DOL Annual Report, Fiscal Year 2007
Performance and Accountability Report

Management's Discussion & Analysis

The President’s Management Agenda

In FY 2007, the Department continued its focus on implementing the President's Management Agenda (PMA) — and securing the taxpayer benefits tied to PMA success. Announced in 2001, the PMA remains the key strategy for improving the management and performance of the Federal government. The objective is to ensure a Federal government that is citizen-centered, not bureaucracy-centered; results-oriented, not output-oriented; and market-based — actively promoting rather than stifling innovation through competition.

The Office of Management and Budget (OMB) regularly assesses all Federal agencies' implementation of the PMA, issuing a quarterly Executive Branch Management Scorecard rating of green, yellow or red for both status and progress on each initiative. On June 30, 2005, the U.S. Department of Labor became the first Executive Branch department or agency to achieve green status scores on all five government-wide PMA initiatives. While not an end in itself, this achievement represents an ongoing commitment to good management to bring quality services to the American people.

As noted on the table below, as of September 30, 2007 DOL is pleased to have again achieved all-green status scores on the five government-wide initiatives — as well as on two of the three PMA program initiatives managed by DOL. Government-wide PMA results can be found at www.results.gov.

We are now into the OMB-led Proud to Be V campaign, which runs through June 30, 2008 — with other goals linked to June 30, 2009 — and DOL intends to maintain its dedication to improve its performance through PMA implementation. To ensure that the good-government principles are used in day-to-day management, the Department uses a similar scorecard on a semi-annual basis to measure DOL individual agency progress on the PMA.

Strategic Management of Human Capital
The Human Capital initiative requires Federal agencies and departments to develop and use a comprehensive human capital plan, with the aim of significantly reducing mission-critical skill gaps. In 2007, to develop future leaders with the critical skills and experience needed to effectively manage DOL programs, the Department continued its MBA Fellows, Senior Executive Service (SES) Candidacy, and Management Development programs. Each of these programs is structured to develop the core competencies required for successful performance in the SES and necessary to continue the Department's mission.

DOL's successful MBA Fellows program welcomed its sixth class of 15 Fellows in the summer of 2007 — Increasing the total to 92 participants. Of the 49 Fellows who have completed the program, 48 have been placed in permanent positions within the Department.

Competitive Sourcing
Competitive Sourcing allows the government to take advantage of market-based competition while simultaneously allowing the existing Federal employees to compete for the work. Competitive sourcing requires Federal employees to compete against private sector bidders for work that is deemed commercial activity. The skills and competencies that are not required to be performed by government personnel can often be performed more effectively and efficiently when subject to the competition of the marketplace.

The Department encourages the development of a government "most efficient organization" (MEO) to compete with bids which may be received from the private sector. The MEO is designed to find innovative solutions to existing work processes that can be made more efficient to improve the Department's chances of retaining the work in-house when competing against private-sector firms. The competition process generally results in savings regardless of whether the performance decision is in favor of the government or the private sector. The following four recently-completed competitions involving 117 FTE will save the government approximately $5.4 million:

• National Certification Program
• Installation Services
• Visual Services
• Chemical Services

All four competitions resulted in the work being retained in-house, which means that the work continues to be performed by DOL employees.

Improved Financial Performance
The availability of timely, accurate, and useful information is essential to any well-managed, effective organization. The Improved Financial Performance initiative requires Federal agencies to receive clean audit opinions on their annual financial statements, meet accelerated financial reporting deadlines, implement managerial cost accounting practices, improve internal controls, and have financial management systems that are compliant with Federal laws and regulations. The Office of the Chief Financial Officer (OCFO) has devoted significant resources to secure the Department's achievement of excellence in financial management in the Federal Government. DOL's clean audit opinion for FY 2007 marks the 11th straight year for this achievement.

DOL's managerial cost accounting system, Cost Analysis Manager (CAM), provides program managers with costs of outputs and activities to better understand how those costs affect the operations of their programs. This tool collects and allocates costs to activities — and ties these costs to performance. In doing so, it improves accountability and transparency by showing the results for the tax dollars spent. CAM generated the goal costing information at the strategic and performance goal levels for this report and for the second year straight year CAM generated costing information at the performance indicator level. Last year, costs were allocated at the indicator for about half of DOL's performance goals. This year, most DOL programs were able to associate costs with their performance indicators.

Expanded Electronic Government (E-government)
The Expanding Electronic Government (E-government) initiative requires Federal agencies and departments to develop secure Information Technology (IT) systems and strictly adhere to IT project cost, schedule, and performance projections. The Department's Unified DOL Technology Infrastructure (UDTI) initiative is consolidating 30 IT service components into a unified, efficient environment. Savings resulting from UDTI on network maintenance costs alone are estimated at $3 million. In addition, E-Grants — a web-based grants management tool — is used by all DOL grant-making programs to award some $9 billion in grants each year. E-Grants lowers administrative costs, strengthens internal controls, improves efficiency and customer service. Estimated savings associated with E-grants is nearly $20 million over the system's twelve-year life.

DOL also continues to seek other creative strategies and efficiencies to better serve our stakeholders. In April 2002, GovBenefits.gov was launched — with DOL serving as the managing partner. GovBenefits' mission is to use the Internet to connect citizens to government benefit program eligibility information; increase access to information, particularly for people with disabilities; reduce the burden and difficulty of doing business with the government; and continue to add programs to become the single source for Federal, State, and local government benefit programs. In April 2005, DOL launched GovBenefits en Espanol — and in April 2007, GovBenefits.gov was named as one of the Top 50 most innovative government programs in the Innovations in American Government Award program of Harvard University's John F. Kennedy School of Government. In fact, GovBenefits.gov was one of only six Federal programs so recognized. Since its 2002 launch, GovBenefits.gov has had over 25 million visits — and now includes over 1,000 programs, both Federal and State.

Performance Improvement Initiative
The Performance Improvement Initiative — which, as of July 1, 2007, replaced the Budget and Performance Integration initiative of the PMA — seeks to ensure that performance is routinely considered in funding and management decisions and that agency programs achieve expected results while working toward continual improvement. At DOL, it has also resulted in a gradual cultural shift that fosters a closer dialogue among program, performance, budget, and finance staff. Three FY 2007 areas to highlight:

DEPARTMENTAL e-BUDGETING SYSTEM (DEBS)
A recent management efficiency was gained through how DOL's FY 2009 budget submission was created: the Departmental E-Budget System (DEBS). DEBS is an innovative tool designed to automate the budget formulation process — and allow budget analysts the ability to easily and electronically merge budget data with justification narrative using a web browser. For our FY 2008 cycle, we successfully completed pilot tests of the new DEBS system — which involved five DOL agencies or offices with 50 volunteer users. The DEBS system was rolled out to all of DOL for this FY 2009 budget cycle — and we are proud of the efficiencies gained by and budget produced through this new system.

PROGRAM ASSESSMENT RATING TOOL (PART)
DOL recently concluded six assessments and reassessments through the 2007 PART process. These assessments included National Emergency Grants, the Energy Employees Occupational Injury Compensation Program, Job Corps, the Occupational Safety and Health Administration, the Pension Benefit Guaranty Corporation, and Trade Adjustment Assistance. All new PART assessments, scores, ratings, and Improvement Plans were published this summer on www.ExpectMore.gov. This was several months in advance of when they have been published in the past — and allowed PART findings to play a more central role in the formulation of the FY 2009 DOL Budget.

RIGOROUS EVALUATION OF MAJOR JOB TRAINING PROGRAMS
DOL is contracting an independent study of program effectiveness — using administrative data — to be completed in 2008. Also in 2008, a more rigorous, seven-year evaluation will begin to determine WIA services' impact on employment and earnings outcomes for participants.

Strategic Planning and Program Performance
This is the first report in which DOL will report on progress against the strategic goal structure launched last September 30 in DOL's 2006 — 2011 Strategic Plan. The Government Performance and Results Act of 1993 calls for six-year strategic plans that must be updated every three years. Last year's strategic planning process offered an opportunity to re-examine goals, program strategies and targets, and to solicit feedback from Congressional leadership and the public. The updated plan demonstrates how the Department's diverse agency missions and program objectives will contribute to achieving our four overarching strategic goals: A Prepared Workforce, A Competitive Workforce, Safe and Secure Workplaces, and Strengthened Economic Protections.

In addition, the Department's commitment to the new Performance Improvement Initiative continues through the Program Assessment Rating Tool (PART) process and implementation of PART program improvement plans. To date, 35 DOL programs have been reviewed under the PART process. FY 2007 was the first year of in which previously reviewed programs were reassessed to determine the impact of program improvements identified in the first review. DOL has implemented nearly half of the non-legislative PART recommendations.

Agency-specific PMA Program Initiatives

In addition, DOL is responsible for three of the PMA components found in selected departments: Eliminating Improper Payments, Faith-Based and Community Initiative, and Federal Real Property Asset Management.

Eliminating Improper Payments
The Improper Payments Act of 2002 defines improper payments as payments made to the wrong recipient; in the wrong amount; or used in an improper manner by the recipient. Better detecting and preventing improper payments to ensure taxpayer dollars are wisely and efficiently spent is the goal of the Eliminating Improper Payments initiative.

At DOL, developing strategies and the means to reduce improper payments is good stewardship — and good business. Accurate payments lower program costs, thereby improving efficiency. The Department has three programs classified as high-risk for improper payments. Two are benefit programs — Unemployment Insurance in ETA and the Federal Employees Compensation Act program in ESA — and the third is an ETA grant program administered under the Workforce Investment Act.

While Eliminating Improper Payments is still a fairly new PMA initiative, DOL is making progress and achieving results. Through the efforts of the Department's Office of the Chief Financial Officer and ETA, 35 States now use a cross-match of National Directory of New Hires data with State UI claimant data to identify individuals no longer eligible to receive UI benefits. In 2008, all States will be required to do so.

Faith-Based and Community Initiative
Over the past six years, DOL has significantly expanded opportunities for partnerships with faith-based and community non-profit organizations (FBCOs) to better serve Americans in need. Critical to this effort is removal of any unnecessary barriers to the participation of small and faith-based and community organizations in DOL grants and programs, thus establishing a level playing field for all. As reported last year, the Department employs a wide range of grants, technical assistance and other tools to draw upon the unique strengths of FBCOs in efforts such as serving the unemployed and underemployed, aiding homeless and incarcerated veterans, helping ex-offenders transition from prison to work, and reducing exploitive child labor abroad. In FY 2007, DOL strengthened its partnerships between faith-based and community organizations and the workforce investment system at the state and local levels.

In 2007, DOL's Center for Faith-Based and Community Initiative worked with the Employment and Training Administration to fund a sixth year of Grassroots grants, which feature simplified application and reporting requirements. These modest $25,000 grants allow DOL to draw upon the unique assets FBCOs bring to the task of assisting individuals looking for training and employment. This is particularly true with hard-to-serve populations who often need long-term, in-depth assistance to find and retain jobs. In Program Year 2006, the grantees reported impressive results. Forty-three Grassroots grantees, in partnership with One-Stop Career Centers, provided an expansive range of services, including enabling 1,460 high-need individuals to enter employment. Significantly, 1,007 of these individuals — ranging from ex-offenders to homeless individuals to persons with disabilities — were helped to retain their jobs for at least six months. Part of the partnerships' success came through the efforts of the grantees to leverage a remarkable 14,275 volunteer hours! In FY 2008, we look forward to reporting greater achievements.

Federal Real Property Asset Management
Better managing the Department's properties is at the core the Federal Real Property Asset Management effort. This PMA initiative is intended to eliminate surplus assets; better manage the cost of inventory, and improve the condition of critical assets. The Department's ongoing efforts in real property management have yielded important benefits including DOL's new Space Management System. Our Space Management Initiative includes a new tracking system with data on space holdings, utilization rates, rent costs, and square footage. Using this data to identify potential consolidations, since 2001 the Department has closed just over 100 offices and released over 100,000 square feet — which accounts for an approximate annual cost savings of $2.8 million.

As demonstrated above, the Department has continued to make solid progress in improving DOL's effectiveness and accountability to the American public. This is reflected in the fact that, since 2004, DOL has been honored with four President's Quality Awards for management excellence. More important than the awards are the results for the taxpayers highlighted in this report. We are dedicated to ensuring that our programs achieve the best possible results, are managed effectively, and provide high quality services.