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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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