Budget Issues
Agency Implementation of Capital Planning Principles Is Mixed Gao ID: GAO-04-138 January 16, 2004In fiscal year 2002, the federal government spent nearly $100 billion on capital investments intended to yield long-term benefits for its own operations. Interested in ensuring that good investment decisions are made, the Chairman and Ranking Minority Member, Subcommittee on Government Efficiency and Financial Management, House Committee on Government Reform, asked GAO to evaluate agency experiences with the capital planning principles embodied in the Office of Management and Budget's (OMB) Capital Programming Guide and GAO's Executive Guide on leading state, local, and private sector capital investment practices. This report examines selected agencies' implementation of this guidance and OMB's use of long-term capital planning data.
VA, the Park Service, BOP, and NOAA have had mixed success with implementing the planning phase principles found in OMB's Capital Programming Guide and GAO's Executive Guide. The agencies' capital planning processes generally link to their strategic goals and objectives, and they all consider a range of alternatives to bridge an identified performance gap--including nonownership options where appropriate. Most have established processes to review and select from competing project proposals--including the use of senior-level review boards and established criteria to rank project proposals--strongly emphasizing linkage to strategic goals. However, case study agencies have had limited success with using agencywide asset inventory systems and data on asset condition to identify performance gaps. Also, none of them prepares an agencywide long-term capital investment plan. Some have long-term capital planning documents that could serve as a base for development of a comprehensive agencywide plan. While two case study agencies indicated plans to develop agencywide asset inventories and condition data--one of these making substantial progress--only one plans to develop a comprehensive agencywide long-term capital plan. OMB resource management office (RMO) staff varied in their expectations about agency use of OMB's Capital Programming Guide. The RMO staff for the four case study agencies consider numerous factors in reviewing agency requests for capital funding, including strategic plans, obligation rates, and the overall budget request. OMB does not require long-term capital plans from agencies, but RMOs receive various documents for individual capital projects.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-04-138, Budget Issues: Agency Implementation of Capital Planning Principles Is Mixed
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Report to the Subcommittee on Government Efficiency and Financial
Management, Committee on Government Reform, House of Representatives:
January 2004:
Budget Issues:
Agency Implementation of Capital Planning Principles Is Mixed:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-138]
GAO-04-138:
GAO Highlights:
Highlights of GAO-04-138, a report to the Subcommittee on Government
Efficiency and Financial Management, Committee on Government Reform,
House of Representatives
Why GAO Did This Study:
In fiscal year 2002, the federal government spent nearly
$100 billion on capital investments intended to yield long-term
benefits for its own operations. Interested in ensuring that good
investment decisions are made, the Chairman and Ranking Minority
Member, Subcommittee on Government Efficiency and Financial
Management, House Committee on Government Reform, asked GAO to
evaluate agency experiences with the capital planning principles
embodied in the Office of Management and Budget‘s (OMB) Capital
Programming Guide and GAO‘s Executive Guide on leading state, local,
and private sector capital investment practices. This report examines
selected agencies‘ implementation of this guidance and OMB‘s use of
long-term capital planning data.
What GAO Found:
VA, the Park Service, BOP, and NOAA have had mixed success with
implementing the planning phase principles found in OMB‘s Capital
Programming Guide and GAO‘s Executive Guide. The agencies‘ capital
planning processes generally link to their strategic goals and
objectives, and they all consider a range of alternatives to bridge an
identified performance gap”including nonownership options where
appropriate. Most have established processes to review and select from
competing project proposals”including the use of senior-level review
boards and established criteria to rank project proposals”strongly
emphasizing linkage to strategic goals. However, case study agencies
have had limited success with using agencywide asset inventory systems
and data on asset condition to identify performance gaps. Also, none
of them prepares an agencywide long-term capital investment plan. Some
have long-term capital planning documents that could serve as a base
for development of a comprehensive agencywide plan. While two case
study agencies indicated plans to develop agencywide asset inventories
and condition data”one of these making substantial progress”only one
plans to develop a comprehensive agencywide long-term capital plan.
OMB resource management office (RMO) staff varied in their
expectations about agency use of OMB‘s Capital Programming Guide. The
RMO staff for the four case study agencies consider numerous factors
in reviewing agency requests for capital funding, including strategic
plans, obligation rates, and the overall budget request. OMB does not
require long-term capital plans from agencies, but RMOs receive
various documents for individual capital projects.
What GAO Recommends:
GAO recommends that OMB (1) require that agencies comply with the
principles and practices of its Capital Programming Guide and (2)
require that long-term capital plans be submitted to OMB and provided
to congressional decision makers. GAO also recommends various specific
improvements that could help the Department of Veterans Affairs (VA),
the National Park Service (Park Service), the Bureau of Prisons (BOP)
and the National Oceanic and Atmospheric Administration (NOAA) in
fully implementing the capital planning principles.
www.gao.gov/cgi-bin/getrpt?GAO-04-138.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Susan J. Irving at
(202) 512-9142 or irvings@gao.gov.
[End of section]
Contents:
Letter:
Executive Summary:
Purpose:
Background:
Results in Brief:
Principal Findings:
Recommendations for Executive Action:
Agency Comments:
Chapter 1: Capital Planning Is the Core of the Capital Decision-Making
Framework:
Importance of Governmentwide Capital Investment Spending:
Background:
Case Study Agencies:
Chapter 2: Agency Capital Planning Processes Link to Strategic Goals
and Objectives:
Capital Investments Link to Strategic Plans:
Agency Guidance Requires That Capital Investment Proposals Link to
Strategic Goals and Objectives:
Agency Criteria Used to Rank and Select Capital Investments Include
Strategic Linkage:
Conclusion:
Chapter 3: Agency Processes for Assessing Capital Needs Reflect OMB
and GAO Guidance to Varying Degrees:
VA Has a Formal Process for Assessing Its Needs, but Lacks Agencywide
Asset Condition Data and an Inventory of Capital Assets:
The National Park Service Has a Formal Process for Assessing Its Needs,
but Lacks Agencywide Comprehensive Information on Asset Condition:
NOAA Has a Process for Assessing Its Needs and Maintains an Agencywide
Asset Inventory, but Lacks Current Information on Asset Condition:
BOP Maintains an Inventory of Capital Assets and Information on Asset
Condition; However, the Basis for Its Long-term Performance Gap Is
Unclear:
Agency Use of Integrated Project Teams:
Conclusion:
Recommendations for Executive Action:
Agency Comments:
Chapter 4: Agencies Consider Alternatives but Processes to Rank and
Select Investments and Produce Long-term Capital Plans Need Attention:
Agencies Have Processes to Consider Various Options for Addressing
Their Performance Gaps--Generally a Range of Alternatives, Including
Noncapital Options:
Case Study Agency Processes for Ranking and Selecting Proposed Capital
Investments Vary, but Most Have a Formal Review and Approval Framework:
Case Study Agencies Did Not Prepare Long-term Capital Plans, but Two
Had Various Long-term Planning Documents:
Conclusion:
Recommendations for Executive Action:
Agency Comments:
Chapter 5: Agencies and Budget Decision Makers Agree That Capital
Planning Is Useful, but Implementation Challenges Exist:
Agencies Have Mixed Opinions about Usefulness of OMB Capital Guidance:
Agencies Identified Challenges in Implementing the Principles of OMB's
Capital Programming Guide:
OMB and Congressional Perspectives on Long-term Capital Planning
Information and Views on Agency Processes:
Conclusion:
Recommendations for Executive Action:
Agency Comments:
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Department of Veterans Affairs:
Background/Organizational Structure:
Types of Assets:
Capital Spending:
Capital Planning Process:
Challenges:
Prior GAO Work at VA:
The Future of VA:
Some Related GAO Reports:
Appendix III: National Park Service:
Background/Organizational Structure:
Types of Assets:
Capital Spending:
Capital Planning Process:
Challenges:
Prior GAO Work at Park Service:
The Future of the Park Service:
Some Related GAO Reports:
Appendix IV: National Oceanic and Atmospheric Administration:
Background/Organizational Structure:
Types of Assets:
Capital Spending:
Capital Planning Process:
Challenges:
Prior GAO Work at NOAA:
The Future of NOAA:
Some Related GAO Reports:
Appendix V: Bureau of Prisons:
Background/Organizational Structure:
Types of Assets:
Capital Spending:
Capital Planning Process:
Challenges:
Prior GAO Work at BOP:
The Future of BOP:
Some Related GAO Reports:
Appendix VI: OMB Guidance:
Appendix VII: Comments from the Department of Veterans Affairs:
Appendix VIII: Comments from the Bureau of Prisons:
Appendix IX: Comments from the National Oceanic and Atmospheric
Administration:
Appendix X: GAO Contact and Staff Acknowledgments:
GAO Contact:
Acknowledgments:
Related GAO Products:
Figures:
Figure 1: Case Study Agencies' Conformance with Capital Planning
Guidance:
Figure 2: Governmentwide Major Public Physical Capital Investment
Outlays:
Figure 3: Governmentwide Major Public Physical Capital Investment
Outlays as a Percentage of Total Outlays:
Figure 4: Governmentwide Major Public Physical Capital Investment
Outlays as a Percentage of GDP:
Figure 5: Case Study Agencies Major Public Physical Capital Investment
Outlays:
Figure 6: OMB Capital Programming Cycle:
Figure 7: Capital Decision-Making Framework, Principles and Practices:
Figure 8: OMB Decision Tree for Analyzing Agency Programs and
Investments:
Figure 9: Example of Agency Process Illustrating Elements of Planning
Phase Guidance:
Figure 10: VA Enhanced-Use Authority:
Figure 11: Value Analysis Use at the Park Service:
Figure 12: VA Use of the Analytical Hierarchy Process:
Figure 13: AHP Criteria Weights:
Figure 14: VA's Review and Selection Process:
Figure 15: Park Service Capital Investment Review and Selection
Process:
Figure 16: VA Capital Outlays for Fiscal Years 1993 through 2002:
Figure 17: Park Service Capital Outlays for Fiscal Years 1993 through
2002:
Figure 18: NOAA Capital Outlays for Fiscal Years 1993 through 2002:
Figure 19: BOP Capital Outlays for Fiscal Years 1993 through 2002:
Abbreviations:
ACP: Agency Capital Plan:
AHP: Analytical Hierarchy Process:
ASC: Administrative Support Centers:
BOP: Bureau of Prisons:
CAMS: Capital Asset Management System:
CARES: Capital Asset Realignment for Enhanced Services:
CBA: Choosing By Advantage:
CIP: Capital Investment Panel:
CMMS: Computerized Maintenance Management System:
CPM: Construction Program Management Office:
DAB: Development Advisory Board:
DOD: Department of Defense:
DOI: Department of the Interior:
DOJ: Department of Justice:
EIS: environmental impact statement:
FASA: Federal Acquisition Streamlining Act of 1994:
FIRB: Finance and Investment Review Board:
FMSS: Facilities Management Software System:
GDP: gross domestic product:
GSA: General Services Administration:
GMP: general management plan:
GPRA: Government Performance and Results Act of 1993:
ICE: Bureau of Immigration and Customs Enforcement:
INS: Immigration and Naturalization Service:
IPT: integrated project teams:
IT: information technology:
LROBP: Long-Range Overseas Buildings Plan:
M&R: modernization and repair:
MSN: memorial service network:
NAPA: National Academy for Public Administration:
NASA: National Aeronautics and Space Administration:
NCA: National Cemetery Administration:
NEPA: National Environmental Policy Act:
NESDIS: National Environmental Satellite, Data, and Information
Service:
NLC: National Leadership Council:
NMFS: National Marine Fisheries Service:
NOAA: National Oceanic and Atmospheric Administration:
NOS: National Ocean Service:
NPOESS: National Polar-Orbiting Operational Environmental Satellite
System:
NWS: National Weather Service:
OAEM: Office of Asset Enterprise Management:
OAR: Office of Oceanic and Atmospheric Research:
OFA: Office of Finance and Administration:
OIG: Office of Inspector General:
OMAO: Office of Marine and Aviation Operations:
OMB: Office of Management and Budget:
PAC: procurement, acquisition, and construction:
PMIS: Project Management Information System:
POES: Polar-Orbiting Operational Environmental Satellite:
RMO: resource management office:
SMC: Strategic Management Council:
TRSO: Technical Resource Support Office:
TVA: Tennessee Valley Authority:
UNOLS: University-National Oceanographic Laboratory System:
USMS: United States Marshals Service:
VA: Department of Veterans Affairs:
VBA: Veterans Benefits Administration:
VHA: Veterans Health Administration:
VISN: Veterans Integrated Service Network:
Letter January 16, 2004:
The Honorable Todd R. Platts:
Chairman:
The Honorable Edolphus Towns:
Ranking Minority Member:
Subcommittee on Government Efficiency and Financial Management:
Committee on Government Reform:
House of Representatives:
This report responds to your request that we evaluate agency
experiences with implementing the capital planning principles embodied
in the Office of Management and Budget's (OMB) Capital Programming
Guide and GAO's Executive Guide: Leading Practices in Capital Decision-
Making. As requested, we (1) determined the extent to which selected
agencies have implemented the planning phase principles and concepts
described in the capital guidance, (2) identified problems selected
agencies have encountered in implementing the guidance principles and
concepts, and (3) determined the extent to which OMB uses long-term
capital planning information in reviewing agency budget requests and
supporting budget justifications to the Congress. We are making
recommendations to the Director of the Office of Management and Budget
and selected federal agency heads directed at improving agency
conformance to OMB and GAO capital planning guidance.
We are sending copies of this report to the Director of the Office of
Management and Budget, the Secretary of Veterans Affairs, the Director
of the National Park Service, the Under Secretary of Commerce for
Oceans and Atmosphere, the Director of the Federal Bureau of Prisons,
and selected federal agencies. We will also make copies available to
others upon request. This report will also be available at no charge on
the GAO Web site at http://www.gao.gov. Major contributors to this
report are listed in appendix X. If you have any questions concerning
this report, please call me on (202) 512-9142.
Susan J. Irving
Director, Federal Budget Analysis:
Signed by Susan J. Irving:
[End of section]
Executive Summary:
Purpose:
In fiscal year 2002, the federal government spent nearly $100 billion
on capital investments intended to yield long-term benefits for its own
operations. During 2002, the National Oceanic and Atmospheric
Administration spent $787 million on such investments--a 15-fold
increase in real terms from the $51 million it spent in 1993. The
Department of Veterans Affairs spent $2.1 billion in 2002--a
substantial increase from the $1.4 billion in real terms it spent in
1993. Both because large sums of taxpayer funds are spent on capital
assets and because their performance affects how well agencies are able
to achieve their missions, goals, and objectives and provide service to
the public, effective planning for capital investments is a very
important task. The Congress, the Office of Management and Budget
(OMB), and GAO all have identified the need for effective capital
planning. In addition, budgetary pressures and demands to improve
performance in all areas put pressure on agencies to make sound capital
acquisition choices. Recently, GAO added federal real property
management to its list of high-risk areas. Prior GAO studies found that
many federal assets are not effectively aligned with agencies' changing
missions and the problems are compounded by the lack of reliable
governmentwide data for strategic asset management. In the overall
capital programming process, planning is the first phase--and arguably
the most important--since it drives the remaining phases of budgeting,
procurement, and management.
The Chairman and Ranking Minority Member, Subcommittee on Government
Efficiency and Financial Management, House Committee on Government
Reform, asked GAO to evaluate agency experiences with OMB's and GAO's
capital investment guidance. This report specifically addresses the
extent to which selected agencies have implemented the planning phase
principles of the OMB Capital Programming Guide and the practices
described in the GAO Executive Guide: Leading Practices in Capital
Decision-Making. The report identifies challenges agencies have faced
with implementing the principles and practices and describes the extent
to which OMB uses long-term capital planning information in reviewing
agency budget requests and supporting justifications to the Congress.
Using a case study approach, GAO evaluated the experiences of the
Department of Veterans Affairs (VA), the National Park Service (Park
Service), the Bureau of Prisons (BOP), and the National Oceanic and
Atmospheric Administration (NOAA). GAO also surveyed officials in eight
additional agencies with significant capital investment spending to
obtain their views on the usefulness of OMB's Capital Programming
Guide.
Background:
Federal government spending on capital investments can be divided into
two categories: that which provides long-term benefits to the nation as
a whole--increasing the nation's overall capital stock for economic
growth--and that which improves the efficiency of internal federal
agency operations--capital investment for the government as an
operating entity. This report, like OMB's Capital Programming Guide,
focuses on the latter--those assets the government acquires for its own
use. They are defined as land, structures, equipment, and intellectual
property (including software) that have an estimated useful life of 2
years or more. Examples are office buildings, hospitals, prisons,
ships, satellites, motor vehicles, information technology, and
parklands.
During the 1990s, the Congress enacted legislation to help move
agencies toward improving their capital planning processes. The
Congress enacted the Federal Acquisition Streamlining Act of 1994 to
improve the federal acquisition process and the Clinger-Cohen Act in
1996 to improve the implementation and management of information
technology investments. OMB has issued various guidance and
requirements for agencies to follow and use in developing disciplined
capital programming processes, including the 1997 Capital Programming
Guide, to provide agencies a basic reference for establishing an
effective process for making investment decisions. The Capital
Programming Guide integrates executive office and statutory asset
management initiatives into a single, integrated process to ensure that
capital investments contribute to the achievement of agency goals and
objectives. While agencies are provided flexibility in how they
implement the guidance principles and practices, they are expected to
comply with existing statutes for planning and funding new capital
asset acquisitions. In 1998, GAO issued its Executive Guide based on a
study of leading state and local government and private sector capital
investment practices. The GAO Guide summarizes 12 fundamental practices
(shown in ch. 1, fig. 7) that have been successfully implemented by
organizations that are recognized for their outstanding capital
decision-making practices and provides examples of leading practices
from which the federal government may draw lessons and ideas.
This report focuses on the principles and practices that underlie the
planning phases of both OMB's Capital Programming Guide and GAO's
Executive Guide. They start with linking the capital planning process
to the organization's mission, goals, and objectives and culminate with
the development of a long-term capital investment plan and are
described in this report as strategic linkage, needs assessment and gap
identification, alternatives evaluation, establishment of a review and
approval framework (using established criteria to rank and select
proposed projects), and development of a long-term capital plan.
Results in Brief:
Case study agencies have experienced mixed success with implementing
the planning phase principles and practices described in OMB's Capital
Programming Guide and GAO's Executive Guide. GAO found that agency
capital planning processes generally link to the agencies' strategic
goals and objectives and consider a range of alternatives to bridge any
identified performance gaps. GAO also found that most case study
agencies have formal processes for ranking and selecting proposed
capital investments. However, not all agencies have been successful in
developing and using agencywide asset inventories and asset condition
data to assess capital needs and identify performance gaps. Also, none
of the case study agencies has developed a comprehensive, agencywide,
long-term capital investment plan. Some agencies have long-term
planning documents, but none has a comprehensive plan that defines its
long-term investment decisions. Figure 1 shows the case study agencies'
varying degrees of implementation of the planning phase guidance. GAO
makes recommendations in this report directed at improving agency
conformance to OMB and GAO capital planning guidance.
Figure 1: Case Study Agencies' Conformance with Capital Planning
Guidance:
[See PDF for image]
[End of figure]
Some of the capital guidance also has presented a challenge for the
eight additional agencies GAO surveyed, and the degree to which the
surveyed agencies and GAO's case study agencies follow the capital
guidance varies. As mentioned, some of the GAO case study agencies have
successfully implemented many of the principles and practices described
in both OMB's and GAO's guidance but have not been successful in
implementing others. The survey agencies have been challenged by some
of the guidance principles and practices--specifically, those agencies
whose activities involve research and development or scientific
pursuits. Despite the challenges experienced, agencies generally agree
that the guidance is helpful for developing an effective capital
decision-making process.
OMB's reliance on long-term capital planning information for budget
review and its expectations for agency use of its capital guidance
varied by OMB resource management office (RMO) staff. OMB RMO staff for
GAO's four case study agencies consider a number of factors--but not
long-term capital plans--when reviewing agency budget requests for
capital projects. However, based on GAO's work at leading private and
state and local entities, long-term capital plans, as well as all the
other leading practices, result in better capital decisions. Since
these practices embedded in the OMB Guide have demonstrated benefits to
leading organizations, GAO makes recommendations in this report
directed at requiring agency use of OMB's Capital Programming Guide.
Principal Findings:
Case Study Agencies Have Successfully Implemented Some of the Capital
Guidance Principles and Practices:
Both OMB and GAO guidance stress the importance of linking capital
asset investments to an organization's overall mission and long-term
strategic goals. The guidance also strongly emphasizes evaluating a
full range of alternatives to bridge any identified performance gap.
Further, the guidance calls for a comprehensive decision-making
framework to review, rank, and select from among competing project
proposals. Such a framework should include appropriate levels of
management review and selections should be based on the use of
established criteria.
Case study agency capital planning processes do consider strategic
goals as decisions are made about capital investments. Current
presidential administration and departmental priorities are
communicated throughout the planning processes. In some cases, the
strategic linkage is demonstrated by specific projects that implement
long-term agency goals. In other cases, the linkage is evident in
agency guidance for developing capital project proposals and the
criteria used to rank and select among competing project proposals.
When a performance gap--a gap between resources needed and the capacity
of existing resources to achieve goals and objectives--is identified,
case study agencies consider various alternatives for acquiring new
capital assets and often choose such alternatives, including
nonownership options, where appropriate. This consideration of
alternatives is one of the practices in OMB's Capital Programming
Guide.
VA departmental guidance requires that four alternative approaches be
considered to bridge any performance gap--leasing; status quo; new
construction; and rehabilitation, repair, or expansion of existing
facilities.
For BOP, one strategy to achieve its goals is to acquire needed prison
capacity through cooperative arrangements with state and local
governments, contracts with private providers of correctional services,
and alternatives to traditional confinement where appropriate.
The Park Service conducts extensive alternatives analysis at various
stages of a project proposal's development and review. Park Service
alternatives considered and used include renovating and rehabilitating
existing facilities and partnering with other governments for land
acquisitions and with the private sector and nonprofit entities.
NOAA has converted excess U.S. Navy vessels to its own use as an
alternative to new ship construction. Also, one of NOAA's strategic
goals is to pursue partnerships with entities in the public and private
sectors. To accomplish this, NOAA has partnered with universities for
the use of excess university vessels and shares a radar system with the
Department of Defense and the Federal Aviation Administration.
Most case study agencies have an established framework to review and
select from among competing capital investment proposals. These
processes are formal and include the use of senior-level review boards
and committees and established criteria for selecting proposed
projects. VA has a department-level process that considers projects for
all VA administrations. It has various levels of review and uses
established criteria and group-enabled software to rank proposed
investments. The ranking and selection process is managed by a
multidisciplinary assessment team and uses evaluation factors applied
to each proposed investment. The Park Service also has a formal review
and selection process that includes both internal and external senior-
level review boards. Like VA, the Park Service ranking process is
managed by a multidisciplinary assessment team and uses evaluation
factors applied to each proposed investment. NOAA's review process uses
multiple NOAA-level review boards that are aligned with NOAA's
strategic goals. These boards each use a separate set of established
criteria to rank capital investment proposals--criteria aligned with
specific strategic goals. While BOP's review and selection process
includes the use of senior-level committees, it is not formal, is not
well documented, and does not appear to use formal selection criteria.
Case Study Agencies Generally Assess Their Capital Needs and Identify
Performance Gaps, but Not All Agencies Have Asset Inventories and
Sufficient Information on Asset Condition:
Both OMB and GAO guidance stress the importance of conducting a
baseline assessment of the resources needed and current capacity of
existing resources to achieve results-oriented goals and objectives.
This assessment should include the use of an inventory of all existing
assets and current information on asset condition in order to identify
any performance gaps. Asset inventory and current condition data should
be available to all program managers and decision makers involved in
the capital decision-making process. One GAO case study agency, VA, has
neither an agencywide inventory of existing capital assets nor
agencywide information on the condition of those assets, although it is
in the process of creating a data management system to inventory
capital assets and measure their performance against VA portfolio
goals. A second case study agency, the Park Service, has just recently
developed an asset inventory, and while the agency has made some
progress toward determining the condition of its assets, comprehensive
condition assessments will not be completed for some time. A third case
study agency, NOAA, has an agencywide inventory of its assets but lacks
current information on the condition of those assets. The fourth GAO
case study agency, BOP, maintains an asset inventory and information on
asset condition but lacks a clear basis for its long-term performance
gap.
VA's Veterans Health Administration (VHA) maintains information on the
type, number, and use of facilities and other assets at the network
level, but until March 2003, the data on facilities were not readily
available to other networks or headquarters personnel. Therefore,
decision makers cannot readily identify assets available for sharing
across networks. Similarly, although VHA facility employees have
routinely conducted condition assessments of the facilities under their
control, the results were maintained at each facility or, in some
cases, at the health care network level and were not available to other
VHA networks or headquarters decision makers. VA's National Cemetery
Administration (NCA) maintains an inventory system of its assets and
facilities, including information on condition, as well as a separate
database of major asset items at each cemetery. While these data are
used as part of NCA's 5-year planning process and are used to identify
program performance gaps and options for addressing the gaps, the
information is not readily available to VA headquarters managers.
Officials told GAO that VA is in the process of developing an
agencywide inventory system and that inventory data will be available
to all VA managers at the department and bureau levels. VA officials
also told GAO that VHA has conducted a nationwide building-by-building
survey of each facility in each VHA health care network, and the survey
data will be available to facility managers VA-wide.
Historically, the Park Service has maintained asset inventories at the
park level with varying levels of detailed information. Some national
park units have a limited inventory covering the assets under their
control. For example, the Grand Canyon National Park has an inventory
of real property assets and an inventory of what it calls "formal"
property, including assets with an acquisition value of $15,000 or
more. Each division within the park has an inventory of so-called
"informal" property valued below $15,000. Until just recently this
individual park information was not available servicewide. Since asset
condition assessments were not required in the past, condition
information historically had not been available servicewide to capital
planners and decision makers. Asset condition is monitored on a park-
by-park basis at the park level, and priority capital projects were
determined based on the institutional knowledge of park management and
visual inspections of park assets. However, these visual inspections
were not based on any systematic criteria and there was little
documentation available.
Also, until just recently, for two decades the Park Service lacked the
benefit of a comprehensive asset inventory by age, type, size, and
number of assets. As a result, the physical condition, functionality,
suitability, and life expectancy of its facilities and the backlog of
deferred maintenance requirements were not adequately documented. The
Park Service is in the process of implementing an asset management
process that is designed to include a comprehensive inventory of park
assets and comprehensive data on the condition of those assets. This
asset information will be captured in a centralized database for the
entire park system. According to the Park Service, the agency recently
completed the asset inventory phase of the process and has completed
visual inspections on all but nine of the larger parks in the park
system. The agency also is concurrently performing the more detailed
comprehensive condition assessments, but these assessments will not be
completed for some time.
NOAA has separate asset inventories for its real and personal
property[Footnote 1] but maintains no asset condition data. NOAA
headquarters and the Department of Commerce's administrative support
centers maintain a single inventory of real property assets, including
data on leased properties. The personal property inventory is
centralized and maintained by NOAA's finance and administration office.
While information on asset type, size and age of facility, and current
physical location is available to decision makers, NOAA currently
maintains no comprehensive data on the condition of its real or
personal property assets. In past years, NOAA regularly performed asset
condition assessments for its real property assets; however, those
assessments have been suspended. Officials at NOAA told GAO that a new
process for conducting assessments of real property assets is scheduled
to begin in fiscal year 2003. However, NOAA has no process for
assessing the condition of its personal property assets. An official
told GAO that NOAA line and program offices do not perform assessments
of personal property assets because it is believed that if regular
asset maintenance is performed, condition assessments and inspections
are not necessary.
The BOP new construction program follows a centralized long-term
capacity planning process with the goal of ensuring sufficient
institution capacity while maintaining prison crowding at safe and
secure targeted levels. Along with data from BOP's asset inventory and
maintenance systems, the process uses the concept of rated capacity,
which is a standard that considers a stated level, or percentage, of
double bunking (overcrowding) in inmate living quarters to arrive at an
institution's inmate capacity level. However, BOP is unable to
demonstrate the basis for what it considers an acceptable level of
systemwide overcrowding. Officials told GAO that over the past two
decades, the overcrowding goal has increased from 10 to 15 percent and
more recently to about 30 percent. They say the increases are the
result of what is believed to be acceptable percentages of double
bunking. BOP officials could not provide any studies or documentation
supporting what the agency considers an acceptable level of double
bunking or crowding above rated capacity levels. According to
officials, the change in targeted levels or increased goal levels
appears to have had no effect on managing the prison population.
None of the Case Study Agencies Have Developed Long-term Capital
Investment Plans:
Both OMB and GAO guidance emphasize the importance of developing a
long-term capital investment plan. Similar to long-term strategic
plans, long-term capital plans covering 5 to 6 years guide the
implementation of organizational goals and objectives and help decision
makers establish priorities over time. The long-term plan is considered
the ultimate product of an organization's planning phase activities and
should clearly describe an entity's performance gap and the resources
needed to bridge it. It also should provide a clear justification for
new acquisitions proposed for funding--linking proposed investments to
an organization's long-term strategic goals. Although two of the four
case study agencies have long-term planning documents, none have single
agencywide long-term capital plans that define agency capital
investment decisions.
VA has prepared 1-year plans in the past that served as the
department's annual budget request for capital acquisitions. VA's NCA
prepares a 5-year facilities plan that is driven by its strategic plan.
Although NCA's planning documents are available to VA decision makers,
VA does not produce a long-term plan that integrates all of the
department's capital needs. Officials told GAO that the department has
begun a process to develop a comprehensive long-term plan for all of
VA. Like VA, NOAA lacks a long-term capital plan that integrates the
capital needs for its major line and program offices although some
offices have planning documents that reflect OMB and GAO guidance to
varying degrees. For example, NOAA's Office of Marine and Aviation
Operations officials told GAO that the office prepares an unpublished
plan that is a 10-year chart of cost estimates and dates for major
repairs and replacements to its ships. Officials at NOAA had no plans
to develop an agencywide NOAA long-term capital plan.
BOP prepares three long-term documents that viewed together, provide a
sense of how BOP plans to achieve its current overcrowding goal;
however, there is no single document that culminates its capital
planning process. The Park Service prepares a servicewide 5-year
construction plan that results from its rigorous review and selection
process; however, the plan itself is merely a list of planned projects
with estimated costs and schedule data rather than a narrative
justification supporting an identified performance gap and linkage to
organizational goals. In addition, the Park Service construction plan
does not include all of the agency's construction needs or its major
equipment and land acquisitions.
Some Agencies Are Challenged by Aspects of OMB's Guide, and Agencies
Vary in the Extent to Which They Use It:
The OMB Capital Programming Guide was intended to assist agencies with
developing a disciplined capital programming process. OMB strongly
encourages agencies to use its guidance but does not require it, and
the degree to which agencies use OMB's guidance varies. Some agencies
have found it difficult to implement some of the guidance principles.
Surveyed agencies, such as the Tennessee Valley Authority, find it
challenging to quantify benefits of capital projects over several
years. Also, the National Aeronautics and Space Administration (NASA)
found the guidance inconsistent with the research and development
nature of its programs. As mentioned, not all GAO case study agencies
have successfully developed and used asset inventories or developed
agencywide long-term capital plans. While some agencies have had
difficulties, other survey and case study agency officials told GAO
they generally find the guidance helpful in developing an effective
process for capital decision making. Some have successfully
incorporated many of the guidance principles into their processes. For
example, the Indian Health Service told GAO that many of the OMB
guidance principles are included in its Health Care Facilities
Construction Priority System. While NASA found the guidance
inconsistent with its research and development activities, officials
told GAO that the agency has implemented the guidance principles for
selected information technology projects. NOAA' s National Weather
Service officials cite the establishment of its senior-level review
board as stemming from the OMB guidance.
Use of Long-term Capital Planning Information by Budget Decision Makers
Varies by Agency:
When the OMB Capital Programming Guide was developed, a general
presumption was that OMB would only consider recommending for funding
in the President's Budget priority capital investments that comply with
good capital programming principles. However, expectations for agencies
to use OMB's Guide and reliance on long-term capital planning
information varied by OMB RMO staff. OMB does not require long-term
capital plans from agencies, but RMO staff solicit and receive various
documents for individual capital projects. OMB staff told GAO that they
place more emphasis on the required OMB Exhibit 300 (Capital Asset Plan
and Business Case for Major Acquisitions) when reviewing agency funding
requests. OMB requires Exhibit 300 for each requested asset as part of
an agency's budget submission. It is an individual asset plan for each
major new and ongoing project, system, or acquisition, but it is not a
long-term capital plan that defines the agency's long-term investment
decisions. An agency could have many Exhibits 300 but have no
comprehensive capital plan to pull them all together over the long
term.
VA's OMB RMO receives thorough business case packages for VA
construction projects, and BOP's RMO receives regular long-term
planning information from BOP and independently performs research to
obtain more information. OMB views its role as that of integrator of
specific capital project proposals into the larger budget process. All
of the RMO staff told GAO that they consider other factors, such as
agency obligation rates, the overall budget request, and agency
strategic plans, when reviewing agency budget requests for capital
acquisitions.
While OMB RMOs receive some capital planning information for use during
budget review, staff told GAO that they are pushing agencies to
consider more alternatives as part their capital planning processes.
The BOP RMO staff person said she would like to see more consideration
of state facilities as an alternative to new prison construction and
has urged BOP to consider more contracting opportunities.
Since long-term capital plans have not been routinely provided to
congressional decision makers, GAO cannot assess their actual use.
However, congressional staff indicated that long-term capital planning
information could help them identify what the agencies viewed as
important. They also said that the planning process and analyses
required for developing a long-term plan can help ensure that agencies
make well-informed decisions.
The Department of State's 2003 Long-Range Overseas Buildings Plan,
which provides a strategic road map for State's overseas buildings
operations, states that fiscal year 2003 budget decisions were based on
the 2001 long-range plan.
Recommendations for Executive Action:
GAO makes several recommendations to case study agency management
regarding increased emphasis and implementation of specific practices
from OMB's Capital Programming Guide. GAO also recommends that the
Director of OMB require that agencies comply with the principles and
practices of its guide, including development of long-term agency
capital plans.
Agency Comments:
OMB's Assistant General Counsel provided us with oral comments on the
draft report, saying that OMB agreed with our recommendations. A few
technical comments were also provided and have been incorporated where
appropriate. We received written comments from our four case study
agencies--VA, the Park Service, BOP, and NOAA. Our case study agencies
either agreed with our conclusions and recommendations or did not
directly address them. Most case study agencies indicated some actions
planned or taken to address our recommendations. Written comments
provided from VA, BOP, and NOAA are reprinted in appendixes VII, VIII,
and IX, respectively. A number of technical comments were also provided
by our case study agencies and have been incorporated in this report as
appropriate.
[End of section]
Chapter 1 Capital Planning Is the Core of the Capital Decision-Making
Framework:
Federal government spending on capital investments is spending that
yields long-term benefits. Its purpose may be to increase the nation's
overall capital stock for economic growth or to improve the efficiency
of internal federal agency operations--capital investment for the
government as an operating entity. This study focused on the capital
assets the government acquires for its own use. They are defined as
land, structures, equipment, and intellectual property (including
software) with an estimated useful life of 2 years or more. Examples
include office buildings, hospitals, prisons, ships, satellites, motor
vehicles, information technology, and parklands. Both because large
sums of taxpayer funds are spent on capital assets and because their
performance affects how well agencies are able to achieve their
missions and goals and provide service to the public, effective
planning for the acquisition and management of federal capital assets
is an important task. In the overall capital programming process,
planning is the first step--and arguably the most important since it
drives the remaining phases of budgeting, procurement, and management.
The objectives of this study were to (1) determine the extent to which
selected agencies have implemented the Planning Phase principles of the
Office of Management and Budget's (OMB) Capital Programming Guide (OMB
Guide)[Footnote 2] and the leading practices in capital decision making
described in GAO's Executive Guide (GAO Guide);[Footnote 3] (2)
identify what, if any, problems or issues exist with implementing the
principles and practices; and (3) determine the extent to which OMB
uses long-term capital planning information in reviewing agency budget
requests and supporting budget justifications to the Congress. Using a
case study approach, we evaluated the experiences of the Department of
Veterans Affairs (VA), the National Park Service (Park Service), the
Bureau of Prisons (BOP), and the National Oceanic and Atmospheric
Administration (NOAA).[Footnote 4] We also surveyed officials in eight
additional agencies with significant capital spending to obtain their
perceptions of OMB's Capital Guide. Appendix I contains a detailed
discussion of our objectives, scope, and methodology.
Separate chapters in this report address each principle as applied by
the case study agencies. Appendixes II through V each describe the case
study agency's processes in greater detail.
Importance of Governmentwide Capital Investment Spending:
A review of recent historical trends can provide some perspective on
the magnitude and overall pattern of spending for federally owned
capital asset investments.[Footnote 5] For the 10-year period 1993
through 2002, direct governmentwide capital investment outlays as
reported in the President's Budget and adjusted for inflation by GAO
were sizable, but as shown in figure 2, show only a slight increase
from $97.5 billion to $97.9 billion, in real terms. Real defense
capital outlays decreased from $77.3 billion to about $68.3 billion,
while real nondefense outlays increased from $19.8 billion to $29.5
billion over the 10-year period.
Figure 2: Governmentwide Major Public Physical Capital Investment
Outlays:
[See PDF for image]
[End of figure]
However, as figure 3 shows, as a percentage of total federal outlays,
direct governmentwide capital investment outlays fell sharply from 6.8
percent to 4.9 percent. Most of this decline was in the defense portion
of governmentwide capital outlays, which fell from 5.4 percent to 3.4
percent. Although the nondefense portion fluctuated some, it was
basically unchanged at 1.4 percent in 1993 and 1.5 percent in 2002.
Figure 3: Governmentwide Major Public Physical Capital Investment
Outlays as a Percentage of Total Outlays:
[See PDF for image]
[End of figure]
Finally as figure 4 shows, as a share of gross domestic product (GDP),
both governmentwide capital outlays and defense capital outlays fell by
0.6 percentage points during the 4-year period 1993 through 1997 and
then remained basically unchanged through 2002. Nondefense capital
outlays fluctuated during the 10-year period 1993 through 2002 but
ended the period at the same 0.3 percent of GDP. The stability of
nondefense capital outlays goes back further. As a percentage of total
outlays and as a percentage of GDP, nondefense capital outlays have not
changed considerably since we reported 30-year spending trends in
1996.[Footnote 6]
Figure 4: Governmentwide Major Public Physical Capital Investment
Outlays as a Percentage of GDP:
[See PDF for image]
[End of figure]
Historical data for our four case study agencies show that capital
outlays fluctuated considerably in real terms over the 10-year period
1993 through 2002.[Footnote 7] VA's capital outlays varied
considerably throughout the 10-year period but showed an increase from
$1.4 billion in 1993 to $2.1 billion in 2002. The Park Service's
capital outlays fluctuated during the 10-year period and showed an
increase from $395 million in 1993 to $496 million in 2002. BOP's
capital outlays fluctuated from $399 million to $481 million during
the period 1993 through 2001, with a sharp drop to $34 million in
fiscal year 1998, and then a sharp increase to $795 million. NOAA's
capital outlays increased more than 15-fold over the 10-year period,
from $51 million to $787 million. This increase was primarily due to
funding the modernization of NOAA weather facilities and systems,
satellite systems, the first planned fisheries research vessel, and
new laboratories and science centers. Figure 5 shows these case study
agency outlay trends.
Figure 5: Case Study Agencies Major Public Physical Capital Investment
Outlays:
Background:
Federal spending on capital assets can be divided into two categories:
that which provides benefits to the government's own operations and
that which provides long-term benefits to the nation as a whole. This
report, like OMB's Capital Programming Guide, focuses on the former--
those capital assets owned and used by the federal government primarily
to deliver federal services. These assets are those used by the
government as an operating entity.
The Congress, OMB, and GAO all have identified the need for effective
planning and management of capital asset investments. In addition,
increasing budget pressures and demands to improve performance in all
areas puts pressure on agencies to make the most effective capital
acquisition choices. OMB has issued various guidance and requirements
for agencies to follow and use in developing disciplined capital
programming processes. We conducted a study of leading state and local
government and private sector practices that can provide lessons for
the federal experience. More recently, we added federal real property
to our list of high-risk areas. In the high-risk report,[Footnote 8] we
describe how many federal assets are no longer effectively aligned
with, or responsive to, agencies' changing missions; how many assets
are in an alarming state of deterioration; and how the problems are
compounded by the lack of reliable governmentwide data for strategic
asset management.
The Congress enacted legislation during the 1990s to help move agencies
toward improving their capital planning processes. The Congress enacted
the Federal Acquisition Streamlining Act of 1994 (FASA) to improve the
federal acquisition process. Title V of FASA was designed to foster the
development of (1) measurable cost, schedule, and performance goals and
(2) incentives for acquisition personnel to reach these goals. Civilian
agencies and Department of Defense agencies are required to report
annually on whether major and nonmajor programs are achieving 90
percent of program goals and to identify suitable action if goals are
not being met. The Congress enacted the Clinger-Cohen Act in 1996 to
improve the implementation and management of information technology
projects by requiring that agencies engage in capital planning and
performance-and results-based management. The Government Performance
and Results Act of 1993 (GPRA) requires agencies to develop mission
statements, long-range strategic goals and objectives, and annual
performance plans. It also emphasizes identifying and measuring
outcomes, including benefits.
Effective capital programming requires long-range planning and a
disciplined decision-making process as the basis for managing a
portfolio of assets to achieve performance goals and objectives with
minimal risk, lowest life-cycle costs, and greatest benefits to the
agency's business. OMB has provided certain requirements and guidance
to agencies regarding capital programming in Circular A-11 and its
supplement. This circular and an executive order on investments are
described in appendix VI.
In July 1997, OMB issued the Capital Programming Guide to provide
federal agencies a basic reference for establishing an effective
process for making investment decisions. The guide stresses long-term
capital planning and the importance of having a formal capital asset
infrastructure. It suggests that like agency strategic plans, capital
planning should span 5 years and the process should provide agency
management with accurate information on acquisition and life-cycle
costs, schedules, and performance of current and proposed capital
assets. OMB's Guide also stresses that a formal asset management
infrastructure helps establish clear lines of authority,
responsibility, and accountability for the management of capital
assets. This infrastructure should include an executive review
committee that reviews the agency's entire capital portfolio
periodically and the use of an integrated project team.
The OMB Guide provides detailed guidance to federal agencies on
planning, budgeting, acquisition, and management of capital assets. The
guide is organized in four phases of capital programming--Planning,
Budgeting, Procurement, and Management-In-Use--and includes
information from linking capital decisions to strategic goals and
objectives, to analyzing and ranking potential investments, to making
informed decisions based on the full cost and risk of a project. Each
of the four phases of the capital programming process is composed of a
number of steps. Planning Phase steps range from strategic linkage to
the development of a long-term agency capital plan. The Budgeting Phase
begins with the agency's budget submission to OMB and ends with
congressional approval and OMB apportionment of funding. The
Procurement Phase of the capital process begins with acquisition
planning, includes contract award and contract management, and ends
with testing and acceptance of the asset--ensuring that the asset meets
the requirements of the contract. The Management-In-Use Phase begins
with operational analysis and includes the execution of an operation
and maintenance plan, a postimplementation review--to evaluate the
overall effectiveness of the agency's capital planning and acquisition
process, and the execution of an asset disposal plan.
The Capital Programming Guide integrates executive office and statutory
asset management initiatives, including GPRA, the Clinger-Cohen Act,
and FASA, into a single, integrated process to ensure that capital
investments contribute to the achievement of agency goals and
objectives. The OMB Guide supplements the requirements of OMB Circular
A-11, part 7, by providing procedural and analytic guidelines. While
agencies are provided flexibility in how they implement the key
principles and concepts of the OMB Guide, they are expected to comply
with existing statutes for planning and funding new capital assets and
achieving cost, schedule, and performance goals.[Footnote 9] Figure 6
illustrates the four phases of capital programming as presented in the
OMB Guide.
Figure 6: OMB Capital Programming Cycle:
[See PDF for image]
[End of figure]
In December 1998, we issued an Executive Guide on capital decision
making based on extensive research to identify leading practices used
by state and local governments and private sector organizations. Our
Executive Guide summarizes 12 fundamental practices that have been
successfully implemented by organizations that were recognized for
their outstanding capital decision-making practices and provides
examples of leading practices from which the federal government may
draw lessons and ideas. To help consider the applicability to the
federal government experience, our Executive Guide includes information
from one federal agency.
Our Executive Guide presents an overall framework for effective capital
decision making and identifies organizational attributes that are
important to the decision-making process as a whole. Leading
organizations described vision and leadership, strategic planning, good
information and data systems, and clear communication as critical to
the success of their capital decision-making process. Our Guide is
organized around five general principles that leading organizations
used to make capital investment decisions: (1) integrate organizational
goals into the capital decision-making process, (2) evaluate and select
capital assets using an investment approach, (3) balance budgetary
control and managerial flexibility when funding capital projects, (4)
use project management techniques to optimize project success, and (5)
evaluate results and incorporate lessons learned into the decision-
making process. To help translate these principles into actions and to
provide concrete examples of how agencies and the Congress can apply
these principles, we identify practices used by the leading
organizations that best demonstrate each principle. Figure 7
illustrates the capital decision-making framework principles and
practices.
Figure 7: Capital Decision-Making Framework, Principles and Practices:
[See PDF for image]
[End of figure]
Although our Guide focuses on fundamental practices rather than
detailed guidance, the practices represent actions and steps to be
taken. In addition, the examples presented in the guide illustrate and
complement many of the phases and specific steps contained in the OMB
Capital Programming Guide. There is a great deal of overlap between the
OMB and GAO guides since both suggest similar fundamental practices
that are essential to making effective capital investment decisions.
Because of the importance of planning, this study focuses on agencies'
implementation of the concepts that underlie the planning phase of
OMB's Guide and support principle I and principle II of our Executive
Guide. The planning phase, as the driver of the following phases, is
key to making effective capital investment decisions. The concepts
start with linking the capital planning process to the organization's
overall mission, goals, and objectives and culminate in the development
of a long-term organization capital plan. They are described in this
report as:
* strategic linkage,
* needs assessment and gap identification,
* alternatives evaluation,
* establishment of a review and approval framework,
* establishment and use of criteria to rank and select proposed
projects, and:
* development of a long-term capital plan.
The planning phase is the crux of the capital decision-making process.
The products that result from this phase are used throughout the
remaining phases of the process, and failure during this stage may have
repercussions throughout.
Strategic Linkage:
Strategic planning can be defined as a structured process through which
an organization translates a vision and makes fundamental decisions
that shape and guide both what the organization is and what it does.
Both OMB and GAO guidance emphasize the importance of linking capital
asset investments, funding, and management to an organization's overall
mission and long-term strategic goals. OMB's Guide describes capital
planning as an integral part of an agency's strategic planning process
within the framework established by GPRA. It states that capital assets
should be planned for, acquired, and managed based on their ability to
contribute to accomplishing program outputs and outcomes as described
in an agency's strategic plan. It further states that an effective
strategic plan should identify major capital assets that are critical
to the plan's implementation and should define the outcomes that the
assets will help to realize. Our Guide describes how leading
organizations also view strategic planning as the vehicle that guides
decision making for all spending. These organizations use their
strategic planning processes to assess the needs of clients and
constituents and the political and economic environment in which they
are operating and to link the expected outcomes of projects, including
capital projects, to the organization's overall strategic goals and
objectives.
Needs Assessment and Performance Gap Identification:
Conducting a comprehensive assessment of resources needed or an
analysis of program requirements is an important first step in an
organization's capital decision-making process. A comprehensive needs
assessment identifies the resources needed to fulfill both immediate
requirements and anticipated future needs based on the results-oriented
goals and objectives that flow from the organization's mission. The
needs assessment is results oriented in that it determines what is
needed to obtain specific outcomes rather than what is needed to
maintain or expand existing capital stock. A comprehensive assessment
of needs considers the capability of existing resources and makes use
of an accurate and up-to-date inventory of capital assets and
facilities as well as current information on asset condition. Using
this information, an organization can properly determine any
performance gap between current and needed capabilities.
OMB's Capital Programming Guide describes the needs assessment and gap
identification process in terms of an assessment of the existing
performance baseline that covers both those capital assets currently in
use and those assets in the procurement process. It includes all assets
regardless of how they are being acquired--purchase, lease, or service
contract. OMB guidance suggests the criteria for the baseline
assessment include each asset's current or anticipated functionality,
full life-cycle costs,[Footnote 10] the affordability of full life-
cycle costs, associated risks, and the agency's capacity to manage the
asset. OMB guidance further states that a performance gap should be
defined in terms of the functional requirements to be achieved and that
such functional requirements should consider the
capabilities of other assets with which the function or proposed asset
must interact in order to achieve its goal, objective, or
mission.[Footnote 11] Our Guide describes how leading organizations
conduct a comprehensive needs assessment (variously referred to as
needs determination, needs study, or mission analysis). This is often
the first step in an organization's capital planning and budgeting
process and includes an assessment of an entity's internal and external
environments and an examination of its primary role and organizational
structure.
Our Guide also describes how leading organizations track the use and
performance of existing assets and facilities to help assess current
capabilities and establish a baseline. These organizations maintain
asset inventory and tracking systems that not only identify the
location and status of assets and facilities but also track and report
asset and facility condition and deferred maintenance needs.
Information about existing assets is also used in determining what
capital resources are currently available and what resources are needed
in order for the organization to be able to meet its goals and
objectives. The data and the information provided by well planned
information systems give organizations the ability to build
comprehensive measures, collect relevant data, and perform analyses
that can be used to support strategic as well as operational budgeting
decisions. Using a variety of automated systems that are frequently
updated, leading organizations provide managers and decision makers
with timely, current, and useful information to assess the availability
and condition of existing assets.
For example, one large state government we studied maintained three
levels of inventory systems to identify and control its capital assets
and facilities: a statewide inventory, individual agency inventories,
and an inventory of deferred maintenance. The state also required
routine asset and facility condition assessments. The statewide
inventory was maintained through the state's fixed asset accounting and
control system and was updated at least annually to reflect new assets
acquired and old assets disposed of. Reports generated by this
inventory system identified assets within a given agency that were
available for use by other departments or divisions and surplus assets
within the state that may be available for any agency's use. Some
agency inventory systems also contained asset condition assessment data
in addition to data on asset existence. Agencies included asset
condition assessment data when submitting their capital project
requests to the state's planning and budgeting department. When
requesting funding for new assets or facilities, agency managers were
required to fully describe the agency's current assets and facilities,
including information on the adequacy of existing assets and facilities
to meet current and future program demands.
Alternatives Evaluation:
When a performance gap between needed and current capabilities has been
identified, it is important that organizations carefully consider how
best to bridge the gap by identifying and evaluating alternative
approaches, including noncapital options. OMB's Guide suggests that
once detailed requirements are defined, management should answer the
"Three Pesky Questions" before planning to acquire capital assets.
These questions are as follows:
1. Does the investment in a major capital asset support core/priority
mission functions that need to be performed by the federal government?
2. Does the investment need to be undertaken by the requesting agency
because no alternative private sector or governmental source can better
support the function?
3. Does the investment support work processes that have been simplified
or otherwise redesigned to reduce costs, improve effectiveness, and
make maximum use of commercial-off-the-shelf technology?
If the answer to all three questions is yes, according to the OMB
Guide, management should still consider options other than acquiring
new assets to bridge the performance gap. The guide suggests that
management also consider meeting the objectives through regulation or
user fees or by using human capital instead of physical capital assets.
OMB's Guide encourages the use of benefit-cost or cost-effectiveness
analysis to determine if acquiring a new asset is the best way to
reduce an identified performance gap. In addition, the guide encourages
agencies to consider modifying existing assets or some other method.
Figure 8 illustrates the use of OMB's "Three Pesky Questions.":
Figure 8: OMB Decision Tree for Analyzing Agency Programs and
Investments:
[See PDF for image]
[End of figure]
Our Guide describes how leading organizations consider a wide range of
alternatives to bridge a performance gap, including noncapital
alternatives, before choosing to purchase or construct a capital asset
or facility. Managers carefully consider options such as contracting
out and privatizing the activity as well as nonownership options such
as leasing. Leading organizations also consider engaging in joint
venture projects with other organizations to minimize the amount
invested and reduce the organization's risk. If it is determined that a
capital asset is needed to bridge a performance gap, leading
organizations first consider the use of existing assets before choosing
to purchase or construct new assets. Information obtained from an
organization's asset inventory system facilitates considering the use
of existing assets. One local government we studied considered many
alternatives, and renovating or expanding an existing facility was the
option used most frequently.
Establishment of a Review and Approval Framework:
Establishing a decision-making framework (which encourages the
appropriate levels of management review and approval) is a critical
factor in making sound capital investment decisions. A framework
supported by the proper financial, technical, and risk analyses can
mean capital investment decisions are made more efficiently and
supported by better information. OMB's Capital Programming Guide
suggests that each agency establish a formal process for senior
management review and approval of proposed capital assets. The cost of
a proposed asset and its importance to achieving the agency mission
should be considered when defining criteria for executive review. Also,
the number of times a project proposal is reviewed should be based on
the level of risk involved in the acquisition.
GAO's Executive Guide describes how leading organizations use decision-
making processes to help them assess where they should invest for the
greatest benefit. Some organizations have processes that determine the
level of review and analysis based on the size, complexity, and cost of
a proposed investment or its organizationwide impact. One multinational
company we studied had various levels of review based on the business
and economic significance of the proposed capital project. This company
used its corporate executive council for some project decisions while
managers within the company's business groups reviewed and approved
other projects. The company's chief executive officer was involved only
when proposed investments were of strategic significance to the company
as a whole or were very large and capital intensive. This company also
categorized proposed projects as "mandatory," "necessary," or "would
like to do." Projects required by law or regulation were considered
mandatory and were subject to less up-front analysis and management
review. Projects defined as necessary were usually more strategic in
nature and involved either benefits to the organization or cost
savings. Depending on the scope and risk involved, "necessary" projects
required a greater level of analysis or review. This was also true of
"would like to do" projects, which were projects that were desired but
not critical to the organization's goals.
As part of the capital investment review and approval process, leading
organizations develop a decision or investment package to justify
capital project requests. These packages--referred to as business cases
or project requests--generally include detailed economic and financial
analyses and other documents to support the proposed investment. The
types of analysis ranged from a complete cost-benefit analysis--which
included full life-cycle costing--to an analysis that compared
alternatives and recommended the most cost-effective option. Decision
packages also show how a proposed investment is linked to an
organization's strategic goals.
Establishment and Use of Criteria to Rank and Select Projects:
Capital investments should be compared to one another to create a
portfolio of major assets ranked in priority order. Much like
individuals selecting a diverse portfolio of investments, agencies
invest in a diverse portfolio of capital assets. While investor returns
are measured in dividends or capital gains, the costs and benefits of
capital asset investments should be quantified both in monetary terms
as well as in terms of outputs and outcomes. It is generally
beneficial, if not necessary, to rank proposed projects because the
number of requested projects often exceeds available funding. OMB's
guidance suggests that agencies choose portfolios of capital
investments that maximize return to the taxpayer and the government--at
an acceptable level of risk. The guide provides one approach to
devising a ranked list of projects drawn from multiple best practices
organizations: the use of a scoring mechanism that assigns a range of
values based on project strengths and weaknesses. Higher scores are
given to projects that meet or exceed positive aspects of the decision
criteria. Such a ranking process might produce three groups of
projects--likely winners, likely dropouts, and projects that warrant a
closer look. Also, such a process may be used iteratively--in multiple
steps--to limit the number of projects to be considered by an executive
decision-making body.
GAO's Executive Guide describes processes used by leading organizations
for ranking and selecting proposed capital projects. These
organizations determined the appropriate mix of projects by viewing all
proposed investments and existing capital assets as a portfolio. They
selected projects based on preestablished criteria and a relative
ranking of investment proposals. The organizations used their overall
missions and strategic objectives as a basis for establishing decision-
making criteria. These criteria, such as increased cost savings, market
growth, and link to organizational strategies, were used to rank
projects. Senior-level managers were involved both in developing the
criteria and communicating the criteria throughout the organization.
For example, a state government we studied used a scoring process that
ranked all projects across all agencies. Using criteria based on the
governor's strategic goals and objectives, projects received scores
ranging from 0 to 700 (in specified increments). Critical projects,
which addressed life safety emergencies and legal obligations,
typically received the maximum score. Noncritical projects were
assigned points based on factors such as the linkage to the agency's
mission, the priority assigned by the requesting agency, and whether
the project would result in operating savings or increased
efficiencies.
Development of a Long-term Capital Plan:
The long-term capital asset plan is the final product resulting from
the various steps and stages of the planning phase of capital
investment decision making. The capital plan should be the result of an
executive review process that has determined the proper mix of existing
assets and new investments needed to fulfill the organization's
mission, goals, and objectives. Long-term capital plans, covering 5 to
6 years, guide the implementation of organizational goals and
objectives and help decision makers establish priorities over time.
While long-term plans must respond to changing requirements and
priorities, they are based on the organization's long-range vision
embodied in its strategic plan. Thus, any year-to-year changes should
be driven by strategic decisions that are consistent with the
organization's long-term goals.
OMB's Capital Programming Guide encourages each agency to develop a
capital plan defining the agency's long-term capital needs consistent
with its strategic plan. The guide states that the plan should include
an analysis of the portfolio of assets--both those currently owned by
the agency and those in the procurement stage--and of any performance
gap and capability needed to bridge it. The plan should be the central
document, or group of documents, used by the agency for capital asset
planning. OMB's Guide further encourages agencies to use a summary of
the capital plan in their budget justifications to OMB, in their
requests for congressional authorizations of projects, and in their
justifications of estimates for appropriations to the Congress. While
there is no required format for the capital plan, certain elements
should be included, such as a statement of agency mission, goals, and
objectives; a description of the planning phase; a baseline assessment
and performance gap; and a project risk mitigation plan.
The GAO Executive Guide describes how leading organizations stress the
importance of developing a long-term capital plan. These organizations
prepare long-term plans to document specific planned investments, plan
for resource use over the long term, and establish priorities for
project implementation. These capital plans typically cover a 5-, 6-,
or 10-year period and are updated either annually or biennially. Most
state governments we studied required that all capital project requests
be included in an agency's long-term capital plan. In leading private
sector companies, planned capital expenditures are aligned with long-
range business plans. The business plans are usually based on a
product's life cycle, market conditions, or corporate goals and
objectives.
One state government we studied prepared a 5-year capital plan that
assists the government in refining the scope and cost estimate of
individual projects. Requested projects generally go into the plan in
year 5, and agencies are required to resubmit project applications and
obtain approval each year until the project reaches the first year of
the capital plan, which is the budget request for the upcoming year.
Resubmission of requests is the only way a project could move forward
from year 5 to year 4, and from year 4 to year 3, and so forth. Only
very small project requests generally appeared for the first time in
the budget year. The annual review of capital project applications
allowed the state budget office to determine if a project request
continued to meet the goals and objectives outlined in the agencies'
strategic plans. It also allowed a project's scope and cost to be
refined each year over a 5-year period, which kept project costs within
specified resource limits. State officials believed that the continual
review was a key factor in why the state had limited cost overruns and
few surprises once project funding was approved.
Long-term planning requires that decision makers rank capital
investment needs and promotes the making of informed choices about
managing the organization's resources. It also requires the
organization to weigh and balance the need to maintain existing assets
against the demand for new ones. Some congressional staff indicated it
could be useful to have long-term capital planning information to see
what an entity viewed as important. Further, they said that the process
and analyses involved in developing a plan are effective in ensuring
that well-informed decisions are made at the agency level. They believe
that the lack of good information sometimes leads to situations in
which other considerations drive decisions. Other congressional staff
noted that comparisons of plans over several years might provide a
basis for questioning projects that appear in budget requests without
having been in the previous years' long-term plans and that having more
information, such as that contained in a long-term capital plan, also
would be useful in oversight. In addition to providing their views on
long-term capital plans, the staff commented that improved asset
inventory systems and condition assessments should be a reasonable
expectation of government agencies.
In summary, the planning phase of capital decision making should
contain certain elements to help ensure well-informed decisions. Figure
9 illustrates a process that a geographically dispersed organization
could follow using the elements of OMB's and GAO's capital guidance.
Figure 9: Example of Agency Process Illustrating Elements of Planning
Phase Guidance:
[See PDF for image]
[End of figure]
Case Study Agencies:
Our four case study agencies have varied missions and program
responsibilities that require the use of different types of capital
assets to fulfill their goals and objectives. These agencies acquire
land, buildings and other structures, ships, satellites, and major
equipment, including information technology (IT) assets. The following
provides a brief discussion of each agency's mission, organizational
structure, unique characteristics, recent capital spending in 2002
dollars, and any noteworthy changes to its capital decision-making
process.
Department of Veterans Affairs:
With a budget of over $50 billion, VA is one of the world's largest
health care, medical research, and insurance benefits organizations. VA
is a cabinet-level department whose primary mission is to serve
America's veterans and their families, ensuring that they receive
medical care, benefits, social support, and lasting memorials. VA
consists of three separate administrations--the Veterans Health
Administration, the Veterans Benefits Administration, and the National
Cemetery Administration--and the staff offices of VA's central office.
VA capital assets vary by administration and consist of VA-owned
buildings and real estate, VA-leased buildings, enhanced-use and
sharing agreements pertaining to capital assets, major equipment, and
IT infrastructure and software. These include hospitals, clinics,
cemeteries, office buildings, fire departments, and medical equipment.
In recent years, a rapidly increasing patient base has challenged VA,
along with the aging of the veteran population and their changing
health care needs. Also, veterans are finding it increasingly difficult
to obtain VA care in selected geographic regions, challenging VA to
maintain services and facilities where they are most needed. VA's total
capital spending for fiscal years 2001 and 2002 was $1.4 billion and
$2.1 billion, respectively.
VA's capital planning process has evolved over the years, with
management making a concerted effort to ensure that VA's practices were
in keeping with industry best practices and OMB guidance. VA began a
rigorous effort to develop a model capital investment process shortly
after the issuance of OMB's Capital Programming Guide by contracting
for a study of its then-current process and implementing a number of
the contractor's recommendations. One of the key improvements to its
process was the creation of a centralized (department level) office to
strengthen its process and ensure coordination of planning and
investment decisions. The Office of Asset Enterprise Management (OAEM)
was created in July 2001 and is responsible for developing capital
asset policy, providing guidance and oversight, and ensuring a
consistent and cohesive agency approach to capital asset acquisition,
management, and disposal. Another key improvement to the agency's
process is the use of a decision-support software program that
evaluates and ranks projects based on agency goals and financial
measures--an improvement for which VA received a best practices award
from OMB.
More recently, OAEM has devised an approach to streamline the process
for developing capital investment proposals. This new process involves
the submission and review of investment proposal data in increasing
levels of detail. It is believed that this streamlined approach will
reduce the laborious data collection associated with developing
proposals that are not funded and allow proposal developers more time
to provide senior management with the most accurate cost and schedule
data. VA's leadership states that its process has evolved from a
vertical stovepipe process with minimal crosscutting proposals to one
that is horizontally integrated between the administrations and staff
offices and encourages projects that cut across departmental lines. See
appendix II for additional detail on VA's process.
National Park Service:
The Park Service, a bureau within the Department of the Interior,
exists to preserve the natural and cultural resources of the nation's
park system for the enjoyment, education, and inspiration of this and
future generations. The park system is organized into seven geographic
regions, contains 388 park units of widely varying size and nature, and
covers 80 million acres of land. Park Service assets include roads;
trails; campgrounds; park visitor centers; other buildings and employee
housing; utility systems; marine and dock structures; signs and
information structures; and special features assets, such as monuments,
statutes, memorials, and viewing structures. Park units vary
considerably and range from large landscapes such as the Grand Canyon
and Yosemite national parks, to historic structures such as
Philadelphia's Independence Hall, to the granite faces of Mount
Rushmore. Visitation rates at national parks have grown considerably
over the past two decades--from about 220 million visitors in 1980 to
close to 290 million today. This growth has required expansion of Park
Service facilities and presented a challenge to many of the park's
transportation infrastructures. The park system also has been
challenged by the need to preserve increasing numbers of historic park
properties and the expense to maintain them. Park Service total capital
spending for fiscal years 2001 and 2002 was $334 million and $496
million, respectively.
The Park Service's capital programming and asset management process is
evolving, and some current practices are largely the result of
implementing a number of recommendations from a 1998 National Academy
for Public Administration (NAPA) study. At the request of the
Department of the Interior, NAPA conducted a study of the Park
Service's line-item construction program. The NAPA report made several
recommendations focused on the Denver Service Center, which has a
primary role in implementing the Park Service's construction program.
One key recommendation was the establishment of an external review
group to assess line-item construction projects for suitability and
cost-effectiveness. This advisory group meets concurrently with the
Park Service's senior-level review board and reviews every facility
project with an estimated cost greater than $500,000. The advisory
group provides its findings directly to the Park Service Director. Also
in 1998, spurred by congressional concerns and new federal accounting
standards for plant, property, and equipment, the Park Service
initiated the design of a new asset management process. The new process
is intended to provide better overall management of the agency's asset
inventory. See appendix III for additional information on the Park
Service's process.
National Oceanic and Atmospheric Administration:
NOAA describes and predicts changes in the Earth's environment and
conserves and manages the nation's coastal and marine resources. NOAA
is a bureau within the Department of Commerce and accomplishes its
overall mission through five major line offices with diverse missions
and numerous program offices. These line offices are the National
Weather Service (NWS); the National Environmental Satellite, Data, and
Information Service (NESDIS); the National Marine Fisheries Service;
the National Ocean Service; and the Office of Oceanic and Atmospheric
Research. Key among the NOAA program offices is the Office of Marine
and Aviation Operations. Some line offices are users of other NOAA
line-office products (e.g., NESDIS produces satellites for NWS's
weather prediction). NOAA uses various types of assets, including
satellites, ground systems, aircraft, water vessels, buildings, and
vehicles. Many of NOAA's assets are specialized and unique to NOAA's
mission, making the consideration of alternatives to acquiring some
needed assets--such as ships and satellites--difficult to do. NOAA's
capital spending for fiscal years 2001 and 2002 was $602 million and
$787 million, respectively.
Most of NOAA's capital planning occurs at the line-office level. The
various service lines and program offices have separate planning
processes that are consistent with both the goals of NOAA and of the
Department of Commerce. A recent improvement to the NWS process was the
establishment of an executive board--the Finance and Investment Review
Board (FIRB) in fiscal year 2000, which created a formal process for
management review and prioritization of capital investment proposals in
support of NWS strategic goals. FIRB reviews capital projects costing
$1 million or more and consists of five voting members and three
nonvoting advisor members. The board reviews and evaluates capital
investment proposal justifications, scores capital investments
according to established criteria, and ranks the approved investments.
The FIRB charter cites OMB's Capital Programming Guide as one of the
reasons for its creation. NOAA's capital investments are funded through
a single budget account--the procurement, acquisition, and construction
(PAC) account. The PAC account was established 5 years ago. See
appendix IV for additional information on NOAA and its capital planning
process.
Bureau of Prisons:
BOP is an agency of the Department of Justice (DOJ) responsible for
providing for the safe, secure, and humane confinement of persons in
federal custody. The agency consists of six geographical regions with
102 facilities, and its activities encompass two areas of
responsibility--detention and incarceration. While detention
responsibilities are shared with the U.S. Marshals Service and the
Bureau of Immigration and Customs Enforcement (formerly the Immigration
and Naturalization Service), incarceration is the sole responsibility
of BOP. In addition to housing the federal inmate population, BOP
provides inmates with basic services, such as food, clothing, and
health care and an array of educational, vocational, and other
programs. The federal inmate population has increased sixfold in the
last two decades, from approximately 25,000 inmates and 41 institutions
in 1980 to more than 160,000 inmates and 102 institutions in 2002. Most
of these inmates were confined in BOP-operated facilities while more
than 27,000 were assigned to privately managed institutions, state and
local facilities through intergovernmental agreements, community
corrections centers, or home confinement. BOP's acquires capital assets
such as facilities and other buildings, major equipment, and vehicles.
BOP has limited control over the size of its inmate population as this
is influenced by other parts of the criminal justice system, including
the aggressiveness of law enforcement policies and the length of
sentences imposed. In 1997, BOP was required to absorb the District of
Columbia inmate population,[Footnote 12] which necessitated the
construction of some additional facilities. It is unclear what impact
the September 11, 2001, terrorist attacks may have on BOP facility
needs.
BOP's capital spending for fiscal years 2001 and 2002 was $481 million
and $795 million, respectively. Funding for BOP capital projects
competes with other DOJ programs. DOJ has a Strategic Management
Council (SMC) that is chaired by the Attorney General. Its members are
the directors of all of the DOJ agencies. BOP's Director is the only
career-service member--the others are political appointees. SMC meets
to discuss the entire DOJ budget request, and each director defends his
or her agency's request. SMC then makes recommendations to the Attorney
General for the entire DOJ budget submission to OMB. See appendix V for
additional information on BOP and its process.
[End of section]
Chapter 2: Agency Capital Planning Processes Link to Strategic Goals
and Objectives:
Both the Office of Management and Budget (OMB) and GAO guidance
emphasize the importance of linking capital asset investments to an
organization's overall mission and long-term strategic goals.
Therefore, the capital decision-making process must reflect both the
results of an organization's long-term strategic planning process and
short-term goals and objectives. OMB's Capital Programming Guide
suggests that an agency's capital planning process be an integral part
of the strategic planning process--stressing that capital assets should
be planned for and acquired in light of their ability to contribute to
the accomplishment of outcomes as described in an agency's strategic
plan. Our study found that leading organizations also view strategic
planning as the instrument that guides decision making for all
spending. Case study agencies' capital planning processes considered
strategic goals as decisions were made about capital investments, and
administration and departmental priorities were communicated
throughout the processes.
Capital Investments Link to Strategic Plans:
Case study agencies engage in strategic planning, but strategic plans
vary. Some agencies prepare administration-or bureau-level strategic
plans while others prepare strategic plans at various levels within the
administrations or bureaus. Although the Government Performance and
Results Act of 1993 (GPRA) only requires that agency heads prepare
strategic plans, bureau-level planning at all of the case study
agencies is usually accomplished in support of departmental strategic
plans. For example, the Department of Veterans Affairs' (VA) National
Cemetery Administration (NCA) develops its own corporate-level
strategic plan. NCA also engages in strategic and business planning at
the memorial service network (MSN) and cemetery levels, respectively.
There are five MSNs and each prepares a strategic plan that draws from
and supports the NCA strategic plan. Individual cemeteries then prepare
business plans that support the strategic plan for their MSNs and help
to identify specific capital asset requirements throughout NCA. These
cemetery-and MSN-level plans support the NCA strategic plan that is
ultimately linked to VA's strategic plan.
One of the primary goals for NCA under the VA Strategic Framework is to
meet the burial needs of veterans and their eligible family members.
Strategies to achieve this include establishing additional national
cemeteries or expanding existing cemeteries in underserved areas--with
the long-term objective of providing a burial option within 75 miles of
a veteran's home to 90 percent of the veteran population. NCA prepares
a 5-year construction plan identifying its planned major and minor
construction projects, which are driven by the goals and objectives of
the NCA strategic plan.
Strategic planning for VA's Veterans Health Administration (VHA) is
also done at the network level. There are 21 Veterans Integrated
Service Networks and each prepares a VHA network-level strategic plan.
Like NCA, these network plans are driven by and support the VA
departmental strategic plan. Among other things, the VHA network-level
plans address the capital proposals and infrastructure needed to
support the network goals and objectives. VHA future capital needs are
likely to be largely driven by the results of the ongoing Capital Asset
Realignment for Enhanced Services studies being conducted in each
network (discussed later in this report).
While VA does not prepare an overarching department-level long-term
capital plan (discussed in ch. 4), it does evaluate both individual
cemetery projects from the 5-year NCA construction plan and VHA medical
facility projects for funding along with other VA project proposals.
Those of highest priority are ultimately included in the annual budget
submission to OMB and the Congress.
The National Park Service (Park Service) prepares a servicewide
strategic plan, and individual national parks prepare park-level
strategic plans that cover a 5-year time frame and discuss the capital
facilities needed to support individual park strategic goals. The
strategic goals of the Park Service are consistent with and contribute
primarily to the Department of the Interior's (DOI) goals to protect
the environment and preserve our nation's natural and cultural
resources and to provide recreation for America. The Park Service
prepares a servicewide 5-year line-item construction plan, which is a
list of planned capital projects in priority order and reflects the
criteria used to rank and select the projects--criteria based on the
agency's strategic goals. According to officials, each national park
has specific goals pursuant to GPRA that support the servicewide Park
Service goals and each has park-specific goals to better align with its
own mission. Individual park strategic plans, such as the Cape Cod
National Seashore's plan for fiscal years 2000 through 2005, list the
capital facilities and infrastructure--such as visitor centers,
bathhouses, paved roads, and employee housing--needed to accomplish the
park's strategic goals of providing for the public use and visitor
enjoyment of parks and reducing the number of poor employee housing
units for that period. Officials also stated that each park prepares a
general management plan that covers a 10-to 20-year period and contains
elements of both a strategic plan and a long-term capital plan.
At the National Oceanic and Atmospheric Administration (NOAA), both a
NOAA-level strategic plan and individual line and program office-level
strategic plans are prepared. All of them support the vision and long-
term goals of the Department of Commerce, as shown by clearly
articulated interrelationships between NOAA and Commerce goals. The
strategy for fulfilling NOAA's mission consists of seven interrelated
goals. According to NOAA's strategic plan for 1995 through 2005, each
goal is a coherent unit, but there also are crosscutting relationships
that according to the plan, enable the implementation of Commerce and
NOAA objectives. The plan describes its seven goals and the strategies
to achieve them in general terms. NOAA's line offices implement the
strategies and conduct the work to achieve these goals. The line and
program office strategic plans discuss the capital needed to support
each office's goals and programs.
As an example, the National Weather Service (NWS) line office strategic
plan for weather, water, and climate services for fiscal years 2000
through 2005 supports one of two primary missions of NOAA--
Environmental Assessment and Prediction--and contains three of the
seven NOAA goals and a number of objectives to fulfill this mission.
One of the NWS objectives includes the planned deployment of the
Advanced Hydrologic Prediction System to 50 percent of river forecast
sites by the year 2005. Another includes expanding the number of
International Emergency Weather Network receiving stations by 50
percent by the year 2005.
In addition to its strategic plan, the National Environmental
Satellite, Data, and Information Service (NESDIS) line office prepares
a 5-year capital plan to guide the acquisition of its satellite ground
systems--a primary responsibility of NESDIS. This capital plan outlines
NESDIS current operations and planned capital acquisitions--including
7-year cost estimates--to bridge its performance gap in support of the
strategic goals established in its strategic plan. The Office of Marine
and Aviation Operations (OMAO) program office, which is responsible for
improving the quality and efficiency of NOAA's ship and aircraft
operations, prepares a strategic plan that also addresses its capital
issues. For instance, its strategic plan for fiscal years 2000 through
2005 describes the need to acquire three additional fisheries ships to
meet program expectations over the next decade. The plan also describes
the impending critical need for replacement aircraft capability.
The Bureau of Prison's (BOP) strategic planning documents describe the
capital projects planned and in progress to support its current goals
and objectives. The activities of the federal prison system support the
Department of Justice's (DOJ) strategic goal VI--protect American
society by providing for the safe, secure, and humane confinement of
persons in federal custody. This strategic goal is supported by four
DOJ objectives that drive the BOP strategic goals and objectives. The
DOJ strategic plan for fiscal years 2001 through 2006 contains
strategies to achieve the objectives of ensuring sufficient prison
capacity and maintaining prison operations. The strategies describe the
activation of two recently completed facilities, the ongoing
construction of four additional facilities with expected activation in
fiscal years 2002 and 2003, and the planned design and construction of
seven new facilities expected to be activated in fiscal year 2004. The
DOJ plan also describes the use of privately managed facilities and
cooperative arrangements to maximize prison capacity, which illustrates
the consideration of alternatives to new construction. In addition, the
DOJ plan describes the strategies for maintaining prison operations,
which include an extensive modernization and repair program. BOP's
strategic planning documents provide additional detail on the ongoing
and planned new facilities--providing facility location and the
expected increase in rated prison capacity.
Agency Guidance Requires That Capital Investment Proposals Link to
Strategic Goals and Objectives:
Agency spring budget calls (call memorandums) for proposed capital
investments contain clear guidance for proposal development that
includes top-level guidance on adhering to agency goals, objectives,
and administration priorities. For example, VA's departmental requests
for capital investment proposals require that all VA administration and
staff office proposals be linked to the department's current strategic
goals and objectives. The guidance also illustrates current
presidential and departmental priorities. The capital investment
request for proposals for fiscal year 2004 required that any proposed
capital projects support one or more of the priorities of the VA
Secretary or the President--priorities that are aligned with VA's
strategic goals and objectives. Attached memorandum guidance described
the President's management agenda and the VA Secretary's priority areas
and the performance measures associated with both. The guidance also
detailed the priority areas for all three VA administrations and
included the associated performance measures. For proposed capital
projects that were not related to priorities of the Secretary or the
President, staff were required to explain which of VA's strategic goals
the project would support and how. The guidance referred staff to VA's
current strategic plan for additional information.
At BOP, capital project requests also must include descriptions of how
strategic goals will be supported, and the guidance reinforces the
Attorney General's current priority objectives. The BOP Director's
budget call memorandum for fiscal year 2003 directed assistant and
regional directors to be mindful of the Attorney General's priority
objectives when developing proposed budget initiatives. The guidance
also required that proposals reference the BOP strategic planning goal
that would be supported and the current BOP objective. It further
required the proposals to estimate costs and identify performance
indicators to measure if the goals are achieved. The BOP Facilities
Management Branch's memorandum for fiscal year 2004 capital requests
required that line item and major project requests (projects with costs
of $300,000 or more) be documented in the requesting institution's
strategic plan.
NOAA's capital investment proposals are developed within the strategic
themes that have been established to achieve NOAA's mission. Strategic
themes are a grouping of crosscutting multi-line-office programs that
are aligned with NOAA goals and priorities. The themes, representing
major areas of concentration, are organized around line offices. A
working group established for each theme and led by one of the line
offices it supports implements their objectives. These working groups
function as internal review boards, reviewing line-office proposals and
preparing initiatives for consideration by NOAA's budget office. All
programs, including capital investment proposals submitted to the
themes' work group must be justified in terms of how they support the
theme.
At the Park Service, administration and departmental priorities
influence projects initiated at individual parks. The annual budget
call memorandum issued by the Park Service's Washington Office informs
the park regions and ultimately the individual parks of current
priorities. For the past several years, the administration's priority
has been to reduce the backlog of deferred maintenance projects. More
recently, increased visitor health and safety has become another
priority after the September 2001 terrorist attacks.
Agency Criteria Used to Rank and Select Capital Investments Include
Strategic Linkage:
Case study agency processes for ranking and selecting proposed capital
investments give great weight to strategic goals and objectives as well
as current administration and organizational priorities. As discussed
further in chapter 4, VA's process includes the use of a computerized
decision software package and established criteria to rank proposed
capital investments. This comprehensive process scores capital
proposals based on the assigned weights of a set of 9 core criteria and
19 subcriteria, 1 of which is the proposal's alignment to the strategic
plan's goals. The established criteria used by the process are reviewed
each year, updated, and aligned with VA's mission and current
administration and Secretary priorities.
At the Park Service, proposed capital investments and projects intended
to enhance or maintain existing infrastructure are rated against their
support of Park Service and DOI strategic goals. Project data entered
by individual parks into the Park Service Project Management
Information System (discussed in ch. 3) include the proposed project's
link to specific long-term goals and the associated performance
measures and benefits based on outcomes. The regional and national-
level project review and ranking process uses a scoring system that
considers evaluation factors linked to the Park Service's mission and
strategic goals. The scores in the various evaluation categories allow
the Park Service's construction office to respond to the Park Service,
DOI, and administration priorities and strategic direction. A detailed
discussion of this review and selection process and the factors used is
presented in chapter 4.
Strategic linkage is also an important factor used by NOAA to rank and
select from its competing capital investment proposals. Chapter 4
presents a detailed discussion of this process and its use of review
boards that implement the objectives of strategic themes, aligned with
and established to help ensure that NOAA's mission, long-term goals,
and current priorities are fulfilled. Project proposals submitted to
each theme's review board must be justified in terms of the specific
goals the project will support. For example, the Infrastructure,
Maintenance, Safety and Human Capital theme review board used a set of
criteria to rank project proposals. The criteria included, among
others, contribution to agency mission, productivity improvement,
operational efficiency, and the likelihood of the project's success.
Similar criteria permeated the other NOAA themes' processes, and
although each theme's review board has a distinct process for ranking
proposals, the criteria include how well the proposal is aligned with
NOAA's mission.
Conclusion:
Although we did not evaluate agencies' actual practices or the
resulting decisions about capital acquisitions, the case study
agencies' capital planning processes appear to consider overall
organizational goals and current administration and departmental
priorities when planning for capital asset acquisitions and evaluating
projects intended to improve, enhance, or maintain existing asset
infrastructure. In some cases, the strategic linkage is demonstrated by
specific projects that implement long-term goals. In other cases, the
linkage is apparent in agency guidance for developing capital project
proposals and the criteria used to rank and select among competing
proposed projects.
[End of section]
Chapter 3: Agency Processes for Assessing Capital Needs Reflect OMB
and GAO Guidance to Varying Degrees:
Both the Office of Management and Budget (OMB) and GAO guidance
emphasize the importance of conducting a baseline assessment of the
resources needed and current capacity of existing resources to achieve
results-oriented goals and objectives. This assessment should involve
the use of an inventory of existing assets and current information on
asset condition in order to identify any performance gap. A
comprehensive inventory of assets that includes current and accurate
data on asset condition can provide proposal developers with
information to use in determining if an actual performance gap exists.
It also can help decision makers when they consider options for
addressing an identified performance gap. For example, data on unused
or underused facilities can prompt decision makers to consider
renovating or converting an existing facility to address the new need.
When a performance gap is identified, guidance also suggests that
detailed functional requirements be identified in order to adequately
evaluate options for reducing the gap. OMB guidance recommends the use
of integrated project teams to manage this and other aspects of the
capital programming process.
Agencies' processes for assessing needed resources and identifying a
performance gap reflect OMB and GAO guidance in some areas but not in
others. The Department of Veterans Affairs (VA) lacks agencywide asset
condition data and an inventory of assets, although it is in the
process of creating a data management system to inventory capital
assets and measure their performance against VA portfolio goals. The
National Park Service (Park Service) has just recently developed an
inventory of its assets, but lacks agencywide comprehensive information
on the condition of those assets. The National Oceanic and Atmospheric
Administration (NOAA) maintains an agencywide asset inventory but lacks
complete information on asset condition. Although the Bureau of Prisons
(BOP) maintains both an inventory of assets and information on facility
condition, the basis for determining its long-term performance gap is
unclear.
VA Has a Formal Process for Assessing Its Needs, but Lacks Agencywide
Asset Condition Data and an Inventory of Capital Assets:
VA's capital needs are generally identified at the Veterans Integrated
Service Network (VISN)[Footnote 13] level by network personnel. Major
capital project requests are developed in response to the departmental
spring budget call for project proposals. Minor project proposals
(projects with estimated costs under $4 million) are developed in
response to a separate call for proposals. Facility employees of the
Veterans Health Administration (VHA) have routinely conducted condition
assessments of facilities under their control, but until March 2003,
the results were maintained at the facilities, or in some cases at the
VISN level, and were not available to other VHA networks or
headquarters decision makers. Similarly, data on the type and number of
other assets are maintained at the VISN level, and the data are not
readily available to other VISNs or headquarters personnel. Therefore,
decision makers cannot readily identify assets to share across
networks.
In response to a fundamental change in VA's mission from hospital-based
to outpatient-based services, a GAO testimony[Footnote 14] on VHA's
operations and maintenance of its capital infrastructure and a
congressional hearing,[Footnote 15] VHA established the Capital Asset
Realignment for Enhanced Services (CARES) process in October 2000. The
CARES process is designed to assess veterans' health care needs and
identify planning initiatives to meet those needs in the future. Under
CARES, VA's Undersecretary for Health has directed VISNs to develop
asset-restructuring plans to guide any future capital investment
decisions that would involve constructing new facilities or renovating
or closing existing ones in order to deliver health care more
efficiently in existing locations or closer to where veterans live. The
CARES process--involving a study of each VHA VISN--consists of nine
steps, including defining market areas, analyzing needs, developing
market plans, implementing the plans, and integrating the plans into
the strategic planning cycle. Phase I of the program, completed in
August 2002, was a pilot test (study) of the Great Lakes network. A
recent GAO study of VA's management of vacant buildings in the Great
Lakes CARES pilot found that VA has developed or implemented
alternative use or disposal plans for 21 of its 30 unneeded, vacant
buildings in the Great Lakes VISN.[Footnote 16] Despite the efforts of
VISN officials, the lack of interest in the remaining 9 vacant
buildings has been an obstacle to finding alternate uses for these
properties. VISN officials believe that maintaining ownership of the
vacant buildings is the least expensive course of action, given the
relatively high demolition costs compared to annual maintenance costs
and considerable uncertainties about VA's potential costs to transfer
the properties to the General Services Administration (GSA). In August
2003, we reported on how VA and two other federal agencies identify
vacant and underutilized properties and the numbers, types, and
locations of these properties.[Footnote 17] The report describes VA's
efforts to address these properties and presents an analysis of
information on vacant and underutilized properties at VHA. Among other
actions being taken by VA, VHA future capital needs and program
resources are expected to be largely driven by the results of the
CARES studies. The remaining 20 VISN studies are ongoing and the
entire process is scheduled for completion in fiscal year 2003.
As part of CARES, VHA has conducted a functional space and use survey
through a nationwide building-by-building survey of each facility in
each VHA network. According to officials, the surveys are intended to
document each facility's usable space (square footage and acreage), the
programs it supports, and the functional ability of the facilities to
support those programs. The results of these surveys were collected in
a database at the VHA level and were planned to include data on vacant
properties, including swing-space.[Footnote 18] Officials said the
surveys were planned to consist of three types of facility assessments:
a technical assessment--assessing, for example, whether a building has
a sufficient number of windows and the condition of its mechanical
systems; a functional assessment--assessing, for example, whether
services provided at a building's location are capable of handling a
patient workload similar to a private sector facility; and a space
assessment covering things such as whether there is sufficient space in
the patient waiting rooms or whether the number and location of patient
exam rooms provide for adequate privacy. Standards for these
assessments are generally based on the standards for comparable private
sector facilities. According to one official, the VHA functional space
and use surveys will provide a comprehensive inventory of all VHA
assets, and data on these assets will be available VHA-wide. The
official also stated that while data on the National Cemetery
Administration (NCA) and Veterans Benefits Administration facilities
and properties have been included in the survey, a facility (building-
by-building) walk-through has not been performed and the programmatic
use of the facilities has not been documented. According to the
official, the data from the survey database helped VHA develop planning
initiatives associated with the CARES program. While the focus of the
survey database was to complement the CARES program today, capital
planners in both the field and headquarters offices can use it in the
future.
This will be helpful since today facility managers within the various
VHA networks are knowledgeable about the assets and facilities under
their control, but have no process or system for knowing the
availability and condition of assets in other networks. A facility or
network manager has to call other network managers to inquire about
available assets and facilities. Likewise, the condition and functional
use of any available asset would have to be researched, as this
information currently is not readily available in any systematic way. A
VHA official in VISN 7, a regional area that has recently experienced
substantial growth in veteran population, said his network generally
follows the headquarters capital planning process but recently began
its own 3-year planning process to assess its own infrastructure needs.
As part of that process, facility managers were required to think about
their capital asset needs and the current condition of existing
facilities and start developing proposals for 3 to 4 years into the
future. As discussed below, other VA networks are also in the process
of identifying their assets and facilities and collecting information
on their condition, and a VA-wide system is being developed that will
allow facility managers to obtain information on the availability and
condition of assets VA-wide.
The lack of a comprehensive agencywide asset management system has been
an area of concern for VA headquarters managers. In a briefing on the
agency's process, they noted that VA lacks an adequate portfolio
management function, does not have good information on existing assets,
and lacks a system to manage its leases--one that allows for automatic
updates of new leases and rate changes. As a result, independent from
the CARES effort, in early 2002 VA's asset management office began the
process of developing a system that will allow VA to inventory,
monitor, and maximize the use of its capital assets. The office
solicited a contract for a study that would provide VA with information
on industry best practices, strategies for developing and maintaining
an optimal capital asset portfolio, and strategies for developing an
optimal long-range capital asset plan. The office has since decided to
develop the asset portfolio using VA staff. The capital asset
portfolio, the Capital Asset Management System (CAMS), is being
designed as a database umbrella that will sit atop and interact with
existing databases--allowing programmed data to be drawn from them and
new data to be entered directly into CAMS. The database is to include
all VA-owned buildings and land, leased real estate, information
technology, capital equipment, and sharing agreements. The system was
to be developed in two phases, with the first phase scheduled for
activation at the end of January 2003 and the second phase scheduled
for activation at the end of February 2003. However, as of September
2003, VA officials had not replied to our request for information on
whether and when CAMS had been activated. The survey database being
developed under the CARES effort will complement CAMS.
While VA currently lacks agencywide asset inventory and condition data,
NCA maintains an asset inventory and information on the condition of
its assets and facilities. Moreover, these data are used as part of its
5-year planning process. The NCA inventory of national cemeteries
includes information on current and future cemetery capacity. NCA also
maintains a computerized database of major asset items at each
cemetery. This information is available to NCA managers at the
administration level and is used to identify program performance gaps
and options for addressing the gaps. NCA facility managers and
contractors routinely conduct asset and facility condition assessments.
Field staff in each cemetery in the five memorial service networks
perform the initial assessment of cemetery buildings and grounds to
determine the need for maintenance; renovation; and if appropriate,
replacement of cemetery structures. The assessment results are
forwarded to NCA headquarters for review. To supplement the assessments
routinely performed, NCA contracted early in 2001 for an extensive
condition assessment and needs determination at each cemetery. The
process involved both visual inspections and use of a standard
methodology to determine the costs for cemetery upgrades.
NCA's guidance for preparing its 5-year facilities plan explicitly
states that construction planning should consider existing assets and
their condition. The guidance further stresses that routine assessments
of current assets, including equipment and buildings, should include a
determination of changes in mission needs, whether existing cemetery
features continue to fulfill current and expected mission needs, and
whether the assets should continue to be used in the same manner.
The National Park Service Has a Formal Process for Assessing Its Needs,
but Lacks Agencywide Comprehensive Information on Asset Condition:
The Park Service's capital needs are identified at the park level--
through a process that produces a general management plan (GMP) for
each park and an ongoing process in which individual projects are input
to a project management database and extracted from the database in
response to the annual budget call for project proposals. Some capital
projects are initiated as a result of funding becoming available from
specific project funding sources; other projects are initiated in
response to departmental or administration priorities. While individual
parks historically have maintained asset inventories with varying
levels of detail, the Park Service has just recently completed the
servicewide asset inventory phase of its new asset management process.
Also, the agency lacks servicewide comprehensive data on the condition
of its assets. While the new asset management process is designed to
include comprehensive asset inventory and condition data as key
components, only limited asset inspections have been performed so far
and the more detailed comprehensive assessments will not be completed
for some time.
GMPs are linked to Park Service strategic goals and define long-term
park direction. The plans provide a broad overview of park needs and
identify areas for major improvements and performance gaps in service.
The planning process also identifies maintenance deficiencies at the
park level. GMPs cover a 10-to 20-year period and usually are general
in nature so they do not become outdated before associated projects
actually receive funding. A plan typically begins with an overview
discussion of the park's mission--why the park exists--and then
identifies park performance gaps and the resources required to fill
those gaps. Some older plans, such as the August 1995 Grand Canyon GMP,
are more detailed than plans developed in recent years. For example,
the Grand Canyon GMP not only describes long-term objectives for the
entire park area, but also identifies and describes specific capital
projects to achieve the objectives. Producing a GMP can take 2 to 6
years and involves intense consultation and review by the public and
other agencies, regional office and headquarters program staff, and
Park Service and Department of the Interior managers and senior
executives. Only after all major issues are discussed and resolved,
does a park's regional director approve the GMP.
The capital needs identified at the park level are entered into the
servicewide Project Management Information System (PMIS)--an automated
tracking system containing thousands of proposed capital projects.
Projects are entered into the servicewide system throughout the year
and are extracted in response to budget calls for project proposals.
Projects also may be entered into PMIS for the first time in response
to budget calls for project proposals. According to Park Service
officials, PMIS is a list of identified needs containing a mix of
projects that have been initiated and those that have not. Using PMIS,
decision makers are able to access the specific project information,
including justifications; link to agency goals, and estimated costs;
and begin the ranking and selection phase of the capital decision-
making process. PMIS is discussed further in chapter 4.
Capital project proposals are generally developed independent of
funding sources and entered into the PMIS database as described above.
However, some annual budget call memorandums solicit capital projects
tied to specific funding sources such as funding provided through the
recreational fee demonstration (fee-demo) program,[Footnote 19] line-
item construction and maintenance program, and park concessions
franchise fees. Each funding source can fund specific types of
projects. Annual budget calls may also solicit project proposals for a
specific type of project, such as road repair and maintenance, even
though parks may have needs that differ from these sources and
categories. According to Park Service officials, when OMB sets the
target amounts available from the various sources, that determines the
types of project proposals submitted by the Park Service for that year.
The parks, in conjunction with the regional offices, determine which
proposals to put forth based on the needs linked to strategic goals
that best fit within the criteria and funding limits established in the
call letter. Parks may have needs that differ from those permitted to
be funded by the specified funding source. For example, officials say
there is a severe need for employee housing at the Grand Canyon
National Park, but fee-demo funding cannot be used for that purpose.
Also, departmental and administration priorities can influence projects
initiated at individual parks. For example, for the past several years
the administration's priority has been to reduce the backlog of
deferred maintenance. This continues to be a priority, while more
recently the current administration has made visitor security a
priority after the terrorist attacks of September 11, 2001.
Until just recently, the Park Service did not have a servicewide
inventory of its capital assets and facilities. Prior to this, it has
not had the benefit of a comprehensive asset inventory of all its
assets. As a result, the physical condition, functionality,
suitability, and life expectancy of facilities and the backlog of
deferred maintenance requirements were not adequately documented. Some
national park units maintained limited inventories covering the assets
under their control. For example, the Grand Canyon National Park has an
inventory of what it calls "formal" property, including capitalized
assets with an acquisition value of $15,000 or more, and each division
within the park has an inventory of so-called "informal" property
valued below $15,000 with an estimated useful life of 2 years or more.
This individual park information had not been available servicewide. As
part of its new asset management process (discussed below), the Park
Service says it recently completed its asset inventory and trained its
staff on the use of the required computer software.
The Park Service also historically has not had servicewide asset
condition data or systematic criteria for individual park managers to
use in making assessments for their parks. According to Park Service
officials, condition assessments were not required in the past; as a
result, asset condition information historically has not been available
to servicewide capital planners and decision makers. Condition is
monitored at the park level. For example, the Grand Canyon National
Park management team, which includes the park superintendent and other
managers, determines project priorities for the park based on its
knowledge of park facilities. According to one park official, there is
an extensive amount of institutional memory within the management team
and that institutional knowledge of the park and its functions, along
with visual inspections of the condition of the park's assets, is used
to make needs assessment decisions. However, these visual inspections
were not based on systematic criteria and there was little
documentation available. Making progress toward implementing another
component of the new asset management process, the Park Service says it
has completed visual inspections on all but nine of the larger parks in
the park system. However, the more detailed, comprehensive condition
assessments will not be completed until the end of fiscal year 2006.
As planned, the Park Service's new asset management process will, for
the first time, provide the agency with a reliable inventory of its
assets; a process for reporting on the condition of those assets; and a
consistent, systemwide methodology for estimating deferred maintenance
costs. The cornerstone of the new asset management process is the
Facility Management Software System (FMSS)--a commercial-off-the-shelf
integrated software system currently used by other federal agencies.
FMSS will allow Park Service managers to track cost and maintenance
data for each asset in the agency's inventory. The system requires each
park to enter all of its assets and information on their condition into
a centralized database for the entire park system. Parks also will be
required to conduct annual condition assessments of their assets and
more comprehensive condition assessments regularly. The annual
condition assessments--which are essentially "eyeball" inspections--
are designed to identify obvious and apparent asset deficiencies, while
the comprehensive condition assessments are more in-depth inspections
and designed to identify hard-to-find problems, such as hidden
structural defects in building foundations, roofs, or walls.
In April 2002 we reported[Footnote 20] that when fully developed and
implemented as planned, the new asset management process would enable
the Park Service to provide agency managers and the Congress with much
more accurate and reliable information on the amount of deferred
maintenance throughout the park system. In July 2003, we
reported[Footnote 21] on the Park Service's progress with implementing
its new process. We found that the agency had completed, or nearly
completed, a number of substantial and important steps toward
implementing the new process. As mentioned, the Park Service says it
has completed an inventory of its assets and the annual condition
assessments (eyeball inspections) have been performed on all but nine
of the larger parks in the park system. The remaining annual
assessments are under way and planned for completion by the fall of
2003. While the Park Service says it is concurrently performing the
more comprehensive (detailed, in-depth) assessments, these
comprehensive assessments will not be completed until the end of fiscal
year 2006. At that time, according to the schedule, the entire process
is to be fully implemented. However, the capital asset plan and
justification (OMB Exhibit 300)[Footnote 22] for this system shows an
estimated completion date of September 2007.
Whether fully implemented in fiscal year 2006 or 2007, the new asset
management process using FMSS is expected to allow for improved
prioritization of capital projects by providing more centralized,
quantifiable data. According to Park Service officials, the backlog of
maintenance identified through this system will be imported into PMIS
and ranked for funding and accomplishment. The reports generated by the
system, including work order reports, requisition forms, and condition
assessment and asset management reports, would be available to capital
planners and decision makers servicewide.
This new process for managing the nation's historic treasures and other
assets sounds promising but will require years of sustained commitment
by the Park Service and other stakeholders. Comprehensive data on the
condition of assets in the Park Service portfolio is critical not only
to identifying deferred maintenance needs but also to determining an
asset's true functionality and ability to achieve long-term goals and
objectives.
NOAA Has a Process for Assessing Its Needs and Maintains an Agencywide
Asset Inventory, but Lacks Current Information on Asset Condition:
NOAA's capital needs are identified at the line office and major
program office levels and flow from the individual line and program
offices' strategic planning processes. As discussed in chapter 2, NOAA
line and major program offices prepare separate strategic plans in
support of NOAA's strategic goals and the long-term goals of the
Department of Commerce. Capital resources needed to support these goals
are identified in the individual offices' current strategic plans and
operating plans. For example, the current strategic plan for the Office
of Marine and Aviation Operations (OMAO) identifies its mission and
long-term goals and describes how investments in capital assets play a
key role in addressing these goals. The plan describes the operational
requirements that must be met, which could require major refurbishment
of old platforms, converting existing ones obtained from other
government agencies, or building new platforms to replace older ones.
The plan further states that new cost-efficient and more technically
capable assets must be considered as part of future capital plans, and
the plan identifies important functional requirements, such as the need
for technically advanced platforms to meet the growing public demand
for services. Further, the strategic plan describes OMAO's goal of
expanding public and private partnerships to best meet NOAA business
objectives. This discussion of such alternatives is continued in
chapter 4.
In another example, the strategic plan for the National Environmental
Satellite, Data, and Information Service describes the replacement of
polar-orbiting satellites needed to continue NOAA's tracking of global
variables that affect weather and climate. The planned new polar-
orbiting satellites are being acquired through partnership with other
federal agencies that have the same needs--the Department of Defense
(DOD) and the National Aeronautics and Space Administration (NASA).
Taking an integrated approach to identifying and meeting the
operational satellite needs for both the civil and national security
communities, the new system--the National Polar-Orbiting Operational
Environmental Satellite System (NPOESS) will replace polar systems
currently operated by NOAA and DOD and is expected to save the
government an estimated $1.8 billion over the life of the program.
NOAA, DOD, and NASA established a joint Integrated Program Office to
develop, manage, acquire, and operate NPOESS. Each participating agency
is responsible for one of three primary functional areas. NOAA has
overall responsibility for the converged system and is also responsible
for satellite operation.
The other NOAA line offices have separate processes for identifying
their capital needs--each in accordance with its current strategic
plan, which in turn is linked to the NOAA strategic plan and long-term
Commerce goals. Also, individual line and program offices have ranking
processes that occur at the line and program office levels before
proposed investments are submitted to NOAA review boards and,
ultimately, to NOAA headquarters management for approval. These
processes are discussed in chapter 4.
NOAA maintains separate inventories of real and personal property
assets but maintains no asset condition data on real or personal
property.[Footnote 23] A single inventory of real property assets is
maintained by NOAA headquarters and the four Commerce Administrative
Support Centers (ASC). Each regularly updates the inventory for the
assets under its purview. NOAA Headquarters and the ASCs receive input
from internal realty specialists on acquired and disposed properties
and update the real property inventory monthly. The inventory also
contains information on properties leased by NOAA and GSA. NOAA
officials can generate reports from the real property inventory, which
show basic information such as acquisition cost and the size and age of
facilities. According to a NOAA official, the real property inventory
is difficult to use and decision makers do not regularly consult it.
NOAA's personal property inventory also contains basic asset
information. The inventory identifies each personal property asset by a
unique identifier and briefly describes the asset; provides its date of
acquisition, acquisition cost, useful life, and current physical
location; and notes whether the asset is owned or leased. This
inventory is centralized and maintained by NOAA's Office of Finance and
Administration (OFA). NOAA's line and program offices provide OFA with
data on their respective assets and OFA enters the data into its
database. The personal property inventory includes both capitalized
personal property (assets costing $200,000 or more) and noncapitalized
property (assets costing less than $200,000). Noncapitalized property
is mostly computer equipment.
In the past, NOAA regularly performed asset condition assessments for
its real property assets; however, these assessments have been
suspended for several years while identified asset deficiencies are
addressed. An official said that previous condition assessments for
real property assets were very exhaustive and costly and the condition
data aged very quickly. A new process for assessing asset condition is
scheduled to begin in fiscal year 2003 and will involve a facility
rating and prioritization process performed by a contracted firm.
According to an OFA official, NOAA has no standard process for
performing condition assessments for personal property assets. OFA
conducts what it refers to as an annual assessment of property
condition for capitalized personal property only. However, this
assessment merely consists of OFA asking the line and program offices
if there is any deferred maintenance on their equipment and other
assets. According to the official, the answer is generally "no." The
official further stated that the line and program offices themselves do
not perform condition assessments because it is believed that if
regular asset maintenance is performed, routine condition assessments
or inspections are not necessary.
In addition to the new process for assessing the condition of real
property assets, NOAA is implementing a new real property inventory
system. Commerce has purchased a system that is presently running
parallel to NOAA's present inventory. It contains the same information
as the present inventory, although according to an official, it is Web
based and will be easier to update than the present inventory. The new
inventory will not collect asset condition information but could be
expanded to include it in the future. At the time of our study, it was
not fully deployed but was scheduled to be fully operational by fiscal
year 2003. The current personal property inventory was implemented in
the fall of 2002.
BOP Maintains an Inventory of Capital Assets and Information on Asset
Condition; However, the Basis for Its Long-term Performance Gap Is
Unclear:
BOP capital needs are determined through the use of a number of
separate parallel processes. Capital projects are identified in
response to the BOP Director's spring budget memorandum, through
routine inspections of facilities, and through a long-term capacity
planning process. Modernization and repair (M&R) projects are
identified as a result of routine physical inspections of correctional
institutions or in response to legal requirements, such as the need to
provide access for the physically challenged. M&R projects also are
identified as a result of contractor surveys of facilities that are
more than 50 years old. These surveys of older institutions determine
the extent of renovation needed and if replacement of the facility is
more cost effective than renovation. Projects that require construction
of new institutions--which represent the bulk of BOP's capital
spending--are identified through a centralized process that is driven
by future inmate population projections with the goal of keeping prison
crowding at targeted manageable levels.
BOP maintains an automated inventory system to track, control, and
depreciate both real and personal property capital assets--its Real
Property Management System, which tracks all BOP-owned land, buildings,
other structures, and related improvements, and a Personal Property
Management System which tracks and depreciates all BOP-owned personal
property. BOP's capital asset inventory is a nationwide system run on a
mainframe computer, and its data are available nationally to all
capital planners and decision makers. Numerous reports are generated
from this system, including a list of operational correctional
facilities at any given point in time and individual asset records
showing detailed asset information such acquisition date, accumulated
depreciation, and current book value. According to capacity planning
officials, the real property inventory data are considered in the
overall needs assessment process. For example, when population
increases occur, the existing inventory of correctional facilities and
their current populations are first considered in determining how to
maintain or achieve a targeted population level.
Likewise, capital asset condition data are available to regional and
headquarters capital planners and decision makers. BOP's policy is to
inspect its institutions either quarterly, semiannually, or annually
depending on the institution's age. Correctional institution staff
throughout each of the six regions perform the inspections, and the
results are compiled to form an institution-specific list of
infrastructure maintenance needs. These institution lists are forwarded
to each regional office where they are consolidated for evaluation by
regional staff. At least annually regional offices rank the needed
projects and forward the ranked lists to headquarters staff. BOP's
Facilities Management Branch consolidates the six regional project
lists with additional requests received in response to the Director's
spring budget call. More extensive condition assessment surveys are
performed for facilities over 50 years old with the oldest institutions
and facilities that have not had major renovations in years being
surveyed first.
BOP also relies on its Computerized Maintenance Management System
(CMMS) to track preventive maintenance, equipment history, recommended
replacement schedules, and costs related to institution maintenance. In
addition to the project repair lists, facility condition survey
reports, and reports generated by CMMS, BOP units are required to
provide current asset condition data when responding to the Director's
spring budget call. For the fiscal year 2004 budget cycle, the Chief of
Facilities Management issued a memo, in addition to the BOP Director's
memo, with instructions for developing the buildings and facilities
budget request. The memo required that current asset condition be fully
explained in all requests--including the likely consequences of not
receiving funding for the requested project. While this requirement
indicates that asset condition could be seriously considered in the
budget process, BOP officials could not provide us with any completed
requests containing this information.
BOP also considers a program's functional requirements when determining
its performance gap. As suggested in OMB guidance, a performance gap
should be defined in terms of the functional requirements to be
achieved. An important requirement in BOP's program is a policy
decision to house prison inmates within 500 miles of their homes.
Therefore, BOP planners and decision makers consider how best to meet
this requirement when evaluating various alternatives to bridging an
identified performance gap.
Although asset inventory and condition data are available for
considering the use of existing assets when identifying a performance
gap and determining how best to fill the gap, BOP is not able to
support the basis of its estimated overall long-term performance gap.
While BOP considers a number of factors, as described below, it lacks
studies to support its judgment about the acceptable level of
overcrowding.
BOP's new construction program follows a centralized long-term capacity
planning process with the goal of ensuring sufficient institution
capacity while maintaining prison crowding at safe and secure targeted
levels. The agency's Office of Research and Evaluation generates
projections of future inmate population levels using a microsimulation
computer program and data from the Administrative Office of the U.S.
Courts and the U.S. Sentencing Commission. These projections are
influenced by factors such as increased resources for law enforcement
and prosecutorial agencies and estimated increases in the number of
Immigration and Naturalization Service (INS) detainees. The Office of
Research and Evaluation continually monitors population growth and the
projections are updated regularly. The population projections are
subdivided by inmate security level--minimum, medium, and maximum
security--and geographic region. BOP's capacity planning staff also
monitors inmate population growth and current and estimated prison
capacity levels. Long-term rates of prison overcrowding are regularly
generated using a formula that considers an institution's "rated
capacity" and the expected prison population. This results in an
overcrowding percentage, which is the inmate population amount above
the institution's rated capacity.
The concept of rated capacity is a standard that uses a stated level or
percentage of double bunking (crowding) in inmate living quarters to
arrive at an institution's inmate capacity level. In recent years, BOP
has sought to operate at 25 percent double bunking for high-security-
level inmates, 50 percent for medium-security-level inmates, and 100
percent for low-security-level inmates.[Footnote 24] These percentages
of double bunking are multiplied by the number of inmates the
institutions were designed to accommodate to arrive at the
institution's rated capacity. For example, a high-security institution
designed to accommodate 768 inmates (768 beds) with 25 percent double
bunking would have a rated capacity of 960 (768 x 1.25). A low-security
institution designed to accommodate 768 inmates with 100 percent double
bunking would have a rated capacity of 1,536 (768 x 2.00). The rated
capacity numbers are then compared to an institution's projected
population to arrive at the institution's percentage of overcrowding.
Therefore, a high-security institution with a population of 1,100 and a
rated capacity of 960 would have an overcrowding rate of about 15
percent (1,100-960/960 = 14.6).
The institution numbers are aggregated to determine an overall
systemwide percentage of overcrowding in BOP-operated facilities. A
long-term capacity plan is regularly generated, which shows these
overcrowding percentages by security level and inmate gender over a 9-
year period. For example, the capacity plan dated April 30, 2002, shows
that medium-security institutions housing male prisoners are estimated
to be overcrowded by 52 percent in fiscal year 2003. The same capacity
plan shows that systemwide BOP overcrowding is expected to be around 30
percent through fiscal year 2009.
While BOP planning and budget documents suggest that record inmate
population increases over the past few years will likely continue, BOP
is unable to demonstrate the basis for what it considers an acceptable
level of systemwide overcrowding. Officials say that over the past two
decades the overcrowding goal has increased from 10 to 15 percent to an
actual goal of around 30 percent. They say this goal is a result of
gradual increases in what the previous administration believed were
acceptable percentages of double bunking. According to budget and
capacity planning staff, during the early 1980s a goal of 10 percent
overcrowding was established, but population growth never allowed them
to maintain that level. In the 1993-94 time frame, the goal was set at
15 percent, but the funding needed to attain 15 percent was never
provided. Also, the absorption of felons sentenced in the District of
Columbia and INS long-term detainees made attaining this goal unlikely.
More recently, according to BOP officials, the Department of Justice
(DOJ) decided that BOP would, at least temporarily, try to manage the
prison population at 85 percent double bunking in penitentiary cells
(maximum security) and 95 percent in medium-security facilities. These
levels of double bunking the forecasted prison population translate to
a systemwide overcrowding rate of around 30 percent through fiscal year
2009. DOJ's fiscal year 2001 Performance Report,[Footnote 25] which
includes the fiscal year 2003 performance targets, states that the BOP
systemwide overcrowding goal is 37 percent for fiscal year 2003 and 31
percent for fiscal year 2006.
BOP officials could not provide any studies or documentation supporting
what the agency considers an acceptable level of double bunking or
crowding above rated capacity levels. As mentioned, the goal has
changed over the past two decades and, according to BOP officials, it
appears that the prison population has been adequately managed at the
varying levels of overcrowding. To justify the need to construct new
facilities, expand existing facilities, or even enter into additional
contracts with privately run facilities, it is reasonable to expect the
long-term need to be based on standard criteria, supported by studies
or analyses that discuss some correlation between levels of
overcrowding and problems in controlling and managing the prison
population.
Agency Use of Integrated Project Teams:
With the exception of NOAA and VA, the use of integrated project teams
(IPT), suggested by OMB guidance, was not generally evident in the
planning phase of case study agencies' processes. It is hard to judge
the impact of this since our study of the practices of leading
organizations found that often such teams were not used until later,
while organizations were managing the implementation of capital
projects. NOAA's OMAO formed an IPT to facilitate its ship replacement
process--a team consisting of mission, acquisition, and program
managers. Stakeholders of the fisheries vessels were also consulted in
the process. The team operated under NOAA's Administrative Order that
prescribes general procedures for developing requirements for major
systems. The working group began with unconstrained requirements
discussions, but through the process of feasibility design studies, the
final ship design met the most critical requirements. This IPT
developed a set of requirements for the new vessels, and an acquisition
team began a pilot ship design.
VA's capital guidance strongly emphasizes the use of IPTs. Its fiscal
year 2002 guide amended prior guidance to define the acronym, IPT, as
the "Investment Proposal Team," a multidisciplinary team that includes
subject matter experts on the investment being requested. Generally,
the VA IPT is composed of disciplines such as the local facility
planner; facility engineer; finance, budget, and information technology
staff; and representatives from clinical disciplines defined in the
project scope.
Conclusion:
While case study agencies have successfully begun their capital
planning processes by recognizing their primary missions and long-term
goals and identifying resources needed to fulfill their goals, only BOP
has been successful at maintaining a current inventory of its assets
and information on asset condition. VA and the Park Service have
struggled to develop and maintain agencywide comprehensive inventories
of capital assets and current data on asset condition; however, the
Park Service says it has recently completed an inventory of its assets
and is making progress toward assessing the condition of those assets.
NOAA has not maintained current information on the condition of assets
under its control. This lack of current information on asset
availability and condition may have hindered these agencies' ability to
properly identify current capabilities and the actual gaps between
their current and needed capabilities. The lack of accurate inventory
and condition data also may have prevented a thorough evaluation of
available alternatives to bridging performance gaps. Case study
agencies recognize the value of maintaining up-to-date and
comprehensive asset information and appear to have begun processes to
improve this deficiency. It is important that agency management
diligently proceed with the development and implementation of these
needed asset management systems.
Recommendations for Executive Action:
We recommend that the Secretary of Veterans Affairs continue to
emphasize and support the timely development and implementation of CAMS
currently under way agencywide. Decision makers should use the asset
inventory and condition information as an integral part of VA's capital
planning process when both determining a need for a new capital asset
and considering options for filling a performance gap.
We recommend that the Director of the National Park Service ensure that
asset inventory and current asset condition data from FMSS are
available to assist capital planners and decision makers when
determining future capital needs and alternatives to bridging
identified performance gaps.
We further recommend that the Director of the Bureau of Prisons require
that studies be undertaken to determine the relationship between
different levels of overcrowding and problems with managing prison
populations, and that such studies be used in determining needs.
Finally, we recommend that the Under Secretary for Oceans and
Atmosphere, Department of Commerce, (NOAA Administrator) resume
regularly scheduled asset condition assessments for real property
assets and develop a standard process for assessing the condition of
personal property assets.
Agency Comments:
We provided a draft of this report to VA, the Park Service, BOP, and
NOAA. In its written comments, reprinted in appendix VII, VA said it
agreed with our conclusions and concurred with our recommendation to
continue the development of CAMS and incorporate facility condition
assessment information when making capital investment decisions. VA
also described the progress it has made thus far with implementing a
life cycle portfolio management approach and the development of CAMS to
facilitate this effort. In addition, VA provided a number of technical
comments, which have been incorporated in this report as appropriate.
The Department of the Interior did not directly address our conclusion
and recommendation regarding the Park Service. It provided a number of
technical comments, which have been incorporated in this report as
appropriate.
In its written comments, reprinted in appendix VIII, BOP did not
directly address our conclusion or recommendation. It said that over
the years, a number of corrections authorities have undertaken studies
on the issue of overcrowding in prisons, and the analysis and findings
from those studies and its own operational experience are factored into
its population and capacity planning process.
In its written comments, reprinted in appendix IX, NOAA agreed with our
recommendation to resume regularly scheduled asset condition
assessments for real property assets and develop a standard process for
assessing the condition of personal property assets. NOAA stated that
it implemented real property asset condition assessment surveys in
fiscal year 2003 and has implemented a program requiring annual
condition and maintenance assessments for all capitalized personal
property assets.
[End of section]
Chapter 4: Agencies Consider Alternatives but Processes to Rank and
Select Investments and Produce Long-term Capital Plans Need Attention:
Both Office of Management and Budget (OMB) and GAO guidance stress that
when a performance gap between needed and current capabilities has been
identified, it is important that organizations carefully consider how
best to bridge the gap by identifying and evaluating a full range of
alternatives to constructing or purchasing a new capital asset. The
guidance also emphasizes the need to have a comprehensive decision-
making framework to review, rank, and select from among competing
project proposals. Such a framework should include appropriate levels
of management review and approval, and selections should be based on
the use of established criteria. Capital planning guidance also
emphasizes the importance of documenting the selected projects in a
long-term capital asset plan. The capital plan should define the
organization's long-term capital acquisitions needed to support its
long-term goals and objectives.
Case study agencies have processes through which to consider various
alternatives to acquiring new capital assets and often choose such
alternatives, including nonownership options. Case study agencies have
various processes for the review and selection of proposed capital
investments, but most have established frameworks. The process used at
the Bureau of Prisons is less formal than other agencies' processes and
is not well documented. None of the case study agencies have developed
long-term capital plans that describe the goals and objectives to be
achieved, baseline assessment of the current conditions and performance
gaps to be filled, and justification for new acquisitions proposed for
funding.
Agencies Have Processes to Consider Various Options for Addressing
Their Performance Gaps--Generally a Range of Alternatives, Including
Noncapital Options:
While it is almost always possible to hypothesize more alternatives for
any given need than may have been seriously considered by agencies, all
of the case study agencies considered a reasonable number of
alternatives to address any identified performance gaps.
Department of Veterans Affairs:
The Department of Veterans Affairs' (VA) departmental guidance requires
its facility staff to answer OMB's "Three Pesky Questions"[Footnote 26]
when developing capital investment project proposals. These questions
seek to ensure that the function to be supported by the investment is
mission critical, no other governmental or private entity can perform
the function better, and agency business processes have been
reengineered to optimize performance at the least cost. The Veterans
Health Administration (VHA) and the National Cemetery Administration
(NCA) follow department-level guidance and consider a range of
alternatives to address identified performance gaps. There are four
alternatives that must be considered--leasing; status quo; new
construction; and rehabilitation, repair, or expansion of existing
facilities. Enhanced-use leasing and contracting with a university
hospital to share assets are nonownership options considered by VHA.
NCA has the authority to partner with state governments through the use
of federal grants to establish, expand, or improve state-owned and
operated veterans' cemeteries. When researching alternatives, NCA also
considers the expansion of existing memorial sites through the purchase
of adjacent cemetery land.
VA was given the authority to enter into enhanced-use leasing[Footnote
27] arrangements to address some of its facility needs. Under these
arrangements, originally authorized in 1991, VA leases its land to a
private or public developer. The developer constructs a facility on
this VA-owned land and assumes ownership of the facility. The developer
may lease the whole or part of the facility back to VA at below-market
rent and the facility owner can solicit other tenants for space not
used by VA. This arrangement can be structured to require only a 2-year
financial commitment on behalf of the government. VA has used enhanced-
use leasing for clinics, regional offices, research facilities, and
office buildings, and VA is looking to expand enhanced-use leasing into
other areas, such as equipment investments. Figure 10 describes VA's
enhanced-use authority.
Figure 10: VA Enhanced-Use Authority:
[See PDF for image]
[End of figure]
While VHA considers alternatives within its general scope of delivering
services, it defines its range of alternatives within the rubric of
maintaining service to all future expected enrollees. It has given some
attention to alternatives, such as provision of services to veterans by
non-VA health care facilities. For example, some VA medical centers
have agreements with military treatment facilities to exchange patient
care and support services. Also, VA and the Department of Defense (DOD)
have pooled resources to construct a joint medical facility or to make
use of an existing facility.
Bureau of Prisons:
The Bureau of Prisons (BOP) considers a range of alternatives to
address the performance gap identified through its capacity planning
process. One of the Department of Justice's (DOJ) strategic objectives
is to ensure the existence of sufficient and cost-effective prison
capacity. BOP's strategy to attain this objective includes acquiring
needed capacity through cooperative arrangements with state and local
governments, contracts with private providers of correctional services,
and alternatives to traditional confinement where appropriate. BOP also
considers the expansion of existing BOP facilities and the acquisition
and conversion of nonprison facilities to prison use.
Where the inmate security level is appropriate and for certain prison
populations, BOP contracts with private companies and state and local
governments to provide prison capacity as an alternative to new
construction. In 1996, BOP began using privately managed facilities in
a 5-year demonstration project to evaluate the potential effectiveness
of privatizing future BOP facilities. Under authority provided in DOJ's
fiscal year 1997 appropriations act, BOP contracted with a private firm
to operate a correctional institution for low-and medium-security
inmates in Taft, California, to help reduce crowding in the facilities
of BOP's western region. In 1997, the Congress also required the use of
private contract facilities to house felons sentenced in the District
of Columbia who were transferred to BOP custody.[Footnote 28] As of
April 30, 2002, 27,000 of the approximately 162,000 inmates in federal
custody were assigned to either privately managed institutions, state
or local facilities through intergovernmental agreements, community
corrections centers, or home confinement. DOJ's fiscal year 2001
performance report[Footnote 29] includes reducing overcrowding as one
of BOP's fiscal year 2003 performance targets. The stated strategy for
attaining this goal includes the aggressive analysis of existing
private and other correctional facilities for sale, which may offer a
more timely and affordable alternative to new prison construction.
Alternatives to construction of new facilities also include the
expansion of existing correctional institutions. For example, BOP
received congressional approval in fiscal year 2001 to reprogram funds
for the initial design and then included in its fiscal year 2003 budget
request construction funding for three expansion projects. These
projects are expected to expand the existing bed space at institutions
BOP currently operates. Budget documents state that the agency also
tries to accommodate its prison population through acquiring military
and other properties and converting them to prison use. Officials
stated that the agency has also considered the use of former university
campuses as alternatives to construction of new prison facilities.
Although BOP has considered and used numerous alternatives to
construction of new prison facilities, new construction is still a key
part of DOJ's strategy for meeting its bed space needs for persons in
federal custody. The fiscal year 2003 budget request included a request
to fund construction of a 512-bed secure unit for female inmates on
land already owned by BOP. The requested new facility is expected to
provide housing specifically designed for the special needs of women
inmates, such as special rooms for visiting children--something BOP
sees as an important functional program requirement. The budget
justification says that planned construction of this facility at an
existing site is cost effective since it will allow for shared
services, such as administrative, utility, and medical services.
Additional new construction plans include awarding contracts for the
design and construction of 7 facilities for activation in fiscal year
2004 (adding 8,192 beds) and beginning or continuing environmental
review, design, or design-build activities for 13 new facilities to add
prison capacity of 14,720 beds in fiscal years 2004 through 2007.
National Park Service:
The National Park Service (Park Service) considers a range of
alternatives to address an identified performance gap--including
noncapital options as appropriate. It also conducts extensive
alternatives analysis at various stages of a project proposal's
development and review. The nature of the Park Service's activities,
the type of capital project being considered, and the strategic goal
that is being accomplished drive the consideration of alternatives and
the level and type of alternatives analysis performed. For some routine
capital projects, such as life and safety deferred maintenance, which
has been an administration priority for some time, limited alternatives
are available. Although the Park Service considers alternatives such as
renovating and rehabilitating existing facilities where possible,
specific circumstances may limit the range of alternatives. For
example, renovating or rehabilitating a surplus or underused facility
at a remote location would not be considered an alternative for a new
visitor center that would use existing adjacent trails, the current
transportation system, and other adjacent structures. Park facilities
may also have specific functional requirements that limit the types of
buildings or locations considered during the alternatives evaluation
process. For example, the new Grand Canyon National Park visitors
center must serve visitors 24 hours a day in all weather conditions.
The Park Service considers partnering with other governments for land
acquisitions and has partnership programs with the private sector and
nonprofit entities to share the burden of funding costly projects. For
example, according to an official, the Park Service recently sought a
partner for the Mesa Verde National Park curatorial facility and
visitors center. Although the project is estimated to cost $40 to $60
million, the Park Service wanted to limit its share of the funding to
$5 to $15 million. A local foundation expressed interest in providing
the remaining funding for the project. The Park Service also tries to
partner with other federal agencies. In its August 1995 general
management plan (GMP), the Grand Canyon National Park said it was
working closely with the Forest Service concerning specifics of a land
exchange environmental impact statement (EIS). The GMP stated that the
Park Service worked with the Forest Service to (1) help ensure that the
land exchange would not adversely affect the national park and (2)
determine if needed park housing, community services, and possible
gateway information, staging/parking, and public transit facilities
could be a part of the development.
The Park Service may share equipment with other federal agencies and
does consider leasing some assets where appropriate. For example, the
Grand Canyon National Park shares some equipment with the Forest
Service and leases most of its vehicles through the General Services
Administration. Operating funds typically fund vehicle acquisitions.
The Park Service conducts alternatives analysis at three points in
time: (1) during the program formulation phase in which the Park
Service uses Department of the Interior (DOI) criteria in conjunction
with the Choosing By Advantages process (discussed later in this
chapter) to rank projects for inclusion in the servicewide 5-year
construction program; (2) as part of a value analysis[Footnote 30]
process during project predesign and design; and (3) during development
of compliance documentation such as the EIS, environmental assessment,
and categorical exclusion.
Value-based decision making or value analysis is an important component
of the Park Service's project planning process. It compares
alternatives to select the best value. Value analysis is being
increasingly used during general management planning, implementation
planning, and project formulation. A project's predesign team develops
alternatives and uses value analysis to select the best alternative
during its predesign activities. The Park Service's value analysis
process allows proposal alternatives to be compared to each other in
terms of variations on space, site location, and impact on resources
and visitor experience. Value analysis in the predesign stages does not
always consider status quo as an alternative because it is presumed
that if the project advances to the value analysis phase, there is a
compelling reason to require action other than the status quo. An
example of a value analysis review of alternatives would be choosing to
construct an outdoor visitors center where the exhibits are maintained
outdoors and maintenance is cheaper compared to constructing an indoor
visitors center that requires heating, air conditioning, and other
maintenance.
The Park Service servicewide senior-level review board, the Development
Advisory Board (DAB), which evaluates project proposals prior to their
submission to OMB (discussed later in this chapter), will not review
proposals that lack value analysis studies. Completion of these studies
is mandatory for proposals above certain dollar thresholds, and the
number of value analysis studies has increased from 17 in fiscal year
1997 to 113 in fiscal year 2001. DAB discusses the value analysis
results for all alternatives--both those recommended for selection and
the other alternatives that are analyzed. The proposal presentations
include a discussion of why the alternatives not recommended were not
chosen and the benefits of the recommended alternatives. Figure 11
further describes value analysis use in the Park Service.
Figure 11: Value Analysis Use at the Park Service:
[See PDF for image]
[End of figure]
The National Environmental Policy Act (NEPA)[Footnote 31] requires that
each Park Service project have appropriate compliance activities
completed that must include an alternatives analysis to determine the
various impacts of a considered option. Status quo is considered as an
alternative as part of the NEPA compliance process because the other
alternatives will affect the environment in different ways. The Park
Service must also consult with the U.S. Fish and Wildlife Service and
other agencies during the review of alternatives.
National Oceanic and Atmospheric Administration:
The National Oceanic and Atmospheric Administration (NOAA) considers
many alternatives at its line and program office levels and at the NOAA
bureau level to address identified performance gaps. Each line and
program office has its own requirements for considering alternatives to
new acquisitions of proposed capital investments. One of NOAA's program
offices, the Office of Marine and Aviation Operations (OMAO), considers
alternatives to purchasing new capital assets as one means of
fulfilling one of the goals in its strategic plan--the goal of pursuing
partnerships with the public and private sector. OMAO officials said
that they partner with universities in the University-National
Oceanographic Laboratory System (UNOLS) for excess university vessels
when this is the best approach. OMAO may also contract for services
with the private sector. In fiscal year 2002, NOAA was expected to
acquire approximately 3,800 operating days of ship support through
outsourcing with the private sector and UNOLS, while NOAA ships also
would provide approximately 3,800 operating days of ship support. OMAO
also has purchased excess Navy vessels and converted them for its use.
At the time of our study, OMAO had converted two Navy T-AGOS vessels
for its use and was in the process of converting two others. OMAO's
strategic plan and interviews with officials demonstrate its continued
efforts to repair and maintain aging vessels.
The National Weather Service (NWS) shares some assets with other NOAA
entities. For example, many Weather Field Offices colocate with other
NOAA line offices as an alternative to acquiring or constructing new
facilities. Also, the NEXRAD (Next Generation Radar) system is shared
with both DOD and the Federal Aviation Administration. When projects
are proposed to the NWS Finance and Investment Review Board (FIRB),
their justifications must clearly articulate the alternatives
considered to address the identified performance gap, including the
costs and benefits of the proposed alternative. The "alternatives
examined" is one criterion in the highest weighted criteria group used
by the review board. For each alternative compared to the original
investment considered, the proposal must document how it is different
from other alternatives. Each alternative must consider different
program scales, methods of provision, and degrees of government
involvement. Project proposals must also describe selection of the best
alternatives based on benefit-cost analysis. The analysis must be
summarized in quantitative terms presenting the total benefit-cost
advantages and disadvantages associated with each alternative. In cases
where benefits cannot be fully monetized, staff are instructed to
quantify the benefits in terms of physical measurements, for example,
flash flood warning lead-time improvement in minutes or percentage of
the U.S. population covered by national weather radio.
NOAA's line and program offices are required to document alternatives
at the administration level as well. Budget formulation guidance for
project proposals requires line offices to consider alternatives. The
guidance requires proposals to consider outsourcing (contracting) and
partnerships with other agencies or with other line offices before
proposals are reviewed by NOAA-level review boards.
Case Study Agency Processes for Ranking and Selecting Proposed Capital
Investments Vary, but Most Have a Formal Review and Approval Framework:
Department of Veterans Affairs:
VA has an established framework to review and approve proposed capital
investments. VA's process is well documented and the roles of managers
are clearly defined. The review and approval framework is a department-
level process that considers projects for all VA administrations. It
consists of various levels of review and uses established criteria,
multiattribute decision analyses, and group-enabled software to rank
proposed investments.
VHA, which had the largest number of proposed capital investments in
VA's fiscal year 2003 budget request, has its own separate process for
reviewing project proposals before they are submitted to the
department-level process. For the fiscal year 2003 budget request,
VHA's Office of Facilities Management, Technical Resource Support
Office (TRSO) issued a call letter to field offices (VA networks) for
capital asset proposals prior to issuance of VA departmental guidance.
This was intended to allow network staff advance time to develop
project proposals. Also, according to one VHA official, the early call
and proposal guidance was issued because the development of project
proposals--a 3-inch business case package--requires considerable time
and resources. Business cases submitted by the field staff were
subjected to an initial cursory review by VHA officials. Feedback from
this allowed network personnel to incorporate additional data and
resubmit the updated business cases.
After a more detailed review by the Capital Asset Management and
Planning Service (which assumed the major program from TRSO), VHA
formed an administration-level panel to review the capital project
proposals. The panel used four criteria to rank proposals: (1) the
extent to which the project is consistent with and supports the
intentions of the Capital Asset Realignment for Enhanced Services
(CARES) program (discussed in ch. 3), (2) the extent to which the
project involved a seismic improvement (repair or prevention of
earthquake damage), (3) the extent to which the project fulfilled the
criteria set forth in H.R. 811,[Footnote 32] and (4) the general
quality of the proposal. For this cycle, the panel cleared 25 proposals
and forwarded them for department-level review. The Veterans Benefits
Administration (VBA) and NCA also have structured processes to generate
capital project proposals for inclusion in VA's department-level
review.
VA's Office of Asset Enterprise Management (OAEM) and the Capital
Investment Panel (CIP)[Footnote 33] conduct the initial VA department-
level review of business cases submitted from the three VA
administrations and VA's staff offices. OAEM first ensures that
proposal packages pass a validity assessment--a quality index check
that ensures the proposal is complete with the required documents, that
OMB's "Three Pesky Questions" are answered, and that there is rationale
for including it in the project scoring process. OAEM may allow network
staff an opportunity to improve their business case packages if needed
before further review. Proposals that pass the validity assessment are
then scored by CIP on each of the subcriterion and main criterion in
VA's Analytical Hierarchy Process (AHP) before they are forwarded to
VA's Strategic Management Council (SMC)[Footnote 34] for validation.
According to a VA official, this scoring is done to ensure that all VA
internal stakeholders have similar views on the merits of a project
proposal. After CIP project scores are complete, CIP prepares a "Board
Book"[Footnote 35] for use by SMC during its review and deliberation.
CIP assigns the weights of the subcriteria and SMC assigns the weights
of the main criteria using AHP. Figure 12 describes AHP.
Figure 12: VA Use of the Analytical Hierarchy Process:
[See PDF for image]
[End of figure]
After subcriteria and main criteria weights are assigned, project
proposal scores are entered into a decision software package titled
Expert Choice that ranks the project proposals based on the assigned
weights of the sub-and main criteria. The proposals with the highest
scores are listed highest on VA priorities. The criteria used by AHP
and Expert Choice are reviewed each year, updated, and aligned with the
VA's mission and current administration and secretary's priorities. The
criteria have evolved over time and most recently have emphasized
seismic (earthquake-related) projects and other administration
priorities; however, "One-VA customer service"[Footnote 36] remains the
most heavily weighted criterion. For fiscal year 2003, the total
assessment process scored proposals against 9 main criteria and 19
subcriteria. Figure 13 shows a comparison of weights of different
criteria used from fiscal year 2000 to fiscal year 2003.
Figure 13: AHP Criteria Weights:
[See PDF for image]
[A] The weight for alternatives analysis is part of return on taxpayer
investment for this year.
[End of figure]
The rank ordered list of project proposals resulting from AHP and
Expert Choice is then validated by SMC and forwarded to the VA
Executive Board for the next level of review. The Executive Board
consists of the VA Secretary (chair); Deputy Secretary; Chief of Staff;
General Counsel; and Under Secretaries for Health, Benefits, and
Memorial Affairs. The board's final selections are included in VA's
budget request forwarded to OMB. Figure 14 provides an overview of VA's
review and selection process for proposed capital investments.
Figure 14: VA's Review and Selection Process:
[See PDF for image]
[End of figure]
Officials reported to us VHA staff and managers' immense frustration
over the amount of resources spent to develop comprehensive project
proposals and the subsequent low levels of construction funding
received. OAEM developed a more streamlined process for fiscal year
2004 proposals. To allow for better use of staff resources, a three-
step process was developed. First, an initial concept paper is prepared
providing a high-level, conceptual description of a proposed project
and broadly identifying project goals, benefits, risks, estimated
costs, and project schedule. According to VA officials, the concept
paper allows for early project agreement with stakeholders and agency
officials. It also serves as the initial review step.
Proposal concepts that survive this initial review are then expanded,
and staff will develop a more detailed proposal with refined cost and
schedule estimates, identified performance measures, limited risk and
alternatives analyses, and technical requirements. This "300 Planning"
proposal would be in a form similar to OMB's Exhibit 300, Capital Asset
Plan and Justification (discussed in ch. 3), that OMB requires for
capital investment proposals, but with less detail. If approved for use
by OMB, the 300 Planning proposal would be used for requesting design
funding for major construction proposals rather than the full Exhibit
300. According to VA officials, the 300 Planning document allows
decision makers to weed out proposals that do not fit VA strategic
objectives or are not viable to proceed at this time.
For those that survive this level, the final step in the new process
would be the preparation of a comprehensive Exhibit 300, or a "300
Acquisition." The 300 Acquisition is more detailed and provides insight
based on experiences with planning and piloting. The 300 Acquisition is
a comprehensive project proposal with a detailed project plan; in-depth
risk, alternatives, cost-effectiveness, and earned-value analysis; and
primary source documentation. It would be required after the design/
concept funding is provided in the President's Budget. A complete
proposal or business case would be required only for construction
projects that are likely to receive full funding. VA guidance allows
for staff to bypass the 300 Planning and submit a 300 Acquisition after
a concept paper has been approved--resulting in an accelerated two-step
process. This would serve as the complete Exhibit 300 required by OMB
Circular A-11, Part 7. The 300 Planning and Acquisition applications,
as well as electronic templates for risk, alternatives, cost-
effectiveness, and earned-value analysis, are VA Web-based documents
and easily accessible by all VA staff.
This new three-step process allows for better-developed proposals as
well as a reduced number of proposals subjected to the AHP scoring
process because proposals that are not viable can be removed earlier in
the process. The three-step process also advances efficient use of
staff resources by eliminating the development of full proposals for
projects that are likely to be rejected. The motivation behind this new
process is to devote resources to development of a capital plan with
realistic proposals, rather than simply a wish list.
Bureau of Prisons:
Although BOP has a process for the review, ranking, and selection of
proposed capital investments, the process is not formal, is not well
documented, and does not appear to use formal selection criteria. It is
unclear what documents selection officials use to decide which capital
investment proposals are to be forwarded to OMB.
Leading organizations select projects based on pre-established criteria
and a relative ranking of investment proposals. OMB's Capital
Programming Guide provides one approach for devising a ranked listing
of projects using a scoring mechanism that assigns a range of values
based on project strengths and weaknesses. Project proposals that meet
or exceed positive aspects of the decision criteria are given higher
scores. An outcome of such a ranking process might produce multiple
groups of projects, and such a process may be used more than once--in
multiple steps--to limit the number of projects being considered by an
executive review board.
BOP's Capacity Planning Committee is responsible for proposing new
construction projects and consists of senior-executive-level staff from
the Administration; Correctional Programs; and Information, Policy, and
Public Affairs Divisions. Subject matter experts--chiefs of Capacity
Planning, Design and Construction, and Budget Development of the
Administration Division--also attend committee meetings. The agency
also has a Long-range Planning Committee that ranks new construction
proposals and makes specific project recommendations to the BOP
Director for funding. With a few exceptions, the same individuals are
members of both committees.
BOP officials told us that proposed capital projects for its new
construction and modernization and repair (M&R) programs are separately
ranked and selected. For new construction projects, the Long-range
Planning Committee meets regularly and uses inmate capacity plans
(resulting from the capacity planning process discussed in ch. 3), site
recommendations, and construction progress on ongoing projects to
determine which capital projects to recommend for funding. According to
officials, the committee ranks new construction proposals based on
need, funding, and the speed at which facilities can be constructed.
This information is used to develop options to be considered by the BOP
Director for the DOJ spring budget call. For M&R projects, the
Facilities Management Branch (Administration Division) receives
separate lists of proposed projects in response to the Director's
spring budget memorandum to all BOP units, an annual call to regional
offices from Facilities Management, and project initiatives submitted
by contractors as a result of surveys of older institutions (discussed
in ch. 3). These lists are reviewed and consolidated by the facilities
management staff and ranked according to need. According to officials,
this ranked list generally includes thousands of projects, and the
highest priority projects are those that are included in the multiyear
M&R plan. The criteria used to rank these projects assign life safety
projects the highest priority followed by accessibility projects;
building and institution infrastructure projects--roofs, utilities,
and structural repairs; projects for facilities over 50 years old; and
general M&R. Once the projects are ranked, the facilities management
branch staff determine a cutoff for the project list based on
anticipated resources.
While officials state that formal weighted criteria are used to rank
M&R projects, the criteria used to rank new construction projects
appear to be very informal. In addition, neither the criteria for new
construction nor the criteria for M&R projects are applied
systematically, nor are BOP officials either willing or able to provide
the results of any scoring process using the criteria. Furthermore,
neither of these processes is well documented. BOP officials were
unable or unwilling to provide a summary report or documents otherwise
showing the results of the ranking and selection processes. Moreover,
they could not provide any instructions to guide deliberations or any
standard agenda for the Long-range Planning Committee's meetings. This
is a concern because, at the time of our study, BOP had 800 ongoing M&R
projects, which officials said is rather typical, and 28 major
construction projects, which officials said is rather high.
This lack of a documented process makes it difficult to determine
exactly what documents are used by BOP decision makers to choose among
numerous potential capital investments. For example, the BOP Director's
fiscal year 2003 spring budget call memorandum required BOP assistant
directors and regional directors to prepare a separate program request
form for each "initiative," including construction projects. The memo
further required that each form identify and explain the goals to be
achieved, provide estimated costs, justify the need, and identify
performance indicators to measure if the goals are achieved. The memo
included a two-page attachment with separate sections to provide this
information and requested that the forms be returned to the Budget
Development Branch of the Administration Division. After numerous
requests, BOP officials were unable or unwilling to provide an example
of a completed budget request form for a fiscal year 2003 new
construction project request. However, officials did provide a copy of
an M&R project request; it was a one-page memo listing three projects
with estimated costs totaling $11.3 million and no other support or
justification. Further, there appears to be no standardized form that
succinctly provides information needed by decision makers. Thus, BOP
could not show that capital project request packages were actually
prepared for most capital projects or that detailed information was
provided to the Long-range Planning Committee for its selection
decisions.
National Park Service:
The Park Service has an established framework for the review and
selection of proposed capital investments. This framework includes two
senior-level review boards and a formal system to rank projects using
established criteria and to consider alternatives. It allows for (1)
initial review and winnowing out of projects at the park and regional
levels and (2) the use of an external advisory group that reviews
individual projects that have completed the predesign sequence and
reports directly to the Park Service Director.
As discussed in chapter 3, individual parks enter proposed capital
projects into the servicewide Project Management Information System
(PMIS). There were approximately 40,000 projects in PMIS in fiscal year
2002. PMIS data fields allow a park to provide project description,
justification of the expected improvements by the proposed projects
tied to specific Park Service mission and long-term goals, proposed
performance measures, a cost estimate, benefits based on outcomes,
asset condition information for existing assets, and other project
data. PMIS is designed to include all of the key project proposal
information needed to make the evaluation and ranking decisions.
Capital project proposals developed by the individual parks are
submitted to the regional offices for initial evaluation and ranking
within their units. These proposals are subjected to preliminary
scoring on the regional level based on the same criteria that are used
for official scoring at the national level later in the process. The
regional offices develop a ranked list of project proposals and forward
their priority list to the Park Service Construction Program Management
Office (CPM) for evaluation and ranking in the servicewide program. CPM
reviews the submitted proposals for completeness and compliance with
the line-item construction program eligibility criteria before the
proposals are submitted for further evaluation at the national level.
Regional managers and CPM managers can access PMIS for any needed
information on an individual proposed capital project.
Capital project proposals evaluated and ranked at the regional level
and conforming to the initial CPM review are then formally reviewed and
evaluated on a national level, systemwide, using the Choosing By
Advantage (CBA)[Footnote 37] process. CBA uses specific evaluation
factors to compare proposed projects to one another. The five factors
recently used in CBA were (1) provide safe visits and working
conditions; (2) protect cultural and natural resources; (3) improve
visitor enjoyment through better services and educational and
recreational opportunities; (4) improve operational efficiency,
reliability, and sustainability; and (5) provide cost-effective,
environmentally responsible, and otherwise beneficial development for
the national park system. CBA involves a relative comparison of every
project proposal by each factor.
A multidisciplinary assessment team led by CPM is assembled to manage
the CBA process and apply the evaluation factors to each project,
producing an individual project ranking. The project with the best
score on any particular factor sets the scale for that factor, and the
other projects are scored relative to that best score. Each project's
score is divided by its cost to arrive at an advantage-to-cost ratio.
That ratio (results of cost-benefit analysis) is a major determinant of
the project's priority ranking in the 5-year construction program or
plan and DOI and OMB policy direction. At times, the call letter for a
project proposal will specify a certain project type (e.g., life and
safety) for which funding is specifically available. This restriction
on the type of project likely to be funded may narrow the list of
projects for comparison.
Recently, as a result of negotiations between DOI and Park Service
senior executives, an additional step was added to the rating and
ranking process to place greater emphasis on DOI priority areas--a
project rating method based on a set of weighted-factor data that
focuses on deferred maintenance and public health and safety. The
rating method requires that proposed capital projects be grouped into
bands as follows: (1) projects with a DOI score from 1,000 to 800
points (to be funded first), (2) projects with a DOI score from 799 to
500 points (to be funded second), and (3) projects with scores from 499
to 100 points (to be funded last). Within the project bands created by
the DOI scores, projects are then ranked using the CBA process and the
advantage-to-cost ratio. According to the Park Service, this approach
is intended to result in early funding of projects that are of high
priority with the DOI Secretary and the President while preserving an
ability to address the full range of cost-effective projects that
address the Park Service mission and goals.
The Park Service's DAB reviews proposed capital projects vetted and
ranked by the agency's CBA process. DAB is composed of four Park
Service associate directors, three regional directors, and two senior
executive service park superintendents. DAB has two responsibilities:
(1) policy, which involves reviewing the proposed 5-year construction
program and thus recommending projects for inclusion in the
construction program, and (2) reviewing individual projects at the end
of predesign development. With some exceptions, DAB reviews every
project with estimated costs greater than $500,000 regardless of the
funding source. Without DAB's approval, project managers cannot proceed
with design efforts or initiate construction activities. DAB reviews
approximately 120 projects per year primarily focusing on the review of
projects that have completed the planning and predesign activities that
are precursors to formal requests to OMB for review and to the Congress
for funding. However, DAB has multiple opportunities to see project
proposals at various levels of development.
Once projects proposed for inclusion in the 5-year plan clear DAB, they
are forwarded to the National Leadership Council (NLC). NLC is composed
of the Park Service Director, deputy directors, associate directors,
and regional directors, and it meets bimonthly to consult on major
policy and program issues confronting the Park Service. Projects
proposed for inclusion in the 5-year plan are reviewed by NLC, and its
members provide any comments or concerns about the ranking and rating
of projects directly to the Park Service Director for consideration
before final approval of the 5-year plan. Projects reviewed by DAB that
have completed planning and predesign activities are not forwarded to
NLC; they are instead advanced directly to the Park Service Director
for approval.
The Park Service external advisory group was established to assess
line-item construction projects for suitability and cost-
effectiveness. The five-member group is composed of private citizens
appointed by the Park Service Director. The group's members have
experience in areas such as engineering, architecture, historic
preservation, and budgeting. They provide an independent review of Park
Service construction projects. The advisory group meets concurrently
with DAB to review projects that have completed predesign and reviews
every line-item construction project with an estimated cost greater
than $500,000. This review is required before a project can proceed
with design efforts. The advisory group provides its findings directly
to the Park Service Director. Figure 15 shows the Park Service review
and selection process for proposed capital investments.
Figure 15: Park Service Capital Investment Review and Selection
Process:
[See PDF for image]
[End of figure]
National Oceanic and Atmospheric Administration:
NOAA also has an established framework to rank and select proposed
capital investments. NOAA's line and program offices individually
initiate the ranking processes before the administration-level review
boards review investment proposals. For example, one of NOAA's line
offices, NWS, formed a review board, FIRB, in fiscal year 2000 to
establish a formal process for management review and ranking of capital
investment proposals in support of strategic goals. FIRB reviews
projects costing $1 million or more. The FIRB charter cites OMB's
Capital Programming Guide as one of the reasons for its creation. FIRB
consists of five voting members and three nonvoting advisor members who
review and evaluate capital investment proposal justifications, score
capital investments according to established criteria, and rank the
approved investments. NWS's budget formulation and program analysis
division, among its other roles, assists the various units of NWS in
developing project justification materials and provides professional
assessments on proposals to FIRB.
FIRB will, through quarterly or more frequent meetings, approve a
portfolio of investments ready for final approval in the budget
process. The criteria that FIRB uses to evaluate the proposals are
publicized and include alternatives considered, contribution to
improved agency performance, and contribution to NWS mission. Projects
submitted to FIRB must document alternatives and the cost and benefits
of the best alternative. If all the costs and benefits cannot be
monetized, then projects must be quantified in terms of other "physical
measurements." Approved projects are forwarded to the administration
level for review.
NOAA's administration-level review boards--working groups established
to foster implementation of NOAA's strategic themes--are aligned with
NOAA's strategic goals and priorities as outlined in the fiscal year
2001 Department of Commerce Performance Report and fiscal year 2003
Annual Performance Plan. These review boards receive proposals ranked
by line and program offices, such as NWS proposals ranked by its FIRB.
The strategic themes represent major areas of concentration and consist
of multi-line-office programs. NOAA line and program offices draft the
guiding principles for each strategic theme; however, NOAA management
has the final say on theme development. For the fiscal year 2004
budget, NOAA's budget office met with NOAA management to finalize the
themes. The themes included in the fiscal year 2004 budget process were
(1) Climate Change, Research, Observations and Services; (2) Ecosystem
Forecasting and Management; (3) Environmental Monitoring and
Prediction; (4) Energy and Commerce; (5) Homeland Security; and (6)
Infrastructure, Maintenance, Safety and Human Capital. For fiscal year
2005, a new NOAA strategic plan will become the underpinning of budget
formulation and budget requests.
The review boards representing the strategic themes rank proposed
investments for management review. A different NOAA line office is
designated as a lead for each theme's review board. The lead line
office, in conjunction with the other line offices represented, is
required to prepare program initiatives for review by NOAA's budget
office and NOAA management. Project proposals submitted to the themes'
review boards must be justified in terms of how they support the theme.
The boards are to review funding requests for both new and ongoing
projects.
The strategic themes' review boards use established criteria to rank
and select proposed projects. According to a NOAA official, the
Infrastructure, Maintenance, Safety and Human Capital theme's board
used the following criteria to rank submitted project proposals: (1)
contribution to agency mission, (2) cost development of the proposal,
(3) productivity improvement, (4) operational efficiency, (5) improving
efficiency, and (6) the likelihood of success. Similar criteria
permeated the other themes' processes, although each theme's review
board had a distinct process for ranking proposals. According to a NOAA
official, the similar criteria included (1) the cost proposal is well
developed, (2) the proposal is aligned with NOAA's mission, and (3) the
proposal increases worker productivity. Once this internal review is
complete, the review boards recommend project proposals to NOAA's
Budget Office and NOAA senior management for inclusion in the budget.
Case Study Agencies Did Not Prepare Long-term Capital Plans, but Two
Had Various Long-term Planning Documents:
Under OMB's Capital Programming Guide, the Agency Capital Plan (ACP) is
the ultimate product of the planning phase. The ACP should include an
analysis of the portfolio of assets already owned by the agency and
those in procurement, the agency's performance gap, and justification
for new acquisitions proposed for funding. Leading organizations
develop long-term capital plans to guide implementation of
organizational goals and objectives and help decision makers establish
priorities over the long term. Although the long-term capital plan is
the culmination of the planning phase guidance and is an industry best
practice, none of the case study agencies had a single long-term plan.
However, two agencies--BOP and the Park Service--developed long-term
planning documents that contain aspects of a long-term capital plan.
Seven of the eight additional agencies we surveyed reported that they
had some type of long-term planning information.[Footnote 38] However,
with the exception of a copy from the Department of State's Bureau of
Overseas Buildings Operations, we did not obtain copies of any capital
planning documents and therefore cannot comment on their content or
extent to which they constitute best practice documents. The National
Aeronautics and Space Administration said that its long-term capital
plan takes the form of an annual 5-year budget submitted to OMB. The
U.S. Coast Guard reported that it prepares an ACP that includes
appendixes, one of which is a Capital Investment Plan. According to the
Coast Guard, the Capital Investment Plan has been provided to OMB and
the Congress as required by the Transportation and Related Agencies
Appropriations Acts. Another appendix is its Long-range Resource
Allocation Plan to project needs beyond the 5-year horizon. The
Tennessee Valley Authority (TVA) reported that its project
justification process requires the development of a detailed 3-year
capital plan and inclusion of a 5-year plan within the annual
performance plans. Project details within these plans are submitted
quarterly for review and approval by the Project Review Committee. TVA
said it also projects 10 years of capital spending for planning
purposes using validated benchmarks and escalation factors.
We obtained a copy of the State's Bureau of Overseas Building
Operations' Long-Range Overseas Buildings Plan (LROBP) for fiscal years
2003 through 2008. The plan is a comprehensive outline of the State's
facilities requirements--new construction, major renovations, and
other programs--with a focus on resources needed to support the
department's priority diplomatic readiness goal in the long term. In
addition to providing a narrative description of and rationale for each
proposed capital project, estimated total project costs, and expected
fiscal year for requesting project funding, the plan includes a
description of the bureau's capital planning process and its specific
goals, strategies, and performance measures. The LROBP document is
updated annually and rolled forward each year to include a new planning
year.
Department of Veterans Affairs:
VA does not have a long-term capital plan, but officials have
recognized that one is needed. The 1-year plans VA completed in the
past did not contain information on longer-term needs to fill its
performance gaps. In 2002, VA solicited a contract for a study of
industry best practices in the development of a long-term capital plan.
However, the effort was suspended as the agency focused on the VHA
CARES implementation. As described in chapter 3, the capital asset
needs of VA's VHA (where the bulk of VA's capital assets are acquired
and used) are likely to be largely driven by the results of the ongoing
CARES process. A VA long-term capital plan would have to consider the
individual network asset restructuring plans.
Although VA currently does not have an agencywide long-term capital
plan, one administration--NCA--prepares a 5-year facilities plan that
is driven by its strategic plan. NCA's facilities plan contains long-
term project cost estimates for both major and minor projects that
extend to fiscal year 2006. The major construction plan lists projects
needing advance planning funds, design funds, and construction funds.
Both the major and minor construction plans identify each project by
location and its proposed cost. Although NCA provides long-term
planning documents to VA decision makers, VA does not produce a long-
term capital plan for the entire department that integrates NCA, VHA,
and VBA capital needs.
Bureau of Prisons:
BOP has three documents that it considers long-term capital planning
documents for major capital investments--the Capacity Plan, the
Buildings and Facilities Status of Construction report, and a report of
the rated capacity of facilities partially or fully funded by
anticipated fiscal year of activation.
The Capacity Plan provides inmate population projections and rates of
prison overcrowding typically for a 9-year period. It is generated by a
system that also contains data for additional future years, but
officials caution that data reliability is low because the projections
change frequently. The Capacity Plan provides population and
overcrowding projections categorized by the institution security level,
whether the facilities are BOP-operated or contractor facilities, and
whether the inmates are male or female. The data contained in the
Capacity Plan are updated weekly, and reports can be generated at any
time. OMB receives the weekly update of this report, and a version is
included in the budget submission to the Congress.
The Buildings and Facilities Status of Construction report provides the
status of construction for major projects that have received some level
of funding, including both new construction and expansion of existing
facilities projects. The report also shows projects initiated to house
District of Columbia inmates and Immigration and Naturalization Service
long-term detainees. The May 2002 report showed 28 ongoing new
construction projects--which an official said is an atypically high
number--and 7 existing facility expansion projects. The report provides
amounts funded by fiscal year, total project cost estimates, funding
obligated to date, estimated facility activation date, and a brief
status of each project. It is updated monthly and is provided to OMB
and to the Congress as part of the budget submission.
BOP's third long-term capital planning document--the report of rated
capacity of planned facilities that have received some level of
funding--shows facility capacity levels for planned projects for a 7-
year period, including the budget year and 4 years beyond. The report
shows the level of capacity added for each fiscal year that a group of
facilities are activated and is also a part of the annual budget
submission to the Congress.
These documents, viewed together, provide a sense of how BOP plans to
achieve its current overcrowding goal. However, there is no single
document that culminates its capital planning process, pulls these
three documents together, and so defines its long-term capital
investment decisions.
National Park Service:
The Park Service has a servicewide 5-year construction plan (also
referred to as the line-item construction program), a GMP at each
national park, and park action plans. While it is not publicly
available, the Park Service 5-year construction plan is reviewed and
approved by OMB. It is the only servicewide capital asset planning
document and provides a cost schedule and rating for each line-item
construction project. It is the result of the CBA process discussed
earlier in this chapter. Projects included in the 5-year construction
plan are at various phases of completion--planning, predesign, design,
and construction. The data needed to prepare a long-term capital plan
with detailed narrative are likely available since they are used in the
ranking and selection process; however, the current 5-year construction
plan is solely a list of projects, estimated costs, and schedule data.
After the plan is completed at the Park Service, DOI and OMB review it,
sometimes reordering priorities and inserting programs. Approximately 3
months of negotiations between the Park Service, DOI, and OMB center on
reordering project priorities for the final 5-year plan. The plan is
dynamic because unexpected events, such as the terrorist attacks of
September 11, 2001, can affect the priority of projects. For example,
in fiscal year 2003 as a result of the terrorist attacks, several
security-related projects were moved up in priority, pushing some non-
security-related projects into fiscal year 2004 for initiation.
GMPs define the long-term direction at each individual park. The plans
provide a broad overview of individual park needs and identify areas
for major improvements and performance gaps in service. The planning
process also identifies maintenance deficiencies at the park level.
GMPs cover 10-to 20-year periods and are general in nature. Some older
GMPs (such as the Grand Canyon National Park GMP) are relatively
detailed as compared to newer ones. A plan begins with an overview
discussion of the park's mission--why the park exists--and then
identifies park performance gaps and the resources required to fill
those gaps. The GMP process results in new concepts for capital
projects rather than specific projects themselves. The August 1995
Grand Canyon National Park GMP, for example, describes the concept of
developing two visitor orientation centers to help visitors understand
and appreciate the park's major interpretive themes and to plan their
visits. This effort addresses issues identified in the plan regarding
visitor difficulty in locating the existing center and that center's
inadequate orientation process.
While these plans together provide a general outlook of future Park
Service capital needs, there is no central document or group of
documents that describes the agency's existing baseline assessment,
analyses involved in developing the plan, and the performance gap being
filled by the planned capital projects. Specifically, while the 5-year
construction plan is the culmination of a rigorous review and selection
process, it does not include all of the Park Service's needs identified
in PMIS. Also absent from the 5-year plan are equipment investments and
land acquisitions. Equipment and about 28 other categories of projects,
such as rehabilitation, repairs, and cyclical maintenance, are funded
through allocations from the Special Emphasis Projects Allocation
System. Land acquisitions are made through a separate process that
follows each park's land protection plan.
National Oceanic and Atmospheric Administration:
NOAA does not prepare a comprehensive long-term capital plan defining
its capital investment decisions. The budget office does not require
long-term plans from line and program offices, but it does have
information on ongoing and proposed capital projects that were not
funded within the past 2 years.
NOAA's line and program offices have planning documents that reflect
planning guidance to varying degrees. Although one of NOAA's line
offices has a long-term capital plan, none of the other line offices or
NOAA overall has a long-term capital plan that defines its capital
investment decisions. OMAO's program office completes an unpublished
plan that is a 10-year chart of tentative dates and cost estimates for
major repairs and replacements to NOAA's ships. OMAO officials said
this information has been useful for planning purposes, but would not
provide a copy. OMAO officials also said this unpublished plan is
discussed with NOAA management. At the request of NOAA's management,
OMAO is currently drafting a 10-year plan for ships and aircraft.
The NWS line office's FIRB charter says that capital investment
proposals that are approved, vetted, and ranked in order of priority,
in conjunction with the NWS strategic plan and information technology
target architecture plan, will form NWS's capital asset plan. In
practice, NWS said that its capital plan is reflected in its fiscal
year 2003 and fiscal year 2004 NWS budget request, which is included in
NOAA's Procurement, Acquisition and Construction account. NWS said that
it maintains budget information on the capital investments but does not
see the value of rewriting the information in a separate Capital Asset
Plan.
The National Environmental Satellite, Data, and Information Service
(NESDIS) line office prepares a satellite ground systems 5-year plan.
This plan identifies the resources NESDIS requires to operate and
maintain satellite ground systems to monitor and control on-orbit
operational satellites and to acquire, process, and distribute
environmental data to users. The plan outlines the useful life of
components typically used in ground system operations and maintenance
activities. The plan also outlines NESDIS current ground system
capability by satellite and includes the launch dates for planned
satellites and what those satellites will accomplish. In addition, this
plan outlines the ground resources needed by NESDIS to fulfill its
performance gap. The NESDIS line office considers its plan a long-term
plan that reflects OMB guidance.
Conclusion:
Case study agencies present a mixed picture. Their capital processes
include consideration of numerous alternatives for addressing
performance gaps. Noncapital options are also considered and used,
where appropriate. Most agencies have review and approval frameworks
that include the establishment and use of formal review boards and
committees and established criteria for selecting proposed projects.
However, none of our case study agencies has developed a single
document that can be considered a long-term capital asset plan that
defines its long-term capital investment decisions, although some
agencies have long-term planning documents and long-term construction
plans for approved projects. Only VA informed us of plans to develop an
agencywide long-term capital plan.
Recommendations for Executive Action:
We recommend that the Secretary of Veterans Affairs continue to
emphasize the importance of efforts currently under way to develop a
departmentwide long-term agency capital plan that will reflect all VA
long-term capital investment decisions and results of the asset-
restructuring plans developed by VHA networks under the CARES process.
The Secretary should make the long-term plan available to OMB and
congressional decision makers.
We recommend that the Director of the Bureau of Prisons require the
development of a long-term agency capital plan in the form of a single,
central document that defines long-term investment decisions of the
bureau and includes a clear discussion of the basis for any long-term
performance gap leading to proposals for the construction of new prison
facilities. The Director should make the long-term plan available to
OMB and congressional decision makers.
We recommend that the Director of the National Park Service require
that the 5-year construction plan be expanded to include a narrative
description of the performance gap that a planned project would fulfill
and the analysis leading to its inclusion in the 5-year plan. The
Director should make the long-term plan available to congressional
decision makers.
Finally, we recommend that the Under Secretary for Oceans and
Atmosphere, Department of Commerce (NOAA Administrator), require the
development of a long-term agency capital plan that defines the capital
investment decisions for all of NOAA's line offices and program offices
and make it available to OMB and congressional decision makers.
Agency Comments:
In its written comments, reprinted in appendix VII, VA agreed with our
conclusions and concurred with our recommendation on the need to
develop a long-term capital plan. VA further described its efforts
under way to develop a plan with a 5-year strategy that will be
submitted to the Congress in the spring of 2004.
DOI did not directly address our conclusions and recommendations
regarding the Park Service. It provided a number of technical comments,
which have been incorporated in this report as appropriate. It also
noted that the 5-year construction plan includes project data sheets
(usually a one page narrative description of the project and its
benefits) that accompany the spreadsheet format when the plan is
submitted to DOI, OMB, and the Congress, although these documents were
never provided to us.
In its written comments, reprinted in appendix VIII, BOP agreed with
our recommendation to develop a long-term agency capital plan in the
form of a single, central document that defines its long-term
investment decisions. BOP further stated that it recognizes the value
of a single document and will develop a consolidated document
containing all of its current capital planning documents.
In its written comments, reprinted in appendix IX, NOAA agreed with our
recommendation to develop a long-term agency capital plan that defines
the capital investment decisions for all of NOAA. It further stated
that since our study was conducted, NOAA has completed 10-year ship and
aircraft platform requirements plans and has developed a Facilities
Master Plan.
[End of section]
Chapter 5: Agencies and Budget Decision Makers Agree That Capital
Planning Is Useful, but Implementation Challenges Exist:
Agencies have mixed perceptions of the usefulness of the Office of
Management and Budget (OMB) capital programming guidance, and the
degree to which it is used varies by agency. Some of our case study
agencies have successfully implemented many of the principles and
practices described in both OMB's Capital Programming Guide and our
Executive Guide. While some of the OMB guidance has presented a
challenge for case study agencies and the other agencies we surveyed,
agencies generally agree that it is helpful for developing an effective
capital decision-making process. OMB's expectations for agency use of
its capital guidance and its reliance on long-term capital planning
information varied by the OMB resource management office (RMO) staff
person. The OMB RMO staff for our case study agencies consider a number
of factors--but not long-term capital plans--when reviewing agency
budget requests for capital projects. Congressional staff indicated
that long-term capital planning information could be useful for
reviewing budget requests and for oversight.
Agencies Have Mixed Opinions about Usefulness of OMB Capital Guidance:
Agencies are aware of and use various aspects of OMB's Capital
Programming Guide. Although OMB strongly encourages but does not
require agencies to use the guide, its principles have been implemented
in agency capital planning programs. Many of the principles and
practices described in GAO's Executive Guide also have been
successfully used by case study agencies.
Since the use of OMB's Capital Programming Guide is not required, the
degree to which agencies use it varies, but officials say they
generally find the guide helpful in developing a process for effective
capital decision making. For example, the National Oceanic and
Atmospheric Administration's (NOAA) National Weather Service (NWS)
officials cite the establishment of a senior-level review board as
stemming from guidance in the Capital Programming Guide. Also, NWS
capital investment proposals must answer OMB's "Three Pesky Questions"
and must contain alternatives to address the performance gap. NWS's
written guidance says that projects that its review board approves will
culminate in or become part of its agency capital plan,[Footnote 39]
which mirrors the guide's planning phase steps.
The Department of Veterans Affairs (VA) formulated its current process
based on the principles and practices contained in the OMB guidance.
Its process includes multiple levels of review, including the use of an
executive review board, and generally mirrors the Capital Programming
Guide; however, VA has had limited success with developing an
agencywide long-term capital plan.
Bureau of Prisons (BOP) officials say they do not use the Capital
Programming Guide to assist their decision-making process. BOP
officials say the BOP process preceded the guide, but they believe the
process is consistent with OMB's guidance.
Aspects of the National Park Service's (Park Service) capital planning
process are based on recommendations from a 1998 National Academy of
Public Administration study rather than on the OMB Guide, but the
process is consistent with OMB's guidance. A key feature of the Park
Service process is the establishment of an external review group
required to review each line-item construction project proposal with an
estimated cost greater than $500,000.
Eight other agencies[Footnote 40] with high levels of capital spending
provided information on their experiences with OMB's Capital
Programming Guide. These agencies indicated that they were aware of the
guide and had implemented some of its principles. Different portions of
the guide were cited as useful by different agencies. For example, the
Indian Health Service said that many of the planning phase principles
in the guide are included in its Health Care Facilities Construction
Priority System. The U.S. Coast Guard said that it found the planning
phase guidance on formulating a strong strategic system of evaluating
and replacing capital assets most useful. The State Department said
that the guide's language regarding alignment with the mission function
of the federal government was helpful. The National Aeronautics and
Space Administration (NASA) said it has implemented the guide's
principles for selected information technology projects.
Agencies Identified Challenges in Implementing the Principles of OMB's
Capital Programming Guide:
Case study agencies have different views on how OMB's Capital
Programming Guide could be made more useful. While VA has modeled its
process on OMB guidance and industry best practices, including GAO's
Executive Guide, a VA National Cemetery Administration official
commented that OMB's Guide could be streamlined somewhat. He stated
that the process of developing extensive business cases VA uses during
its ranking and selection process is relatively burdensome. The
difficulty and amount of time spent preparing OMB's required Exhibit
300,[Footnote 41] Capital Asset Plan and Business Case for major
acquisitions, was also cited by some. The Park Service officials would
like the OMB Exhibit simplified. NOAA's NWS officials said that
although it spends considerable resources preparing Exhibits 300, the
process essentially mirrors the budget justification process. NWS also
said that the planning guidance is a challenge to implement because
NOAA is a scientific agency and it is sometimes difficult to quantify
benefits of certain projects.
The eight other agencies we surveyed also identified challenges to
implementing OMB's Capital Programming Guide principles. Like NOAA,
NASA said the guide did not seem to fit the research and development
nature of its programs because it seems more applicable to longer-term
operational acquisitions. Also like NOAA, the Tennessee Valley
Authority (TVA) said it has difficulty with quantifying benefits of
capital projects. Current processes require the project manager to
estimate, based on failure history or other means, the cost savings/
benefits (prorated based on probability) associated with a particular
project. These savings/benefits form the basis of cost/benefit analysis
and prioritization of projects. In addition, performance measures are
established for all projects to determine their level of success upon
completion. TVA said that identifying specific benefits to multiple
projects over several years is difficult, and it prefers to look at the
overall performance improvement due to all of the projects. Similarly,
the Coast Guard said it has found formulating meaningful strategic and
performance goals that can stand the test of time against changes in
executive and legislative branch priorities to be a challenge.
The challenges identified by the agencies stem from the variety of
missions and activities undertaken. A strong, analytical review process
that uses established criteria has allowed case study agencies to
adjust selected project proposals by changing the relative weights of
criteria to adjust for changing priorities. Such processes and weighted
criteria may help other agencies address the challenges in implementing
the principles of the guide that they identified. Linking capital
planning to strategic planning allows for a transparent and systematic
process in which all acquisitions support the vision and strategic
direction of the agency. A long-term capital plan is an important final
step in the capital programming process; however, as discussed in
chapter 4, agencies have had mixed success with developing plans.
Although we were not able to validate the contents of the long-term
plans to which the survey respondents referred, this long-term focus is
encouraging.
OMB and Congressional Perspectives on Long-term Capital Planning
Information and Views on Agency Processes:
OMB's Capital Programming Guide stresses the importance of linking
planning for capital asset investments with an agency's strategic plan.
The guide also says that planning for capital assets should take a
long-term view, possibly the same 5-year horizon as the agency
strategic plan. Further, the guide states that agencies are encouraged
to prepare long-term agency capital plans that define long-term agency
capital investment decisions. As reported in our Executive Guide,
leading organizations develop long-term capital plans and use them to
guide implementation of their investment decisions.
OMB staff were universally familiar with the Capital Programming Guide,
yet their expectations for agency use of the guide and their reliance
on long-term capital planning information varied across OMB RMOs. OMB
does not require long-term capital plans from agencies, but RMO staff
solicit and receive various documents for individual capital projects.
OMB staff said they place more emphasis on the Capital Asset Plan and
Business Case (i.e., Exhibit 300) when agencies request funding for
capital projects than on long-term agency capital plans. For example,
NOAA completes Exhibits 300 for all of its major systems acquisitions.
Similarly, the Park Service completes Exhibits 300 for major projects
over $10 million, for multiyear projects, or when the OMB RMO staff
requests them. BOP completes Exhibits 300 only for information
technology (IT) projects. VA completes Exhibits 300 for both IT and
non-IT projects and provides comprehensive business case packages for
construction projects. While Exhibits 300 and VA's business cases
contain multiyear cost estimates and project schedule information for
single major acquisitions, they are not long-term planning documents
and they do not place those acquisitions in the context of an agency's
long-term capital needs and investment decisions.
Each OMB RMO works slightly differently with its agency. For example,
VA's RMO works closely with VA on capital investment issues because of
recent changes to VA's capital planning process and the Capital Asset
Realignment Enhanced Services (CARES) process discussed earlier. The
results of the CARES studies are expected to drive future VHA non-IT
capital investments. When completed, OMB envisions that VA will submit
Exhibits 300 for non-IT capital assets that will be used as a
management tool and for long-term planning.
The Park Service RMO staff has also worked closely with the Park
Service and has been instrumental in revamping its capital planning
process. Until recently, the Park Service did not have a system to rank
projects or a uniform system to assess asset condition at national
parks.
BOP's RMO receives regular long-term planning information from BOP and
independently performs additional research to obtain more information.
BOP provides the RMO with weekly projections of inmate population
changes and current and future inmate capacity. BOP also provides the
RMO with the monthly status of construction reports and regular reports
on unobligated balances.
OMB RMO staff said they are pushing agencies to consider more
alternatives as part their capital planning processes. The BOP RMO
staff person would like to see more consideration of state facilities
as an alternative to new prison construction. She has urged BOP
specifically to pursue more contracting opportunities and the use of
any available excess capacity in state facilities. The Department of
Justice's fiscal year 2003 performance plan states that one of BOP's
strategies to reduce prison crowding is to aggressively analyze
existing private and other correctional facilities for sale, which may
offer a more timely and affordable alternative to new prison
construction. This is important because our analysis of BOP's capacity
planning data showed that in fiscal year 2002 about 17 percent of
inmates were assigned to non-BOP facilities, and that percentage is
expected to drop to about 14.5 percent by 2009. NOAA's RMO staff person
said he wants NOAA to consider more alternatives rather than simply
replacing assets, such as vessels. VA's RMO staff person said that
recent funding has been minimal for new construction because VA is
waiting until the results of the CARES studies are implemented, which
will allow VA to consider, among other things, sharing resources with
the Department of Defense health system.
OMB's role in agencies' internal processes is limited, but OMB does
have strong views on the products of agencies' processes. OMB does not
get involved in initial processes, in which agencies develop ranking
and selection criteria. VA's RMO staff person said that some
facilities' managers add facility upgrades to high-priority seismic
projects, but rather than reject these projects outright, OMB tries to
find a compromise solution. The Park Service, for example, makes its
trade-offs between visitor services and preservation of resources
independent of input from the OMB RMO, although OMB may inquire as to
the weight given to specific criteria in the selection process to
ensure they align with those of the administration. OMB staff are aware
that many of the Capital Programming Guide's planning principles have
been implemented by the agencies. However, one RMO staff person
cautioned that many of the documents agencies submit out of their
processes are of variable quality and that a distinction should be made
between the process and the quality of those documents.
OMB views its role as the integrator of specific capital project
proposals into the larger budget process. RMO staff said they consider
a number of other factors when recommending funding for agency capital
projects, including agency obligation rates, the overall agency budget
request, and agency strategic plans. They may also consider future
events that will affect capital needs, such as the completion of the
CARES process in the case of VA. OMB staff said they have an idea of
the long-term needs of agencies, but are reluctant to publish these
needs because it could imply a future financial commitment on the part
of the administration.
Some congressional staff indicated that it could be useful to have
long-term capital planning information to see what an entity viewed as
important. Further, they said that the process and analyses involved in
developing a plan are an effective way to ensure that well-informed
decisions are made at the agency level. They believe that sometimes the
lack of good information leads to situations in which other
considerations drive decisions. They agreed that comparisons of plans
over several years might provide a basis for questioning projects that
appear in budget requests without having been in the previous years'
long-term plans, and that having more information, such as that
contained in a long-term capital plan, also would be useful in
oversight.
State's 2003 Long-Range Overseas Buildings Plan (LROBP) states that
fiscal year 2003 budget decisions were based on the 2001 LROBP. The
letter from the Director of the Bureau of Overseas Buildings Operations
that accompanied the 2003 LROBP includes a statement that while the
LROBP is not a budget document, it is an important tool to inform the
budget decision-making process. The plan gives all stakeholders a road
map of where the department is headed.
Conclusion:
OMB's Capital Programming Guide is guidance and not a requirement for
federal agencies. However, agencies are aware of its principles and
practices, and some of the principles have been implemented in agency
capital decision-making processes. While the degree to which agencies
have used the guide varies and some agencies have had difficulty
implementing some principles, they generally find the guide useful.
Some agency difficulties stem from their varied missions and program
responsibilities.
OMB RMOs do not require agencies to submit long-term agency capital
plans, but instead rely on OMB Exhibit 300 submissions for individual
capital projects and other types of long-term planning documents. Some
RMOs have worked closely with their respective agencies on capital
investment issues and have been involved with recent changes to agency
processes. OMB RMO staff would like agencies to consider more
alternatives to the acquisition of new capital assets and would like to
see improvements in some of the documents submitted as a result of
agency processes. Although OMB RMOs receive some capital planning
documents during budget review, our work at leading private and state
and local entities showed that long-term capital plans, as well as all
the other leading practices, result in better capital decisions. Since
these practices embedded in the OMB Capital Programming Guide have
demonstrated benefits to leading organizations, they would prove
beneficial to federal agencies as well.
Congressional decision makers could make use of long-term capital plans
when reviewing agency budget requests. The plans also can provide the
basis for questioning agencies about their real property management, an
area we recently identified as high risk.[Footnote 42]
Recommendations for Executive Action:
We recommend that the Director of the Office of Management and Budget
require that agencies comply with the principles and practices of its
Capital Programming Guide. The Director should further require that
long-term agency capital plans developed pursuant to the guide be
submitted to OMB and provided to congressional decision makers.
We further recommend that the Director of the Office of Management and
Budget work with agencies to update the Capital Programming Guide to
address agency implementation challenges and increase its usefulness by
streamlining some of the requirements so they are not so burdensome to
agencies.
Agency Comments:
We requested comments on a draft of this report from the Director of
OMB or his designated representative. The Assistant General Counsel
said that OMB agreed with our recommendations. A few technical comments
were also provided and have been incorporated where appropriate.
In addition to the case study agencies, we requested comments on a
draft of this report from the U.S. Coast Guard, the Department of
State, the General Services Administration, the Indian Health Service,
the National Aeronautics and Space Administration, the Tennessee Valley
Authority, the Army Corps of Engineers, and the Bureau of Reclamation.
The Coast Guard disagreed with our recommendation that OMB should
require that long-term agency capital plans be submitted to OMB and
congressional decision makers. The Coast Guard believes it has met the
spirit of our recommendation by providing OMB and the Congress a 5-year
Capital Investment Plan. The Coast Guard also provided technical
comments, which have been incorporated where appropriate. TVA commented
that it should not be required to comply with OMB's Capital Programming
Guide because all of its capital requirements are funded from its
operating income. TVA also provided technical comments, which have been
incorporated as appropriate.
The Department of State, the General Services Administration, the Army
Corps of Engineers, and the Department of Interior on behalf of the
Bureau of Reclamation, had no comments on the draft report. None of the
other agencies disagreed with our conclusions and recommendations
related to long-term agency capital plans. The Indian Health Service
said the OMB Guide is very helpful, but because federal capital assets
have so many different purposes, making the guide a requirement as
written would change the way agencies developed strategic objectives--
which may be less driven by mission and more by OMB requirements. The
Indian Health Service also said if the guide is made a requirement, it
would be helpful to have an extended implementation schedule in order
to make changes to the long-term planning process.
[End of section]
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
The objectives of this study were to determine (1) the extent to which
selected agencies have implemented the capital programming principles
and concepts described in the planning phase of the Office of
Management and Budget's (OMB) Capital Programming Guide and have
followed the planning practices of leading organizations as described
in our Executive Guide when acquiring capital assets; (2) what, if any,
problems or issues selected agencies have encountered in implementing
the principles and concepts of these guides; and (3) the extent to
which OMB uses long-term capital planning information in reviewing
agency budget requests and supporting budget justifications to the
Congress.
This study focused on major capital assets acquired by the federal
government primarily to benefit the government's own operations. They
are defined as land, structures, equipment, and intellectual property
(including software) that are used by the federal government and have
an estimated useful life of 2 years or more. Capital assets exclude
items acquired for resale in the ordinary course of operations or held
for the purpose of physical consumption, such as operating materials
and supplies. Specific capital assets acquired by the case study
agencies in this study include land, buildings and other structures,
medical facilities and equipment, satellites, ships, aircraft, prison
facilities, and parklands. We limited the general scope of our work to
the planning processes used to acquire and manage investments other
than those in information technology, so we did not identify the
principles and practices specific to information technology
acquisitions. We looked only at the planning processes used to acquire
major capital assets as defined by the case study agencies, including
major modifications or enhancements to existing structures.
To select our case study agencies, we used character class data from
OMB's MAX[Footnote 43] system to identify agencies with substantial
capital expenditures over a 10-year period.
As described in chapter 1, agencies code their net outlays each year
according to various investment categories or character classes. The
OMB categories used to select our case study agencies are those for
direct spending on physical assets.[Footnote 44]
We first sorted the agencies from highest to lowest level of capital
outlays for fiscal year 2000. We then excluded the Department of
Defense military outlays and extracted the top 23 agencies whose
capital expenditures represented 87 percent of total nondefense capital
outlays for fiscal year 2000. From this list of 23, we excluded certain
agencies--such as the Federal Bureau of Investigation and the Federal
Aviation Administration--that could pose access difficulties due to
recent national security concerns. We also excluded agencies such as
the Department of Energy and the Environmental Protection Agency
because of their heavy dependence on contractors to manage their
capital. This resulted in a list of 12 agencies whose capital outlays
represented 54 percent of nondefense capital outlays for fiscal year
2000: the Department of Veterans Affairs (VA), the National Aeronautics
and Space Administration, the Indian Health Service, the Bureau of
Prisons (BOP), the Bureau of Reclamation, the U.S. Coast Guard, the
Tennessee Valley Authority, the National Oceanic and Atmospheric
Administration (NOAA), the Army Corps of Engineers, the National Park
Service (Park Service), the General Services Administration, and the
Department of State.
We examined the characteristics of the 12 agencies, including their
missions, the types of assets acquired, and recent related studies, and
again considered the timing of our study with respect to the ability to
gain access to agency information. We reviewed our past work and other
literature, organizational data available on the Internet, departmental
strategic and annual performance plans, and agency accountability
reports. We then selected four agencies for case studies: VA, BOP, the
Park Service, and NOAA. This final selection was based on the goal of
having diversity in agency missions, the types of assets acquired, and
the volume of capital spending.
To accomplish our objectives, we conducted extensive interviews with
officials at various levels of management, including planning, budget,
and facilities staff; construction, asset, and property management
staff; and operations and maintenance personnel. We also obtained and
reviewed various forms of agency documentation, including asset
planning, budget, and program documents; strategic plans; annual
performance plans; budget requests; and capital project proposals. We
made site visits to the Park Service's Denver Service Center
Construction Program Management Office, Intermountain Region (also
located in Denver, Colorado), and the Grand Canyon National Park.
Although the information we gathered and our work at Grand Canyon
National Park may not be representative of that of all Park Service
units, it provides insights into the capital planning processes of the
agency's large national parks.
Our work at VA focused primarily on the activities of the Veterans
Health Administration where the bulk of VA's capital assets are
acquired and used. However, we also reviewed documents and interviewed
staff of the National Cemetery Administration and Veterans Benefits
Administration. In addition, we interviewed and obtained documentation
from VA departmental office staff responsible for coordinating capital
asset planning for the entire department. Our work at NOAA focused on
the service lines and program offices that acquire and use the bulk of
NOAA's major capital assets--the National Weather Service, the National
Environmental Satellite, Data and Information Service, the Office of
Marine and Aviation Operations, and NOAA's facilities office.
The findings of our study and agency acquisition practices described in
this report are based on testimonial evidence and our review of
documentation provided by agency officials. We did not observe or
evaluate the processes in operation, nor did we evaluate the
effectiveness of the specific elements of agency processes or assess
the outcomes or decisions made as the result of agency planning
efforts. Our work documented the agency practices and whether they
conformed to OMB guidance and the practices of leading organizations.
Governmentwide capital spending data presented in chapter 1 were
obtained from the historical tables of the President's Budget for
Fiscal Year 2004 and adjusted for inflation using fiscal year 2002 as
the base year and the composite outlay deflators for direct capital.
Capital spending data in appendixes II through V were derived from
OMB's MAX system and adjusted for inflation using fiscal year 2002 as
the base year and the composite deflators for direct capital as
presented in the President's Budget for Fiscal Year 2004.
To add context to the information obtained from case study agencies, we
surveyed the remaining 8 agencies from our list of 12 to obtain their
views on the usefulness of OMB's capital guidance and to learn if they
had developed long-term agency capital plans. We sent a survey with
five structured questions to each of the remaining 8 agencies and
received responses from all of them. We did not verify agency responses
to the survey nor did we request from them or receive documentation
supporting their responses. The 8 survey agencies were the U.S. Coast
Guard, the Department of State, the General Services Administration,
the Indian Health Service, the National Aeronautics and Space
Administration, the Tennessee Valley Authority, the Army Corps of
Engineers, and the Bureau of Reclamation.
We met with each of the OMB resource management officers responsible
for our case study agencies to determine what long-term capital
planning data OMB receives and how they are used in reviewing budget
justifications. In addition, we interviewed staff of the House and
Senate Budget Committees about their interest in having long-term
capital planning data from agencies.
We held an exit briefing with each of the case study agencies to convey
our findings and request comments on a draft of this report. Our work
was conducted from August 2001 through September 2002 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix II: Department of Veterans Affairs:
Background/Organizational Structure:
The mission of the Department of Veterans Affairs (VA) is to serve
America's veterans and their families with dignity and compassion and
be their principal advocate in ensuring that they receive medical care,
benefits, social support, and lasting memorials. VA is a cabinet-level
agency with a budget of over $50 billion and is one of the world's
largest health care, medical research, and insurance benefits
organizations. VA is geographically dispersed and consists of four
components: the Veterans Health Administration (VHA), the Veterans
Benefits Administration (VBA), the National Cemetery Administration
(NCA), and the staff offices of VA's central office. VHA, VBA, and NCA
are separate administrations within VA and each operates as a distinct
entity. VHA--the largest VA administration--is divided into 21 Veterans
Integrated Service Networks (VISN), and NCA is divided into five
memorial service networks. There are more than 100 service markets
including markets with multiple VA facilities and markets with only one
VA facility. The overall veteran population is estimated to be about 25
million, and over 4 million of them received VHA health care services
in fiscal year 2002. VA's capital programs include major construction
(cost over $4 million), minor construction, nonrecurring maintenance,
medical equipment, enhanced-use leasing, enhanced-sharing (space and
facilities), energy investments, and information technology
initiatives. VA activities and its capital spending are influenced by
numerous veterans advocacy groups and other stakeholder groups, such as
medical schools and unions.
Types of Assets:
VA acquires many different types of capital assets. Its current
portfolio consists of VA-owned buildings and real estate, VA-leased
buildings, enhanced-use leases and sharing agreements, major equipment,
and information technology infrastructure and software. The assets
specifically include hospitals, clinics, cemeteries, office buildings,
fire departments, computers, and medical equipment. VA owns 162
hospitals, more than 130 nursing homes, over 650 outpatient clinics,
about 4,900 buildings, and about 15,600 acres of land. VA also leases
500 additional buildings.
VA construction is divided into major construction--for projects
costing $4 million or more--and minor construction. VA's recent
appropriations for major capital investments were for seismic projects,
which are required to comply with industry building standards. Projects
in VA's minor construction program are ranked and selected based on the
availability of funds within the total appropriation for minor
construction.
Capital Spending:
VHA acquires the bulk of VA's capital assets. As illustrated in figure
16, VA's capital outlays varied considerably throughout the 10-year
period but showed an increase in real terms from $1.4 billion in 1993
to $2.1 billion in 2002 (in 2002 dollars). The lowest levels of outlays
during this 10-year period occurred in fiscal years 1994 and 1999 when
capital outlays decreased in real terms to about $1 billion but then
rose dramatically in fiscal year 2000 to $1.8 billion.
Figure 16: VA Capital Outlays for Fiscal Years 1993 through 2002:
[See PDF for image]
[End of figure]
Capital Planning Process:
VA's capital planning process is formal and contains considerable
guidance and documentation. VA has made commendable efforts to revise
and improve its capital planning process in recent years although VA
does not have a long-term capital plan. Efforts to improve its process
include establishing a new department-level office to centralize the
review of capital project proposals and coordinate capital investments
for the department. Also, in recent years, VA has contracted for two
studies of its process and industry best practices; the current process
is based on the results of those studies and the guidance contained in
our Executive Guide. In addition, VA implemented most of the principles
contained in the Office of Management and Budget's (OMB) capital
planning guidance when it revamped its planning process. VA continues
to refine its capital planning efforts. Its process begins with and is
directed by departmental guidance and oversight--from the development
of capital project proposals to the ranking and selection of final
projects. The process begins with a call memorandum from VA
headquarters to its administrations and culminates with proposals
scored based on their compliance with weighted criteria developed by
central VA decision makers.
VA requires that proposed capital projects clearly document the needed
investment, although the three administrations accomplish this in
different ways. NCA maintains an asset inventory and information on the
condition of its assets that assists its proposal developers in
justifying the performance gap. NCA also completes a 5-year facilities
plan with project cost estimates for both major and minor projects.
Conversely, VHA facility and VISN employees do not have complete asset
inventories or readily available asset condition data that are
available VHA-wide. VHA conducts condition assessments of facilities
and maintains that information at the facility and VISN level. As
discussed in chapter 3, VHA initiated the Capital Asset Realignment for
Enhanced Services (CARES) program in October 2000 to assess veterans'
health care needs and identify planning initiatives to meet those needs
in the future. VHA future capital needs and program resources are
expected to be largely driven by the results of the CARES studies being
conducted for each VISN.
Capital project proposals must identify alternatives considered
throughout the planning process. The budget call memorandum issued by
VA headquarters requires proposal developers to first vet their
proposals through internal bureau processes--being mindful of
administration-level and department-level strategic goals. Following
departmental guidance, VHA, NCA, VBA, and staff offices are required to
consider a range of alternatives to address an identified performance
gap. At least four alternatives--leasing (and enhanced-use leasing);
status quo; new construction; and rehabilitation, repair, or expansion
of existing facilities must be considered. Once proposals pass
administration-level processes, VA departmental guidance requires its
facility staff to answer OMB's "Three Pesky Questions"[Footnote 45]
when developing capital investment project proposals.
VA's Analytical Hierarchy Process (AHP), discussed in chapter 4, forms
the foundation of its department-level review. VA's Office of Asset
Enterprise Management and Capital Investment Panel (CIP) conduct the
initial VA department-level review of capital project proposals
(business cases) submitted from the three primary administrations and
the staff offices to ensure that proposal packages pass a validity
assessment--ensuring that proposals are complete with the required
documents, that OMB's "Three Pesky Questions" are answered, and that
there is rationale for including it in the project scoring process.
Project proposals that pass the validity assessment are scored by CIP
on each of the subcriterion and main criterion in AHP before they are
forwarded to VA's Strategic Management Council (SMC) for validation.
CIP prepares a "Board Book" (a synopsis of proposals reviewed and
scored) for SMC's use during its review and deliberation.
Project proposal scores are then fed into a decision software package
called Expert Choice, which is based on AHP, that ranks the proposals
based on assigned weights of major criteria (established by SMC) and
subcriteria (established by CIP). The established criteria used by AHP
and Expert Choice are reviewed each year, updated, and realigned with
VA's mission and current administration's and Secretary's priorities.
The established criteria have evolved over time. According to a VA
official, the Return on Investment criterion was added at OMB's request
and the Special Emphasis criterion[Footnote 46] was congressionally
mandated. The ranked list of proposals generated by Expert Choice is
validated by SMC and forwarded to VA's Executive Board. The Executive
Board reviews the ranked results of AHP and determines which projects
are forwarded to OMB for funding in the President's Budget.
Challenges:
VA is confronted with diverse challenges in planning for and
maintaining the infrastructure needed to support its programs and
activities. VA owns a large number of very old buildings, pieces of
equipment, and facilities. VA officials expressed frustration that in
recent years, after it expended considerable resources to develop the
business cases and other paperwork, many of its project proposals were
not funded. VA officials also stated that VA lacks sufficient staff to
prepare business cases within the given time frames and that some staff
lack the technical expertise to develop project proposals properly. In
those cases, VA has had to rely on contractors to develop major capital
investment proposals.
VA also faces challenges that are not within its control. The United
States has a growing, aging veteran population. Veterans' health care
needs have changed over the last several decades, and VA must now
adjust its services and supporting facilities where the age of the
infrastructure is more than 50 years to meet those changing needs.
Female veterans are increasing in number but most inpatient or
outpatient facilities were not designed to accommodate their needs.
Additionally, VA is challenged by the geographical movement of the
nation's veteran population, resulting in some service markets lacking
sufficient facilities and others having facilities that are underused.
Prior GAO Work at VA:
We have previously reported[Footnote 47] that VA needs to modify its
infrastructure to support its increased reliance on outpatient health
care services. In August 1999, we recommended that VA develop asset-
restructuring plans for its health care markets to guide its planning
and management of health care assets. In response, VA established the
CARES program. We also have reported[Footnote 48] that VA and the
Department of Defense (DOD) should increase their joint activities to
maximize federal health care resources. In an effort to save federal
health care dollars, VA and DOD have sought ways to work jointly to
gain efficiencies. For example, local VA medical centers and military
treatment facilities have entered into agreements to exchange
inpatient, outpatient, and specialty care services, as well as support
services. Some local VA and DOD facilities have entered into joint
ventures--pooling resources to build a joint medical facility or
benefit from an existing facility. Additional related GAO reports are
listed at the end of this appendix and at the end of this report.
The Future of VA:
VA has made considerable progress toward improving its capital planning
process and developing a process that conforms to OMB guidance and
implements GAO capital planning recommendations. VA officials said they
are dedicated to further improving their process and ensuring
conformance to industry best practices. OMB staff said they are
actively assisting VA in achieving this desired outcome. Future capital
acquisitions and overall plans would depend on the results of the CARES
studies.
Some Related GAO Reports:
Federal Real Property: Vacant and Underutilized Properties at GSA, VA,
and USPS.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-747]
GAO-03-747. Washington, D.C.: August 19, 2003.
Department of Veterans Affairs: Key Management Challenges in Health
and Disability Programs.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-756T]
GAO-03-756T. Washington, D.C.: May 8, 2003.
VA Health Care: Improved Planning Needed for Management of Excess Real
Property.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-326]
GAO-03-326. Washington, D.C.: January 29, 2003.
Major Management Challenges and Program Risks: Department of Veterans
Affairs.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-110]
GAO-03-110. Washington, D.C.: January 2003.
Managing for Results: Efforts to Strengthen the Link Between Resources
and Results at the Veterans Health Administration.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-10]
GAO-03-10. Washington, D.C.: December 10, 2002.
VA Health Care: Challenges Facing VA in Developing an Asset
Realignment Process.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/T-HEHS-99- 173]
GAO/T-HEHS-99-173. Washington, D.C.: July 22, 1999.
Veterans' Affairs: Observations on Selected Features of the Proposed
Veterans' Millennium Health Care Act.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/T-HEHS-99-125]
GAO/T-HEHS-99-125. Washington, D.C.: May 19, 1999.
VA Health Care: Capital Asset Planning and Budgeting Need Improvement.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/T-HEHS-99-83]
GAO/T- HEHS-99-83. Washington, D.C.: March 10, 1999.
Major Management Challenges and Program Risks: Departments of Defense,
State, and Veterans Affairs.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/T-NSIAD/HEHS/
AIMD-99-104]
GAO/T-NSIAD/HEHS/AIMD-99-104. Washington, D.C.: February 1999.
VA Health Care for Women: Progress Made in Providing Services to Women
Veterans.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/HEHS-99-38]
GAO/HEHS-99-38. Washington, D.C.: January 29, 1999.
Veterans' Health Care: Challenges Facing VA's Evolving Role in Serving
Veterans.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/T-HEHS-98-194]
GAO/T-HEHS-98-194. Washington, D.C.: June 17, 1998.
VA Hospitals: Issues and Challenges for the Future.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/HEHS-98-32]
GAO/HEHS-98-32. Washington, D.C.: April 30, 1998.
VA Health Care: Closing a Chicago Hospital Would Save Millions and
Enhance Access to Services.
[Hyperlink, http://www.gao.gov/cgi-bin/ getrpt?GAO/HEHS-98-64]
GAO/HEHS-98-64. Washington, D.C.: April 16, 1998.
[End of section]
Appendix III: National Park Service:
Background/Organizational Structure:
The mission of the National Park Service (Park Service) is to preserve,
unimpaired, the natural and cultural resources and values of the
national park system for the enjoyment, education, and inspiration of
this and future generations. A bureau of the Department of the Interior
(DOI), the Park Service is organized into seven geographic regions and
388 national park units and covers 84 million acres of land. In 1995,
the Park Service regions were reorganized--making the Intermountain
Region the largest region covering eight states and 89 parks units.
Types of Assets:
Park Service assets include roads; trails; campgrounds; park visitor
centers; other buildings and houses; utility systems; marine and dock
structures; signs and information structures; and special features
assets, such as statues, memorials, and viewing structures. In every
category of these assets, there are both general and stewardship
facilities.[Footnote 49] These assets consist of over 18,000 permanent
structures, 8,000 miles of roads, 1,800 bridges and tunnels, 4,400
housing units, about 700 water and wastewater systems, 200 radio
systems, more than 400 dams, and 200 solid waste operations and include
numerous cultural and historic buildings and structures. There is
considerable diversity within the park system, with assets ranging from
large landscapes such as the Grand Canyon and Yosemite national parks,
to historic structures such as Philadelphia's Independence Hall, to the
granite faces of Mount Rushmore.
Grand Canyon National Park assets include visitor centers, maintenance
facilities, employee housing, roads and parking facilities, other
structures, and utility systems. The Grand Canyon Park is very much
like a small city, and is responsible for maintaining its own
infrastructure, utilities, employee housing, and services for residents
and visitors.
Capital Spending:
The bulk of Park Service capital spending is for major projects,
including new construction, rehabilitation, and maintenance projects,
costing $500,000 or more. Some capital spending is accomplished through
funding provided by the Park Service fee demonstration program, the
franchise fee program, and the road improvement program--in addition to
the line-item construction budget. Some national parks--generally the
larger parks--are given authority to collect fees from the public to
finance various capital projects. Such parks are referred to as 80
percent parks because they are allowed to retain 80 percent of the fees
collected. The remaining parks--referred to as 20 percent parks--do not
collect fees from the public but can request part of the remaining 20
percent of fees collected by the other parks for their capital
projects. The Park Service fee demonstration program began in 1997 and
has grown to where it now provides the Park Service approximately $100
million annually for new projects.
As illustrated in figure 17, the Park Service's capital outlays
fluctuated during the 10-year period 1993 through 2002 but grew in real
terms from $395 million in 1993 to $496 million in 2002. The lowest
level of capital outlays--$184 million--occurred in fiscal year 1999.
Figure 17: Park Service Capital Outlays for Fiscal Years 1993 through
2002:
[See PDF for image]
[End of figure]
Capital Planning Process:
The Park Service's capital planning and asset management process is
evolving. Some of its current practices--such as the establishment of
an external advisory group--stem from recommendations of a 1998
National Academy for Public Administration (NAPA) study of the agency's
line-item construction program. The NAPA report's recommendations
focused on the Park Service's Denver Service Center, which has a
primary role in implementing the service's construction program. The
advisory group meets concurrently with the Park Service's senior-level
internal review board, reports directly to the Park Service Director,
and reviews every facility project with an estimated cost greater than
$500,000. Also in 1998, spurred by congressional concerns and new
federal accounting standards for plant, property, and equipment, the
Park Service initiated the design of a new asset management process.
The cornerstone of the process is a facility management software system
that is intended to help the Park Service achieve better overall
management of its portfolio of capital assets.
Park Service capital planning begins at the park level with individual
park general management plans that cover a 10-to 20-year period and
contain elements of both a strategic plan and long-term capital plan.
Individual park-level strategic plans also are prepared that cover a 5-
year period and discuss the capital facilities needed to support park
strategic goals. These individual park-level strategic plans drive the
servicewide Park Service strategic plan. Current administration and
departmental priorities also influence capital projects initiated at
individual national parks. Current priorities are communicated to park
regions and individual parks via the annual budget call memorandum
issued by the Park Service's Washington Office. Examples of
administration priorities are life and safety and facility deferred
maintenance (discussed later)--which have been priorities for several
years--and, more recently, increased visitor safety after the terrorist
attacks of September 11, 2001.
Capital needs identified at individual parks are entered into and
tracked within the Park Service's servicewide Project Management
Information System (PMIS). PMIS is an automated system containing
thousands of identified capital projects. According to Park Service
officials, in fiscal year 2002, there were approximately 40,000
projects in the PMIS database. Identified needs are entered into the
system throughout the year and extracted in response to annual budget
calls for capital project proposals. Projects also may be entered into
PMIS for the first time in response to a budget call. According to Park
Service officials, PMIS is a list of identified needs containing a mix
of capital projects--some that have been initiated and others that have
not. These projects are all labeled as nonrecurring needs and are
identified in the system by a unique identification code. When parks
such as the Grand Canyon National Park respond to budget calls, the
PMIS code is used to inform decision makers of which projects the park
is proposing to initiate. Using the PMIS code, decision makers are then
able to access the specific project information, including project
justifications, link to agency goals, and estimated costs, and begin
the ranking and selection phase of the capital decision-making process.
To assist with identifying and documenting capital needs, some national
parks have asset inventories with varying levels of detail, but the
Park Service has only recently developed a servicewide asset inventory.
Also, the Park Service has just recently completed visual inspections
of assets in a large number of its parks; however, it does not have
servicewide comprehensive information on the condition of its assets.
When capital needs are identified, the Park Service considers a range
of alternatives to address them. Extensive alternatives analyses are
conducted during the development of a capital project proposal. The
type of capital project being considered and strategic goal being
accomplished drives the level and type of alternatives analyses
conducted. For capital projects involving life and safety or facility
deferred maintenance, there are limited alternatives available. When
appropriate, the Park Service considers renovating and/or upgrading an
existing facility or structure. At times, a park facility's specific
functional requirements may limit the type of facility or location
considered during the alternatives evaluation process. For example, the
Grand Canyon National Park's new visitor center must be open 24 hours a
day, 7 days per week, in all weather conditions. Therefore, it required
a design that would permit indoor and outdoor access to visitor
information, regardless of whether park personnel staff the facility.
Upgrading an existing facility would not fulfill this requirement. The
Park Service also considers partnering with other governments for land
acquisitions and has partnered with the private sector and nonprofit
entities to share the funding of costly projects. In addition, the Park
Service considers partnering with other federal agencies, sharing
equipment with the Forest Service, and leasing some assets where
appropriate.
Value analysis is an important component of the Park Service capital
planning and alternative evaluation processes. It is used to select the
best alternative during a project's initial planning and predesign
stages. Value analysis is completed for project proposals above the
$500,000 threshold, and the Park Service senior-level review board will
not review projects that lack such studies. From fiscal years 1997
through 2001, the number of value analysis studies increased from 17 to
113.
The Park Service's capital planning process includes an established
framework for ranking and selecting proposed capital investments--a
framework that consists of two senior-level review boards, an external
advisory group, and a formal system to rank projects using established
criteria. Capital project needs extracted from the PMIS database are
forwarded to the regional offices for initial evaluation and ranking
within their regions. These project proposals are subjected to
preliminary scoring on the regional level based on the same criteria
used for scoring at the national level later in the process. The
regional offices develop a ranked listing of proposals and forward
their priority lists to the Park Service's Construction Program
Management Office (CPM) for evaluation and ranking in the servicewide
program. CPM reviews the submitted proposals for completeness and
compliance with the line-item construction program eligibility criteria
before the proposals are submitted for further evaluation at the
national level.
Capital project proposals evaluated and ranked at the regional level
and those conforming to the initial CPM review are then formally
evaluated on a national level, park system-wide, using DOI criteria and
the Park Service Choosing By Advantage (CBA) process. CBA uses a series
of evaluation factors to compare proposed projects to one another. The
five factors recently used in CBA were (1) provide safe visits and
working conditions; (2) protect cultural and natural resources; (3)
improve visitor enjoyment through better services and educational and
recreational opportunities; (4) improve operational efficiency,
reliability, and sustainability; and (5) provide cost-effective,
environmentally responsible, and otherwise beneficial development for
the national park system. CBA involves a relative comparison of every
project proposal by each factor and produces an individual project
ranking. The project with the best score on any particular factor sets
the scale for that factor, and the other projects are scored relative
to that best score. Each project's score is divided by its cost to
arrive at an advantage-to-cost ratio. A multidisciplinary assessment
team led by CPM is assembled to manage the CBA process and apply the
evaluation factors to each project.
Recently, an additional step was added to the Park Service process that
required proposed projects be grouped into three bands using DOI
criteria that emphasize the Secretary of the Interior's and the
President's priority areas. Within the project bands created by the DOI
criteria, projects were then ranked using the CBA process.
Capital projects receive a number of high-level reviews as part of the
decision-making process. The senior-level Park Service Development
Advisory Board (DAB) reviews proposed capital projects vetted and
ranked by the CBA process. DAB is composed of four Park Service
associate directors, three regional directors, and two senior executive
service park superintendents. It has two responsibilities: (1) policy,
which involves reviewing the proposed 5-year construction program plan
and thus recommending projects for inclusion in the construction
program, and (2) reviewing individual projects at the end of predesign
development. With some exceptions, DAB reviews every project with
estimated costs greater than $500,000. Without the approval of DAB,
project managers cannot proceed with design efforts or initiate
construction activities. DAB reviews approximately 120 projects per
year. Once projects proposed for inclusion in the 5-year plan clear
DAB, they are forwarded to the National Leadership Council (NLC). NLC
is composed of the Park Service Director, deputy directors, associate
directors, and regional directors and meets bimonthly to consult on
major policy and program issues confronting the Park Service. Projects
proposed for inclusion in the 5-year plan are reviewed by NLC, and its
members provide any comments or concerns about the ranking and rating
of projects directly to the Park Service Director for consideration
before final approval of the 5-year plan. Projects reviewed by DAB that
have completed predesign activities are advanced directly to the Park
Service Director for approval.
In addition, the Park Service's external advisory group was established
to provide an independent review of Park Service construction projects-
-assessing line-item construction projects for suitability and cost-
effectiveness. The five-member group is composed of private citizens
appointed by the Park Service Director. Members of the group have
experience in areas such as engineering, architecture, historic
preservation, and budgeting. The group meets concurrently with DAB to
review projects that have completed predesign activities and provides
its findings directly to the Park Service Director.
Capital project proposals rated through CBA and approved at the
national level form the Park Service 5-year construction plan. The 5-
year construction plan is the only Park Service-wide capital asset
planning document. It provides a cost schedule and rating for each
line-item construction project.
Challenges:
The Park Service is confronted with a number of challenges in planning
for and maintaining its assets and infrastructure. The Park Service
owns and is responsible for maintaining numerous prehistoric and
historic facilities and structures. Historic preservation is expensive,
and the number of properties designated as historic is increasing.
Officials commented that the cost to repair and renovate historic
properties is usually greater than the cost to tear down and rebuild
them. As discussed below, the Park Service deferred maintenance backlog
has long been a challenge due to inadequate data and a low priority for
funding maintenance needs. The maintenance backlog is expected to
continue to challenge the agency.
The Park Service also faces challenges that are outside of its control.
Visitation rates at national parks have grown substantially over the
past 20 years--from about 220 million visitors per year in 1980 to
almost 290 million visitors in recent years. This growth has required
the expansion of Park Service facilities and presented a significant
challenge to many of the parks' transportations systems. Since
September 2001, the Park Service has given increased attention to park
visitor safety and security, which presents an additional challenge.
Prior GAO Work at Park Service:
We have reported[Footnote 50] that the Park Service frequently did not
have baseline information about the condition of its natural and
cultural resources, including historic structures, making it difficult
for park managers to clearly ascertain the condition of resources and
whether resources are deteriorating, improving, or staying the same. At
the same time, many park resources face significant threats, including
air pollution, vandalism, and nearby land development. According to the
Park Service, steps have been taken to improve the situation.
Specifically, the Congress is funding the Park Service's Natural
Resources Inventory and Monitoring Program to a level sufficient to
develop needed information on basic natural resource inventories. Also,
the Park Service has begun efforts to preserve many prehistoric and
historic sites.
We have also reported that the Park Service, along with other bureaus
within DOI, is challenged with maintaining its facilities and
infrastructure and is not meeting its safety responsibilities in many
of its structures. These assets include some deteriorating facilities
for which repair and maintenance have been a low priority for funding.
These unfunded repair and maintenance needs are referred to as the
deferred maintenance backlog. In February 2002, DOI estimated that the
Park Service deferred maintenance backlog was from $4.08 billion to
$6.8 billion. However, we also reported that the Park Service has yet
to assess or define the scope of it maintenance needs accurately.
Factors contributing to this situation included the agency's lack of an
accurate inventory of the assets that need to be maintained and
inaccurate data on the condition of these assets. In May 2000, we
reported that the structural fire safety efforts in several national
parks were not effective.[Footnote 51] The gaps in the Park Service's
efforts include inadequate employee training and fire inspections and-
-for many buildings--inadequate or nonexistent fire detection or
suppression systems. Additional related GAO reports are listed at the
end of this appendix and at the end of this report.
The Future of the Park Service:
As discussed earlier, the Park Service is in the process of
implementing an asset management process that is intended to enable the
agency to have a reliable inventory of its assets and a process for
documenting and reporting on the condition of each asset. The
cornerstone of the new process is the Facility Management Software
System that also will provide a systemwide methodology for estimating
deferred maintenance costs. Like most other federal agencies, the Park
Service will be affected by increased attention to homeland security.
This may require Park Service management to balance competing
priorities while accomplishing its strategic goals and, at the same
time, providing increased park visitor safety and security.
Some Related GAO Reports:
National Park Service: Status of Agency Efforts to Address Maintenance
Backlog.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-992T]
GAO-03-992T. Washington, D.C.: July 8, 2003.
National Park Service: Status of Efforts to Develop Better Deferred
Maintenance Data.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-02-568R]
GAO-02-568R. Washington, D.C.: April 12, 2002.
Recreation Fees: Management Improvements Can Help the Demonstration
Program Enhance Visitor Services.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-02-10]
GAO-02-10. Washington, D.C.: November 26, 2001.
Park Service: Visitor Center Project Costs, Size, and Functions Vary
Widely.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-781]
GAO-01-781. Washington, D.C.: July 24, 2001.
Park Service: Need to Address Management Problems That Plague the
Concessions Program.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-00-70]
GAO/RCED-00-70. Washington, D.C.: March 31, 2000.
National Park Service: Efforts to Link Resources to Results Suggest
Insights for Other Agencies.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-98-113]
GAO/AIMD-98-113. Washington, D.C.: April 10, 1998.
Park Service: Managing for Results Could Strengthen Accountability.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-97-125]
GAO/RCED-97-125. Washington, D.C.: April 10, 1997.
National Parks: Park Service Needs Better Information to Preserve and
Protect Resources.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/T-RCED-97-76]
GAO/T-RCED-97-76. Washington, D.C.: February 27, 1997.
[End of section]
Appendix IV: National Oceanic and Atmospheric Administration:
Background/Organizational Structure:
The mission of the National Oceanic and Atmospheric Administration
(NOAA) is to describe and predict changes in the Earth's environment
and to conserve and wisely manage the nation's coastal and marine
resources. NOAA is a bureau within the Department of Commerce; it
accomplishes its mission through five major line offices and numerous
program units. The five line offices are the National Weather Service
(NWS); the National Environmental Satellite, Data and Information
Service (NESDIS); the National Marine Fisheries Service (NMFS); the
National Ocean Service (NOS); and the Office of Oceanic and Atmospheric
Research (OAR). Key among the program units is the Office of Marine and
Aviation Operations (OMAO). Some line offices and program units
function as users of other NOAA line-office products (e.g., NESDIS
produces satellites for NWS use in weather prediction).
NOAA's line and program offices have diverse missions and are
geographically diffuse. NWS provides weather, hydrologic, and climate
forecasts and warnings for the United States, its territories, adjacent
waters, and ocean areas and has 122 weather forecasting offices in six
regions, including Alaska and the Pacific Islands of Hawaii and Guam.
NESDIS acquires and manages the nation's operational environmental
satellites, operates the four national data centers, provides data and
information services, and conducts related research. NMFS scientists
study the life history, stock, size, and ecology of economically
important fisheries. NOS develops the national foundation for coastal
and ocean science, management, response, restoration, and navigation.
NOAA's research, conducted through OAR, is the driving force behind
NOAA's environmental products and services intended to protect life and
property and to promote sustainable economic growth. OMAO operates a
wide variety of specialized aircraft and ships used in NOAA's
environmental and scientific missions.
Types of Assets:
NOAA acquires and uses various types of assets to accomplish its
mission, including satellites, radars, ground systems, aircraft, ships
and other water vessels, computers, and facilities. Many of NOAA's
assets are specialized and unique to NOAA's mission.
Capital Spending:
NOAA's capital investments are funded through a single budget account,
the procurement, acquisition, and construction (PAC) account. The PAC
account was created 5 years ago with the goal of smoothing the capital
investment funding among the various line and program offices to avoid
large year-to-year fluctuations in funding requests. As illustrated in
figure 18, NOAA's capital outlays grew dramatically in real terms over
the 10-year period 1993 through 2002, from $51 million in 1993 to $787
million in 2002--a more than 15-fold increase. While outlays fluctuated
some over the 1993 through 1996 period, capital spending grew
substantially in the following years and almost tripled from $213
million in 1997 to $617 million in 1999. This increase was primarily
due to funding the modernization of NOAA weather facilities and
systems, satellite systems, the first planned fisheries research
vessel, and new laboratories and science centers. While outlays dropped
some in fiscal year 2000 to $536 million, they significantly increased
in the last 2 years.
Figure 18: NOAA Capital Outlays for Fiscal Years 1993 through 2002:
[See PDF for image]
[End of figure]
Capital Planning Process:
The capital planning processes within each of NOAA's line and program
offices are driven by their unique activities and specific needs as
outlined in their current individual strategic plans. For example,
NWS's current focus is the continued routine maintenance of recently
modernized assets. In the 1980s, NWS began a nationwide modernization
program to upgrade weather-observing systems, such as satellites and
radars; to design and develop advanced computer workstations for
forecasters; and to reorganize its field office structure. Its current
focus is to maintain these upgrades. Other examples are OMAO's
replacement of its aging fleet of ships and NESDIS's planned
procurement of satellites near the end of this decade.
At NOAA, both a NOAA-level and individual line and program office
strategic plans are prepared. All of them support the vision and long-
term goals of Commerce as shown by clearly articulated
interrelationships between NOAA and Commerce goals. NOAA's mission is
supported by seven interrelated goals--each goal is separate but the
goals have crosscutting relationships that enable NOAA and Commerce to
accomplish their goals and objectives. NOAA's line offices implement
the strategies and conduct the work to achieve these goals and
objectives. The line and program office strategic plans discuss the
capital needed to support each office's program, goals, and objectives.
For example, NWS's strategic plan supports one of two primary missions
of NOAA and contains three of the seven NOAA goals. Capital investments
needed to achieve these goals include weather prediction and receiving
systems. NESDIS prepares a 5-year capital plan to guide the acquisition
of its satellite ground systems--to bridge its performance gap in
support of the strategic goals established in its strategic plan.
OMAO's strategic plan describes its current vessels and aircraft
capabilities, and identifies the minimum number of these assets needed
for OMAO to operate safely.
The process for assessing NOAA's capital asset needs can also vary by
line and program office. For example, OMAO current capital needs are
based on its current strategic plan. The plan describes the need to
acquire three additional fisheries ships to meet program expectations
over the next decade and the impending critical need for replacement
aircraft capability. OMAO formed an integrated project team (IPT)
consisting of mission and program managers and directed the team to
develop a ship proposal that would satisfy most fisheries needs with
one common design. NESDIS also formed an IPT to develop its newest
satellite system--coordinating activities within NOAA and the other
agencies participating in its development.
To assist with identifying and assessing capital needs, NOAA maintains
separate inventories of its real and personal property. NOAA
headquarters and Commerce's administrative support centers maintain a
single inventory of real property assets, which includes improvements
to land, buildings, and building systems. NOAA officials can generate
reports from the real property inventory that show basic information
such as acquisition cost and the size and age of facilities. The
inventory also contains information on NOAA leased and General Services
Administration (GSA) assigned property. NOAA does not maintain asset
condition data in the real property inventory or in any other location.
Asset condition assessments were conducted in the past, but have been
suspended until the existing identified asset deficiencies are
addressed. NOAA's personal property inventory contains all other
capital assets, such as satellites, antennas, and computers. NOAA has a
formal process for keeping its personal property inventory up to date.
Commerce and NOAA are in the process of deploying a Web-based
facilities management system that will track information similar to the
present real property inventory but is expected to be easier to use.
According to a NOAA official, the real property inventory is difficult
to use and decision makers do not regularly consult it.
NOAA considers many alternatives to address an identified performance
gap--both at the line and program office level and at the
administration level. For example, OMAO has purchased excess Navy ships
and converted them for its needs. OMAO also considers alternatives to
purchasing new capital assets as one means of fulfilling one of the
goals in its strategic plan--the goal of pursuing partnerships with the
public and private sectors. According to officials, in fiscal year
2002, NOAA expected to acquire approximately 3,800 operating days of
ship support through outsourcing with the private sector and the
University-National Oceanographic Laboratory System. NWS officials
said that some of its operations colocate or share resources with other
federal agencies as an alternative to acquiring or constructing new
facilities. NWS requires that project proposals forwarded to the
Finance and Investment Review Board (FIRB), its internal review board,
document alternatives considered, the cost and benefits of the best
alternative, and how the various alternatives differ. In order to
receive the highest score in the FIRB review, the proposal must include
an explanation of alternatives considered.
NOAA budget formulation guidance for project proposals requires line
offices to consider alternatives. The guidance requires proposals to
consider outsourcing (contracting) and partnerships with other agencies
or with other line offices before review by administration-level review
boards. The NOAA Facilities Office may also require construction
proposals to identify alternatives, although the Facilities Office's
involvement is not routine. If the Facilities Office does become
involved, it is most often during the initial phase of a proposal
development. During this review, the Facilities Office has a standard
set of alternatives each proposal must consider--purchasing existing
assets, new construction, leasing, and the use of university
facilities.
NOAA's line and program offices have individual ranking processes that
precede the review by the administration-level review boards. For
example, NWS formed FIRB in fiscal year 2000 to establish a formal
process for management review and ranking of capital investment
proposals in support of strategic goals. The FIRB members review and
evaluate capital investment proposal justifications, score capital
investments according to established criteria, and rank the approved
investments. The criteria used include alternatives considered,
contribution to improved agency performance, and contribution to NWS
mission. FIRB evaluates the approved portfolio of capital investments
for inclusion in the NWS budget submission. NESDIS managers solicit
project proposals based on NOAA's annual goals. Brief conceptual
proposals are initially reviewed and ranked. Proposal developers then
prepare more detailed proposals, and the selected proposals are
forwarded to the NOAA boards for review.
NOAA's six administration-level review boards--working groups
representing NOAA's strategic themes--consider administration
priorities and goals when reviewing proposals ranked by line and
program offices. Each project proposal submitted to the themes' review
board must be justified in terms of how it supports the theme. The
review boards are confronted with funding requests for both new and
ongoing projects and conduct their own internal reviews for ranking and
selection prior to NOAA management review. According to a NOAA
official, the Infrastructure, Maintenance, Safety and Human Capital
theme used the following set of criteria to rank submitted project
proposals: (1) contribution to agency mission, (2) cost development of
the proposal, (3) productivity improvement, (4) operational efficiency,
(5) improving efficiency, and (6) the likelihood of success. Similar
criteria permeated the other themes' processes. Once this internal
review is complete, review boards recommend the highest ranked project
proposals to NOAA's senior management and the NOAA budget office for
inclusion in the Commerce budget submission to the Office of Management
and Budget (OMB).
NOAA does not prepare a long-term capital asset plan, but long-term
planning information exists at the line-office level. The budget office
does not require long-term plans from the line offices but says it has
information about ongoing projects and proposed projects that were not
funded within the past 2 years. Two line offices have longer-range
documents--OMAO completes an "unofficial" (unpublished) long-range
plan and NESDIS prepares a 5-year satellite ground systems plan. The
OMAO plan is a 10-year chart of tentative dates and cost estimates of
major repairs and replacements of NOAA ships. The NESDIS plan
identifies the resources it requires to operate and maintain satellite
ground systems to monitor and control on-orbit operational satellites,
and to acquire, process, and distribute environmental data to users. It
outlines the ground resources NESDIS needs to fulfill its gap and
follows the principles of OMB's guidance. NWS officials said that the
NWS plan for capital investments was reflected in its fiscal year 2003
and 2004 budget requests.
Challenges:
NOAA is tasked with serving the nation's continuing need for weather
and water information. On average, hurricanes, tornadoes, and other
severe weather events cause $11 billion in damages per year, and early
warning systems can reduce such damage. Weather is directly linked to
public safety, and about one-third of the U.S. economy (about $3
trillion) is weather sensitive. With so much at stake, NOAA's role in
observing, forecasting, and warning of environmental events is
expanding, and the agency is challenged by the need to increase its
number of new multiuse observation systems.
Also, safe and efficient transportation systems are crucial economic
lifelines for the nation. The Department of Transportation's U.S.
Marine Transportation System ships over 95 percent of the tonnage and
more than 20 percent by value of the nation's foreign trade through
America's ports. Waterborne cargo contributes more than $740 billion to
the U.S. gross domestic product and creates employment for over 13
million citizens. As U.S. dependence on surface and air transportation
grows over the next 20 years and with the projected doubling of
maritime trade, better navigation and weather information will be
critical to saving lives, cargo, and the environment. NOAA's
information products and services are essential to the safe and
efficient transport of goods and people at sea, in the air, and on
land.
Prior GAO Work at NOAA:
We have reported in the past on the difficulties NOAA's NWS encountered
with its modernization program to upgrade its weather observing
systems, satellites, and radars. We made numerous recommendations, and
NWS has acted to implement them. For example, in response to our
recommendations, NWS established an overall systems architecture,
improved the availability of its Next Generation Weather Radar, and
enhanced its Advanced Weather Interactive Processing System software
development process. Since 2001, NWS has made plans to further improve
weather forecasts and warnings through upgrades to its supercomputer
and future enhancements to weather satellites.[Footnote 52]
Also, GAO has urged NOAA to aggressively pursue cost-effective
alternatives to its in-house fleet of ships. According to NOAA, it has
taken steps to improve the cost efficiency of its fleet, such as
removing some ships from service, bringing new and converted Navy ships
into service, and negotiating contracts outside NOAA to meet some of
its needs.[Footnote 53] Additional related GAO reports are listed at
the end of this appendix and at the end of this report.
The Future of NOAA:
As discussed earlier, NOAA is making improvements to its ability to
track and control its capital assets. Commerce is deploying a Web-based
inventory system that is currently operating parallel to NOAA's present
property inventory. The new system is expected to be easier to update
and use than the present inventory. It was scheduled to be fully
operational in fiscal year 2003. A new asset condition assessment
process was also scheduled to begin in fiscal year 2003. A NOAA working
group is currently reviewing the strategy to initiate a new round of
condition assessments. NOAA wants to improve its condition assessment
process because previous asset condition data aged very quickly and
were of limited use.
NOAA's draft strategic plan for fiscal years 2003 through 2008 states
that its core missions of environmental prediction and management are
manifested in more than 80 capabilities that support America's efforts
to prepare for and, if necessary, respond to terrorist attacks. Among
the best known are NOAA's hazardous materials spill response, rapid on-
site weather forecasts to support emergency operations, and civil
emergency alert relay through NOAA Weather Radio. NOAA is also prepared
to provide its other resources--ships, aircraft, global observation
systems, and professional law enforcement officers--to serve the nation
when the need arises. Through these core capabilities and strategic
investments, NOAA plans to expand its support for homeland security by
coordinating delivery of its products and services to federal, state,
and local emergency managers and responders, and strengthening its own
infrastructure to protect agency personnel, facilities, and information
services.
Some Related GAO Reports:
Polar-Orbiting Environmental Satellites: Status, Plans, and Future Data
Management Challenges.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-02-684T]
GAO-02-684T. Washington, D.C.: July 24, 2002.
Department of Commerce: Status of Achieving Key Outcomes and Addressing
Major Management Challenges.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-793]
GAO-01-793. Washington, D.C.: June 15, 2001.
National Oceanic and Atmospheric Administration: National Weather
Service Modernization and Weather Satellite Program.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/T-AIMD-00-86]
GAO/T-AIMD-00-86. Washington, D.C.: March 29, 2000.
[End of section]
Appendix V: Bureau of Prisons:
Background/Organizational Structure:
The mission of the Bureau of Prisons (BOP), an agency of the Department
of Justice (DOJ), is to protect society by confining persons convicted
of federal crimes and sentenced to incarceration in the controlled
environments of prisons and community-based facilities that are safe,
humane, and appropriately secure. The agency consists of six
geographical regions with 102 facilities. In addition to housing the
federal inmate population, BOP provides inmates with basic services,
such as food, clothing, and health care and an array of educational,
vocational, and other programs. The agency fulfills its incarceration
function using a range of BOP-operated institutions with varying
security levels as well as privately managed institutions, state and
local facilities, community corrections centers, and home confinement.
While BOP shares federal detention responsibilities with the United
States Marshals Service (USMS) and the Bureau of Immigration and
Customs Enforcement (ICE) (formerly the Immigration and Naturalization
Service (INS)), incarceration is the sole responsibility of BOP. In
2002, BOP was responsible for more than 160,000 federal inmates--of
which 27,000, or about 17 percent, were housed in non-BOP-operated
facilities.
Types of Assets:
BOP's capital assets consist of land, prison facilities, other
buildings and structures, major equipment, and motor vehicles.
Capital Spending:
While new construction represents the bulk of BOP's capital outlays,
modernization and repair of existing facilities are a significant part
of BOP's annual Building and Facilities appropriation. New construction
outlays include costs associated with the acquisition, construction,
and leasing of prison facilities. Modernization and repair outlays
include costs associated with rehabilitation and renovation of
buildings, necessary facility modifications to accommodate new
correctional programs, rehabilitation and replacement of utility
systems, and repair projects at existing facilities.
As illustrated in figure 19, BOP's capital outlays fluctuated from $400
million to $500 million in real terms from 1993 to 2001, with a sharp
drop to $34 million in fiscal year 1998 and then a sharp increase to
$795 million in 2002. The sharp decrease in 1998 is somewhat misleading
since it reflects reimbursements from nonfederal sources that offset
BOP's gross capital outlays for that year.
Figure 19: BOP Capital Outlays for Fiscal Years 1993 through 2002:
[See PDF for image]
[End of figure]
Capital Planning Process:
BOP's capital acquisitions support a DOJ strategic goal--to protect
society by providing for the safe, secure, and humane confinement of
persons in federal custody. This goal is supported by a number of
objectives, including ensuring sufficient prison capacity and
maintaining prison operations. BOP strategic planning documents provide
details about the ongoing projects and new facilities planned to
achieve and maintain sufficient prison capacity. BOP budget call
guidance requires that capital project proposals describe how each
project will support the agency's goals and objectives. The guidance
also reinforces the Attorney General's current priority objectives. For
the fiscal year 2004 budget submission, guidance from BOP's facilities
management unit required that major project requests--projects with
estimated costs of $300,000 or more--be documented in the requesting
institution's strategic plan.
The BOP Director issues an annual spring budget request memorandum to
all BOP regional and assistant directors. The fiscal year 2003
memorandum asked that units develop separate program funding requests
for initiatives to be included in the annual budget submission to DOJ.
Individual units were required to prepare a separate "program request
form" for each initiative, which identified and explained the goals to
be achieved, estimated costs, justified the need, and identified
performance indicators to measure whether the goals are achieved. The
program request forms were to be forwarded to the Budget Development
Branch at BOP headquarters and were to include funding requests for
both capital projects and operational expenses. Capital project
responses are included in the Buildings and Facilities budget request.
In addition to the annual budget call, capital project needs are
identified and requested through a long-term capacity planning process
and routine inspections of existing facilities. BOP's new construction
program follows a centralized long-term capacity planning process that
uses information from its Office of Research and its Capacity Planning
staff. Prison inmate population levels and institution capacity are
tracked daily, and reports are regularly generated by facility,
geographic region, and inmate security level. The research office also
generates projections and reports of future inmate population levels in
the same categories using a microsimulation computer program and data
from the Administrative Office of the U.S. Courts. These projections
are continually monitored and regularly updated, and weekly reports of
institution overcrowding are generated using a measure of rated
capacity. New construction project requests are forwarded to BOP's
Design and Construction Branch for review.
Through regular inspections of existing facilities, BOP institutions
identify essential rehabilitation, renovation, and repair needs and
request modernization and repair (M&R) funding. Legal mandates, such as
the Architectural Barriers Act, which requires access for the
physically challenged, also can result in requests for M&R funding.
Institution staff develop lists of identified M&R capital projects and
forward the lists to their respective regional offices. More extensive
M&R projects are identified through contractor surveys of older BOP
facilities. Institutions over 50 years old are comprehensively surveyed
for needed renovations and to determine whether the cost to renovate
exceeds the replacement cost of such facilities. The six regional
offices evaluate and consolidate the project lists, including those
identified by contractor surveys, and forward them to BOP's Facility
Management Branch for consideration.
BOP capital planners and decision makers consider numerous alternatives
to address an identified performance gap. They use information from
BOP's nationwide inventory system to assist them in considering some
options. One DOJ objective is to ensure sufficient and cost-effective
prison capacity, and BOP's strategy to accomplish this includes
contracts with private sector providers of correctional services, state
and local cooperative agreements, and alternatives to traditional
inmate confinement where appropriate. BOP also considers the expansion
of existing facilities and the acquisition and conversion of nonprison
facilities to prison use.
Having an accurate and up-to-date inventory of institutions and other
assets helps with evaluating the expanded use of existing correctional
facilities. BOP maintains both a Real Property Management System to
track all BOP-owned land, buildings, other structures, and related
improvements, and a Personal Property Management System to track all
BOP-owned personal property (e.g., vehicles, computers, and other
equipment). The real property inventory tracks all buildings,
structures, and related improvements with an acquisition value of
$100,000 or more and tracks all BOP-owned land regardless of its value.
Depreciation is calculated monthly over a 30-year period for buildings
and a 20-year period for structures. BOP-owned personal property
depreciation is calculated monthly over a 10-year period for assets
with an acquisition value of $5,000 or more, with the exception of
vehicles, which are depreciated over a 6-to10-year period, depending on
the vehicle type.
BOP has two planning committees that are involved in the capital
decision-making process. The Capacity Planning Committee consists of
senior-executive-level staff from the Administration; Correctional
Programs; and Information, Policy, and Public Affairs Divisions and
subject matter experts, such as chiefs of capacity planning, design and
construction, and budget development from the Administration Division.
The Capacity Planning Committee proposes new construction projects. The
Long-range Planning Committee consists of members from the
Administration Division who are senior executive staff, senior
managers, and branch chiefs. The Long-range Planning Committee ranks
the new construction project proposals made by the Capacity Planning
Committee and makes specific funding recommendations to the BOP
Director. New construction proposals are ranked based on need, funding,
and the speed at which facilities can be constructed. The criteria for
ranking M&R project proposals assign life and safety the highest
priority followed by accessibility projects, building and institution
infrastructure projects, projects for facilities over 50 years old, and
general repair. The resulting new construction and M&R proposals are
combined to form the BOP annual Buildings and Facilities budget
request.
BOP has three long-term capital planning documents for major capital
investments: (1) the Capacity Plan, (2) the Building and Facilities
Status of Construction report, and (3) a report of the rated capacity
of facilities that have received some funding by anticipated year of
activation. The Capacity Plan provides inmate population projections
and rates of prison overcrowding, categorized by institution security
level, whether the facilities are BOP-operated or contractor
facilities, and whether the inmates are male or female, typically for a
9-year period. The data contained in the Capacity Plan are updated
weekly and reports can be generated from the system that produces them
at any time. The Office of Management and Budget (OMB) receives the
weekly update of this report, and a version is included in the annual
budget submission to the Congress. The Buildings and Facilities Status
of Construction report provides the status of construction for major
projects that have received some level of funding, including both new
construction and institution expansion projects. The report provides
amounts funded by fiscal year, total project cost estimates, funding
obligated to date, estimated facility activation date, and a brief
status of the project. This report is updated monthly and is provided
to OMB and to the Congress as part of the annual budget submission. The
report of rated capacity of planned facilities that have received some
level of funding shows facility capacity levels for planned projects
for a 7-year period. The report shows the level of capacity added for
each fiscal year a group of facilities are activated and is also a part
of the annual budget submission to the Congress.
Challenges:
BOP is confronted with a number of challenges in ensuring sufficient
and cost-effective prison capacity and maintaining prison operations.
The major determinants of the need for prison capacity are outside of
BOP's control. The agency is required to continually monitor not only
its current and long-term projected inmate population, but the
composition of its population as well--the security level required and
inmate gender. The federal inmate population has increased sixfold over
the past 20 years, from approximately 25,000 inmates in 1980 to more
than 160,000 inmates in 2002. Since BOP is required to provide the
level of secure inmate confinement consistent with the needs of the
inmate population, the number of correctional institutions has
increased from 41 to 102.
BOP's inmate population is directly influenced by new laws, mandatory
sentencing guidelines, and increases in law enforcement efforts. The
agency must respond to quickly changing requirements and the need to
balance the protection of American society with providing for the safe
and humane confinement of persons in federal custody. For example, as
of December 2001, more than 8,000 felons sentenced in the District of
Columbia were transferred to BOP custody. This required the rapid
construction of additional facilities to attain sufficient capacity.
While managing the unique problems that accompany the long-term custody
and care of federal inmates, BOP is also a major provider of detention
bed space and operates several metropolitan detention centers. Inmates
awaiting sentencing and persons charged with federal crimes awaiting
trial are primarily the responsibility of USMS; however, USMS does not
operate detention centers and obtains some of its needed bed space from
BOP. Also, while ICE (formerly INS) has its own detention centers, some
of its detainees are housed at BOP facilities.
Prior GAO Work at BOP:
In 1995, we reported on challenges to the federal prison
system.[Footnote 54]
GAO reported that new criminal justice policies
and demographic changes in the prison population have created
challenges for BOP as well as state and local correctional systems.
These challenges were caused by increasing numbers of prison inmates,
inmates serving longer sentences, demands on the health care systems
from a more diverse population, and increased financial burdens on
government systems to pay for correctional costs. We concluded that the
principal barrier to BOP accomplishing its objective of confining
offenders in appropriate facilities and environments would be the
ability to afford to provide the level of service it intended.
In 1996, we reported on studies comparing the operational costs and/or
quality of service between public and private prisons.[Footnote 55] The
report noted that the comparisons of operational costs indicated little
difference and/or mixed results and the comparisons of quality were
unclear. In December 1999, we reported on issues important or unique to
managing the female inmate populations.[Footnote 56] The report noted
that since 1980, the female prison population had increased over 500
percent and that while some progress had been made, the U.S.
correctional systems continued to face challenges in addressing the
unique needs of female inmates. Specific needs included child-related
responsibilities and gender-specific health care. Additional related
reports are listed at the end of this appendix and at the end of this
report.
The Future of BOP:
While the terrorist attacks of September 11, 2001, have redefined the
mission of DOJ, it is unclear what direct impact the nation's war on
terrorism will have on the responsibilities and activities of BOP. The
DOJ Office of Inspector General (OIG) included Detention Space and
Infrastructure in its December 2001 list of top 10 management
challenges facing DOJ. This has been cited as a material weakness since
1989 because both USMS and ICE are experiencing a rapidly growing need
for detention space. The OIG also addressed the possibility that the
DOJ role in the war on terrorism will create an even greater need for
detention space.
Some Related GAO Reports:
Bureau of Prisons: Recent Concerns and Challenges for the Future.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/T-GGD-95-177]
GAO/T-GGD-95-177. Washington, D.C.: June 8, 1995.
Private and Public Prisons: Studies Comparing Operational Costs and/or
Quality of Service.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-96-158]
GAO/GGD-96-158. Washington, D.C.: August 16, 1996.
Women in Prison: Issues and Challenges Confronting U.S. Correctional
Systems.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-00-22]
GAO/GGD-00-22. Washington, D.C.: December 28, 1999.
Federal Prison Expansion: Overcrowding Reduced but Inmate Population
Growth May Raise Issue Again.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-94-48]
GAO/GGD-94-48. Washington, D.C.: December 14, 1993.
Prison Costs: Opportunities Exist to Lower the Cost of Building Federal
Prisons.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-92-3]
GAO/GGD-92-3. Washington, D.C.: October 25, 1991.
Private Prisons: Cost Savings and BOP's Statutory Authority Need to Be
Resolved.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/GGD-91-21]
GAO/GGD-91-21. Washington, D.C.: February 7, 1991.
[End of section]
Appendix VI: OMB Guidance:
Office of Management and Budget (OMB) Circular A-11, Parts 7 and 8,
outlines agency budget formulation and execution requirements for
capital asset investments. Part 7, titled Planning, Budgeting,
Acquisition, and Management of Capital Assets, requires agencies to
establish and maintain capital programming processes that link mission
needs and capital assets effectively and efficiently. To facilitate
this process, Part 7 requires that agencies submit capital asset plans
and business cases, also known as an OMB Exhibit 300, that are products
of agency capital programming and investment processes. Agencies must
submit a capital asset plan for each new and ongoing major project,
system, or acquisition and operational (steady-state) asset included in
their capital asset portfolios. For major information technology
projects, agencies must also complete OMB Exhibit 53, pursuant to
Circular A-11, section 53.
OMB Circular A-11, Part 8, Managing Federal Assets, is the first step
in the current administration's recent initiative to improve agency
asset management. Beginning with their fiscal year 2004 budget
submissions, agencies were to conduct self-assessments of their ability
to manage their physical and financial assets. To improve asset
management, Part 8 states that agencies should have physical asset
management processes that (1) adequately track real property assets
through their respective life cycles, (2) determine whether assets are
being utilized properly and identify assets suitable for disposal, and
(3) provide accurate asset valuation information for financial
statement purposes.
Executive Order 12893, Principles for Federal Infrastructure
Investments,[Footnote 57] requires agencies to conduct systematic
analyses of the expected benefits and costs of infrastructure
investments--including both quantitative and qualitative measures,
encourages agencies to conduct periodic reviews of the operation and
maintenance of existing facilities, and requires agencies to seek
private sector participation in infrastructure investment and
management.
[End of section]
Appendix VII: Comments from the Department of Veterans Affairs:
THE SECRETARY OF VETERANS AFFAIRS:
WASHINGTON
November 3, 2003:
Ms. Susan J. Irving:
Director, Federal Budget Analysis
U. S. General Accounting Office
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Irving:
The Department of Veterans Affairs (VA) has reviewed your draft report,
BUDGET ISSUES: Agency Implementation of Capital Planning Principles Is
Mixed (GAO-04-138) and agrees with your conclusions. VA concurs with
the recommendation to continue the development of the Capital Asset
Management System (CAMS) and incorporate facility condition assessment
information when making capital investment decisions. VA also concurs
on the need to develop a long-term capital plan.
The timing of your report is significant since the Department is
undergoing the most comprehensive review of its capital inventory, and
long-term needs in VA's history-CARES (Capital Asset Realignment for
Enhanced Services). VA will use the results of the CARES process as
the primary driver of the Department's long-term capital strategy.
Streamlining business practices, optimizing performance, and
encouraging implementation of innovative asset management initiatives
are hallmarks of VA's approach to capital asset management. VA is
committed to a comprehensive, corporate-level approach to capital asset
management. This approach helps VA link asset decisions closely with
its strategic goals, elevates awareness of Departmental assets, and
employs performance management techniques to monitor asset performance
on a regular basis. At the core of VA's capital asset business strategy
is value management-striving to return value to VA's business and
managing existing value for greater return. The building of a
comprehensive portfolio system requires a phased, methodical approach
for implementation with a clearly defined structure, goals, measures,
and benchmarks.
Finally, VA again proposed legislation for FY 2004 that would allow the
Department to dispose, sell, transfer and/or exchange excess properties
and retain the proceeds by establishing a Capital Asset Fund. By
allowing the Department to retain proceeds, the fund provides the
incentive needed for VA to better manage its underutilized or excess
real property by improving the capability to dispose of unneeded
property.
The enclosure specifically addresses GAO's recommendations and VA's
plans to implement them. In addition, the Department has provided under
separate cover a set of needed technical corrections. Thank you for the
opportunity to comment on your draft report. If you wish to discuss
this further, please contact Mr. James Sullivan at (202) 273-5254.
Sincerely yours,
Anthony J. Principi
Signed by Anthony J. Principi:
Enclosure:
Department of Veterans Affairs' Comments to GAO Draft Report BUDGET
ISSUES: Agency Implementation of Capital Planning Principles Is Mixed
(GAO-04-138):
GAO recommends that the Secretary of Veterans Affairs continue to
emphasize and support the timely development and implementation of the
agencywide Capital Asset Management System currently underway. Decision
Makers should use the asset inventory and condition information as an
integral part of VA's capital planning process when both determining a
need for a new capital asset and considering options for filling a
performance gap.
Concur - VA is implementing a life cycle portfolio management approach
and is developing a Departmentwide Capital Asset Management System
(CAMS) in order to facilitate this effort. When fully functional in
summer 2004, the data system will provide for life-cycle portfolio
management across the enterprise and integrated business programs. Each
significant investment will be tracked through its entire lifecycle
from formulation, to execution, through steady state, and finally to
disposal. CAMS will capture, track, and evaluate capital assets and
provide for measurement and accountability of VA's investments. CAMS
will provide us with a capital asset inventory, which addresses the
issue GAO raised. A significant first step in this effort was VA's
Office of Asset Enterprise Management's (OAEM) development of an online
Exhibit 300 application for use by all VA organizations. Using this
application, VA is able to better track investments and produce
scorecards that show, for example, how specific investments tie to the
Department's strategic and performance goals. In addition, all assets
tracked in CAMS will be monitored and evaluated against a set of
performance measures (including capital assets that are underutilized
and/or vacant) and capital goals to maximize highest return on the
dollar to the taxpayer. The following portfolio goals have been
established:
* Decrease operational costs:
* Reduce energy utilization:
* Decrease underutilized capacity:
* Increase intro/inter-agency and community-based sharing:
* Increase revenue opportunities:
* Maximize highest and best use:
* Safeguard assets:
Department of Veterans Affairs' Comments to GAO Draft Report BUDGET
ISSUES: Agency Implementation of Capital Planning Principles Is Mixed
(GAO-04-138) (Continued):
GAO also recommends that the Secretary of Veterans Affairs continue to
emphasize the importance of efforts currently under way to develop a
departmentwide long-term agency capital plan that will reflect all VA
long-term capital investment decisions and results of the asset-
restructuring plans developed by VHA networks under the CARES process.
The Secretary should make the long-term plan available to OMB and
congressional decision makers.
Concur - The Department is developing a capital asset inventory and a
long-term capital plan that is aligned with VA's current strategic
plan. The long-term capital plan will be based on the decision the
Secretary will make on the independent recommendations of the Capital
Asset Realignment for Enhanced Services (CARES) Commission, which is
expected to present its report to the Secretary by November 30, 2003.
As the GAO report correctly states, VA has produced annual capital
plans in previous years but did not do so for FY 2003. VA did not
produce a long-term capital plan since CARES results were only
available for VISN 12, and CARES will be the primary driver of VA's
long-term capital strategy. VA is developing its long-term capital plan
with a 5-year strategy that will provide a description of how
Departmentwide capital decisions are made, provide an inventory of
planned and current capital investments (by administration and asset
type), and illustrate how these assets align to the Department's
overall strategic goals. The 5-year plan will also include condition
assessments of VA facilities. In addition, it will address
congressional report language requirements as follows: "[e]stablish a
5-year strategic plan for capital asset management, construction and
improvement of all VA's infrastructure needs including, but not limited
to, major and minor construction, research facilities, safety and
seismic improvements and improved access to veterans." The long-term
capital plan will be submitted to congress in spring 2004, after the
Secretary makes a final CARES decision at the end of calendar year
2003.
[End of section]
Appendix VIII: Comments from the Bureau of Prisons:
U.S. Department of Justice
Federal Bureau of Prisons:
Office of the Director
Washington, DC 10534:
November 4, 2003:
Christine E. Bonham, Assistant Director
Strategic Issues:
General Accounting Office
Washington, DC 20548:
Dear Ms. Bonham:
The Bureau of Prisons (BOP) appreciates the opportunity to formally
respond to the General Accounting office's draft report entitled Budget
Issues: Agency Implementation of Capital Planning Principles Is Mixed.
We have completed our review of the information reflected in the
report and offer the following comments.
Recommendation 1: The Director of the Federal Bureau of Prisons should
require that studies be undertaken to determine the relationship
between different levels of overcrowding and problems with managing
prison populations, and that such studies be used in determining needs.
Response: Over the years, a number of corrections authorities have
conducted studies on the issue of overcrowding in prisons to assess the
relationship between crowding and a number of inmate issues, such as
safety and security, quality of health care, use and wear of physical
facilities, etc.
The analysis and findings available from existing studies and our own
ongoing operational experience are routinely factored into the Bureau's
population and capacity planning process. Through this process, the
Bureau works, within overall budgetary and other constraints, to
provide adequate bedspace capacity with the goal of bringing systemwide
crowding to manageable levels. Consequently, there appears to be little
utility in undertaking additional studies.
We will continue to monitor and evaluate the trends and should the data
indicate a need to make adjustments to our plan, we will act
accordingly.
Recommendation 2: We recommend that the Director of the Bureau of
Prisons require the development of a long-term agency capital plan in
the form o^ a single, central document that defines long-term
investment decisions of the Bureau and includes a clear discussion of
the basis for any long-term performance gap leading to proposals for
the construction of new prison facilities. The Director should make the
long-term plan available to OMB and congressional decision makers.
Response: The BOP agrees with the recommendation and recognizes the
value of one central document. As indicated in the GAO report, the BOP
has three well-developed documents and two regular standing planning
committees which address long-term capacity, including proposals for
the construction of new prison facilities. The reports are the Capacity
Plan, the Buildings and Facilities Status of Construction exhibit, and
the Rated Capacity Report.
The Capacity Plan categorizes, by institution security level, the
inmate population projections and rates of prison crowding. The
Buildings and Facilities Status of Construction exhibit provides the
level of funding and project construction status for both new
construction and existing institution expansion projects. The Rated
Capacity Report reflects planned institution capacity changes at all
security levels and the resulting impact on crowding.
The two planning committees involved in the capital decision making
process are the Capacity Planning Committee (CPC) and the Long-Range
Planning Committee. Both committees consist of senior managers and
branch chiefs from the Administration Division; plus, the CPC is
composed of senior staff from the Administration, Correctional Programs
and the Information, Policy and Public Affairs Divisions. All capacity-
related changes are vetted through the CPC including proposals for new
construction projects. The Long-Range Planning Committee ranks the new
construction projects proposed by the CPC and makes specific funding
recommendations to the Director of the BOP. In addition, the BOP'S
Population Management Subcommittee provides input to the overall
capital planning effort by monitoring population balance at
institutions throughout the system and reviewing proposals for
increasing capacity.
Further, the Director issues an annual spring budget request memorandum
to all regional and assistant directors. Their responses, which include
capital projects and operational expense funding requests, are
forwarded to the BOP'S Central Office Budget Development Branch and are
taken into consideration in putting together the agency's annual
budget request and OMB exhibit 300B submissions. Capital project
requests are included in the Buildings and Facilities portion of the
budget request.
Due to the responsibilities and initiatives carried out by other
criminal justice components, the BOP cannot control the size of the
total federal inmate population. We do have an effective centralized
long-term capacity planning process with a goal of ensuring sufficient
institution capacity while maintaining prison crowding at safe and
secure targeted levels. The same capacity plan shows that we expect
systemwide crowding to be approximately 30 percent through fiscal year
2010. Based upon the experience of the BOP'S senior executive staff,
evolving science of correctional management, improvements in
correctional management techniques, and the overall design of our
facilities, the BOP believes this systemwide crowding percentage is
manageable.
To adhere to the GAO request of a single capital plan document, the BOP
will develop a consolidated document containing all current capital
planning documents: the Capacity Plan, the Buildings and Facilities
Status of Construction exhibit, the Rated Capacity Report, and the BOP
annual budget request. These documents, when viewed together, contain
the criteria and necessary documentation to support the capital
investment proposals the Department of Justice leadership chooses to
forward to OMB.
If you have any questions regarding this response, please contact
Michael W. Garrett, Senior Deputy Assistant Director, Program Review
Division, at (202) 616-2099.
Harley G. Lappin
Director:
Signed for Harley G. Lappin:
cc: Vickie L. Sloan, Director Audit Liaison Office, JMD:
[End of section]
Appendix IX: Comments from the National Oceanic and Atmospheric
Administration:
UNITED STATES DEPARTMENT OF COMMERCE
The Under Secretary for Oceans and Atmosphere
Washington, D.C. 20230:
NOV 3 2003:
Ms. Susan J. Irving:
Director, Federal Budget Analysis
United States General Accounting Office
Washington, D.C. 20548:
Dear Ms. Irving:
Thank you for the opportunity to review and comment on the General
Accounting Office draft report entitled, Budget Issues: "Agency
Implementation of Capital Planning Principles Is Mixed," GAO-04-138. I
am pleased to enclose the National Oceanic and Atmospheric
Administration's comments on the draft report.
These comments were prepared in accordance with the Office of
Management and Budget Circular A-50.
Sincerely,
Conrad C. Lautenbacher, Jr.
Vice Admiral, U.S. Navy (Ret.)
Under Secretary of Commerce for Oceans and Atmosphere:
Signed by Conrad C. Lautenbacher, Jr.:
Enclosure:
National Oceanic and Atmospheric Administration's (NOAA) Comments on
the Draft GAO Report entitled, "Budget Issues: "Agency Implementation
of Capital Planning Principles Is Mixed" (GAO-04-138/September 2003):
NOAA Response to GAO Recommendations:
Recommendation 1: "Finally, we recommend that the Under Secretary for
Oceans and Atmosphere, Department of Commerce (NOAA Administrator)
resume regularly scheduled asset condition assessments for real
property assets and develop a standard process for assessing the
condition of personal property assets.":
NOAA Response: NOAA agrees with this recommendation. NOAH recognizes
the value and importance of having a standardized process for regular
condition assessments of real and personal property assets. In fiscal
year 2003, NOAA implemented condition assessment surveys on its real
property assets. In accordance with the NOAA Facilities Master Plan,
facility assessments will be conducted on an annual basis. In addition,
NOAA has implemented a program that requires minimum annual condition
and maintenance assessments of all capitalized personal property. NOAA
will continue to pursue actions to improve and standardize the
condition assessment processes for our capital investments.
Recommendation 2: "Finally, we recommend that the Under Secretary for
Oceans and Atmosphere, Department of Commerce (NOAA Administrator)
require the development of a long-term agency capital plan that defines
the capital investment decisions for all of NOAA's line offices and
program offices and make it available to the Office of Management and
Budget (OMB) and congressional decision makers.":
NOAA Response: NOAA agrees with this recommendation. NOAA acknowledges
that the majority of capital planning occurs at the line office level
and that they are responsible for ensuring that capital planning
decisions align and support the goals of the NOAA Strategic Plan. NOAA
has taken several steps over the last year to improve the Agency's
overall planning and decision-making process, including the
establishment of a more consistent planning, programming, and budgeting
system and establishment of executive level decision-making boards with
senior representatives from across the NOAA line and staff offices. In
addition, since GAO completed the study, NOAA has completed ten-year
ship and aircraft platform requirement plans which include ship and
aircraft related capital plans for the next ten years, as well as the
development of a Facilities Master Plan. These plans have been
submitted to the Department of Commerce and OMB for review; and in the
case of the Facilities Master Plan, submitted to House and Senate
Appropriations Committees. We are committed to continuing to make
improvements in our agency-wide long-term capital planning process,
including the development of standardized selection criteria for
capital investments to ensure alignment with NOAA strategic mission
objectives.
[End of section]
Appendix X: GAO Contact and Staff Acknowledgments:
GAO Contact:
Christine Bonham, (202) 512-9576:
Acknowledgments:
In addition to the contact person named above, Trina Lewis made
significant contributions to this report. Brendan Culley and Brodi
Fontenot also made key contributions to this report.
End of section]
Related GAO Products:
High-Risk Series: An Update.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-119]
GAO-03-119. Washington, D.C.: January 2003.
High-Risk Series: Federal Real Property.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-122]
GAO-03-122. Washington, D.C.: January 2003.
Budget Issues: Incremental Funding of Capital Asset Acquisitions.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-01-432R]
GAO-01-432R. Washington, D.C.: February 26, 2001.
Executive Guide: Leading Practices in Capital Decision-Making.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-99-32]
GAO/AIMD-99-32. Washington, D.C.: December 1998.
Budget Issues: Budgeting for Capital.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/T-AIMD-98-99]
GAO/T-AIMD-98-99. Washington, D.C.: March 6, 1998.
Deferred Maintenance Reporting: Challenges to Implementation.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-98-42]
GAO/AIMD-98-42. Washington, D.C.: January 30, 1998.
Budget Issues: Budgeting for Federal Capital.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-97-5]
GAO/AIMD-97-5. Washington, D.C.: November 12, 1996.
(450065):
FOOTNOTES
[1] Real property assets consist of land; facilities; and anything
constructed on, growing on, or attached to land. Personal property is
all property other than real property. It includes items such as ships,
aircraft, satellites, and computers.
[2] Office of Management and Budget, Capital Programming Guide, Version
1.0, Supplement to Office of Management and Budget Circular A-11, Part
3: Planning, Budgeting, and Acquisition of Capital Assets, 1997. (Note:
Since its issuance, the guide is now found as a supplement to Circular
A-11, Part 7, Planning, Budgeting, Acquisition, and Management of
Capital Assets).
[3] U.S. General Accounting Office, Executive Guide: Leading Practices
in Capital Decision-Making, GAO/AIMD-99-32 (Washington, D.C.: December
1998).
[4] In this report, we use the terms "agency" and "agencies" and the
phrase "case study agencies" to describe VA, Park Service, BOP, and
NOAA.
[5] OMB requires agencies to code their net outlays each year according
to various investment categories or character classes. Investment
outlays are defined by OMB as spending that is intended primarily to
yield benefits in the future--whether to the nation as a whole or to
the federal government. Investments may be in the form of either direct
federal spending or grants to state and local governments, and may be
for either tangible or intangible assets. The investment categories
that encompass capital assets used by the federal government are those
for direct spending on physical assets. These categories are
Construction and Rehabilitation (1312 and 1314), Major Equipment (1322
and 1324), and Purchases and Sales of Land and Structures (1340). Major
Equipment includes capital purchases of information technology but
excludes the support services related to information technology
purchases.
[6] U.S. General Accounting Office, Budget Issues: Budgeting for
Federal Capital, GAO/AIMD-97-5 (Washington, D.C: Nov. 12, 1996).
[7] Historical data were derived from GAO's Budget Database. The
database contains data taken from OMB's MAX System--the computerized
system used to collect and process information needed to prepare the
President's Budget.
[8] U.S. General Accounting Office, High-Risk Series: Federal Real
Property, GAO-03-122 (Washington, D.C.: January 2003).
[9] We participated in the development of OMB's Capital Programming
Guide and have provided OMB with examples of leading organization
capital practices for inclusion in a subsequent version of the guide.
[10] OMB's Capital Programming Guide defines life-cycle costs of an
asset as all direct and indirect initial costs, including planning and
other costs of procurement; all periodic or continuing costs of
operation and maintenance; and costs of decommissioning and disposal.
[11] For example, a requirement to meet a program's goal of providing a
warning about hurricanes within a certain number of hours may indicate
a new satellite with the latest technology as a solution. However, if
the program's ground stations use obsolete technology, merely improving
the satellite's functional capacity will not enable the program
performance to reach its full potential.
[12] Title XI of the Balanced Budget Act of 1997, Pub. L. No. 105-33,
August 5, 1997.
[13] VHA is geographically divided into 21 VISNs, and National Cemetery
Administration is divided into five memorial service networks.
[14] U.S. General Accounting Office, VA Health Care: Capital Asset
Planning and Budgeting Need Improvement, GAO/T-HEHS-99-83 (Washington,
D.C.: Mar. 10, 1999).
[15] The hearing was held on July 22, 1999, by the Subcommittee on
Oversight and Investigations, Committee on Veterans' Affairs, House of
Representatives.
[16] U.S. General Accounting Office, VA Health Care: Improved Planning
Needed for Management of Excess Real Property, GAO-03-326 (Washington,
D.C.: Jan. 29, 2003).
[17] U.S. General Accounting Office, Federal Real Property: Vacant and
Underutilized Properties at GSA, VA, and USPS, GAO-03-747 (Washington,
D.C.: Aug. 19, 2003).
[18] Swing-space is vacant space that is available temporarily.
[19] The fee-demo program asks visitors to pay recreation user fees
while in some parks, in order to engage in certain activities requiring
additional services or facilities or to mitigate impacts. The types of
fees range from campground to boat launching fees.
[20] U.S. General Accounting Office, National Park Service: Status of
Efforts to Develop Better Deferred Maintenance Data, GAO-02-568R
(Washington, D.C.: Apr. 12, 2002).
[21] U.S. General Accounting Office, National Park Service: Status of
Agency Efforts to Address Its Maintenance Backlog, GAO-03-992T
(Washington, D.C.: July 8, 2003).
[22] Exhibit 300 is required by OMB. Agencies must submit a capital
asset plan for each new and ongoing major project, system, acquisition,
and operational (steady-state) asset included in their capital asset
portfolios.
[23] Real property assets consist of land; facilities; and anything
constructed on, growing on, or attached to land. Personal property is
all property other than real property. It includes items such as ships,
aircraft, satellites, and computers.
[24] Twenty-five percent double bunking means 25 percent of inmate
cells have twice the number of inmates they were designed to
accommodate. The percentages of double bunking at the various security
levels are based on BOP's own judgment as to the appropriate mix of
single-versus double-bunked cells. In the past, BOP, in determining
rated capacity, had generally followed a single-bunking standard
advanced by the American Correctional Association (ACA) but has
transitioned to a double-bunking standard to accommodate overcrowding.
ACA considers single bunking a nonmandatory standard and will accredit
institutions that use double bunking as long as its other mandatory
standards are followed.
[25] U.S. Department of Justice, FY 2001 Performance Report and FY 2002
Revised Final, FY 2003 Performance Plan.
[26] See ch. 1.
[27] 38 U.S.C. § 8161-8169.
[28] Title XI of the Balanced Budget Act of 1997, Pub. L. No. 105-33,
August 5, 1997.
[29] U.S. Department of Justice.
[30] Value analysis, also known as value engineering and value
planning, is a value management methodology that refers to a systematic
and orderly problem-solving approach that emphasizes improved value,
quality, and performance. It identifies essential functions necessary
to accomplish an activity, analyzes those functions, and generates
alternatives to secure them at their greatest worth, on a life-cycle
benefit-to-cost basis. (See OMB's Capital Programming Guide.)
[31] National Environmental Policy Act of 1969 § 102 (codified at 42
U.S.C. 4332).
[32] H.R. 811 was introduced in the 107THCongress as the Veterans
Hospital Emergency Repair Act. If enacted, it would have authorized VA
to update its facilities through various construction projects. The
bill included specific criteria for such projects, and VA added the
H.R. 811 criteria to its factors for ranking and selecting proposed
projects.
[33] CIP consists of six members, each from a major departmental unit,
who are either senior managers or executives.
[34] SMC is a deputy undersecretary-and assistant secretary-level
committee chaired by VA's Deputy Secretary.
[35] A "Board Book" is a synopsis of project proposals reviewed and
scored by CIP. It contains an executive summary of each proposed
project with information such as project scope, cost estimates
(acquisition and life-cycle costs), schedule, how the project scored on
each criteria, and panel recommendations, as well as technical and
policy issues needing SMC attention.
[36] "One-VA customer service" refers to VA's goal of being more
customer focused and functioning as a seamless organization to deliver
seamless "one stop" service to its customers.
[37] The CBA factors were developed by CPM and adopted by DAB, the
National Leadership Council, and the Park Service Director.
[38] The agencies are the U.S. Coast Guard, the Department of State,
the General Services Administration, the Indian Health Service, the
National Aeronautics and Space Administration, the Tennessee Valley
Authority, and the Bureau of Reclamation.
[39] As discussed in ch. 4, NWS does not have a formal long-term
capital plan.
[40] The agencies are the U.S. Coast Guard, the Department of State,
the General Services Administration, the Indian Health Service, the
National Aeronautics and Space Administration, the Tennessee Valley
Authority, the Army Corps of Engineers, and the Bureau of Reclamation.
[41] Exhibit 300 is required by OMB. Agencies must submit a capital
asset plan for each major new and ongoing project, system, or
acquisition and operational (steady-state) asset included in an
agency's capital asset portfolio.
[42] U.S. General Accounting Office, High-Risk Series: Federal Real
Property, GAO-03-122 (Washington, D.C.: January 2003).
[43] MAX is the computer system used to collect and process information
needed to prepare the President's Budget.
[44] These categories are Construction and Rehabilitation (1312 and
1314), Major Equipment (1322 and 1324), and Purchases and Sales of Land
and Structures (1340). Major Equipment includes capital purchases of
information technology but excludes the support services related to
information technology purchases.
[45] The three questions are (1) Does the investment in a major capital
asset support core/priority mission functions that need to be performed
by the federal government? (2) Does the investment need to be
undertaken by the requesting agency because no alternative private
sector or governmental source can better support the function? and (3)
Does the investment support work processes that have been simplified or
otherwise redesigned to reduce costs, improve effectiveness, and make
maximum use of commercial-off-the-shelf technology?
[46] The Special Emphasis criterion is used to evaluate project
proposals that support special emphasis programs, such as spinal cord
injury, chronic mental illness, and posttraumatic stress disorder.
[47] U.S. General Accounting Office, VA Health Care: Capital Asset
Planning and Budgeting Need Improvement, GAO/T-HEHS-99-83 (Washington,
D.C.: Mar. 10, 1999).
[48] U.S. General Accounting Office, Major Management Challenges and
Program Risks: Department of Veterans Affairs, GAO-03-110 (Washington,
D.C.: January 2003).
[49] General facilities are general property, plant, and equipment
(PP&E) used in providing goods or services. Stewardship facilities
include heritage assets of historical, natural, cultural, educational,
or artistic significance and land other than that acquired for, or in
connection with, general PP&E.
[50] U.S. General Accounting Office, Major Management Challenges and
Program Risks: Department of the Interior, GAO-03-104 (Washington,
D.C.: January 2003).
[51] U.S. General Accounting Office, Park Service: Agency Is Not
Meeting Its Structural Fire Safety Responsibilities, GAO/RCED-00-154
(Washington, D.C.: May 22, 2000).
[52] U.S. General Accounting Office, Major Management Challenges and
Program Risks: Department of Commerce, GAO-03-97 (Washington, D.C.:
January 2003).
[53] U.S. General Accounting Office, Major Management Challenges and
Program Risks: Department of Commerce, GAO-01-243 (Washington, D.C.:
January 2001).
[54] U.S. General Accounting Office, Bureau of Prisons: Recent Concerns
and Challenges for the Future, GAO/T-GGD-95-177 (Washington, D.C.: June
8, 1995).
[55] U.S. General Accounting Office, Private and Public Prisons:
Studies Comparing Operational Costs and/or Quality of Service, GAO/GGD-
96-158 (Washington, D.C.: Aug. 16, 1996).
[56] U.S. General Accounting Office, Women in Prison: Issues and
Challenges Confronting U.S. Correctional Systems, GAO/GGD-00-22
(Washington, D.C.: Dec. 28, 1999).
[57] Exec. Order 12893, 59 Fed. Reg. 4233 (Jan. 26, 1994).
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