PERFORMANCE REPORT

STRATEGIC AND ORGANIZATIONAL GOALS
ORGANIZATIONAL EXCELLENCE STRATEGIC GOAL

ADVANCE THE DEPARTMENT'S ABILITY TO MANAGE FOR RESULTS AND ACHIEVE THE GOALS OF THE PRESIDENT'S MANAGEMENT AGENDA

We cannot achieve our strategic goals without leadership and continuous improvement in all the supporting functions of the Department. We actively pursue the goals of the President's Management Agenda as well as other externally- and internally-driven initiatives that improve the operations of the entire Department through each and every DOT agency.

The U.S. Department of Transportation leverages $1.20 billion to provide leadership in human resources, commercial services, financial management, performance improvement, and eGov.

Key Performance Areas

Strategic outcomes from the DOT Strategic Plan are indicated in blue and FY 2008 results for key DOT performance measures are marked to indicate Met Target () and Did Not Meet Target ().

President's Management Agenda Achieve PMA goals. See the PMA Scorecard in the Management Discussion and Analysis section of this document for a summary of results in all six initiatives.
Commercial Services Management For major DOT aviation systems, percentage of cost goals established in the acquisition project baselines that are met. For major DOT aviation systems, percentage of scheduled milestones established in acquisition project baselines that are met.	Financial Performance Percentage of major federally funded transportation infrastructure projects with less than 2 percent annual growth for project completion milestones. Percentage of finance plan cost estimates for major federally funded transportation infrastructure projects with less than 2 percent annual growth in project completion cost.

2008 Performance Highlights

• All five transit infrastructure projects were within budget and one is anticipated to finish $141 million (6 percent) under budget. Three transit projects are on schedule including the Denver project finished 19 months (20 percent) ahead of schedule. However the two New York projects are both 12 months behind schedule.
• Since the PMA initiative was established the Department's initiatives have resulted in more than $170 million in real property savings.

President's Management Agenda
FY 2008 Enacted Funds: $1.05 Billion

1. HUMAN CAPITAL

The human capital management agenda focuses on long-term management of the Federal workforce and fostering a citizen-centered, results-based government that is organized to be agile, lean, and focused on core competencies.

FY 2008 Accomplishments DOT has institutionalized systematic approaches to achieving strategic alignment and measurable results of agency activities supporting leadership, knowledge management, performance, diversity, talent management and compliance.

• Electronic Training DOT upgraded the electronic Learning Management System (eLMS), an online training and development system, to make it a more accessible and functional tool that supports planning, scheduling, delivery, tracking, and reporting of training and development activities to increase employee competencies in support of program performance.
• Appraisal Requirements DOT and OPM verified that 70 percent of employees are covered by appraisal programs that meet Performance Appraisal Assessment Tool requirements. The appraisal plans link to Departmental mission, goals and outcomes; hold employees accountable for results appropriate to their level of responsibility; differentiate between various levels of performance; and provide consequences based on performance.

Increased Telework Participation

Telework serves as a means to decrease air pollution, lessen energy consumption, and reduce traffic congestion in support of the Department's Reduced Congestion strategic goal. Additionally, telework improves our employees' worklife quality and serves as a workforce flexibility used as a strategic recruitment and retention tool.

DOT set a 50 percent telework-eligible participation goal, and this year all senior executive performance plans include a telework objective.

Telework also serves as a sound business practice for emergency preparedness and continuity of operations to increase workforce readiness as our employees may be called upon to respond to natural/human disasters and events. DOT leveraged the conditions of a major local event near DOT headquarters to conduct the largest telework Continuity of Operations (COOP) exercise in the history of the Federal Government. Sixty-three percent of DOT headquarters employees teleworked on a single day to test our COOP policies and operations and make improvements to the program.

2. COMMERCIAL SERVICES MANAGEMENT

DOT ensures that we are providing cost-effective services by determining which of those services are better performed by the commercial sector. During 2008, this President's Management Agenda initiative was expanded to incorporate related business process reengineering efforts that rely on disciplined management practices including those that are intended to lead to creation of a high performing organization.

FY 2008 Accomplishments DOT conducted all required FAIR Act Inventories, with a focus on accuracy and completeness, assessing each eligible Federal position to be inherently governmental or commercial in nature.

• Competitions Since 2002, DOT has completed 23 competitions covering 30 percent of the 9,772 FTE coded as commercial during the FY 2005 FAIR Act Inventory. Estimated savings from all organizational change efforts are $2.3 billion.
• Independent Validations DOT completed independent validations of competitions beginning in 2005 and results prove that DOT has achieved savings and cost avoidances of $8 million, as reported in the 2007 Annual Report to Congress.
• Regained Scorecard Status For the fourth quarter scorecard period, the Department regained its green status and progress rating. Achievement of green status and progress resulted from completion of 11 and initiation of two independent validations of savings efforts for competitive sourcing projects, and the announcement of management reengineering efforts for certain activities within the FAA and FHWA.

Area of Emphasis:
Transportation Infrastructure Projects

Infrastructure projects are not static; at any point conditions may change in ways that impact the cost of the project or the delivery date. Monitoring cost, schedule, and performance of infrastructure projects is critical in order to identify problems and initiate action to mitigate risk. Three DOT operating administrations oversee major infrastructure projects included in the following infrastructure project performance measures: FAA, FHWA and FTA.

FY 2008 Results. DOT did not meet either schedule or cost targets in FY 2008.

Performance Measure Percentage of major federally funded transportation infrastructure projects with less than 2 percent annual growth for project completion milestones
	2005	2006	2007	2008
Target	N/A	90	90	90
Actual	89	89	89	79
Associated FY 2008 Funding - $46.3 million

Performance Measure Percentage of finance plan cost estimates for major federally funded transportation infrastructure projects with less than 2 percent annual growth in project completion cost
	2005	2006	2007	2008
Target	N/A	90	90	90
Actual	81	84	83	82
Associated FY 2008 Funding - $46.3 million

Air FAA has major runway projects (those costing more than $1 billion) at Seattle-Tacoma (SEA) and Chicago O'Hare (ORD). The projects at both SEA and ORD are on schedule for completion in the first quarter of FY 2009 because they have met the preceding FY 2008 performance targets in project completion cost and milestones. The commissioning of airfield infrastructure (runways and taxiways) provides these airports with the ability to handle more arrivals and departures efficiently and reduce ground delays. Both projects are on schedule for completion and commissioning with no increases in cost in FY 2008.

Highways Of the 26 FHWA major infrastructure projects with estimated costs of more than $500 million, 21 met the completion milestones and 20 met cost milestones. Most projects that missed the completion dates were by less than one month. Of the six that missed cost schedules, three were still under budget. For the three projects exceeding their budgets, adequate contingencies were in place to account for the increases.

Transit FTA has five major projects (projects that exceed $1 billion): New York East Side Access; New York Second Avenue, Dallas Northwest/Southeast; Phoenix Light Rail and Seattle Central Link Light Rail. All five projects were within 2 percent of budget and the Seattle project is anticipated to finish $141 million (6 percent) under budget. Three of the projects are on schedule including the Denver project which finished 19 months (20 percent) ahead of schedule. However, the two New York projects are both 12 months behind schedule.

FY 2009 Performance Forecast.

Air FAA expects to meet the FY 2009 performance targets for both project completion cost and milestones. Only one sub-project of the Chicago O'Hare Modernization Program (OMP), the relocated runway, will remain unfinished as all other components of the OMP Phase 1 will be completed either late in FY 2008 or early in FY 2009. The Seattle runway will be completed in early FY 2009. Neither the Chicago nor Seattle projects are expected to grow in costs in excess of the target.

Highways SAFETEA-LU lowered the monetary threshold for classification as a FHWA Major Project from $1 billion to $500 million. Lowering the monetary threshold increases the number of active Major Projects that FHWA must monitor to 40 by the end of 2009. With more experience in managing costs and schedules for Major Projects, it is expected that the FY 2009 targets for the annual performance measure will be met. FHWA will continue to work with States to attempt to bring in all existing and newly classified Major Projects on time and within budget. But, unforeseen factors such as local labor shortages or a significant increase in the cost of materials could impact schedules and budgets.

Transit It is anticipated that FTA will meet the FY 2009 targets. FTA uses risk management as a continuous process for planning, assessment, mitigation and monitoring. The risk assessment for project cost and schedule was used as a guide to establish a project execution strategy that utilizes a contingency management plan and risk mitigation plan to monitor the projects. However, global economic changes in the cost of materials are causing project sponsors to redesign and repackage contracts to increase competitions after higher bids are received. Also, contractor competition on very large projects in the New York market has not been good because of all the new building in that area. Yet even with uncertain economic conditions, budgets are still being maintained because schedules are being extended in order to allow sufficient time to repackage contracts in response to the changing bidding climate.

3. FINANCIAL PERFORMANCE

DOT's financial stewardship is guided by its performance on key financial metrics which highlight on-going efforts to manage and upgrade fundamental financial factors such as assurances of financial controls, performance under the Federal Managers Financial Integrity Act (FMFIA), financial system upgrades and reduction of improper payments.

FY 2008 Accomplishments The Government Accountability Office and the DOT Office of Inspector General have aggressively recommended that DOT financial management focus on needed improvements. DOT has responded with several efforts that have improved financial performance throughout the Operating Administrations and the Department as a whole.

• Elevated Scorecard Status DOT achieved 'Yellow', elevating its PMA Scorecard during the second quarter of FY 2008. The rise in status was primarily due to DOT successfully regaining a clean audit opinion as the result of a comprehensive cleaning up of FAA's Construction in Progress data.
• Procurement System Consolidation In June 2008, DOT formally established a Department-wide strategy to consolidate 10 stand-alone procurement systems into a single system that would also be integrated with Delphi, the Department's financial management system. This consolidation and integration reduces system operation costs and software maintenance costs, while automating commitment accounting, eliminating duplicate manual data entry, and significantly improving information provided to financial managers for decision-making. Implementation will begin in FY 2009.
• Internal Controls System After 2 years of design, DOT has implemented an internal controls system in accordance with the requirements presented in OMB Circular A-123. Testing began in 2008.
• Centralized Financial Services DOT finalized the transition of all its accounting operations to the Enterprise Services Center (ESC) in Oklahoma City with the exception of the FAA which continues to do its own statements. With all accounting operations staff centrally located, financial policies are being applied more consistently, training on system updates is more efficient, and accounting operations are better managed during peak periods.
• Financial Performance Metrics DOT rolled out a new department-wide initiative designed to help the Operating Administrations recognize and reconcile longstanding data issues in their financial systems. DOT identified fourteen areas of concern and defined corrective actions using an in-house, web-based tool that reports data on a monthly basis. In FY 2008, DOT improved performance on a number of metrics such as increasing the use of electronic payments over paper checks, reduced budgetary to proprietary reconciling items, eliminated the use of suspense accounts and has reduced abnormal balances in general ledger accounts. Two operating administrations reduced their total debt eligible for referral to Treasury from over $1 million to zero in the third quarter of this fiscal year. The result was a major clean up of pending actions in receivables that had previously been on hold.
• Financial Integrity The requirements governing financial management integrity-OMB Circular A-123, Appendix A, Internal Control over Financial Reporting and the traditional Federal Managers Financial Integrity Act (FMFIA). In FY 2008, DOT integrated the analysis and assessment of processes across A-123 and FMFIA to better support the annual assurances required of the agency. The result has been a reduction in potentially duplicative review activities and a strengthening of the analytical basis for assurances issued by DOT executives.

Area of Emphasis: Managing Major Acquisition Projects

Lifecycle acquisition management is built around a logical sequence of phases and decision points to determine and prioritize needs, make sound investment decisions, implement solutions efficiently, and manage services and assets over their lifecycle. The overarching goal is continuous improvement in the delivery of safe, secure, and efficient services over time to ensure that taxpayer dollars spent through DOT's acquisition programs achieve performance outcomes required by tracking cost and schedule milestones.

Performance Measure For major DOT aviation systems, percentage of cost goals established in the acquisition project baselines that are met
	2005	2006	2007	2008
Target	80	85	87.5	90
Actual	97	100	100	96.08
Associated FY 2008 Funding - $30 million

Performance Measure For major DOT aviation systems, percentage of scheduled milestones established in acquisition project baselines that are met
	2005	2006	2007	2008
Target	80	80	85	90
Actual	92	97.4	97	93.88
Associated FY 2008 Funding - $30 million

2008 Results. DOT met 2008 targets. FAA tracked 98 milestones against 51 acquisition programs for this performance measure and met all variances for cost and schedule. Any program with a total budget-at-completion variance of less than 10 percent from the beginning of FY 2008 to the end of FY 2008 is considered to have met the established fiscal year cost performance goal.

FY 2009 Performance Forecast. DOT anticipates meeting the performance targets in FY 2009. Beginning in FY 2009, the FAA will implement standard written criteria for selection of programs and milestones included in the agency's FY 2009 Cost and Schedule acquisition goal. The milestones selected will include major efforts or events contributing to the completion of total program acquisition baseline, or events that are of significant priority to the agency for advancing major programs.

Comprehensive Financial Reform through Business Transformation

During FY 2008, DOT initiated an effort to standardize department-wide business processes in accordance with OMB's Lines of Business Initiatives and develop and define requirements for future financial management system upgrades. The business transformation initiative falls into five main categories.

(1) Reporting and information sharing involves designing a common reporting inventory, the ability to roll-up cost and performance data and improve data quality and integrity, and a shared reporting solution and tools. (2) Business process engineering is intended to achieve economies of scale with consolidated accounting services, implement an integrated procurement solution, and develop a formal process to guide decisions and future investments. (3) Data management involves creation of a Department-wide Accounting Code Structure (ACS) that is aligned with the emerging Common Governmental Accounting Code, and a common data management strategy. (4) Current system set up involves preparations to convert to newer versions of the operating system, improvements to key financial system processes, and development of a strategy to archive and purge as appropriate elements of the current system. (5) Future systems set up involves creation of a comprehensive strategy that includes training and communications plans, anticipated hardware requirements, and increasing security requirements.

To date, the Department has established a governance structure to oversee this program using the CFOs from each DOT agency as a single decision-making body. A Business Transformation Team has been established to manage and coordinate the daily progress of the transformation initiatives and five workgroups have initiated work on the targeted objectives. In FY 2009, work will continue in all five areas.

4. ELECTRONIC GOVERNMENT

DOT is committed to ensuring that investment in information technology (IT) significantly improves its ability to serve the public and that IT systems are part of a comprehensive and secure information architecture. Effective implementation of e-Government initiatives makes DOT more accessible and more responsive to citizens and stakeholders while also making information dissemination more cost-effective.

FY 2008 Accomplishments

• Enterprise Architecture An Enterprise Architecture strategy was approved. This Transition Strategy is designed to move from the 'as-is' state to the 'to be' state over the next 3-5 years using a system of planning and investment control.
• Project Management Operating Administrations of DOT maintained compliance with American National Standards Institute (ANSI) standards and averaged project completions within 10 percent of budget and schedule. Concentration is on Earned Value Management for OMB-designated major investments.
• Employee IDs Made significant progress toward a Homeland Security requirement HSPD-12, the government-wide standard for secure and reliable forms of identification for Federal employees and contractors. Card issuance is already in progress.

5. PERFORMANCE IMPROVEMENT

Regular, systematic measurement and accountability for program performance compared to pre-determined targets is the means to improve DOT management. Connecting budgeting to performance management ensures that resources are properly aligned with mission and goal activities but also that the results of those activities are tied back into the annual budget planning process primarily through outcome-based measurement.

FY 2008 Accomplishments

• Managed Performance The Program Assessment Rating Tool (PART) measures for rating DOT programs were met or exceeded at a rate of 52 percent. Eighty-three percent of those targets actually exceeded the planned rate of performance.
• Program Improvements Ninety-eight percent of planned improvement actions are on track. Sixty-five percent of those on-track program improvements have already been achieved and the majority of the remaining items are scheduled for completion in FY 2009.
• Performance and Accountability Report Earned the top rating among all Federal agencies for DOT's FY 2007 Performance and Accountability Report from George Mason University's Mercatus Center.

Performance Improvement Team

DOT established and implemented a comprehensive performance improvement mechanism -- the Transportation Performance Improvement Council (T-PIT) - which is charged with actively identifying and making targeted improvements that advance performance management in the Department.

Creation of this integrated performance improvement mechanism is significant in that it synthesizes, for the first time, three critical success factors: (1) collaboration across all DOT agencies; (2) active participation from both high level and working level managers; and (3) a systems approach to improvement through participation from support functions and programs.

The DOT performance community will benefit from a more advanced approach to resolving performance management issues and DOT programs will benefit from the informal, applied education that takes place as a part of the council's performance management prioritization and improvement processes.

6. FEDERAL REAL PROPERTY ASSET MANAGEMENT

It is the policy of the United States to promote the efficient and economical use of America's real property assets and to ensure management accountability for implementing Federal real property management reforms. DOT recognizes the importance of real property resources through increased management attention, the establishment of clear goals and objectives, improved policies and levels of accountability, and other appropriate action.

FY 2008 Accomplishments The entire Department, working as a team, has continued to make progress in the elimination of surplus real property, maintaining assets in the proper condition, and management of real property at the right cost.

• Elevated Scorecard Status During the second quarter (Q2) of FY 2008, the Department's real property initiative was rated 'Green' in PMA Status, as well as 'Green' in PMA Progress. The double 'Green' ratings were maintained in Q3 and Q4 FY 2008.
• Disposals In the Federal Real Property Council's June 2008 report, the Department had the highest number of property disposals for a non-DoD agency. During FY 2008, the Department was able to remove more than 2,270 real property assets from its inventory of buildings, structures, and land.
• Innovation The Department received FY 2008 National-level Honorable Mention recognition by GSA for exceptional real property innovation in Federal Government-wide property management initiatives.

Asset Management Review

Management of the Department's inventory has been greatly simplified through the development of a real-time, on-line dashboard application that provides real property managers with accurate data for daily decision-making.

Savings Since the PMA initiative was established the Department's initiatives have resulted in disposals of more than $170 million worth of real property assets. Savings resulting from the disposition of property have been applied toward future disposition efforts, as well as updates, upgrades, repairs, and renovations of current assets.

Disposition DOT removed more than 2,270 real property assets from its inventory of buildings, structures, and land. While a large number of the retired properties were zero-cost leases associated with the FAA's on-airport space, the value of other assets disposed of in FY 2008 exceeded $85 million. Funds realized from the disposition successes are being applied to facility modernization efforts.

Performance Data Completeness and Reliability

Performance measurement is dependent on the availability of useful data that will indicate level of performance and helps progress toward achieving organizational goals. Because all data are imperfect in some fashion, pursuing perfect data may consume public resources without creating appreciable value. For this reason, there must be an approach that provides sufficient accuracy and timeliness but at a reasonable cost. This section of the report provides information on how DOT uses performance data, assesses limitations of the data, and plans to improve DOT's data.

IN GENERAL

In an attempt to bring consistency and quality to its performance reporting, DOT has implemented some general rules regarding the data it uses and how it is evaluated.

Annual Data - Whenever available, the data in this document are reported on a Federal Government fiscal year basis. However, there are instances where fiscal year data are not available so calendar year data are used instead. This often occurs when data are collected and reported to DOT by external sources and a calendar year reporting requirement is specified in the implementing regulation.

Completeness of Data for Annual Results - If available, the results for the most recent year in the report are listed as Actual in the shaded box for each performance measure. However, given the November 15 deadline for submission of the Performance and Accountability Report, not all data have been compiled and finalized for the entire year. When an actual value is not available for the current year, either an estimate or a projection is provided instead. In general, estimates are based on partial-year data that are extrapolated to cover a full 12-month period. Historical trend information, supplemented by program expertise, is then applied to estimate the remaining months of performance for which actual data is unavailable. The result is identified as a preliminary estimate in the report. If partial-year data are not available, then past trend information is analyzed and supplemented by program knowledge to develop a projected value for the annual performance measure. The result is identified as a projection in the report. As data are finalized, the projections and preliminary estimates are replaced by actual results, with resulting changes denoted by an (r). Results are also amended as errors and omissions are identified in the data verification process, as updated information is provided by the reporting sources, or because of legal or other action that changes a previously-reported value.

Reliability of Measurement Data - DOT performance data are generally reliable (useful to program managers and policy makers). But because performance results in a given year are influenced by multiple factors, some of which are beyond DOT's control, and some of which are due to random chance, there may be considerable variation from year to year. A better “picture” of performance may be gained by looking at results over time to determine if there is a trend.

Virtually all data have errors. We have compiled Source and Accuracy Statements for each of the DOT data programs used in this report, which can be found at http:/ /www.bts.gov/ programs/ statistical_policy_and_research/ source_and_accuracy_compendium/ index.html. The Source and Accuracy Statements give more detail on the methods used to collect the data, sources of variation and bias in the data, and methods used to verify and validate the data.

Assessing and, where possible, eliminating sources of error in DOT data collection programs has always been an important task for data program managers. As part of their ongoing work, managers of Departmental data programs use quality control techniques to identify where errors can be introduced into the data collection system. Program managers also use computerized edit checks and range checks to minimize errors that may be introduced into the data of their respective programs. In addition, quality measurement techniques are employed to measure the effects of unanticipated errors. These include verification of data collection and coding, as well as coverage, response and non-response error studies to measure the extent of human error affecting the data. As sources of error are identified, data collection is improved. Quality control is an ongoing and continuous effort to improve data accuracy and availability.

The data used in measuring performance come from a wide variety of sources. Much of it originates from sources outside of the Department and, therefore, outside of the direct control of the Department. The data often come from administrative records or from sample surveys. While DOT may not have a strong voice in improving the quality of outside data, the Department takes all available information about the limitations and known biases in outside data into account when using the data.

To help the OAs address these issues, the Bureau of Transportation Statistics (BTS) is developing a statistical policy framework where the OAs will work together to identify and implement the current statistical best practices in all aspects of their data collection programs. This project is consistent with the data capacity discussions found in the DOT Strategic Plan.

See Other Accompanying Information in the Financial Report for detailed explanations of completeness and reliability for each performance measure.

DATA LIMITATIONS

DOT Data Source Limitations - Timeliness is the most significant limitation for DOT performance measurement data. Some DOT data are not collected annually. For example, the National Household Travel Survey and the Commodity Flow Survey each collect data every five years. Data that are collected each year (or more frequently) require time to analyze, confirm and report results. For example, Highway Performance Monitoring System vehicle-miles traveled (VMT) data require several months of post-collection processing, making final results unavailable for this performance report.

Other performance measurement data limitations are identified in the previously mentioned Source and Accuracy Statements for DOT data programs. These statements contain descriptions of data collection program design, estimates of sampling errors (if applicable), and discussions of non-sampling errors. Non-sampling errors include under-coverage, item and unit non-response, interviewer and respondent response errors, processing errors, and errors made in data analysis.

Estimating and Projection Techniques Used - As discussed under completeness, many of the FY 2007 measures must be projected from either partial-year data or historical trends. The projections based on partial-year data from FY 2007 are more likely to reflect changes effected by current DOT policies and programs. The measures projected from FY 2006 and prior historical data reflect continuing trends from ongoing programs, but do not reflect the effects of changes implemented in FY 2007.

External Data Source Limitations - Data that originate from external or third-party sources are not directly controlled by DOT. These data often come from administrative records or from sample surveys. Timeliness is also a significant limitation. For example, many DOT internal data programs rely on data provided by State DOTs. DOT partners closely with the States, but does not have direct control over these programs.