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PROGRESS IMPLEMENTING THE PRESIDENT'S MANAGEMENT AGENDA
Overall StatusAlmost two years after the launch of the President's Management Agenda (PMA), the federal government is in the midst of a significant transformation. By this time next year, the average federal agency will be:
Prior to the establishment of the PMA, most agencies did not regularly assess the skills of their workforces relative to their needs. Nor did they have data on retention and retirement rates, much less use any of this information to make human capital decisions. Agencies did not have timely financial information and their financial statements often took more than five months to prepare. Before the PMA, only the Department of Defense (DoD) regularly held competitions to determine whether the public or private sector delivered the best value to the taxpayer when conducting commercial activities. Different agencies pursued redundant approaches to providing information to citizens on government benefits, recreation opportunities, and proposed regulations. In addition, agencies were not held accountable for the performance of their programs, and funding and management decisions rarely took performance information into account. Over the past two years, the Office of Management and Budget (OMB) has identified the five management areas it believes are most in need of improvement. OMB has worked with agencies to clarify their specific management improvement opportunities, establish accountability, develop useful management tools, demonstrate what is possible, and establish mutually agreed-upon, aggressive milestones to achieve success. The agencies are fully committed to the Management Agenda because they now realize it will help them be successful. They actively seek OMB's help in getting to where they want to be on the PMA initiatives. Noteworthy agency accomplishments, as well as areas that require sustained focus, are included in the Highlights of Agency Performance table, which appears later in this chapter. Some recent accomplishments include the Department of Commerce's completion of Program Assessment Rating Tools (PARTs) for programs accounting for nearly two-thirds of the Department's funding. The Department of Energy successfully removed 21 of 58 IT investments from the "at-risk" list. The Small Business Administration streamlined its human capital management by separately consolidating administrative functions for loan and section 8(a) government-procurement programs, thereby reducing processing times and overhead costs. The Social Security Administration (SSA) developed a new performance appraisal system for GS–15 employees, which is linked to the agency's goals. This chapter has already discussed what additional accomplishments agencies are on the verge of achieving. Agencies will have made even greater management improvements within just five years. By that time, all federal agencies will be able to say their full implementation of the Management Agenda is also allowing them to:
THE PRESIDENT'S MANAGEMENT AGENDA SCORECARDTo monitor efforts in implementing the PMA, the Administration developed a simple grading system—red, yellow, and green. Each quarter, the major federal agencies receive assessments of their overall status in achieving the "standards for success"—management milestones for each of the initiatives. Because achieving these goals is challenging, and in some cases may require years, agencies also receive progress ratings for their work over the previous three months. Progress scores are based on the achievement of specific action steps and milestones identified by the agencies and OMB. The scorecard for the quarter that ended on June 30, 2003, follows this chapter. Quarterly scorecards, the standards for success, and other information on the PMA can be found at the Results.gov website. THE GOVERNMENT-WIDE INITIATIVESStrategic Management of Human CapitalThe Human Capital Initiative has most federal agencies developing both a vision and a roadmap for strategically managing their workforces to better accomplish their missions for the American people. Agencies are using the Human Capital Assessment and Accountability Framework developed by the Office of Personnel Management (OPM) to transform key areas of human capital management:
Agencies have begun systematically identifying mission-critical occupations and competencies in the current and future workforce to ensure they have the necessary talent. They are also developing strategies to close any gaps. OPM is supporting these efforts by encouraging the strategic use of both new and existing recruitment and retention flexibilities. In addition, to help agencies build their leadership ranks, OPM is encouraging use of an accelerated selection process for Senior Executive Service (SES) positions and executing a succession-planning strategy to fill the leadership pipeline from a diverse pool of qualified applicants. Agencies also are working to improve their ability to keep and motivate their employees through management systems that emphasize performance. The Federal Human Capital Survey showed that only 30 percent of employees responding believe that their awards program gives them the incentive to do their best. Agency efforts to more clearly tie performance management to results will set the stage for the successful use of the Human Capital Performance Fund proposed in the 2004 Budget. This $500 million fund would allow managers to reward their highest performers with increases to their base pay when they demonstrate that their performance appraisal systems appropriately distinguish between high and low performers. Competitive SourcingThe past quarter represented a break-through for the Competitive Sourcing Initiative as three agencies—DoD, the Department of Education, and OPM—were the first to improve to yellow status. Until recently, the use of competition as a management tool to determine the most cost-effective means for service delivery remained largely untested in the federal government. Although competition for commercial services has been the stated policy of the government since 1955, few civilian agencies used competitive sourcing to explore opportunities to perform their commercial functions in a more efficient fashion, primarily because the process for conducting competitions was cumbersome and lengthy. Agencies also lacked the necessary expertise to conduct competitions. Significant obstacles were reduced during the past few months. On May 29, 2003, OMB released the revised Circular A–76 and laid out a much improved process for conducting competitions. The new circular streamlines the competition process and reduces the time needed to complete it. The new circular also levels the playing field, making the process fairer for both the private sector and government entities involved in the competition. To achieve the greatest value for the taxpayer, the new circular eliminates the practice of direct conversions, where agencies were allowed to convert work to contractors without first considering the benefit of continued performance by the agency. The new circular also requires the designation of a responsible official to ensure sufficient expertise at the agency. Several agencies were able to make great strides in competitive sourcing: numerous competitions are currently underway and many have already been completed. As more agencies make progress in competitive sourcing, there will be greater opportunities for sharing experiences. The eventual goal is to make competitive sourcing a tool regularly used by managers to determine the best way to perform commercial functions. Because competitive sourcing often results in re-engineering of government processes, independent studies by the General Accounting Office (GAO) and others, as well as experience to date, show that the taxpayer benefits from competition regardless of whether the function is retained in-house or contracted out to the private sector. Improved Financial PerformanceOver the past few months, two agencies—the Environmental Protection Agency and SSA—met all the criteria for the Improved Financial Performance Initiative. Both received unqualified opinions on their financial statements, have financial systems compliant with federal law, and are free of repeat material weaknesses cited by auditors. Most importantly, they have demonstrated that they use accurate and timely financial information to manage their organizations. Both these agencies earned a green status score this quarter. All agencies are revamping the processes they use to prepare their financial statements. While Treasury and SSA were able to close their books in 45 days this past year, two years in advance of the government-wide goal, almost half of all others are on track to meet this deadline for their 2003 statements, one year in advance of the goal. An important building block that enables agencies to close their books earlier is the preparation of interim quarterly financial statements which, for the first time, all agencies have produced. The reduction of erroneous payments is integral not only to sound financial management, but to program integrity. To date, the initiative to reduce erroneous payments has shown that in programs making about $900 billion in payments, erroneous payments exceed $35 billion annually. In May 2003, OMB issued guidance for measuring, reducing, and recovering erroneous payments to implement the Improper Payments Information Act of 2002. With implementation of this law, the Administration will be providing scrutiny to every dollar the government spends as a way to ensure taxpayer dollars are paid properly. Expanded Electronic GovernmentThe Expanded Electronic Government Initiative is using IT to provide services to the taxpayer in more convenient and efficient ways. Various E-Gov projects were launched over the past few months, including:
The President's E-Gov initiatives aim to make government more responsive to its citizens. They also aim to reduce redundant, wasteful spending by consolidating multiple citizen service projects into single solutions. In an effort to make the federal government a smarter buyer of commercial software, the Administration has created the SmartBUY (Software Managed and Acquired on the Right Terms) initiative. SmartBUY enterprise software agreements will consolidate the purchasing power of the federal government by focusing these volume requirements to obtain optimal pricing and preferred terms and conditions for widely used commercial software. SmartBUY will give the government lower prices, while vendors get higher sales volume at lower cost due to the simplified approach to dealing with federal customers. Agencies also continue to make strides in improving their internal IT management by strengthening the business cases they use to justify IT spending, ensure that projects are well managed, and improving system security. Today, 60 percent of the government's IT systems have sufficient security in place. By July 2004, we expect 80 percent of the government's IT systems to be secure. Budget and Performance IntegrationWhile the 2004 President's Budget included an unprecedented amount of performance information, such as ratings for 234 federal programs, it represented only the first installment of program accountability for achieving results. Using the PART, OMB and agencies are currently working to rate an additional 20 percent of federal programs so that the information from those ratings can be considered in the development of the 2005 Budget. For programs rated in the 2004 Budget, agencies are implementing the recommendations that resulted from the PART with the ultimate goal of improving program effectiveness and efficiency. The overall plan remains to rate an additional 20 percent of federal programs each year until all programs are systematically evaluated on an annual basis. Central to this initiative is ensuring that performance measures and other information from the PART will be used to support and explain budget requests. Funding requests should be based on an expected level of performance. Toward this end, agencies are working to develop useful, informative performance measures, including better measures of program efficiency. They are also preparing "performance budgets"—funding proposals that are based on anticipated results—which they will submit to OMB in the fall. Agency PerformanceAs mentioned earlier, each quarter agencies are rated on their status and progress in implementing the PMA. It is important to note that overall progress on the Agenda is comprised of individual agency achievements. The accompanying table provides a summary of the accomplishments of note for each agency rated in the scorecard. The table also identifies areas that present challenges and are therefore receiving additional attention and focus.
SPECIFIC PROGRAM INITIATIVESThe PMA also includes eight initiatives that are program-specific. Quarterly ratings are also prepared for the program initiatives. Faith-Based and Community InitiativeThe Faith-Based and Community Initiative is designed to identify and remove improper federal barriers to the full participation of faith-based and community organizations in the provision of social services. In December, Presidential Executive Order 13280 created Centers for Faith-Based and Community Initiatives at AID and the Department of Agriculture, raising to seven the number of Centers that have been established. In order to track the participation of Faith-Based/Community-Based Organizations (FBO/CBOs) in these programs, the agencies have begun including a survey in the grant application packages sent out to interested groups. This year's data collection will establish benchmark levels, and next year's data will provide a basis for determining whether progress has met expectations. The Compassion Capital Fund demonstration program, administered by the Department of Health and Human Services (HHS), has funded 21 intermediaries to provide technical assistance and sub-awards to small FBO/CBOs. Similarly, the Department of Labor will hold a technical assistance conference in early August to assist last year's intermediary grantees as well as intermediary grantees for 2003 and 2004 in their efforts to build the capacity of small FBO/CBOs. The Department of the Interior also took a significant step to end what has been a discriminatory double-standard applied to religious properties. As a result, historically significant treasures that are also used for religious purposes will now be eligible to receive historic preservation grants. In May, the Old North Church of Boston received the first such grant under the Save America's Treasures Historic Preservation Fund. Privatization of Military HousingDoD is tackling the problems of inadequate military housing by demolishing dilapidated units, renovating existing homes, and building new ones. Increasingly, DoD relies on the private sector, which has demonstrated expertise in the management of real property and can improve the quality of DoD-owned housing at less cost and more quickly than the federal government. Prior to 2001, DoD had privatized only 4,744 units. Under this Administration's privatization initiative, DoD has accelerated and expanded its efforts, having privatized 32,731 units to date, three quarters of which were considered inadequate before being privatized. DoD plans to privatize an additional 18,000 units in 2003 and another 51,000 units in 2004. Better Research and Development (R&D) Investment CriteriaThe goal of this initiative is to develop objective criteria that R&D agencies will use to select, fund, and manage their R&D programs. The initiative's status score reflects the limited progress most agencies have made in the government-wide implementation of the initiative. The progress score indicates that the initiative has gained momentum, and more of the R&D agencies are using the criteria to assess their programs, in part due to the improved alignment of the R&D investment criteria with the R&D PART for program-level assessments. Twelve of the top 13 R&D agencies are using the R&D PART to assess their programs this year, up from seven last year. As the first agency to test the R&D criteria, the Department of Energy's (DOE's) applied R&D programs have made the most progress in using the criteria to guide budget allocation decisions. DOE has committed to expand its use of the R&D investment criteria to manage programs and develop better ways to estimate and communicate the benefits of its R&D. Elimination of Fraud and Error in Student Aid Programs and Deficiencies in Financial ManagementThe Education Department (ED) has made significant strides in strengthening its management of federal student aid programs. Most notably, ED improved the reliability and timeliness of its financial data, achieving its first clean audit opinion since 1997. To help reduce fraud and error, ED is now changing the way it uses program and financial data to better target and eliminate areas of risk within student aid programs. Specifically, ED has employed data mining techniques to flag risky schools for additional analyses and program reviews. In addition, ED has modified its audit process to obtain more timely and detailed financial information from schools in an electronic format. Like the Department's data mining efforts, the modified audit process (or "EZ audit") allows ED to more quickly identify and address fraud and error occurring at postsecondary institutions. In order to track its progress on these efforts, ED is developing baseline and target metrics for its school compliance and oversight activities. Even with this progress, many challenges remain, such as the resolution of the remaining material weakness identified by the independent financial auditor. Housing and Urban Development (HUD) Management and PerformanceDuring the remainder of 2003, the Department will further improve living conditions for assisted families by providing incentives to the managers of HUD-assisted housing to prevent physical problems, not just to correct problems. HUD will protect borrowers from fraud by publishing a rule to hold Federal Housing Administration (FHA) lenders accountable for the performance of appraisers, and will create a performance measure to track its efforts to combat fraud-related problems in FHA, relative to the number of loans identified as at-risk. Although some subsidized families still reside in poorly maintained housing, the Department continued to make gains toward improving living conditions for assisted families. HUD took aggressive action that will achieve better quality housing for residents of substandard public housing in Puerto Rico and New Orleans. In addition, HUD made progress to reduce meaningless compliance burdens for the state and local governments that receive its block grants by reaching agreement with 25 communities to test alternatives to its consolidated planning requirements. Although some rent-subsidized households still receive erroneous subsidies, HUD took steps to ensure fairness by developing legislation with HHS to verify electronically the wage data of subsidized tenants. The bill has been introduced in Congress as H.R. 1030. To improve the integrity of rent calculations, HUD performed over 350 reviews at public housing authorities. Broadening Health Insurance Coverage through State InitiativesIn 2001 and 2002, HHS kicked off three new demonstration initiatives: Health Insurance Flexibility and Accountability (HIFA), Pharmacy Plus, and Independence Plus demonstrations. These initiatives encourage states to increase and improve health insurance coverage through currently available Medicaid and State Children's Health Insurance Program funding. To date, the Administration has approved eight HIFA, six Pharmacy Plus, and six Independence Plus demonstrations, including one Pharmacy Plus demonstration and one Independence Plus demonstration since January 2003. Future challenges include approving demonstrations consistent with Administration principles and completing the evaluation designed by the Urban Institute to measure the impact of HIFA waivers on the level of uninsured. A "Right-sized" Overseas PresenceThe Rightsizing Initiative was designed to make sure that the right people from the appropriate government agencies are working in overseas posts so that agencies can be most effective at promoting U.S. foreign policy goals. The initiative also has the goal of assuring safe and secure environments for overseas employees. The State Department, in collaboration with OMB, has devoted great time and effort in the development of a capital security cost sharing proposal, which will accelerate the construction of secure embassies overseas. More importantly, this will mandate that all agencies with staff overseas pay their fair share of the actual cost of having those staff overseas. Starting with the 2005 Budget, all agencies will be required to provide a share of the funding for the cost of secure embassy construction and thereby more accurately weigh the costs and benefits of locating employees overseas. The State Department, in close consultation with OMB also moved to establish a regional "rightsized" presence in Frankfurt at a former U.S. Army hospital. This will consolidate and make more efficient the Europe and Eurasia Bureaus' deployment of resources. An interagency group is considering four issues central to this initiative: a common basis for calculating the cost of overseas employees; a common rightsizing methodology, based on GAO's work in this area; an examination of overseas staffing procedures and authorities; and reinforcing the annual process for reporting overseas staff, costs, and new positions. By making the costs of overseas staffing transparent, the initiative aims to put in place a more rigorous decision-making process for determining when staff are stationed overseas. Coordination of Veterans Affairs (VA) and Defense Programs and SystemsThe increased coordination of VA and DoD health care delivery is a top Presidential priority to improve health care services to military service members, their dependents and veterans, and to achieve cost savings. The VA/DoD Executive Council, co-chaired by the VA Deputy Secretary and DoD Under Secretary, created several subgroups to look at different dimensions of this issue, including IT, facilities, and long-range planning. The Departments coordinated on IT by identifying opportunities for systems consolidation. Progress has been made in developing a VA/DoD interoperable electronic health record system to provide better care with less duplication of unneeded services. The system will be operational by 2005. VA is also planning to use DoD's enrollment system so that the transition from active duty to veteran status becomes seamless. VA and DoD are working together on capital planning and on VA's process to move services and facilities to areas where veterans now live. Finally, the Departments are developing performance standards to evaluate program efforts. Executive Branch Management Scorecard Executive Branch Program Initiatives Scorecard
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