August 31, 1999

Thompson Letter on GPRA - Labor

Thompson Letter on GPRA - Labor

August 17, 1999

The Honorable Alexis M. Herman

Secretary

Department of Labor

200 Constitution Avenue, NW

Washington, D.C. 20210

Dear Secretary Herman:

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 Labor (Labor) is using the above statutory tools to improve its 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 Labor 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 EPA annual performance plan for fiscal year (FY) 2000. According to GAO, Labor’s FY 2000 plan "represents a moderate improvement" over its FY 1999 plan. Among improvements in the FY 2000 plan are goals that better focus on outcomes and better linkage of strategies to specific goals.

The FY 2000 plan’s major strengths are that it: has goals and measures that are objective and measurable; recognizes the need for developing information technology goals; has human capital management goals to better address workplace issues; and has means and strategies linked to performance goals. As a result, the plan provides a generally clear picture of intended performance across the agency. For instance, Labor modified one goal to specify a percentage increase for job retention and wages for program participants.

GAO found that the FY 2000 plan had three key weaknesses: serious data limitations that affect the accuracy of reported performance; inadequate description of how Labor will coordinate with other agencies to achieve its goals; and strategies that do not always explain how they will help achieve individual goals.

Need to implement audit recommendations on major management problems

One area where there have been too few results is solving major management challenges that seem to persist year after year at most agencies, including Labor. One problem area of particular concern at Labor is to improve confidence that information on agency performance will be credible. GAO recently reported that Labor lacks adequate information to assess whether many of its programs are operating efficiently and are producing intended results. While Labor’s plan recognizes that challenges lie ahead in this area, GAO found that "measurable progress is not yet evident and the fiscal year 2000 plan represents little, if any, improvement over the fiscal year 1999 plan in this area."

According to information provided to the Committee by your Inspector General (IG) and GAO, there are a number of open audit recommendations addressing major management problems at Labor as well. The enclosure describes many such unresolved recommendations by the IG, and another enclosure describes additional open GAO recommendations. Several of the IG recommendations propose ways to protect worker benefit funds.

Need for specific performance goals to address major management problems

It is essential that agency heads and other managers commit themselves to tangible steps that will lead to solutions and that agency heads 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. Office of Management and Budget (OMB) guidance for agencies on how to prepare their performance plans states:

performance goals for management problems should be included particularly for problems whose resolution is mission-critical or which could potentially impede achievement of program goals . . .

GAO recently evaluated the extent to which Labor’s fiscal year 2000 performance plan contains specific and measurable performance goals to address the high risk and other most serious management problems confronting Labor that GAO and your IG have identified. According to the GAO evaluation, which is detailed in the enclosures, Labor’s plan has no specific goals or measures for 12 of these 13 problem areas. One area without specific goals or measures--the Year 2000 problem--is also on GAO’s high risk list

I am very concerned over the absence of such goals for nearly all 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.

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 it take to complete?

• Do you disagree with any of the GAO or IG designations of management problems facing Labor? 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 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

OPEN GAO RECOMMENDATIONS ON LABOR’s MAJOR MANAGEMENT CHALLENGES

 

Labor Lacks Accurate and Reliable Information to Assess Program Performance

The Department of Labor lacks accurate and reliable information needed to effectively assess whether many of its programs are producing their intended results and to determine whether its resources are being used effectively. This deficiency is particularly important for Labor, because many of its activities are fragmented or duplicated either within the department or by other departments or state or local governments. Thus, major challenges facing Labor include determining how to provide consistent outcome information across multiple programs with similar objectives, ensuring that Labor’s outcome information is accurate, and monitoring program implementation. In addition, Labor needs to rely less on its component offices and the Office of Inspector General to ensure the reliability and validity of program performance data.

GAO Product	Recommendation
GGD/OCE-98-2 Oct. 9, 1997	As long as a fixed market basket Consumer Price Index (CPI) is published, the Commissioner of the Bureau of Labor Statistics (BLS) should update the expenditure weights of the CPI’s market basket of goods and services more frequently than every 10 years to make it more timely in its representation of consumer expenditures.
HEHS-98-1 Oct. 21, 1997	Improvements are needed to make the measures used to assess Job Corps placement contractor performance more meaningful. Therefore, the Secretary of Labor should modify certain measures for placement contractors, including eliminating from the placement pool participants whom contractors realistically could not or should not be expected to place, such as participants who were expelled for criminal or violent behavior.
	Improvements are needed to make the measures used to assess Job Corps placement contractor performance more meaningful. Therefore, the Secretary of Labor should modify certain measures for placement contractors, including establishing separate placement performance standards for participants with different levels of program accomplishment—for example, those who completed program requirements and those who dropped out early.
	Improvements are needed to make the measures used to assess Job Corps placement contractor performance more meaningful. Therefore, the Secretary of Labor should modify certain measures for placement contractors, including replacing the current job-training match system with one that captures realistic information and providing guidance to regional offices to ensure that matches are correct and that the data are accurately recorded.
HEHS-98-20 Dec. 31, 1997	To improve service to both employers and workers, the Secretary of Labor should regularly collect data on its performance in meeting the H-2A regulatory and statutory deadlines for processing H-2A applications and should use these data to monitor and improve its performance.
HEHS-98-193 Aug. 21, 1998	To improve Labor’s detection and reporting of illegal child labor in agriculture, the Secretary of Labor should direct the Assistant Secretary for Employment Standards to test the feasibility of collecting data on the number of minimum-wage and other labor law violations that involve anyone younger than 18.
	The Secretary of Labor should direct the Assistant Secretary for Employment and Training to develop and analyze data on Migrant and Seasonal Farmworker Program services and outcomes for children aged 14 to 17 to determine the number of these children served, the services provided, and the outcomes experienced by these children.
HEHS-99-15 Nov. 4, 1998	Improvements are needed to ensure that the information used to assess Job Corps program performance is accurate and meaningful. Specifically, two of the measures used to judge the success of the Job Corps program--vocational completion and job training match--provide misleading information that overstates program outcomes. Therefore, the Secretary of Labor should more accurately define and report information on the extent to which program participants complete vocational training.
	Improvements are needed to ensure that the information used to assess Job Corps program performance is accurate and meaningful. Specifically, two of the measures used to judge the success of the Job Corps program--vocational completion and job training match--provide misleading information that overstates program outcomes. Therefore, the Secretary of Labor should develop a more accurate system of reporting training-related jobs and effectively monitor its implementation.
HEHS-99-21 Jan. 11, 1999	To reduce the cost of verification related to the Davis-Bacon Act and increase the benefits, the Secretary of Labor should direct the Administrator of the Wage and Hour Division (WHD) to revise verification procedures to maximize the expected value to be gained from verification. Specifically, Labor should increase the use of telephone verification—while decreasing on-site verification audits—and increase efforts to obtain payroll documentation from all selected submitters.
	To reduce the cost of verification related to the Davis-Bacon Act and increase the benefits, the Secretary of Labor should direct the Administrator of WHD to revise verification procedures to maximize the expected value to be gained from verification. Specifically, Labor should change the procedures used to select wage data for verification, using a judgmental sample of wage data forms based on the potential impact of the data on prevailing wage rate determinations rather than using a random sample.
	To reduce the cost of verification related to the Davis-Bacon Act and increase the benefits, the Secretary of Labor should direct the Administrator of WHD to revise verification procedures to maximize the expected value to be gained from verification. Specifically, Labor should revise verification procedures to take more appropriate action when documentation cannot readily be obtained from a contractor, such as not using data when supporting documentation is requested but not provided, requiring documentation where possible, and giving third parties, such as representatives of unions and contractor associations, an opportunity to provide supporting documentation for data they submitted.

Decentralization Intensifies Labor’s Coordination Challenge

Labor’s decentralized structure and the numerous federal, state, and local partners that share responsibility for Labor’s programs complicate its efforts to effectively coordinate the many programs it oversees. Not only does Labor itself have 22 offices, many of which have overlapping responsibilities, but for many of its programs, such as job training, enforcement, and data collection, Labor must work with state and local governments or non-governmental organizations that often manage the programs on a day-to-day basis. As a result, the need for coordination, communication, and cooperation among Labor and its partners is vital to ensuring that program services are delivered efficiently. While Labor’s strategic and performance plans acknowledged the need for coordination among some of its partners, such as in job training, the plans generally lacked detail on how such coordination will be achieved, especially given the rapidly changing job training environment.

GAO Product	Recommendation
HEHS-96-4 Nov. 2, 1995	To better meet the Older Americans Act (OAA) title V goal of equitably distributing Senior Community Service Employment Program (SCSEP) funds within the states, the Secretary of Labor should require greater cooperation among national sponsors and states in equitable distribution matters.
	To better meet the OAA title V goal of equitably distributing SCSEP funds within states, the Secretary of Labor should adjust, as necessary, sponsors’ funding levels to reward sponsors that are willing to establish positions in underserved counties.
	The Secretary of Labor should enforce the statutory limit on administrative expenses and be prepared to reduce the funds available for administration of any grantee exceeding the legal limit by improperly categorizing costs or incurring improper indirect costs.
	The Secretary of Labor should revise the 1995 regulations to adopt the definition of administrative costs set out in the 1976 regulations.
HEHS-97-51 Mar. 31, 1997	The Chairman of the Nuclear Regulatory Commission (NRC) and the Secretary of Labor should coordinate efforts to ensure that NRC’s Allegation Management System includes information on the status of cases at Labor.
HEHS-98-20 Dec. 31, 1997	To improve service to both employers and workers, the Secretary of Labor should update and revise the H-2A handbook to include procedures for all agencies involved and key contact points, both at Labor and at other agencies.
HEHS-98-193 Aug. 21, 1998	To improve Labor’s detection and reporting of illegal child labor in agriculture, the Secretary of Labor should direct the Assistant Secretary for Employment Standards to ensure that procedures specified in the existing agreements among WHD and other federal and state agencies—especially regarding referrals to and from other agencies, joint inspections, and exchange of information—are being followed and, as required in some agreements, are being recorded and tracked.

Alternative Enforcement Strategies Could Leverage Labor’s Limited Resources

Labor faces a formidable challenge in enforcing basic workplace protections, from ensuring that workers receive at least a minimum wage to allowing parents to take leave to spend time with their newborn children to protecting workers from occupational hazards. Labor must enforce these protections in millions of workplaces employing millions of workers throughout the nation. Given the breadth of these mandates and the scope of its enforcement task, Labor needs to more effectively leverage its limited resources beyond traditional inspections, citations, and fines by using alternative enforcement strategies.

GAO Product	Recommendation
HRD-92-40 Mar. 10, 1992	The Secretary of Labor should direct the Assistant Secretary for Pension and Welfare Benefits to develop a mechanism to help states identify Multiple Employer Welfare Arrangements (MEWA).
HEHS-98-20 Dec. 31, 1997	After the Attorney General has delegated the INS role in petition approval to Labor, to reduce total application processing time and facilitate better accuracy in estimating the date workers will be needed, the Secretary of Labor should amend the regulations to allow H-2A applications to be submitted up to 45, rather than 60, days before the date of need so long as INS does not have a role in the petition approval process.
	To better protect both domestic and H-2A workers, the Secretary of Labor should extend the authority to suspend employers with serious labor standard or H-2A contract violations to WHD.
	To better protect both domestic and H-2A workers, the Secretary of Labor should revise Labor’s regulations to require agricultural employers to guarantee H-2A workers’ wages for the first week after the date of need and to pay workers those wages no later than 7 days after the date of need.
	To better protect both domestic and H-2A workers, the Secretary of Labor should revise regulations regarding the three-quarter guarantee to remove incentives to overestimate the contract period. Revisions Labor considers should include applying the guarantee incrementally during the duration of the H-2A contract in a manner that would improve the protection afforded to H-2A workers but also minimize any additional administrative burden on agricultural employers.
HEHS-98-193 Aug. 21, 1998	To improve Labor’s detection and reporting of illegal child labor in agriculture, the Secretary of Labor should direct the Assistant Secretary for Employment Standards to develop a method for identifying the number of record-keeping violations resulting from employers not having children’s ages on file as required by the Fair Labor Standards Act.

Year 2000 Problem Could Jeopardize Benefits Payments and Economic Statistics

The Department of Labor has taken action to prepare its 61 mission-critical systems for the impending century change. However, with about 6 months remaining before the year 2000, Labor still remains at risk of Year 2000 disruptions in two areas as GAO highlighted last fall: making benefits payments to laid-off workers and producing labor and economic statistics. Given these risks, Labor must focus on testing activities and develop appropriate contingency plans to ensure business continuity in the event of system failures.

One of Labor’s programs to help unemployed workers is the Unemployment Insurance Program. Operated under a federal-state partnership, State Employment Security Agencies (SESA) operate their own systems to provide benefits to laid-off workers, collect taxes from employers, and track employee earnings. In September 1998, GAO reported that many SESAs were at risk of Year 2000-induced failures as early as January 1999 because of the inability of some systems to project the end of a claimant’s benefit year past December 1999. GAO urged Labor to initiate the development of contingency plans to ensure continuity of core business processes in the event these systems became inoperable. Indeed, by instituting contingency measures, Labor was able to avert date problems in January at four SESAs thus avoiding disruption of benefits. However, in spite of the agency’s success in meeting its early Year 2000 challenge, many of these state-run systems are still not yet Year 2000 compliant and remain at risk.

The Bureau of Labor Statistics (BLS) is an independent national statistical agency that collects, processes, analyzes, and disseminates essential statistical data for the American public, the Congress, other federal agencies, state and local governments, business, and labor. In May 1999, GAO raised concerns regarding BLS’ use of a noncompliant software product in several of its systems. In 1997, the manufacturer discontinued support for the older version of the product as it was determined not to be "Year 2000 Ready." The vendor strongly recommended that customers upgrade to a compliant version and not attempt to use the noncompliant version in the next century. BLS conducted an assessment of the product and concluded that its systems would not be affected by the date problem identified by the manufacturer due to its limited use. Based on its assessment and testing, BLS made a management decision to accept the risks associated with a known product rather than take the chance of introducing additional unknown risks by upgrading the product or accelerating the migration of the systems to a new technology before the year 2000.

While there are currently no open recommendations related to Labor’s Year 2000 management challenge, GAO will continue to update the Congress on Labor’s progress in assuring that all state unemployment systems are Year 2000 compliant. GAO will also monitor Labor’s use of noncompliant products in its statistical systems and identify any additional concerns raised by the vendor over the next 6 months.

 

SPECIFIC PERFORMANCE GOALS IN LABOR’s FY 2000 PERFORMANCE PLAN

ADDRESSING

GAO- AND IG-DESIGNATED MAJOR MANAGEMENT CHALLENGES

Major Management Challenge	Specific Performance Goal(s)
Department of Labor lacks accurate and reliable information to assess program performance. For example, data reported by the Job Corps program on the percentage of participants who complete their vocational training and obtain jobs related to that training are misleading and overstate the program’s results. In addition, Labor needs to rely less on the OIG to ensure the reliability and validity of program performance data. (OIG also identified aspects of this area as a management challenge.)	None.
Department of Labor’s coordination challenge is intensified by decentralization. Labor has shown limited capacity to effectively coordinate the activities of the many units at the federal, state, and local levels that share responsibility for implementing worker protection programs. For example, GAO reported that the lack of effective coordination could result in farmworker children working in violation of law.	None.
Department of Labor has not effectively leveraged its limited resources by using alternative enforcement strategies. For example, GAO found that billions of dollars in federal contracts were awarded to employers already found to be violating workplace safety and health standards. Labor could do more to help other agencies during the contract procurement process by developing procedures to periodically transmit data on contractors’ safety and health records to agency contracting officers.	None.
Department of Labor’s Year 2000 computer problems could jeopardize benefit payments and economic statistics. For example, the inability of some Labor computer systems to properly distinguish between the years 2000 and 1900 is potentially a critical challenge, putting at risk unemployment insurance benefit payments and the timely issuance of economic statistics. Also, Labor makes extensive use of complex information technology to support its mission. Without effective, up-to-date information technology, Labor cannot ensure the income security of millions of workers or generate crucial national economic data. Adding to the complexity of this challenge is the fact that these data rely on many information systems outside of Labor. (OIG also identified this area as a management challenge.)	None.
Department of Labor needs to ensure that performance and cost information generated are accurate, auditable, and credible.	None.
Department of Labor should monitor the effectiveness of the welfare-to-work initiative. Labor needs to provide effective training and employment services to help individuals transition from welfare dependency to self-sufficiency. Specifically, Labor needs to capture and report results of its efforts on behalf of eligible individuals.	None.
Department of Labor needs to ensure that the Employment and Training Administration cost data for grants and contracts are recorded promptly.	None.
Department of Labor needs to ensure that weaknesses, vulnerabilities, and criminal activity are identified and addressed.	None.
Department of Labor has serious vulnerabilities within three major worker benefit programs. Specifically, these are the continued proliferation of UI fraud schemes, the questionable cost-efficiency of the Federal Employees’ Compensation Act program, and the escalating indebtedness of the Black Lung Disability Trust Fund.	None.
Department of Labor’s collection and disbursement activities related to the Wage and Hour Division’s back wage collections and related penalties are questionable.	None.
Labor’s day-to-day accounting operations, primarily related to needed improvements in financial management system design, are deficient. Specifically, 7 systems do not substantially meet one or more of the Federal Financial Management Improvement Act requirements.	Labor added a new goal (FM1) to the fiscal year 2000 annual performance plan that all financial systems meet the standards set in the Federal Financial Management Improvement Act and the Government Management Reform Act.
Department of Labor needs to ensure effective stewardship over information technology resources related to financial and performance systems. For example, identifying and mitigating risks to avoid inflated budgets, cost overruns, delays, and failures.	None.
The Employment and Training Administration (ETA), within the Department of Labor, does not have sufficient operating procedures to keep the inventory of real properties reasonably current. This places ETA at risk of not being fairly compensated when the properties are sold, disposed of or put to other use.	None