Detailed Information on the
Environmental Quality Incentives Program Assessment

Revise the EQIP state allocation program to address program and agency priorities.

Use the revised EQIP allocation formula to allocate FY 2008 program funds to the States.

Validate EQIP's long-term measures' results by comparing them to the published CEAP findings and report to the Office of Management and Budget.

Incorporate innovative technology and approaches resulting from the Conservation Innovation Grants (CIG) into NRCS practice standards and guidance documents. Provide a report on new and updated technical standards, Technical Notes, Fact Sheets, software tools, and guidance documents resulting from CIG projects.

Analyze cost of the Technical Service Providers (TSP) compared to cost of NRCS employees and recommend changes to the TSP hiring process to increase cost-effectivness.

Incorporate innovative technology and approaches resulting from the Conservation Innovation Grants (CIG) into NRCS practice standards and guidance documents. Provide a report on new and updated technical standards, Technical Notes, Fact Sheets, software tools, and guidance documents resulting from CIG projects.

Provide contract modification training to field offices and publish a national directive on modifying EQIP contracts.

Determine whether it is feasible and cost-effective to modify the annual performance measure data to reflect actual soil conditioning index results from EQIP applicants.

Institutionalize a recurring review and resolution of open obligations.

Showcase innovative technologies in the Conservation Innovation Program (CIG).

Measure: Working cropland with improved soil condition, million acres

Explanation:Captures the increase in cropland acres on which soil organic matter is increasing, as measured by the Soil Conditioning Index (SCI). The SCI uses data on soil erosion, conservation management systems, and biomass to indicate whether soil organic matter is increasing or decreasing. The baseline is for the FY 2001-2005 time period; the target is for the FY 2006-2010 time period. This measure links to NRCS Strategic Plan Foundation Goal High-Quality, Productive Soils.

Measure: Potential nitrogen delivery from agricultural operations reduced, tons

Explanation:Tons of nitrogen prevented from entering waterways from agricultural operations. The baseline performance level is for the FY2001-2005 time period; the target is for the FY2006-2010 time period. This measure links to NRCS Strategic Plan Foundation Goal Clean and Abundant Water.

Measure: Million acre-feet of water conserved.

Explanation:Million acre-feet of water conserved or used more efficiently through the application of conservation practices. The baseline performance level is for the FY2001-2005 time period; the target is for the FY2006-2010 time period. This measure links to NRCS Strategic Plan Foundation Goal Clean and Abundant Water.

Measure: Cropland with conservation applied to improve soil quality, million acres

Explanation:Cropland and hay land on which at least one selected conservation practice to improve soil quality has been applied during the fiscal year. This supports the long-term measure for improving soil condition.

Measure: Comprehensive nutrient management plans applied, number

Explanation:Number of Comprehensive Nutrient Management Plans (CNMPs) applied on animal feeding operations. A CNMP is a grouping of conservation practices and management activities designed to protect water quality and other natural resources, and to assist an AFO owner/operator in meeting all applicable local, Tribal, State, and Federal water quality goals and regulations. This supports the long-term measure for water quality.

Measure: Land with conservation applied to improve irrigation efficiency, acres

Explanation:Acres with irrigation water management practices applied to conserve water or use water more efficiently. This supports the long-term measure for water quantity.

Measure: Grazing and forest land with conservation applied to protect and improve the resource base, million acres

Explanation:Million acres of grazing or forest land units on which at least one selected conservation practice has been applied to protect or improve the resource base during the fiscal year. This supports the long-term measure for grassland condition. New/Development/Revision N/A

Measure: Percent of conservation practices completed in the first three years of the contract

Explanation:This efficiency measure focuses on improving EQIP timeliness by measuring the percent of obligated contract funds that are paid for conservation practices that are applied within the first three years of the EQIP contract. Performance is measured after the third year of each contract, so the 2006 actual performance represents the percent of 2004 contract obligations that have been paid during the 2004-2006 time period.

Measure: Number of active contracts administered per FTE

Explanation:This measure addresses time spent in developing and managing new and existing contracts per FTE of non-administrative staff. The FTE measure includes time spent preparing contract support documents, reviews, modifications and payment documents (including payment for TSP services), correcting errors and omissions, processing disputes and claims, and preparing reports for administrative hearings and appeals.

Is the program purpose clear?

Explanation: The Environmental Quality Incentives Program (EQIP) provides technical and financial assistance to help eligible agricultural producers address soil, water, air, and related natural resource concerns through the application of conservation practices and systems. EQIP also assists producers in complying with federal, state and local environmental regulations and reduces the need for additional regulation. EQIP funds vegetative, structural, and land management conservation practices and systems. These practices and systems improve soil, water and air quality; enhance wildlife habitat; and conserve surface and ground water. EQIP purposes and priorities are defined in the program's authorizing legislation and reflected in agency policy and program implementation tools.

Evidence: Food Security Act of 1985, as amended (16 U.S.C.3839aa) 7 CFR Part 1466, EQIP Final Rule Conservation Programs Manual Part 515, October, 2006.

Does the program address a specific and existing problem, interest, or need?

Explanation: EQIP promotes the long-term stewardship of the nation's private working lands and natural resources. EQIP focuses on five national natural resource priorities: 1. reduction of non-point source water pollution in impaired watersheds consistent with total maximum daily loads (TMDLs), as well as the reduction of groundwater contamination and reduction of agricultural point source contamination; 2. conservation of ground and surface water resources; 3. reduction of air emissions that contribute to air quality impairment violations of National Ambient Air Quality Standards; 4. reduction in soil erosion and sedimentation; and 5. promotion of habitat conservation for at-risk wildlife species. In FY 2005, EQIP national priorities were examined through an extensive public notice and comment effort. Respondents confirmed that EQIP national priorities are addressing specific, existing problems important to agriculture and the environmental quality of the nation.

Evidence: Food Security Act of 1985, as amended (16 U.S.C.3839aa) (see section 1.1) Conservation Programs Manual Part 515, Sections 515.0 A and 515.3, October, 2006 (see section 1.1) Productive Lands Healthy Environment - NRCS Strategic Plan 2005-2010 USDA Strategic Plan FY 2005-2010 Public comments found at www.nrcs.usda.gov/programs/eqip/eqippost.html NRI, State of the Land -www.nrcs.usda.gov/technical/land Schnepf and Cox, editors. Environmental Benefits of Conservation on Cropland: The Status of Our Knowledge. 2006. The Heinz Institute. The State of the Nation's Ecosystems. 2005 Updates. http://www.heinzctr.org/ecosystems/report. EQIP Contracts by Resource Concern FY2005.

Is the program designed so that it is not redundant or duplicative of any other Federal, state, local or private effort?

Explanation: EQIP provides federal assistance to agricultural producers to solve complex and costly environmental concerns on private lands, while maintaining agricultural productivity. No other single Federal, state or local program has the financial assistance capacity or breadth of EQIP. EQIP provides financial assistance in all 50 States, Caribbean Area, and the Pacific Basin. EQIP also is unique because of the diversity of the participants who receive assistance. Between 2005 and 2006, EQIP funded over 15,662 limited resource and minority farmers who have traditionally been underserved by other cost-share programs. EQIP's program delivery system ensures that conservation efforts are not duplicative. Local workgroups and State Technical Committees work with NRCS to ensure programs are coordinated to prevent duplication of effort and to target natural resource concerns effectively. The U.S. Environmental Protection Agency's (EPA) Section 319 Program also offers some financial conservation assistance on private lands through delegated state agencies. Funding is limited, however, and in recent years has been directed away from on-the-ground implementation and toward watershed planning efforts, especially in support of EPA's water quality regulations (such as total maximum daily load requirements).

Evidence: ProTracts (Programs Contracting Tool) data on limited resource and minority producers (Fiscal Years 2005 and 2006); map of EQIP allocations to states; FY 2003 hydrologic units with EQIP funding and EPA nonpoint Source (319) program funding; FY 2004 hydrologic units with EQIP funding and EPA nonpoint source (319) program funding; FY 2003 EQIP cost share approved; FY 2004 EQIP cost share approved; 2003 EPA nonpoint source (319) program funding for all projects; and 2004 EQIP nonpoint source (319) program funding for all projects.

Is the program design free of major flaws that would limit the program's effectiveness or efficiency?

Explanation: A review of the EQIP national priorities in 2005 supported the existing priorities. There is no evidence that any other approach would be more efficient or effective than EQIP. EQIP provides financial and technical assistance to promote the conservation of natural resources on working lands. Land retirement is not a feasible approach for the majority of agricultural land. Land retirement is generally used only for environmentally sensitive lands that should not be farmed and by older farmers who derive most of their income off-farm. Approaches that do not include financial assistance would not be as effective in getting conservation on the land if producers cannot afford the up-front costs of adopting capital-intensive practices or accept the risks of trying new management practices.

Evidence: USDA News Release No. 0106.06, "Letter from Agriculture Secretary Mike Johanns and Farm Bill Forum Comment Summaries." Farm Bill Forum EQIP Comment Summary and Background. EQIP National Priorities Comments http://www.nrcs.usda.gov/programs/eqip/eqippost.html. Lambert and Sullivan, "Land Retirement and Working-land Conservation Structures: A Look at Farmers' Choices." Amber Waves, June 2006.

Is the program design effectively targeted so that resources will address the program's purpose directly and will reach intended beneficiaries?

Explanation: EQIP's state allocation does not target the most pressing natural resource concerns consistent with the national priorities. EQIP targets its resources using four allocation mechanisms: 1) allocation of resources to states, 2) allocation of resources within states, 3) establishment of cost-share and incentive payment levels, and 4) application ranking. EQIP distributes funding to state NRCS offices via a national allocation formula. This formula is based on 31 different factors, several of which are not directly aligned with addressing the five national priorities or natural resource concerns. A Government Accountability Office (GAO, 2006) recommended changing the formula to better align with the EQIP priorities and use more up-to-date data. Additionally, the 2002 Farm Bill requires the agency to redirect conservation program funding to states that have not received a minimum annual amount of $12 million. This has resulted in $215 million of EQIP funding being redirected contrary to program priorities. Evaluations undertaken by the Center for Conservation Incentives (2003) and the USDA Office of Inspector General (2005) identified opportunities to improve the application ranking process. As a result, NRCS developed and piloted an automated application ranking tool in 2005, conducted an expanded testing in 2006, and implemented the tool nationwide in 2007.

Evidence: U.S. Government Accountability Office Final Report GAO-06-969, "Agricultural Conservation USDA Should Improve Its Process for Allocating Funds to States for the Environmental Quality Incentives Program" and associated NRCS response. October 6, 2006 (see section 1.4). OIG Audit Report No. 10099-18-KC. February 2005. Section 1241 (D) of the Food Security Act of 1985 as amended by the Farm Security and Rural Investment Act of 2002. Searchinger and Friedman. "Getting More Bang for the Buck, Nine Suggestions for Improving State EQIP Ranking Criteria." January 2003. Application Evaluation and Program Ranking: Guidance for Developing Ranking Tools for Effective and Consistent Application Ranking. July 2006.

Does the program have a limited number of specific long-term performance measures that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: NRCS has established four long-term performance measures for the EQIP that reflect the program's purpose and natural resource outcomes: Improve soil condition on working cropland, which directly supports NRCS Mission Goal 1 - High Quality, Productive Soils, and USDA Strategic Objective 6.2; Reduce nitrogen delivery to water resources, which directly supports NRCS Mission Goal 2 - Clean and Abundant Water, and USDA Strategic Objective 6.1; Increase water conservation, which directly supports NRCS Mission Goal 2 - Clean and Abundant Water, and USDA Strategic Objective 6.1; and Improve grassland condition, health, and productivity, which directly supports NRCS Mission Goal 3 - Healthy Plant and Animal Communities, and USDA Strategic Objective 6.3. In 2003, NRCS initiated the Conservation Effects Assessment Project to analyze the short-term and long-term impacts of conservation practices. NRCS anticipates information provided by CEAP will begin to quantify the beneficial effects that EQIP has on priority natural resource concerns.

Evidence: Productive Lands Healthy Environment, NRCS Strategic Plan (2005-2010) (see section 1.2). USDA Strategic Plan FY 2005-2010 (see section 1.2). FY 2008 Explanatory Notes, Summary of Budget and Performance, Full Cost of Programs by Strategic Objectives Table. See measures tab.

Does the program have ambitious targets and timeframes for its long-term measures?

Explanation: NRCS has established ambitious targets for each long-term performance measure that reflect improvement in natural resource conditions by 2010, as described in the NRCS strategic plan. During FY 2005-2010, EQIP will improve soil condition on 3.0 million acres, reduce potential nitrogen delivery by 125,000 tons, increase water conservation by 2.5 million acre-feet of water conservation, and improve grassland condition, health, and productivity on 57.5 million acres of grazing land. These targets increase performance by over 30% compared to the 2001-2005 baseline and are derived from conservation needs, USDA and NRCS conservation priorities, and projected EQIP funding levels.

Evidence: FY 2008 Explanatory Notes (see section 2.1). Productive Lands Healthy Environment, NRCS Strategic Plan (2005-2010) (see section 1.2). USDA Strategic Plan FY 2005-2010 (see section 1.2). Targets, baselines, and data on past performance are provided in the PART Performance Measures section.

Does the program have a limited number of specific annual performance measures that can demonstrate progress toward achieving the program's long-term goals?

Explanation: NRCS has established annual performance measures that directly support each EQIP long-term performance measure. These annual measures include: "Cropland with conservation applied to improve soil quality," which directly supports the long-term measure "Improve soil condition on working cropland"; "Comprehensive nutrient management plans applied," which directly supports the long-term measure "Reduce potential nitrogen delivery from agricultural operations"; "Land with conservation applied to improve irrigation efficiency," which directly supports the long-term measure "Increase water conservation"; and "Grazing and forest land with conservation applied to protect and improve the resource base," which directly supports the long-term measure "Improve grassland condition, health, and productivity." The annual performance measures were developed using a logic model process that translates the EQIP program objectives identified in authorizing legislation to the annual performance measures, outputs, work products, and activities needed to achieve the long-term outcomes.

Evidence: Productive Lands Healthy Environment, NRCS Strategic Plan (2005-2010) (see section 1.2). USDA Strategic Plan FY 2005-2010 (see section 1.2). FY 2008 Explanatory Notes (see section 2.1). NRCS General Manual 340, Part 400 Strategic Planning and Accountability.

Does the program have baselines and ambitious targets for its annual measures?

Explanation: NRCS has established baselines and annual targets for each EQIP annual performance measure. However, the targets are not ambitious. All the annual output measures targets flatline after 2007 so they do not support significant continuous improvement with projected constant funding. All measures and targets are based on the NRCS strategic plan and are reflected in the Agency business plan and employee performance plans.

Evidence: Productive Lands Healthy Environment, NRCS Strategic Plan (2005-2010) (see section 1.2). USDA Strategic Plan FY 2005-2010 (see section 1.2). 2008 Explanatory Notes, Summary of Budget and Performance, Full Cost of Programs by Strategic Objectives Table (see section 2.1).

Do all partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) commit to and work toward the annual and/or long-term goals of the program?

Explanation: All partners, including grantees, sub-grantees, and contractors commit to and work to meet the annual and long-term EQIP goals. NRCS communicates these goals directly with each partner and often uses formal agreements. Each agreement articulates the relevant EQIP goals and outlines partners' responsibilities to achieve those goals. NRCS State Conservationists ensure that cooperators meet established objectives, and penalties are assigned for failure to uphold agreement terms and conditions. NRCS also works with local work groups and State Technical Committees to achieve EQIP goals and objectives. Federal, Tribal, State and local agencies, and other individuals with conservation expertise regularly participate in local work groups and State Technical committees. These groups provide advice on EQIP implementation, such as criteria to prioritize applications, cost-share and incentive payment limits, and eligible conservation practices. This collaborative process helps ensure that partners are committed to achieving EQIP goals and that program delivery does not duplicate partner efforts. The Performance Results System (PRS) allows cooperators to enter their annual performance by program and obtain reports of progress. In FY 2004, NRCS hosted a nationwide grants and agreements training for NRCS employees and partners and released grants and agreements policy guidance following the training.

Evidence: PRS Report: Contribution to NRCS (by region)-All Source Contributions, National EQIP, FY 2006. Example of NRCS/Partner Agreement-Contribution Agreement between the Standing Rock Tribal Conservation District and the United States Department of Agriculture, Natural Resources Conservation Service. 7 CFR Part 610, Technical Assistance; Final Rule. Conservation Programs Manual 440, Part 501, Subpart B, State Technical Committees. Iowa Information, State Technical Committee Minutes, Des Moines, IA, September 21, 2006. NRCS General Manual 180, Part 411, Technical Service Provider Assistance Policy. NRCS General Manual 180, Part 610, Technical Service Provider Handbook. Conservation Programs Manual 440, Part 504, Technical Service Provider Assistance. Conservation Programs Manual 440, Part 502.20, Technical Service Provider Terms. 7 CFR Part 652, Technical Assistance Provider; Final Rule. NRCS General Manual 120 Part 600, Federal Grants and Cooperative Agreements. NRCS General Manual 120 Part 610, Contribution Agreements.

Are independent evaluations of sufficient scope and quality conducted on a regular basis or as needed to support program improvements and evaluate effectiveness and relevance to the problem, interest, or need?

Explanation: The NRCS Operations Management and Oversight Division conducts regular evaluations of EQIP as part of its responsibility for oversight of all agency programs. Complementing these evaluations are other numerous external independent evaluations of EQIP activities. Evaluations undertaken by the Center for Conservation Incentives (2003) and the USDA Office of Inspector General (2005) identified opportunities to improve the application ranking process. A Government Accountability Office (GAO, 2006) evaluation focused on the EQIP allocation formula. In 2004, a survey of NRCS customers participating in EQIP was completed using the American Customer Satisfaction Index (ACSI). GAO (2006) also reported on disincentives to EQIP participation including limited funding, a need for more outreach, paperwork requirements, and limited flexibility in eligibility. Similar feedback received during USDA's comprehensive Farm Bill Listening Forum initiative informed the EQIP adjustments within the Administration's 2007 Farm Bill Proposal.

Evidence: U.S. Government Accountability Office Final Report GAO-06-969, "Agricultural Conservation USDA Should Improve Its Process for Allocating Funds to States for the Environmental Quality Incentives Program" and associated NRCS response. October 6, 2006 (see section 1.4). U.S. Government Accountability Office Report GAO-07-35, "USDA Conservation Programs, Stakeholder Views on Participation and Coordination to Benefit Threatened and Endangered Species and Their Habitats." November 2006. American Customer Satisfaction Index, Environmental Quality Incentives Program Customer Satisfaction Study - Final Report. May 2004. Soil and Water Conservation Society and Environmental Defense. "EQIP Program Assessment." March 2007. NRCS Oversight and Evaluation Reports "Implementation Barriers for EQIP, WRP, WHIP, and FPP Conservation Programs." October 2002. "Financial Assistance Agreements." September 2003. "Beginning Farmer and Rancher Review." August 2004. "Financial Assistance Conservation Programs Portfolio." September 2005. "Conservation Program Contract Modifications." September 2006. "EQIP Reconciliation - Status of Contracts." September 2005. "Field Office Operations Management." March 2006.

Are Budget requests explicitly tied to accomplishment of the annual and long-term performance goals, and are the resource needs presented in a complete and transparent manner in the program's budget?

Explanation: The budget requests for the EQIP are explicitly tied to annual and long-term goals and accomplishments. The annual budget submission to Congress includes annual performance measures and targets to indicate the estimated level of performance at the requested budget level. The estimates of resources needed for key activities are based on the agency's Cost of Programs model. Resource needs and agency accomplishments are listed in the budget in the Summary of Budget and Performance section. This section includes a table with the full cost of programs by strategic objective. Since FY 2004, NRCS has instituted a number of measures to strengthen budget and performance integration, including increasing the transparency of EQIP's state allocations; integrating national priorities into the tools and processes for managing EQIP; linking EQIP activities, performance measures, and targets directly to the agency's strategic plan; and integrating NRCS state-level budgets with state performance.

Evidence: FY2008 Explanatory Notes, Summary of Budget and Performance, Full Cost of Programs by Strategic Objectives Table (see section 2.1).

Has the program taken meaningful steps to correct its strategic planning deficiencies?

Explanation: NRCS revised its strategic plan in FY 2005 and strengthened the connection between program performance and agency long term and annual goals. All EQIP activities, performance measures, and targets link directly to the goals and objectives outlined in NRCS' Strategic Plan (2005 - 2010) and to Goal 6 in USDA's Strategic Plan (2005-2010). The EQIP Logic Model shows the association between the USDA and NRCS long-term goals and EQIP's long-term, annual, and efficiency measures. Our ability to assess the environmental benefits provided by EQIP will be enhanced with results from the Conservation Effects Assessment Project. Our ability to quantify technical assistance needed to achieve EQIP performance goals will be enhanced by a recently completed activity based cost effort (ABC). The ABC will also provide base data for credible budget formulation and data for state level performance planning. Information gathered from this effort will be used to identify efficiencies across state and program boundaries, with the overall intent to streamline program implementation efforts. NRCS has commissioned an independent review of its allocation formula to address concerns raised by GAO in 2006. This review will be complete in May 2007.

Evidence: Productive Lands Healthy Environment, NRCS Strategic Plan (2005-2010) (see section 1.2). USDA Strategic Plan FY 2005-2010 (see section 1.2). NRCS EQIP Logic Model. Section 1240 EQIP Purposes, Food Security Act of 1985 (see section 1.1).

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: NRCS regularly collects EQIP data through the Accountability Information Management System (AIMS). AIMS is a set of data collection tools, processes and related software that provide information on a routine basis to support the agency's strategic and performance planning, budget formulation, workforce planning, and accountability activities. AIMS enables the agency to track and evaluate field and state office progress, monitor program applications and cost-share agreements, track financial obligations and outlays, evaluate agency and partner performance, adjust program priorities, and allocate/reallocate program resources. For EQIP, AIMS components include: Performance Results System (PRS) that provides a daily program performance accomplishment; Total Cost Accounting System (TCAS) that stores employees' time and attendance records by program, activity, and location; Foundation Financial Information System (FFIS) that tracks fund obligations and disbursements; Programs Contracting Tool (ProTracts) that manages EQIP program applications and cost-share agreements, and the newly created activity based cost (ABC) system that tracks technical assistance expended by program task. Each system has business rules, definitions, and internal controls that enforce EQIP policies or business requirements and diagnose potential entry errors - allowing managers at appropriate levels to evaluate and monitor program performance. Reports on time, outlays, obligations, and performance are provided to employees and managers on the agency intranet via Conservation Information System (CIS) and Business Intelligence Dashboard reports. These reports are periodically provided to agency leadership to facilitate allocation, performance, and staff adjustments, as well as policy and program priority adjustments. State Conservationists are required to attest to the quality of NRCS and partnership performance information.

Evidence: Conservation Information Systems (CIS) report sample, FY 2006. Performance Results System report sample--FY 2006 EQIP Performance Summary by Affiliation. ProTracts report sample. American Customer Satisfaction Index, Environmental Quality Incentives Program Customer Satisfaction Study - Final Report, May 2004 (see section 2.6). Activity Based Costing Fact Sheet

Are Federal managers and program partners (including grantees, sub-grantees, contractors, cost-sharing partners, and other government partners) held accountable for cost, schedule and performance results?

Explanation: All NRCS managers and employees have performance reporting requirements in their Individual Performance Plans. All performance standards are tied into agency and USDA strategic plan goals through business plans, which provide a roadmap to successful completion of performance goals. When partners, such as conservation districts, deliver agency services, NRCS develops agreements to hold those partners to the same standards as agency allowance holders. Non-Federal technical service providers (TSPs) that provide technical assistance to help deliver EQIP, are also required to meet standards articulated in certification agreements. Funds administered through agreements with partners and contractors must meet the intended program purposes and objectives. Products and services specified in agreements must lead to specific accomplishments and are entered into the agency performance reporting system by the partners and contractors. Failure to meet the intended program purpose results may result in termination of the agreement. At the national level, the Deputy Chief for Programs, Division Director for Financial Assistance Programs, EQIP Program Manager, and other key staff are held accountable for appropriate national performance measures through the Agency business plan, the appropriate deputy area business plan, and individual performance plans. At the state level, NRCS designates key personnel in the state offices to coordinate program delivery. States' annual goals are listed by program in the Performance Results System. NRCS State Conservationists are responsible and accountable for overall program implementation and results, including identifying, monitoring, and analyzing performance indicators and financial integrity. Responsibilities within all levels of the agency are articulated in the EQIP Manual, CPM Part 515. To facilitate oversight by state and national managers, NRCS developed the Accountability Information Management System to evaluate performance, adjust program priorities, and allocate/reallocate resources. Progress reports are available on a real-time basis and are reviewed regularly by leadership.

Evidence: NRCS General Manual 120, Part 610, Contribution Agreements (see section 2.5). TSP Certification Terms and Conditions (http://techreg.usda.gov). Example of NRCS/Partner Agreement-Contribution Agreement between the Standing Rock Tribal Conservation District and the United States Department of Agriculture, Natural Resources Conservation Service (see section 2.5). Sample NRCS State Conservationist Performance Plan. NRCS General Manual 180, Part 411, Technical Service Provider Assistance Policy (see section 2.5). NRCS General Manual 180, Part 610, Technical Service Provider Handbook (see section 2.5). Conservation Programs Manual 440, Part 504, Technical Service Provider Assistance. (see section 2.5). Conservation Programs Manual 440, Part 502.20, Technical Service Provider Terms (see section 2.5). 7 CFR Part 652, Technical Assistance Provider; Final Rule (see section 2.5).

Are funds (Federal and partners') obligated in a timely manner, spent for the intended purpose and accurately reported?

Explanation: EQIP funds are distributed to the states based on a national formula. State offices prepare a detailed performance plan that links EQIP funds directly to annual performance measures and includes a state target that is based on previous years' performance, natural resource needs, and existing budgets and staff. Funding obligation schedules and corresponding annual performance targets are reported nationally on a quarterly basis. On a weekly basis, Agency leadership compares state and national performance, which includes partner performance, to annual targets. As the year progresses, funds may be re-distributed to achieve EQIP performance objectives. Financial data is tracked through the Foundation Financial Information System (FFIS). The Conservation Information System (CIS) compiles financial data, time by activity, and Performance Results System data enabling performance and cost analysis. Both FFIS and CIS flag anomalies, giving management the ability to easily correct data errors thus improving overall management. EQIP has never been anti-deficient. The automated ProTracts (Programs Contracting Tool), linked to FFIS, provides detailed payment scheduling, tracking, and reporting capabilities. The 2005 agency risk assessment found the agency to have an erroneous payment rate of 1.55 percent, below the estimate of 5.0 percent. As a result, the agency moved from yellow to green on the Department's scorecard and the risk assessment sample size was reduced from 536 to 212 transactions in 2006.

Evidence: EQIP Risk Assessment, High Risk Plan. EQIP 2006 IPIA Farm Bill Corrective Action Plan. State Financial Assistance Allocation Formula.

Does the program have procedures (e.g. competitive sourcing/cost comparisons, IT improvements, appropriate incentives) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: NRCS has specific initiatives and regular procedures in place to measure and achieve cost effectiveness in the execution of the EQIP. NRCS is accomplishing EQIP efficiency gains through establishment of efficiency measures, management performance incentives, Information Technology (IT) and e-government improvements. Efficiency Measures: NRCS adopted efficiency measures to monitor timely contract completion and to reduce effort associated with contract administration. Program Management Performance Incentives: these incentives are designed to reward program management that addresses national priorities and program efficiency. In fiscal year (FY) 2006, the performance factor accounted for 8.6 percent of the financial assistance allocations to states. Information Technology (IT) Initiatives and E-Government: NRCS has developed the Customer Service Tool that reduced planning time by 30 percent; the Programs Contracting Tool (ProTracts), that automated contracting, scheduling, and reporting capabilities; and the national application evaluation and ranking tool that adds consistency and transparency to the EQIP application process.

Evidence: National Bulletin 330-4-4, December 18, 2003. Requires mandatory use of ProTracts and integration with PRS. Application Evaluation and Program Ranking: Guidance for Developing Ranking Tools for Effective and Consistent Application Ranking, July 2006 (see section 1.4). Performance Incentive Allocation Methodology (see section 3.3). PART Performance Measures section.

Does the program collaborate and coordinate effectively with related programs?

Explanation: NRCS relies on local workgroups and State Technical Committees to identify local conservation priorities, which ensures that EQIP complements state and local programs and minimizes duplication of effort. State Technical Committees and local workgroups consist of representatives of government agencies, agribusiness, conservation organizations, and interested landowners. Several case studies provide examples of EQIP's collaboration with other programs to address natural resource needs.

Evidence: 7 CFR Part 610, Subpart B, State Technical Committees (see section 2.5). Conservation Programs Manual, part 501 (see section 2.5). Iowa Information, State Technical Committee Minutes, Des Moines, IA, September 21, 2006. (see section 2.5). Case studies: Success Story - EQIP Used to Fund Variable Rate Irrigation; Catawba Indian Nation in South Carolina Protects Acreage with EQIP; RC&D and EQIP Restoring Barren Soils in Illinois. AFC Cooperative Farming, "New Job, Same Principles." February, 2005.

Does the program use strong financial management practices?

Explanation: NRCS's conservation programs, including EQIP, do not use strong financial management practices. NRCS's CFO has refused to validate the agency's open obligations in 2006. EQIP uses ProTracts to track payments issued through the National Finance Center. From February to May 2005, the Office of Inspector General conducted an audit on the ProTracts system. OIG's audit produced eight findings and thirteen recommendations. Four recommendations are still outstanding. Oversight and Evaluation Studies in 2005 and 2006 found that EQIP's contracting modification procedures were applied inconsistently and without proper documentation.

Evidence: NRCS FFIS Manual "National Finance Center Procedures, Title IX, FFIS Manual, Chapter 6, NRCS" and related reports (http://cod.nfc.usda.gov/publications/CodSystem/ffisnrcs.pdf). USDA Office of Inspector General, Financial and IT Operations. Report Number 10501-5-FM, NRCS Application Controls - Program Contracts System (ProTracts), July 2006. EQIP Risk Assessment, High Risk Plan (see section 3.3). EQIP 2006 IPIA Farm Bill Corrective Action Plan (see section 3.3). Oversight and Evaluation Study (Draft) "Conservation Program Contract Modifications." September 2006. Oversight and Evaluation Study "EQIP Reconciliation--Status of Contracts." September 2005.

Has the program taken meaningful steps to address its management deficiencies?

Explanation: In FY 2004, EQIP's administrative responsibilities were transferred from the Farm Services Agency to NRCS. This transfer of administrative responsibilities has enabled the agency to adopt processes to strengthen accountability for effective use of EQIP funds. Following an independent assessment conducted in 2003, NRCS commissioned a comprehensive review of the allocation formula used to distribute funds to the states, implemented an automated application evaluation and ranking tool, strengthened program linkages to performance measures, created program management performance incentives to reward efficient and effective state operations, and improved the transparency of the allocation process. In 2006, NRCS completely updated the EQIP and the Conservation Program Contracting manuals and integrated NRCS state offices' budgets with performance to streamline program management and improve accountability. In addition to external reviews, NRCS has internal reviews that evaluate program implementation. In response to these reviews NRCS has developed management actions plans to correct deficiencies. These action plans are monitored by the Oversight and Management Division and addressed by the EQIP program manager.

Evidence: U.S. Government Accountability Office Final Report GAO-06-969, "Agricultural Conservation USDA Should Improve Its Process for Allocating Funds to States for the Environmental Quality Incentives Program" and associated NRCS response, October 6, 2006 (see section 1.4). Searchinger, Friedman, and Heimlich. "Getting More Bang for the Buck II: Assessment of EQIP 2003 Allocation and Ranking Systems and Ideas for Further Improvement," December 2003 (see section 1.5). NRCS Oversight and Evaluation Reports "Implementation Barriers for EQIP, WRP, WHIP, and FPP Conservation Programs," October 2002 (see section 2.6) . "Financial Assistance Agreements," September 2003. "Beginning Farmer and Rancher Review," August 2004. "Financial Assistance Conservation Programs Portfolio," September 2005. "Conservation Program Contract Modifications," September 2006. "EQIP Reconciliation - Status of Contracts," September 2005. "Field Office Operations Management," March 2006. OIG Audit Report No. 10099-18-KC February 2005 (see section 1.5). American Customer Satisfaction Index, Environmental Quality Incentives Program Customer Satisfaction Study - Final Report, May 2004 (see section 2.6). "Application Evaluation and Program Ranking: Guidance for Developing Ranking Tools for Effective and Consistent Application Ranking" July 2006 (see section 1.5). U.S. Government Accountability Office Report GAO-07-35 "USDA Conservation Programs, Stakeholder Views on Participation and Coordination to Benefit Threatened and Endangered Species and Their Habitats" November 2006 (see section 2.6). EQIP State Financial Assistance Allocation Formula, Performance Incentive Allocation Methodology (see section 3.3). Conservation Programs Manual, Part 512, Conservation Program Contracting, October, 2006.

Has the program demonstrated adequate progress in achieving its long-term performance goals?

Explanation: EQIP continues to make progress toward achieving all its long-term outcomes. For the FY 2001-2005 time period, EQIP improved soil condition on 2.28 million acres of working cropland; reduced potential nitrogen delivery from agricultural operations by almost 94,000 tons; increased water conservation by 1.85 million acre-feet; and improved grassland condition, health, and productivity on 42 million acres of grazing land. The NRCS Strategic Plan contains explicitly quantified goals for these long-term performance measures, as well as strategies for achieving these goals. However, the agency has only baseline data at this point so it is not certain that it will fully achieve its targets by 2010.

Evidence: Productive Lands Healthy Environment - NRCS Strategic Plan 2005-2010 (see section 1.2). See Performance Measures section of this database.

Does the program (including program partners) achieve its annual performance goals?

Explanation: Since the program received a "no" in question 2.4 it can only receive a "small extent" in this question. The program has achieved all of its annual targets but these targets are not ambitious.

Evidence: See Performance Measures section of this database.

Does the program demonstrate improved efficiencies or cost effectiveness in achieving program goals each year?

Explanation: NRCS is authorized to make cost-share and incentive payments to EQIP participants that apply structural and land management practices. EQIP's legislation allows cost-share payments to cover up to 75 percent of the cost of the practice. Incentive payments can be made at a rate necessary to encourage a producer to perform a land management practice. NRCS continuously monitors payment rates to optimize the use of federal dollars. For example, the national average cost-share rate has been reduced from 72 percent in fiscal year (FY) 2003 to 59 percent in FY 2006. As a result, 16 percent more funds were committed to conservation than would have been available had the legislated maximum cost-share rate been applied. NRCS developed program efficiency measures for EQIP in FY 2005. The percentage of the conservation work applied within the first three years of the contract has increased each of the past two years. The inclusion of an efficiency factor in the funds allocation bonus formula is expected to stimulate additional efficiency gains in future years. Because efficiency gains in EQIP delivery are driven by actions at the regional and state level, NRCS is developing efficiency reports that will allow these organizational levels to evaluate efficiency gains over time, to monitor efficiencies for comparison with adjacent states, and identify areas where additional attention is needed. At a minimum, reports will be available on a quarterly basis for managers at all organizational levels. We expect that the increased visibility and use of efficiency measure information will lead to further efficiency gains.

Evidence: See Performance Measures section of this database.

Does the performance of this program compare favorably to other programs, including government, private, etc., with similar purpose and goals?

Explanation: EQIP compares favorably with other programs that have similar goals. NRCS compared its results with the EPA's 319 program, another non-point source pollution water quality program, for nitrogen load reduction to streams. The average result for FY 2003-2005 for EQIP was 122.5 tons of reduced nitrogen loading/$ million expended and 77.6 tons/$ million for EPA 319 program. EQIP is designed to work with other programs that improve and protect soil, water, and air quality, restore wildlife habitat, and conserve surface and ground water. NRCS, conservation districts, and state and federal partners work together through local workgroups and State Technical Committees to coordinate EQIP. Many states have developed a local approach that maximizes the conservation opportunities for producers by utilizing strengths of both EQIP and other Federal, State, and local cost-share programs.

Evidence: Schnepf and Cox, editors. Environmental Benefits of Conservation on Cropland: the Status of Our Knowledge. 2006 (see section 1.2). Farm Bill Forum EQIP Comment Summary and Background: "EQIP" (see section 1.4). Case studies (see section 3.5). Lambert and Sullivan. "Land Retirement and Working-land Conservation Structures: A Look at Farmers' Choices." Amber Waves, June 2006 (see section 1.3). NRCS/EPA comparison was derived by comparing EPA's on-the-ground practices with EQIP financial assistance for water quality conservation practices. The nitrogen loading factors for each program were obtained from the expectmore website.

Do independent evaluations of sufficient scope and quality indicate that the program is effective and achieving results?

Explanation: Independent evaluations indicate that the delivery of the EQIP is achieving results but have identified areas for improvements for the program. The American Customer Satisfaction Index (ACSI) Report on EQIP (2004) indicated that the program achieved an ACSI score of 75, significantly above the aggregate Federal government ACSI of 70.9 but highlighted an opportunity for improving the program application process. External entities, including GAO, OIG, Environmental Defense, and the Soil and Water Conservation Society also have completed evaluations. Additionally, the scope and quality of EQIP is regularly examined by stakeholders at state and local levels, in State Technical Committees, and Local Work Group meetings. Oversight and Evaluation reviews have evaluated many aspects of EQIP. As a result of the evaluations, NRCS has taken program improvement actions, including commissioning a comprehensive review of the allocation formula used to distribute funds to the states, implementing an automated application evaluation and ranking tool, updating the EQIP and the Conservation Program Contracting manuals, strengthening program linkages to performance measures, creating program management performance incentives to reward efficient state operations, and improving the transparency of the allocation process. NRCS also initiated the Conservation Evaluation Assessment Project (CEAP) to provide credible estimates of environmental benefits from conservation practices. This project has been externally reviewed by a blue ribbon panel of the Soil and Water Conservation Society.

Evidence: Schnepf and Cox, editors. Environmental Benefits of Conservation on Cropland: the Status of Our Knowledge. 2006 (see section 1.2) American Customer Satisfaction Index, Environmental Quality Incentives Program Customer Satisfaction Study - Final Report. May 2004. (see section 2.6). Environmental Defense. "Getting More Bang for the Buck: Nine Suggestions for Improving State EQIP Ranking Criteria." January 2003. Lambert and Sullivan. "Land Retirement and Working-Land Conservation Structures A Look at Farmers' Choices." Amber Waves, June 2006 (see section 1.3).