Science (SC) 
and Environmental Management (EM) as "agencies" based on "the diversity 
of their missions, the different types of assets they acquired, and 
their relatively high volume of the capital spending" (page 2, GAO 
Report). GAO subsequently notes in the document, "SC and EM conformance 
with capital planning principles and practices is similar because both 
are primarily driven by DOE's project management directive" (page 25, 
GAO Report). Thus, the conclusions reached in the Report are heavily 
weighted toward two DOE offices. We suggest the use of other terms used 
in the report, such as, "entities, offices or programs." 

Office of Environmental Management: 

In general, EM agrees with the recommendation contained in the report 
and will work with other organizations within the Department to 
implement the recommendations as needed. However, further clarification 
is requested regarding the Government Accountability Office's (GAO) 
assessments of EM's Alternatives Evaluation, noted to partially conform 
to Capital Planning Guidance and the long-term Capital Investment Plan, 
noted not to conform to Capital Planning Guidance. 

In regard to the Needs Assessment and Gap Identification, page 14 of 
the draft report states "EM officials told us that some of its sites 
had not recorded all assets in DOE's real property inventory." EM does 
not agree with that statement because EM made a concerted effort in 
2006 to record all assets in the inventory by October 1, 2006 and, 
thus, obtained a score of green for both progress and status. The 
Office of Engineering and Construction Management agrees with EM's 
assessment of this statement. 

With regard to the Alternatives Evaluation, page 15 of the draft report 
states "Of the 12 SC and EM mission need statements we reviewed, 9 
included an alternatives evaluation, but even when this was included, 
non-capital options were not always considered". EM believes that by 
following the requirements of DOE Order 413.3A, Program and Project 
Management for the Acquisition of Capital Assets, in preparing Mission 
Need Statements, we have met the intent of the Office of Management and 
Budget guidance restated on page 15. A more detailed description of the 
perceived shortcomings in this area related to EM projects would be 
appreciated, so that we may better address GAO's concerns and modify 
our project planning as necessary. 

With regard to the Long-term Capital Investment Plan, pages 21-22 of 
the draft report state "SC and EM sites also produce multiple documents 
with capital planning information, such as Ten-Year Site Plans 
containing each site's investments ranked by priority and project 
baselines that include out-year investments. There are dozens of 
documents, however, and DOE officials do not consolidate them into a 
comprehensive long-term capital plan". We believe the current 
documentation meets the OMB and GAO long-term capital investment 
planning guidance. We request that you clarify whether or not you 
believe the EM procedures and documentation reviewed by GAO meet the 
intent of both OMB and GAO long-term capital investment planning 
guidance. EM believes that, through implementation of sound acquisition 
and project management principles, we have met the intent of long-term 
capital investment planning as discussed on pages 20-21, Again, we 
would appreciate a more detailed description of the perceived 
shortcomings in this area related to EM projects so that we may better 
address GAO's concerns and modify our project planning as necessary. It 
is our hope that GAO has reviewed the Department's strategic planning 
process as this will provide additional insight into our long-term 
investment planning. 

DOE Corporate Level Activities: 

In addition to the SC and EM efforts documented in the draft report, 
efforts at the corporate level of the Department of Energy also support 
comprehensive capital planning. These efforts include our Corporate 
Program Review and linking the DOE Strategic Plan to annual performance 
goals. 

Corporate Program Review - In response to the conclusion that no agency 
has a "plan that defines all of its long-term decisions" (page 3, GAO 
Report), DOE offers the following description of our comprehensive 
efforts conducted annually in advance of the creation of our multi-year 
planning and performance Congressional Budget Request. 

Each spring, DOE conducts an internal Corporate Program Review during 
which a list of priority elements is created. The sum total of this 
effort effectively becomes a comprehensive plan that defines all of our 
long-term investment decisions and is used to identify program 
priorities and make selections from alternative projects. The 
prioritizations reflect internal evaluations which are both 
quantitative (such as OMB's Research and Development Investment 
Criteria) and qualitative (such as opinions from expert panels). 

In justification of spending for proposed new capital assets and other 
projects, priority elements are categorized according to the national 
policy they directly or indirectly support, the details of which 
represent the plans for the proposed capital assets and projects once 
in use. In addition, all elements must be categorized in terms of 
relevant Strategic Plan goals, performance outcomes and compliance 
requirements. 

As part of the instructions in developing this information, programs 
are asked to identify internal and crosscutting issues and risks. These 
issues may necessitate a change in priorities from year to year which 
can manifest into cost-schedule and performance changes. Programs are 
asked to be prepared to propose issue resolutions and risk mitigations. 
Further, each Program Office provides a narrative description of the 
mission impact if this activity is not funded, thus facilitating an 
analysis of performance gaps. 

Linking the DOE Strategic Plan to Annual Performance Goals: 

Other elements of a comprehensive capital plan - a statement of the 
agency mission, strategic goals and objectives, the annual performance 
plans, and a description of the agencies --are addressed in DOE's 
Strategic Plan. Linkage of the Strategic Plan to annual performance 
goals starts with our mission statement which flows to the strategic 
themes. The strategic themes connect to the broader strategic goals and 
are linked to the annual performance goals in the performance budget 
through the multi-year program plans. The multi-year program plans 
allow DOE to strategize over a five-year period how each program will 
implement the strategic goals of the Department through new capital 
assets or projects. Annual performance goals and assessment of 
performance against prior-year goals are included in the budget 
justification materials each year, to demonstrate that actual and 
expected performance is considered in the planning and budget 
processes. A statement of the agency mission, strategic goals and 
objectives, and the annual performance plans is contained in our multi- 
year planning and performance Congressional Budget Request. In 
addition, the annual performance goals are linked to individual 
employee and contractor performance standards, thus creating an 
accountability model for mission achievement. 

Should you have any additional questions please contact me at (301) 903-
2556 or Jack Surash, Deputy Assistant Secretary for Acquisition and 
Project Management at (202) 586-3867 for specific questions relating to 
EM. 

Sincerely, 

Signed by:  

Lynn Harshman: 
Acting Deputy Director: 
Office of Internal Review: 
Office of the Chief Financial Officer: 
U.S. Department of Energy: 

GAO Comments: 

1. We have revised our references to SC and EM throughout the report to 
characterize them as entities. In doing so, we also changed the title 
of our report to reflect this change. 

2. We have revised our statement to reflect that it was EM officials at 
one site that told us not all of their real property assets were 
currently listed in FIMS and that they were working to fix this issue. 

3. Both OMB's and our guidance discuss the importance of considering 
how best to bridge a performance gap by identifying and evaluating 
alternative approaches, including noncapital options. Only one of the 
four EM mission need statements we reviewed discussed noncapital 
alternatives. We also added further information about alternatives 
discussed in SC and EM acquisition plans and strategies--additional 
required documents that are expected to fully discuss alternatives--for 
five investments. Although all considered capital alternatives, only 
one each of the two SC and three EM acquisition plans and strategies we 
reviewed discussed noncapital options. 

4. As we state in the report and appendix II, neither SC nor EM has a 
comprehensive, long-term capital investment plan at the program office 
level. SC and EM budget and related documents satisfy some elements of 
long-term capital plans, but not all. For example, these documents do 
not always include details on planned capital investments or out-year 
funding projections. Moreover, much of this information is contained in 
dozens of SC and EM site-and facility-level planning documents which 
are not consolidated into comprehensive, higher-level capital plans. 

5. This information describes DOE's budget and strategic planning 
processes, which should be informed by its capital planning process. 
Although DOE points out that elements of a capital plan are contained 
in other documents, such as its strategic plan and congressional budget 
request, this further illustrates our point that DOE's capital planning 
information is contained in multiple documents and is not consolidated 
into a comprehensive, long-term capital plan. 

[End of section] 

Appendix V: Comments from the Department of Homeland Security: 

Note: GAO comments supplementing those in the report text appear at the 
end of this appendix. 

U.S. Department of Homeland Security: 
Washington, DC 20528: 

January 24, 2007: 

Ms. Susan Irving: 
Director, Federal Budget Analysis: 
U.S. Government Accountability Office: 
Washington, D. C. 20548: 

Dear Ms. Irving: 

Thank you for the opportunity to comment on the draft report GAO-07-274 
"Federal Capital: Three Agencies' Implementation of Capital Planning 
Principles Is Mixed." The Department of Homeland Security (DHS) and 
U.S. Customs and Border Protection (CBP) appreciate GAO's work in 
planning, conducting and issuing this report. 

The Department and CBP concur with the four recommendations. DHS 
Headquarters strongly supports the recommendations and specifically a 
single agency wide long-term capital planning process that supports 
long-term capital planning and investment decisions. DHS also agrees 
the concept will benefit other DHS Component agencies. At present DHS 
Headquarters is sponsoring a complete review of all existing capital 
investment review practices. The results of that assessment will be the 
basis for recommending modifications to the capital investment review 
process with the objective of incorporating a consistent DHS wide long- 
term capital planning and investment review procedure. 

Furthermore, in response to the recommendations, CBP will coordinate 
with DHS concerning guidance on investment planning and simultaneously, 
begin work on developing implementing guidance within CBP. The new 
guidance will cover alternatives analysis, criteria to rank and select 
projects, revised dollar thresholds for review of capital projects, and 
development of a CBP long term capital plan. 

On pages 12 and 13 of the draft report, the GAO cites a Border Patrol 
air recapitalization plan and indicates that the plan was developed 
years prior to the publication of the capital planning principles and 
therefore was not reviewed as part of their planning process 
implementation audit. On page 21, the draft report states that CBP was 
unable to provide examples of multi-year investment plans, beyond a 
facilities construction plan required by Congress. The CBP Air 
Strategic Plan submitted to Congress in July 2006 addresses each 
element of the capital planning guidance, and includes a 10-year 
investment model for air recapitalization. A copy of the plan was 
provided to the GAO and may mitigate some of the criticism of CBP 
contained in the draft report. 

CBP Air & Marine also notes that the GAO finding concerning a lack of 
comprehensive, long term capital plans is directed more at OMB than the 
three agencies audited. And the language on page 24 touches on the 
desire for Congressional staffs to obtain pre-decisional budget 
formulation information, generally not shared with the Legislative 
Branch, which may be inappropriate. 

The report is generally accurate, complete, balanced, constructive in 
tone and realistic. In areas where the auditors found compliance in CBP 
with capital planning principles, it was generally the real property 
program where the evidence was cited. However, some concerns with 
accuracy in the report do exist relative to findings on the real 
property program. 

On page 21, the report states "CBP provides out year funding estimates 
in its Construction Spending Plan, but this requirement only covers 
several of its construction projects. CBP was unable to provide us with 
other documents that would contain long-term planning information, such 
as its Master Construction Plan or its Five Year Investment Strategy; 
instead it provided us with descriptions of what would be included in 
them". If the finding is targeted at the real property program, this is 
an inaccurate portrayal and perhaps resulted from a miscommunication 
between the auditors and subject matter experts. CBP has approved Five 
Year Investment Plans for real property, and the projects selected for 
inclusion in those plans, are selected using prescribed capital 
planning principles, including needs analysis; gap analysis; 
alternatives analysis; cost benefit analysis; and, risk management. 
This long-term planning information, which the auditors claim is 
lacking, is evidenced in the CBP Facilities and Tactical Infrastructure 
OMB 300, which passed DHS scoring in FY 06. 

Sincerely, 

Signed by: 

Steven J. Pecinovsky: 
Director, Departmental GAO/OIG Liaison Office: 

GAO Comments: 

1. DHS's statement that we indicate the Border Patrol air 
recapitalization plan was developed prior to the publication of capital 
planning principles and therefore we did not review it is inaccurate. 
CBP officials told us that Border Patrol's aircraft recapitalization 
served as an example of how a project proceeds through DHS's capital 
planning process. This project was not reviewed by CBP's current 
capital planning process because when the project began in 2003 the 
process was not yet implemented. Therefore, we could not use this 
project to evaluate CBP's capital planning process and its conformance 
with capital planning principles. 

2. We added information about CBP's Air Strategic Plan to our 
discussion of long-term capital plans, both in the main body of this 
report and appendix III on CBP's capital planning process. However, 
even with the addition of this information, CBP's long-term capital 
planning documents do not meet the requirements for long-term capital 
plans. As the Air Strategic Plan states, it does not yet include CBP's 
marine assets. A long-term capital plan should be comprehensive in 
nature and include information on all planned assets. 

3. Our statement is not targeted at CBP's real property program. The 
information we added about CBP's Air Strategic Plan further clarifies 
this point (see comment 2). In addition, Exhibits 300 do not include 
all expected aspects of a long-term capital plan. As we state earlier 
in the report, Exhibits 300 focus on individual projects and do not 
present an agencywide, long-term portfolio of all planned capital 
projects. 

[End of section] 

Appendix VI: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Susan J. Irving, (202) 512-9142: 

Acknowledgments: 

In addition to the individual listed above, Christine Bonham, Assistant 
Director; Carol Henn, Assistant Director; Mark R. Gribbin; Benjamin T. 
Licht; and Leah Q. Nash made significant contributions to this report. 
Carlos Diz, Maria Edelstein, Ellen Grady, Hannah Laufe, Josh Macy, H. 
Jerome Noel III, and William Trancucci also made key contributions to 
this report. 

FOOTNOTES 

[1] GAO, Executive Guide: Leading Practices in Capital Decision-Making, 
GAO/AIMD-99-32 (Washington, D.C.: December 1998). 

[2] The federal government also acquires information technology assets 
for its own use. However, as requested, this report focuses on non-IT- 
related assets. 

[3] GAO, Budget Issues: Agency Implementation of Capital Planning 
Principles Is Mixed, GAO-04-138 (Washington, D.C.: Jan. 16, 2004). 

[4] GAO-04-138. 

[5] CBP's appropriations do not fund all of its capital needs, in 
particular that for facilities at ports of entry. For example, the 
majority of land ports of entry facilities are funded through the 
General Services Administration's Federal Buildings Fund, which 
receives rent payments from CBP. 

[6] During summer 2006, we met with then majority and minority staff 
from the Senate Committee on Appropriations, Subcommittee on Homeland 
Security; Senate Committee on Homeland Security and Governmental 
Affairs, Subcommittee on Federal Financial Management, Government 
Information, and International Security; House of Representatives 
Committee on Appropriations, Subcommittee on Energy and Water 
Development; and minority staff from the House of Representatives 
Committee on Homeland Security. 

[7] The Government Performance and Results Act of 1993 (Pub. L. No. 103-
62) requires agencies to develop strategic plans that contain mission 
statements, long-term strategic goals and objectives, and annual 
performance plans with annual performance goals, among other things. It 
also emphasizes identifying and measuring outcomes, including benefits. 

[8] Border Patrol's five mission responsibilities are (1) deterrence, 
(2) apprehension, (3) intelligence, (4) detection, and (5) proximity. 

[9] A DOE official told us that a departmentwide personal property 
system is scheduled to be operational in fiscal year 2007. 

[10] GAO, Homeland Security: Successes and Challenges in DHS's Efforts 
to Create an Effective Acquisition Organization, GAO-05-179 
(Washington, D.C.: Mar. 29, 2005). 

[11] CAMP's four criteria are (1) health and safety, (2) environmental 
and waste management, (3) safeguards and security, and (4) mission and 
investment. 

[12] H.R. Rep. No. 109-241, p. 46 (2005) (Conf. Rep.) 

[13] GAO-04-138, p. 106. 

[14] Agencies that actively participated in the update effort were the 
Departments of Agriculture, Commerce, Education, Health and Human 
Services, Homeland Security, Housing and Urban Development, the 
Interior, State, Transportation, the Treasury, and Veterans Affairs, as 
well as the General Services Administration, the National Aeronautics 
and Space Administration, and the Office of Personnel Management. 

[15] GAO-04-138, p. 106. 

[16] During summer 2006, we met with then majority and minority staff 
from the Senate Committee on Appropriations, Subcommittee on Homeland 
Security; Senate Committee on Homeland Security and Governmental 
Affairs, Subcommittee on Federal Financial Management, Government 
Information, and International Security; House of Representatives 
Committee on Appropriations, Subcommittee on Energy and Water 
Development; and minority staff from the House of Representatives 
Committee on Homeland Security. 

[17] GAO-04-138, p. 106. 

[18] MAX is the computer system used to collect and process information 
needed to prepare the President's Budget. 

[19] During summer 2006, we met with then majority and minority staff 
from the Senate Committee on Appropriations, Subcommittee on Homeland 
Security; Senate Committee on Homeland Security and Governmental 
Affairs, Subcommittee on Federal Financial Management, Government 
Information, and International Security; House of Representatives 
Committee on Appropriations, Subcommittee on Energy and Water 
Development; and minority staff from the House of Representatives 
Committee on Homeland Security. 

[20] DOE Order 413.3, Program and Project Management for the 
Acquisition of Capital Assets, was approved in October 2000 and formed 
the foundation of the current DOE capital planning process. It was 
supplemented by Manual 413.3-1 in March 2003. In July 2006 the original 
Order 413.3 was superseded by Order 413.3A, which is now the main DOE 
directive governing acquisition of capital assets with a cost equal to 
or above $5 million. Parts of the supplemental Manual 413.1-1 that 
describe formats and content of capital planning documentation remain 
in effect. 

[21] DOE Order 430.1B, Real Property Asset Management, articulates the 
department's policy on real property asset management. 

[22] The six major SC research programs are: Advanced Scientific 
Computing Research, Basic Energy Sciences, Biological and Environmental 
Research, Fusion Energy Sciences, High Energy Physics, and Nuclear 
Physics. 

[23] CAMP ranks projects based on four criteria: (1) health and safety, 
(2) environmental and waste management, (3) safeguards and security, 
and (4) mission and investment. 

[24] Authorities include environmental regulators such as the 
Environmental Protection Agency or local water boards. 

[25] H.R. Rep. No. 109-86, p. 90 (2006). 

[26] H.R. Rep. No. 109-474, p. 71 (2006) directs DOE to include funding 
profiles for all projects with a cost in excess of $100 million in its 
5-year budget plans for fiscal year 2008. 

[27] H.R. Rep. No. 107-258, p. 108 (2001) (Conf. Rep.) 

[28] Border Patrol's five mission objectives are (1) deterrence, (2) 
apprehension, (3) intelligence, (4) detection, and (5) proximity. 

[29] GAO, Homeland Security: Successes and Challenges in DHS's Efforts 
to Create an Effective Acquisition Organization, GAO-05-179 
(Washington, D.C.: Mar. 29, 2005). 

[30] H.R. Rep. No. 108-280, p. 31 (2003) (Conf. Rep.) 

[31] H.R. Rep. No. 109-241, p. 46, (2005) (Conf. Rep.) 

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