Recommendation: The Director of the Office of Management of Budget should update the Guidelines to include GAO's leading practices of developing monitoring plans that are based on risks, ensuring that monitoring staff have appropriate qualifications, establishing procedures to close-out programs, developing staff skills regarding evaluations, and establishing mechanisms for following up on evaluation recommendations. (Recommendation 1)

Agency: Executive Office of the President: Office of Management and Budget
Status: Open
Priority recommendation

Comments: OMB disagreed with the recommendation and suggested it would be more effective to remind agencies that, in addition to the guidelines, they should follow all other relevant OMB guidance affecting monitoring and evaluation. OMB asserted that this guidance contains provisions relevant to our leading practices not included in the Foreign Assistance Monitoring and Evaluation Guidelines. However, we believe it is important for OMB to incorporate this other guidance into the Foreign Assistance Monitoring and Evaluation Guidelines, if only by reference, to emphasize the importance of these practices in the context of monitoring and evaluation of foreign assistance. As of April 28, 2020, the Office of Management and Budget has not implemented this recommendation. GAO will continue to monitor this issue.

Recommendation: The Secretary of Defense should update the Department's monitoring and evaluation policies to require the agency to conduct impact evaluations on all pilot programs before replicating or expanding, or conduct performance evaluations for those programs and provide a justification for not conducting an impact evaluation. (Recommendation 5)

Agency: Department of Defense
Status: Open

Comments: DOD partially concurred with this recommendation and noted that impact evaluations require a significant resource investment beyond what would be appropriate for more programs. However, DOD is in the process of updating its evaluation guidelines to allow for, but not require, impact evaluations in appropriate cases at all levels of evaluation activities.

Recommendation: The Department of State's U.S. Global AIDS Coordinator, in collaboration with HHS and other implementing agencies, should update the PEPFAR monitoring and evaluation policies to require these agencies to conduct impact evaluations on all pilot programs before replicating or expanding, or conduct performance evaluations for those programs and provide a justification for not conducting an impact evaluation. (Recommendation 6)

Agency: Department of State
Status: Open

Comments: State agreed with the intent of the recommendation (see appendix V for written comments). State explained that impact evaluations are often not feasible in the context of assistance provided under PEPFAR and described its alternative approach to evaluating new initiatives. State indicated it would update appropriate PEPFAR policies to clarify when agencies should conduct impact and/or performance evaluations. These clarifications will reflect how State evaluates PEPFAR programs in practice in accordance with OMB guidance and legislation, according to State.

Recommendation: The Administrator for the National Nuclear Security Administration should develop and document clear procedures for implementing NAP-4C, specifying the process for collecting contractor performance information and describing how officials are to ensure this information can be traced to rating determinations. (Recommendation 1)

Agency: Department of Energy: National Nuclear Security Administration
Status: Open

Comments: The National Nuclear Security Administration (NNSA) concurred with the recommendation. In February 2020, NNSA issued its fiscal year 2020 Corporate Performance Evaluation Process Annual Implementation Guidance. This guidance included a new section specifying the process for collecting contractor performance information and further details regarding the preparation of interim feedback reports and final performance evaluation reports. However, the guidance is unclear regarding how this information can be traced to rating determinations. In order to provide more transparency and ensure this traceability, NNSA guidance and the Performance Evaluation Reports themselves should more clearly link how collected performance information tracks to rating determinations.

Recommendation: The Assistant Secretary for the Office of Energy Efficiency and Renewable Energy should update its policy to require that Performance Evaluation Reports include quality information on cost performance to enable an overall assessment of Management and Operating contractor cost performance. (Recommendation 2)

Agency: Department of Energy: Office of Energy Efficiency and Renewable Energy
Status: Open

Comments: The Office of Energy Efficiency and Renewable Energy (EERE) partially concurred with the recommendation. As of April 2020, EERE officials stated that cost performance feedback was included in the 2019 final performance evaluation for the EERE Management and Operating contractor. EERE officials also stated that they had incorporated cost performance evaluation criteria into the fiscal year 2020 Performance Evaluation Measurement Plan (PEMP) for NREL. EERE officials noted that these actions ensure cost performance will be included as part of the ongoing contractor evaluation process. We have requested documentation of the new PEMP and performance evaluation report and, in order to ensure cost performance evaluation criteria are included in the future, EERE should update its policy to require quality information on cost performance going forward.

Recommendation: The Assistant Secretary for the Office of Environmental Management should update its policy to require that Performance Evaluation Reports include quality information on cost performance to enable an overall assessment of Management and Operating contractor cost performance. (Recommendation 3)

Agency: Department of Energy: Office of Environmental Management
Status: Open

Comments: The Office of Environmental Management (EM) concurred with the recommendation. As of April 2020, EM officials stated that they will include the requirement for quality information on cost performance in EM's Cleanup Project Management Policy. According to officials, EM is working on this policy, along with an additional Cleanup Program Management Policy that they expect to complete by the end of fiscal year 2020.

Recommendation: The Assistant Secretary for the Office of Fossil Energy should update its policy to require that Performance Evaluation Reports include quality information on cost performance to enable an overall assessment of Management and Operating contractor cost performance. (Recommendation 4)

Agency: Department of Energy: Office of Fossil Energy
Status: Open

Comments: The Office of Fossil Energy (FE) concurred with the recommendation. As of April 2020, FE officials stated that they had revised and executed the Performance Evaluation and Measurements Plan (PEMP), for the current Management and Operating contract to add a new PEMP measure that addresses monitoring cost growth, additional activities in internal audit, and data quality that addresses our recommendation. We have requested documentation of the PEMP showing the new measures and an updated policy requiring inclusion of quality information on cost performance in Performance Evaulation Reports. Upon receiving those, we will review to determine if it addresses our recommendation.

Recommendation: The Administrator for the National Nuclear Security Administration should update its policy to require that Performance Evaluation Reports include quality information on cost performance to enable an overall assessment of Management and Operating contractor cost performance. (Recommendation 5)

Agency: Department of Energy: National Nuclear Security Administration
Status: Open

Comments: The National Nuclear Security Administration (NNSA) concurred with the recommendation. In February 2020, NNSA issued its fiscal year 2020 Corporate Performance Evaluation Process Annual Implementation Guidance. This guidance provides instructions regarding the evaluation of cost performance, including examples of the types of cost information that should be collected and how cost data should be analyzed and described. However, the guidance's template for Performance Evaluation and Measurement Plans does not include any explicit cost performance Objectives or Key Outcomes and it is unclear how the cost performance information discussed in the guidance would enable an overall assessment of Management and Operating contractor cost performance. In order to provide quality cost information that does enable such an overall assessment, NNSA should clarify its guidance regarding cost performance information and how this information links to overall Management and Operating contractor performance.

Recommendation: The Assistant Secretary for the Office of Nuclear Energy should update its policy to require that Performance Evaluation Reports include quality information on cost performance to enable an overall assessment of Management and Operating contractor cost performance. (Recommendation 6)

Agency: Department of Energy: Office of Nuclear Energy
Status: Open

Comments: The Office of Nuclear Energy (NE) partially concurred with the recommendation. As of May 2020, NE officials stated that they will include criteria for "day-to-day" cost performance in the annual Performance Evaluation Measurement Plan (PEMP) for fiscal year 2020. NE's evaluation of the contractor's performance against those criteria will be included in the year-end performance reports of its Management and Operating contractor beginning in fiscal year 2020. NE officials stated that modifying the fiscal year 2020 PEMP with added cost criteria, usually done in April, has been delayed due to COVID-19 and that they expect to complete the modification by the end of May 2020. Once the cost criteria are included and evaluated in the Performance Evaluation Report, we will review to determine if it addresses our recommendation. In addition to changes to the fiscal year 2020 report, NE should update its policy to require such criteria for evaluating contractor cost performance going forward.

Recommendation: The Director of the Office of Science should update its policy to require that Performance Evaluation Reports include quality information on cost performance to enable an overall assessment of Management and Operating contractor cost performance. (Recommendation 7)

Agency: Department of Energy: Office of Science
Status: Open

Comments: The Office of Science (SC) partially concurred with the recommendation. In commenting on our report in August 2019, DOE stated that by focusing on the annual Performance Evaluation Reports (PER), our report does not capture the cost performance reviews conducted in day-to-day contract oversight, the annual laboratory planning process, and contract extend/compete decisions. In its comments, DOE stated that since SC conducts cost performance reviews in normal operations and at the year-end annual evaluation process, adequate information is available to assess whether the contractor cost performance is acceptable to the department. As of April 2020, SC had not updated these comments. In the report, we note that SC conducts some cost performance evaluation activities outside of the annual performance evaluation process, although we did not assess these efforts. While there may be adequate information available, SC does not commonly document this information or assessments from such activities in the PERs. We continue to believe that the PERs are important sources of information for contract management--particularly for acquisition decisions and oversight of spending on cost-reimbursement contracts--and that action is needed to improve these formal records of contractor performance. By not including quality information on overall cost performance and assessments in PERs, SC is missing a valuable opportunity to better document contractors' cost performance, improve acquisition decision-making, and strengthen oversight of billions of dollars in contracting. We continue to believe that it is important for SC to implement the recommendation and that by doing so, the office would have better assurance that Management and Operating contractor performance evaluations fully address required elements.

Recommendation: To mitigate the risk of poor acquisition outcomes and strengthen the department's investment decisions, the Secretary of Homeland Security should direct the Undersecretary for Management to update the acquisition policy to require that major acquisition programs' technical requirements are well defined and key technical reviews are conducted prior to approving programs to initiate product development and establishing Acquisition Program Baselines, in accordance with acquisition best practices.

Agency: Department of Homeland Security
Status: Open

Comments: In providing comments on this report, DHS concurred with our recommendation and stated that it planned to initiate a study to assess how to better align its processes for technical reviews and acquisition decisions. Upon completion of the study, DHS updated its acquisition policy instruction in May 2019, which adjusted the acquisition life cycle. Specifically, the updated instruction requires programs to conduct key technical reviews--including a preliminary design review--prior to establishing the program's Acquisition Program Baseline. As of July 2020, DHS was in the process of updating the related policies and guidance for its Systems Engineering Life Cycle, which govern the department's technical reviews. GAO will review these policies and guidance once complete to confirm alignment with the changes made to the acquisition management instruction and will monitor DHS's implementation of its new acquisition life cycle to ensure the department's actions meet the intent of this recommendation.

Recommendation: To improve the internal control environment for oversight using information from CAS and develop a consistent approach to the use of information from CAS in M&O contractor oversight and performance evaluation across the nuclear security enterprise, the Administrator of NNSA should establish comprehensive NNSA policies and guidance, beyond a general framework as included in NAP-21, for using information from CAS to conduct oversight of M&O contractors, clarifying whether CAS is to cover mission-related activities, and describing how to conduct assessments of risk, CAS maturity, and the level of the contractor's past performance.

Agency: Department of Energy: National Nuclear Security Administration
Status: Open
Priority recommendation

Comments: We recommended that NNSA establish comprehensive policies and guidance, beyond a general framework, for using information from contractor assurance systems (CAS) to conduct oversight of management and operating (M&O) contractors, clarifying whether CAS is to cover mission-related activities and describing how to conduct assessments of risk, CAS maturity, and the level of the contractor's past performance. NNSA agreed with the recommendation and has taken an important step to revise its policy. However, NNSA needs to take additional action. Specifically, NNSA approved a revised corporate site governance policy in August 2016, and NNSA further revised its policy in October 2019. The revised policy improves on the agency's prior policy by clarifying one element in our recommendation that CAS is to cover mission-related activities. However the policy is still a general framework and NNSA has not established associated implementing guidance. Specifically, NNSA needs to develop guidance for NNSA headquarters' and field offices' procedures to use information from CAS and appropriately balance use of information from CAS with other more direct activities to oversee M&O contractors. As of April 2020, this recommendation remains open.

Recommendation: To help SEC address identified personnel management challenges, and to help enhance the credibility of its performance management system, the Chairman of SEC should direct the COO and OHR to conduct periodic validations (with staff input) of the performance management system and make changes, as appropriate, based on these validations.

Agency: United States Securities and Exchange Commission
Status: Open
Priority recommendation

Comments: SEC management and the union agreed in November 2018 to implement a new performance management system and a new incentive bonus program in 2020. According to SEC officials, SEC plans to work with OPM to validate the new performance management system by conducting focus groups with staff at the midpoint of the 2020 appraisal period and surveying staff on the new system at the conclusion of the 2020 appraisal period. These plans are consistent with our 2013 recommendation that SEC should conduct periodic validations of its performance management system. In August 2020, SEC reported that it began implementation of the new 2-tier performance management program and will complete the annual rating cycle in December 2020, with feedback and appraisal closeout activities occurring in early calendar year 2021. According to SEC, OPM will assess the new program after calendar year 2020 performance cycle activities are completed. We will continue to monitor SEC's progress in validating the new performance management system.

Recommendation: To better leverage agency quarterly performance reviews as a mechanism to manage performance toward agency priority and other agency-level performance goals, the Director of the Office of Management and Budget should work with the Performance Improvement Council and other relevant groups to identify and share promising practices to help agencies extend their quarterly performance reviews to include, as relevant, representatives from outside organizations that contribute to achieving their agency performance goals.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open

Comments: As of October 2020, the Office of Management and Budget (OMB) and the Performance Improvement Council (PIC) have taken little action to address this recommendation. In August 2017, PIC staff told us that they were working to identify examples where agencies had included representatives from outside organizations in their performance reviews, and would then disseminate promising practices based on those experiences. However, according to information shared by OMB and PIC staff in March 2019, they had not taken any additional action, nor had they identified or shared any such practices. OMB staff emphasized that while some agencies found it is useful to engage external stakeholders in their reviews, agencies generally view them as internal management meetings. OMB's July 2020 guidance continues to direct agencies to include, as appropriate, relevant personnel from outside the agency that contribute to the accomplishment of Agency Priority Goals or other priorities. However, supplementing this guidance with insights into how to do this well could help ensure that agencies can effectively bring together key players to achieve common goals. We will continue to monitor the status of actions taken to address this recommendation.

Recommendation: To promote an efficient use of resources and to better plan for the design of a new performance management system, the Secretary of Defense should direct the Deputy Assistant Secretary of Defense for Civilian Personnel Policy to, in conjunction with the DOD Comptroller, help ensure that information identifying and supporting the costs of the NSPS termination and new performance management system is documented, reliable, traceable to a source document, and readily available for examination.

Agency: Department of Defense
Status: Open

Comments: GAO staff met with DOD officials in October 2019 to discuss the status of the department's new performance management system and any efforts to address this recommendation. DOD officials agreed to provide documentation related to these efforts, but, as of November 2019, this documentation. has not been received. Further updates will be made once that documentation is received and reviewed.

Recommendation: To ensure that IRS can adequately enforce certain tax provisions, Congress may wish to consider providing IRS with MEA to use tax return information from previous years to ensure that taxpayers do not improperly claim credits or deductions in excess of lifetime limits where applicable.

Agency: Congress
Status: Open

Comments: As of March 2020, Congress has expanded IRS's math error authority in certain circumstances, but not as broadly as GAO suggested in February 2010. Section 208 of division Q of the Consolidated Appropriations Act, 2016 (Public Law 114-113 enacted in December 2015) gave IRS the authority to use math error authority if (1) a taxpayer claimed the Earned Income Tax Credit, Child Tax Credit, or the American Opportunity Tax Credit (AOTC) during the period in which a taxpayer is not permitted to claim such credit as a consequence of either having made a prior fraudulent or reckless claim; or (2) a taxpayer omitted information required to be reported because the taxpayer made prior improper claims of the Child Tax Credit or the AOTC. While expanding math error authority is consistent with what GAO suggested in February 2010, GAO maintains that a broader authorization of math error authority with appropriate controls would enable IRS to correct obvious noncompliance, would be less intrusive and burdensome to taxpayers than audits, and would potentially help taxpayers who underclaim tax benefits to which they are entitled. If Congress decides to extend broader math error authority to IRS, controls may be needed to ensure that this authority is used properly such as requiring IRS to report on its use of math error authority. The Administration also requested that Congress expand IRS's math error authority as part of the Service's Congressional Budget Justification and Annual Performance Report and Plan for fiscal year 2021. Specifically, the Administration requested authority to correct a taxpayer's return in the following circumstances: 1) the information provided by the taxpayer does not match the information contained in government databases or Form W-2, or from other third party databases as the Secretary determines by regulation; 2) the taxpayer has exceeded the lifetime limit for claiming a deduction or credit; or 3) the taxpayer failed to include with his or her return certain documentation that is required to be included on or attached to the return. As of March 2020, the Congress had not provided IRS with such authority.

Recommendation: To gain efficiencies and improve taxpayer service, the Commissioner of Internal Revenue should direct the appropriate officials, based on the quality of service provided by comparable organizations and on what matters most to the customer, to determine a customer service telephone standard, and the resources required to achieve this standard based on input from Congress and other stakeholders.

Agency: Department of the Treasury: Internal Revenue Service
Status: Open

Comments: As of August 2019, IRS finalized a customer service strategy identifying an optimal telephone level of service. According to the strategy, IRS has a process to compare major metrics with other agencies and private industry, and conducted two studies to look at industry practices. In response to our recommendation, IRS compared its telephone data with similar telephone environments, and determined that a telephone level of service between 70 and 80 percent provides an optimal balance for servicing customer service telephones and paper correspondence requests. However, IRS faced two significant challenges in managing the 2019 filing season: (1) implementing major tax law changes from the Tax Cuts and Jobs Act (TCJA), and (2) a lapse in appropriations that left IRS unfunded during five weeks leading up to the opening of the 2019 filing season. As a result of issues stemming from these challenges, IRS revised its 2019 filing season telephone service goals from 80 percent to 65 percent during the filing season, and from 75 percent to 63 percent for all of fiscal year 2019. By not maintaining the identified optimal level of service standard, IRS is missing opportunities to illustrate gaps between actual and desired levels of service that may have resulted from issues linked to TCJA implementation and the lapse in appropriations. IRS did outline steps it is taking to achieve the optimal range of 70-80 percent telephone level of service outlined in its customer service strategy. Specifically, IRS said that it is working to upgrade equipment for all IRS business units that provide telephone services to taxpayers. It also cited examples of these upgrades, such as implementing a customer callback system that allows callers to keep their place in queue without remaining on the phone. While IRS said it has allocated funding to begin the development and installation of the customer callback feature, it did not provide an estimate of the resources required to upgrade the equipment and otherwise achieve the optimum range of telephone level of service. By not providing sufficient information to Congress on resources needed to achieve an optimal level of service, IRS is missing opportunities to justify the resources it believes are needed to improve taxpayer service.

Recommendation: To improve the Bureau's use of its master schedule to manage the 2020 decennial census, the Secretary of Commerce should require the Director of the U.S. Census Bureau to include estimates of the resources, such as labor, materials, and overhead costs, in the 2020 integrated schedule for each activity as the schedule is built, and prepare to carry out other steps as necessary to conduct systematic schedule risk analyses on the 2020 schedule.

Agency: Department of Commerce
Status: Open
Priority recommendation

Comments: Commerce neither agreed nor disagreed with this recommendation. Regarding GAO's 2013 assessment of the Bureau's schedule (GAO-14-59), Bureau officials stated that they hoped to begin identifying the resources needed for each activity in their schedules by early 2014. Bureau officials announced they had completed the 2020 Census schedule in July 2016, and have since periodically described their intent to link resources to activities within their schedules. However, as of May 2018, when the Bureau had not taken these steps. Senior Bureau officials stated that it would require additional staffing in order to plan for and implement this recommendation. In July 2018 (GAO-18-589) we reported again on the status of the Bureau's scheduling, stating that when the Bureau has resource loaded its schedule, it will be able to use the schedule more effectively as a management tool. The Bureau took steps toward assigning resources to its master activity schedule for the 2020 Census, but effectively ran out of time to do so. Assigning resources to large complex schedules is easier to do early in schedule development process, as we recommended the Bureau do in 2009 for its 2020 Census schedule. This recommendation will remain open pending the Bureau taking steps in developing its 2030 schedule with appropriate resources linked to it.

Recommendation: To help implement a fair, effective, and credible performance management system for its civilian employees--whether NSPS or another--the Secretary of Defense should review and evaluate the effectiveness of the department's training.

Agency: Department of Defense
Status: Open

Comments: The National Defense Authorization Act for Fiscal Year 2010 which repealed the National Security Personnel System required that DOD (1) take all actions necessary for the orderly termination of NSPS and (2) transition of all employees and positions from NSPS to legacy personnel systems or, if applicable, to the personnel systems that would have applied if NSPS had never been established. The law also mandated that the transition be completed by no later than January 1, 2012 and required DOD to establish a new performance management system, among other things. DOD began to implement a new performance management system in 2016. GAO staff met with DOD officials in October 2019 to discuss the status of the new system and any efforts to address these recommendations. DOD officials agreed to provide documentation related to these efforts, but, as of November 2019, have not yet done so. Further updates will be made once that documentation is received and reviewed.

Recommendation: To help implement a fair, effective, and credible performance management system for its civilian employees--whether NSPS or another--the Secretary of Defense should ensure that guidance is in place for conducting a postdecisional analysis that specifies what process the components should follow to investigate and eliminate potential barriers to fair and equitable ratings.

Agency: Department of Defense
Status: Open

Comments: The National Defense Authorization Act for Fiscal Year 2010 which repealed the National Security Personnel System required that DOD (1) take all actions necessary for the orderly termination of NSPS and (2) transition of all employees and positions from NSPS to legacy personnel systems or, if applicable, to the personnel systems that would have applied if NSPS had never been established. The law also mandated that the transition be completed by no later than January 1, 2012 and required DOD to establish a new performance management system, among other things. DOD began to implement a new performance management system in 2016. GAO staff met with DOD officials in October 2019 to discuss the status of the new system and any efforts to address these recommendations. DOD officials agreed to provide documentation related to these efforts, but, as of November 2019, have not yet done so. Further updates will be made once that documentation is received and reviewed.

Recommendation: To help implement a fair, effective, and credible performance management system for its civilian employees--whether NSPS or another--the Secretary of Defense should include, as part of the department's monitoring of the implementation of its system, efforts to monitor and evaluate how the safeguards specifically are implemented by lower-level organizations across the department.

Agency: Department of Defense
Status: Open

Comments: The National Defense Authorization Act for Fiscal Year 2010 which repealed the National Security Personnel System required that DOD (1) take all actions necessary for the orderly termination of NSPS and (2) transition of all employees and positions from NSPS to legacy personnel systems or, if applicable, to the personnel systems that would have applied if NSPS had never been established. The law also mandated that the transition be completed by no later than January 1, 2012 and required DOD to establish a new performance management system, among other things. DOD began to implement a new performance management system in 2016. GAO staff met with DOD officials in October 2019 to discuss the status of the new system and any efforts to address these recommendations. DOD officials agreed to provide documentation related to these efforts, but, as of November 2019, have not yet done so. Further updates will be made once that documentation is received and reviewed.

Recommendation: To ensure that policymakers and the public have the necessary information to make informed decisions and to improve the progress toward exercising greater scrutiny of tax expenditures, the Director of the Office of Management and Budget (OMB), in consultation with the Secretary of the Treasury, should resume presenting tax expenditures in the budget together with related outlay programs to show a truer picture of the federal support within a mission area.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open

Comments: No executive action taken as of February 2020. OMB had not presented tax expenditures in the fiscal year 2021 budget together with the related outlay programs. OMB did not agree that GAO's September 2005 recommendation is necessary and stated that presenting information on tax expenditures together with related outlay programs is not useful for budgeting and that such a presentation is not part of the congressional budget process. However, the Congressional Budget Act of 1974 requires a list of tax expenditures, including special tax credits, deductions, exclusions, exemptions, deferrals, and preferential tax rates. Whereas OMB favors reporting tax expenditures separately from the rest of the budget, GAO has reported that an integrated presentation is also useful to show the relative magnitude of tax expenditures compared to spending and credit programs across mission areas. OMB previously presented tax expenditure sums alongside outlays and credit activity for each budget function in the federal budget from fiscal year 1998 through fiscal year 2002, but discontinued the practice. Tax expenditures resulted in $1.32 trillion in forgone revenue in fiscal year 2019 and have been roughly approximate to federal discretionary spending levels in recent years.

Recommendation: To ensure that policymakers and the public have the necessary information to make informed decisions and to improve the progress toward exercising greater scrutiny of tax expenditures, the Director of OMB, in consultation with the Secretary of the Treasury, should require that tax expenditures be included in the PART process and any future such budget and performance review processes so that tax expenditures are considered along with related outlay programs in determining the adequacy of federal efforts to achieve national objectives.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open

Comments: OMB made some progress in including tax expenditures along with related outlay programs in the executive branch's budget and performance review processes, as GAO recommended in September 2005. However, as of December 2019, OMB had not developed a systematic approach for conducting such reviews, and OMB staff told GAO that they were not pursuing the effort because of competing priorities, as well as capacity and resource constraints. Prior to that time, OMB had made some progress on the action. The President's fiscal year 2012 budget stated that the administration would work toward examining the objectives and effects of the wide range of tax expenditures in the budget. The GPRA Modernization Act of 2010 (GPRAMA) requires OMB and the agencies to identify the relevant tax expenditures that contribute to each crosscutting priority goal. Beginning with its August 2012 update to Circular No. A-11 with guidance for implementing GPRAMA and continuing in subsequent annual updates, OMB has directed agencies to identify tax expenditures that contribute to each of their agency priority goals. Beginning with the July 2013 update, OMB expanded its guidance to include identifying these contributions to agency strategic objectives. In both its July 2013 and July 2014 guidance, OMB stated that it planned to work with the Department of the Treasury (Treasury) and agencies to facilitate alignment of tax expenditure information with agency priority goals and strategic objectives. However, in its June 2015 update of this guidance, OMB removed the language about working with Treasury and agencies to align tax expenditures with agency goals. OMB's December 2019 guidance still requires agencies to identify tax expenditures that contribute to their agency priority goals and strategic objectives.

Recommendation: To ensure that policymakers and the public have the necessary information to make informed decisions and to improve the progress toward exercising greater scrutiny of tax expenditures, the Director of OMB, in consultation with the Secretary of the Treasury, should develop and implement a framework for conducting performance reviews of tax expenditures. In developing the framework, the Director should (1) determine which agencies will have leadership responsibilities to review tax expenditures, how reviews will be coordinated among agencies with related responsibilities, and how to address the lack of credible performance information on tax expenditures; (2) set a schedule for conducting tax expenditure evaluations; (3) re-establish appropriate methods to test the overall evaluation framework and make improvements as experience is gained; and (4) to identify any additional resources that may be needed for tax expenditure reviews.

Agency: Department of the Treasury
Status: Open
Priority recommendation

Comments: Treasury did not submit comments on this report and deferred to OMB. OMB agreed that this recommendation had promise and also said that tax expenditure evaluations were the responsibility of Treasury, which had access to the necessary data. As of February 2020, when the President's fiscal year 2021 budget was released, the Director of OMB had not developed a framework for reviewing tax expenditure performance, as GAO recommended in June 1994 and again in September 2005. Since their initial efforts in 1997 and 1999 to outline a framework for evaluating tax expenditures and preliminary performance measures, OMB and the Department of the Treasury have ceased to make progress and retreated from setting a schedule for evaluating tax expenditures. The President's fiscal year 2012 budget stated that developing an evaluation framework is a significant challenge due to limited data availability and analytical constraints of isolating the effect of any single program. The administration planned to focus on addressing some of these challenges so it can work toward crosscutting analyses that examine tax expenditures alongside related spending programs. However, OMB and Treasury have not reported on progress on this recommendation since the President's fiscal year 2012 budget. In December 2019, OMB said its Office of Economic Policy is responsible for the framework outline. OMB said it was exploring options to further develop its evaluation framework, which would include working with Treasury. The budget released in February 2020 did not provide an update on these evaluation framework efforts.

Recommendation: To ensure that policymakers and the public have the necessary information to make informed decisions and to improve the progress toward exercising greater scrutiny of tax expenditures, the Director of OMB, in consultation with the Secretary of the Treasury, should develop and implement a framework for conducting performance reviews of tax expenditures. In developing the framework, the Director should (1) determine which agencies will have leadership responsibilities to review tax expenditures, how reviews will be coordinated among agencies with related responsibilities, and how to address the lack of credible performance information on tax expenditures; (2) set a schedule for conducting tax expenditure evaluations; (3) re-establish appropriate methods to test the overall evaluation framework and make improvements as experience is gained; and (4) to identify any additional resources that may be needed for tax expenditure reviews.

Agency: Executive Office of the President: Office of Management and Budget
Status: Open
Priority recommendation

Comments: No executive action has been taken. As of February 2020, when the President's fiscal year 2021 budget was released, the Director of OMB had not developed a framework for reviewing tax expenditure performance, as GAO recommended in June 1994 and again in September 2005. Since their initial efforts in 1997 and 1999 to outline a framework for evaluating tax expenditures and preliminary performance measures, OMB and the Department of the Treasury have ceased to make progress and retreated from setting a schedule for evaluating tax expenditures. The President's fiscal year 2012 budget stated that developing an evaluation framework is a significant challenge due to limited data availability and analytical constraints of isolating the effect of any single program. The administration planned to focus on addressing some of these challenges so it can work toward crosscutting analyses that examine tax expenditures alongside related spending programs. However, OMB and Treasury have not reported on progress on this recommendation since the President's fiscal year 2012 budget. As of December 2019, OMB said its Office of Economic Policy is responsible for the framework outline. OMB said it was exploring options to further develop its evaluation framework, which would include working with Treasury. The budget released in February 2020 did not provide an update on these evaluation framework efforts.

Recommendation: To ensure that policymakers and the public have the necessary information to make informed decisions and to improve the progress toward exercising greater scrutiny of tax expenditures, the Director of OMB, in consultation with the Secretary of the Treasury, should require that tax expenditures be included in the PART process and any future such budget and performance review processes so that tax expenditures are considered along with related outlay programs in determining the adequacy of federal efforts to achieve national objectives.

Agency: Department of the Treasury
Status: Open

Comments: In October 2005, the Department of the Treasury responded that this recommendation did not relate to Treasury. OMB made some progress in including tax expenditures along with related outlay programs in the executive branch's budget and performance review processes, as GAO recommended in September 2005. However, as of December 2019, OMB had not developed a systematic approach for conducting such reviews, and OMB staff told GAO that they were not pursuing the effort because of competing priorities, as well as capacity and resource constraints. The President's fiscal year 2012 budget stated that the administration would work toward examining the objectives and effects of the wide range of tax expenditures in the budget. The GPRA Modernization Act of 2010 (GPRAMA) requires OMB and the agencies to identify the relevant tax expenditures that contribute to each crosscutting priority goal. Beginning with its August 2012 update to Circular No. A-11 with guidance for implementing GPRAMA and continuing in subsequent annual updates, OMB has directed agencies to identify tax expenditures that contribute to each of their agency priority goals. Beginning with the July 2013 update, OMB expanded its guidance to include identifying these contributions to agency strategic objectives. In both its July 2013 and July 2014 guidance, OMB stated that it planned to work with the Department of the Treasury (Treasury) and agencies to facilitate alignment of tax expenditure information with agency priority goals and strategic objectives. However, in its June 2015 update of this guidance, OMB removed the language about working with Treasury and agencies to align tax expenditures with agency goals. OMB's December 2019 guidance still requires agencies to identify tax expenditures that contribute to their agency priority goals and strategic objectives.