Summary
In fiscal year 2005, the federal government spent nearly $117 billion on capital investments intended to yield long-term benefits for its operations. Effective capital planning ensures that the sizable investments made by federal agencies result in the most efficient return to taxpayers. Accordingly, GAO evaluated (1) how well selected entities followed the planning phase principles of GAO's Executive Guide and the Office of Management and Budget's (OMB) Capital Programming Guide, (2) OMB's actions to encourage all agencies to conform with capital planning principles, and (3) what capital planning information is received by or would be useful to congressional decision makers. Based on missions, asset types, and capital spending, we selected three entities to review within the Departments of Energy (DOE) and Homeland Security (DHS).
The selected entities--the Offices of Science (SC) and Environmental Management (EM) within DOE and U.S. Customs and Border Protection (CBP) within DHS--had mixed success with implementing the planning phase principles and practices described in OMB's and our guides. We found that in their capital planning processes, the selected entities' guidance generally requires linkage between proposed investments and strategic goals and they assess needs and identify performance gaps in a variety of ways. We also found that the selected entities' evaluations of alternatives are not always apparent in their capital planning documentation. Each entity has established a framework to review and approve proposed investments and uses criteria to rank and select projects, but problems exist with CBP's framework and CBP has only established criteria to rank and select its real property investments. In addition, although each entity produces some long-term planning documents, none has developed a comprehensive capital plan that defines all of its long-term investment decisions. OMB worked with agencies to update its Capital Programming Guide, which was released in June 2006. OMB staff also told us that OMB requires agencies to comply with the principles and practices in its guide. However, OMB does not routinely request all the information recommended by its guide. For example, although OMB's guide encourages agencies to develop long-term capital plans, OMB staff told us they do not request copies of these plans, so it is not clear whether all agencies develop them. Instead, OMB staff said they are able to determine if an agency has a capital planning process based on other required documents. Although these documents contain some elements of a long-term capital plan, they do not include all expected aspects. Congressional staff with whom we met believed additional capital planning information would be useful. Specifically, those responsible for resource allocation for and oversight of SC, EM, and CBP told us they would like to receive the type of information that would be found in a long-term capital plan. Congressional staff said that this information would help Congress make better-informed appropriations and oversight decisions.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
Susan J. Irving
Government Accountability Office: Strategic Issues
(202) 512-9142
Matters for Congressional Consideration
Recommendation: To ensure that it is receiving the capital planning information it needs to make informed decisions, Congress may wish to require agencies to develop comprehensive, long-term capital plans and submit them for congressional review.
Status: In process
Comments: As of March 14, 2008, Congress has not issued such a requirement.
Recommendations for Executive Action
Recommendation: The Secretary of Energy should ensure that comprehensive alternatives evaluations of capital investments, including consideration of noncapital alternatives as appropriate, are conducted and discussed in agency planning documents.
Agency Affected: Department of Energy
Status: In process
Comments: Although DOE concurred with our recommendation to undertake comprehensive alternatives evaluation, in comments on our draft report DOE stated that by following DOE Order 413.3A, they believe they have met the intent of OMB guidance. Because we do not agree that DOE's alternatives evaluation is comprehensive, we are keeping this recommendation open.
Recommendation: The Secretary of Homeland Security should direct the Commissioner of CBP to ensure that comprehensive alternatives evaluations of capital investments, including consideration of noncapital alternatives as appropriate, are conducted and discussed in agency planning documents.
Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security: Bureau of Customs and Border Protection
Status: In process
Comments: In comments on the report draft, DHS stated it concurred with our recommendations and that it was sponsoring a complete review of all existing capital investment review practices. As of March 2008, DHS expects to complete this review in early fall 2008. Also, an initial memo has been issued describing how the process for major investments will change.
Recommendation: The Secretary of Homeland Security should direct the Commissioner of CBP to require the development of criteria to rank and select capital projects.
Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security: Bureau of Customs and Border Protection
Status: In process
Comments: In comments on the report draft, DHS stated it concurred with our recommendations and that it was sponsoring a complete review of all existing capital investment review practices. As of March 2008, DHS expects to complete this review in early fall 2008. Also, an initial memo has been issued describing how the process for major investments will change.
Recommendation: The Secretary of Homeland Security should direct the Commissioner of CBP to lower the dollar amount of the review threshold for non-information technology capital projects to ensure that all capital projects are linked to the agency's strategic goals and objectives and receive an appropriate level of review.
Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security: Bureau of Customs and Border Protection
Status: In process
Comments: In comments on the report draft, DHS stated it concurred with our recommendations and that it was sponsoring a complete review of all existing capital investment review practices. As of March 2008, DHS expects to complete this review in early fall 2008. Also, an initial memo has been issued describing how the process for major investments will change.
Recommendation: The Secretary of Homeland Security should direct the Commissioner of CBP to require the development of a single, agencywide, long-term capital plan to reflect all long-term capital investment decisions.
Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security: Bureau of Customs and Border Protection
Status: In process
Comments: In comments on the report draft, DHS stated it concurred with our recommendations and that it was sponsoring a complete review of all existing capital investment review practices. As of March 2008, DHS expects to complete this review in early fall 2008. Also, an initial memo has been issued describing how the process for major investments will change.
Recommendation: The Secretary of Homeland Security should finalize the Investment Review Process and its related guidance.
Agency Affected: Department of Homeland Security
Status: In process
Comments: In comments on the report draft, DHS stated it concurred with our recommendations and that it was sponsoring a complete review of all existing capital investment review practices. As of March 2008, DHS expects to complete this review in early fall 2008. Also, an initial memo has been issued describing how the process for major investments will change.
Recommendation: The Director of the Office of Management and Budget should instruct agencies to make their agencywide, long-term capital plans available to congressional decision makers.
Agency Affected: Executive Office of the President: Office of Management and Budget
Status: In process
Comments: In comments on the report draft, OMB said that although there are benefits from OMB review of agency long-term capital plans on an as needed basis, it did not agree that all agencies should be required to submit long-term capital plans. It stated that a summary might be sufficent for the Congressional authorization process or justifications for the appropriate committees. As of March 2008, OMB has not changed its views on this matter.
Recommendation: Further, the Secretary of Energy should require the development of a single, agencywide, long-term capital plan to reflect all long term capital investment decisions.
Agency Affected: Department of Energy
Status: In process
Comments: Although DOE concurred with our recommendation to undertake comprehensive alternatives evaluation, in comments on our draft report DOE stated that by following DOE Order 413.3A, they believe they have met the intent of OMB guidance. Because we do not agree that DOE's alternatives evaluation is comprehensive, we are keeping this recommendation open.
Recommendation: The Secretary of Homeland Security should also consider if similar changes need to be made at other DHS component agencies.
Agency Affected: Department of Homeland Security
Status: In process
Comments: In comments on the report draft, DHS stated it concurred with our recommendations, and that it was sponsoring a complete review of all existing capital investment review practices. As of March 2008, DHS expects to complete this review in early fall 2008. Also, an initial memo has been issued describing how the process for major investments will change.
