Thompson Letter on GPRA - DoD
August 17, 1999
The Honorable William S. Cohen
Secretary
Department of Defense
The Pentagon
Washington, DC 20301-1155
Dear Secretary Cohen:
As you know, the Congress is focused on ensuring that the federal government delivers better results to its citizens and taxpayers. The Congress has enacted a statutory framework to achieve these results. This statutory framework includes the Government Performance and Results Act (GPRA); financial management statutes, such as the Chief Financial Officers Act; and information resources management statutes, such as the Clinger-Cohen Act. Each of these reforms aims at achieving more efficient and effective performance throughout the federal government.
As part of our oversight agenda, the Committee has developed information on how effectively the Department of Defense (DOD) is using the above statutory tools to improve performance in several key areas such as becoming more results-oriented and resolving long-standing problems of fraud, waste, and mismanagement. The purpose of this letter is to share with you the information we have developed and obtain your response to certain questions pertaining to it. With this dialog as a start, we hope to work with you on a continuing basis to ensure that the DOD delivers the best possible results for the American people.
Performance plan assessment
The Congress continues to look closely at how well departments and agencies are implementing GPRA. At the request of this Committee and others, GAO recently completed an assessment of the DOD’s annual performance plan for fiscal year (FY) 2000. According to GAO, DOD’s plan represents only "moderate improvement over the fiscal year 1999 plan" and "privdes a limited picture of intended performance across the Department."
The FY 2000 plan’s major strengths are that it includes a clear discussion of annual performance goals, a general discussion of strategies and resources, and output-oriented measures and indicators related to most major management challenges. The extent to which the plan addresses major management challenges is encouraging. For instance, the plan’s goal to increase the efficiency of logistics operations by improving the ability to track items in the supply system demonstrates DOD’s move toward the utilization of performance goals. However, the plan does not link performance goals to program activities in the President’s budget request for DOD.
GAO found that the FY 2000 plan had several key weaknesses. Among those weaknesses are the fact that the plan does not include information on how DOD will qualitatively assess results, nor does it provide confidence that performance information will be credible. GAO and the IG have consistently reported that DOD is unable to properly account for billions of dollars in assets, and is unable to produce the reliable and timely information required to make prudent decisions. The FY2000 plan does nothing to allay those concerns. Indeed, the GAO report states that DOD’s current financial management improvement plan "has several critical omissions which, unless they are effectively addressed in the near term, will impair the implementation of a sound foundation for fundamentally reforming DOD’s financial management operations."
Need to implement audit recommendations on major management problems
More than any other agency in the federal government, DOD has been plagued by mismanagement. GAO identifies six high risk areas that are specific to DOD: systems development and modernization efforts, contract management, infrastructure, weapons systems acquisition, inventory management, and financial management. And these are in addition to government wide high risk areas, such as the Year 2000 computer problem and information security, both of which beset DOD.
I am particularly concerned with the problems affecting inventory management at DOD. GAO reports that of the $65.8 billion of secondary inventory on hand, more than half is not needed to support DOD war reserve or current operating requirements. In fact, DOD has no demand for about $11 billion of this inventory and continues to purchase inventory for which it retains a more than adequate supply. Recommendations outstanding include one to test the integrated supplier concept at one or more repair depots.
As mentioned above, financial management problems also continue to plague DOD. Weaknesses in DOD’s financial management operations continue to hinder its ability to effectively manage its $250 billion budget and $1 trillion in assets. GAO wrote recently that "DOD’s Biennial Financial Management Improvement Plan lacks critical elements necessary for producing sustainable financial management improvement over the long term. Specifically, the Plan's discussion of how DOD's financial management operations will work in the future--its concept of operations--does not address: how its financial management operations will effectively support not only financial reporting but also asset accountability and control; and budget formulation." This is one of approximately 50 open GAO recommendations made to improve the credibility of DOD’s financial reporting and financial statement preparation.
But, DOD must be prepared to act on the many substantive, constructive recommendations made to solve such problems. Enclosed, you will find a number of recommendations made by the IG and GAO to address major management problems at DOD.
Need for specific performance goals to address major management problems
I recognize that many high-risk and other major management problems are complex and will take time to resolve. However, it is essential that agency heads and other managers commit themselves to tangible steps that will eventually lead to solutions and that they accept accountability for following through on these commitments. One obvious way to do this is to establish specific and measurable goals in your annual GPRA performance plans. Indeed, Office of Management and Budget (OMB) guidance implementing GPRA states:
Performance goals for management problems should be included in the annual plan, particularly for problems whose resolution is mission-critical, or which could potentially impede achievement of program goals . . . (OMB Circular No. A-11, Part 2, § 220.9(e) (July 1998))
In its review of DOD’s FY 2000 performance plan, GAO evaluated the extent to which the plan contains specific performance goals to address the ten high-risk and other most serious management problems confronting DOD that GAO and your IG have identified. According to the GAO evaluation, which is detailed in an enclosure, DOD’s plan contains such performance goals for five of the ten problem areas. This is a start, and some of the specific goals appear to address some of DOD’s most serious management problems in meaningful ways. For example, the plan includes a goal to reduce logistics response time and one to reduce the supply inventory.
On the other hand, I am concerned about the absence of any specific and measurable goals for the other half of your major problem areas. Without specific and measurable performance goals, it is difficult if not impossible to assess progress in addressing major management problems and to hold agencies accountable. For the reasons stated above, the absence of any goals to resolve DOD’s financial management problems is inexcusable.
Congressional follow-up
With so many tax dollars being wasted, this Committee expects agencies to take every opportunity to use the many tools available to them, such as GPRA plans, to resolve major management problems. Furthermore, the GAO and your own IG exist to work in partnership with you to solve longstanding issues of waste, fraud, and abuse.
I hope that the information provided with this letter will stimulate you to make greater use of these tools and resources. In this regard, I ask that you review the enclosed information and respond to the following questions:
- Do you disagree with any of the GAO or IG recommendations described in the enclosures? If so, what is the basis for your disagreement?
- Where you agree with the recommendations, what specific actions are you taking to implement each one and how long will they take to complete?
- Do you disagree with any of the GAO or IG designations of major management problems facing DOD? If so, which ones and why?
- Where you agree with the problem designations, are you prepared to establish specific and measurable commitments to address each one of them in your next performance plan?
- If so, could you outline preliminarily what approach you plan to take for each problem?
- If you believe that any of these problems do not lend themselves to specific and measurable performance plan goals, please explain why. Please also explain what alternative steps you are taking to solve the problem.
I would appreciate your early attention to this letter. After receiving your response, I will ask Committee staff to arrange a meeting with your representatives to discuss it. My Governmental Affairs Committee staff contact is Robert Shea.
Sincerely,
Fred Thompson
Chairman
FT/rs
Enclosures
