Federal Capital:

Three Entities' Implementation of Capital Planning Principles Is Mixed

GAO-07-274: Published: Feb 23, 2007. Publicly Released: Mar 26, 2007.

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In fiscal year 2005, the federal government spent nearly $117 billion on capital investments intended to yield long-term benefits for its operations. Effective capital planning ensures that the sizable investments made by federal agencies result in the most efficient return to taxpayers. Accordingly, GAO evaluated (1) how well selected entities followed the planning phase principles of GAO's Executive Guide and the Office of Management and Budget's (OMB) Capital Programming Guide, (2) OMB's actions to encourage all agencies to conform with capital planning principles, and (3) what capital planning information is received by or would be useful to congressional decision makers. Based on missions, asset types, and capital spending, we selected three entities to review within the Departments of Energy (DOE) and Homeland Security (DHS).

The selected entities--the Offices of Science (SC) and Environmental Management (EM) within DOE and U.S. Customs and Border Protection (CBP) within DHS--had mixed success with implementing the planning phase principles and practices described in OMB's and our guides. We found that in their capital planning processes, the selected entities' guidance generally requires linkage between proposed investments and strategic goals and they assess needs and identify performance gaps in a variety of ways. We also found that the selected entities' evaluations of alternatives are not always apparent in their capital planning documentation. Each entity has established a framework to review and approve proposed investments and uses criteria to rank and select projects, but problems exist with CBP's framework and CBP has only established criteria to rank and select its real property investments. In addition, although each entity produces some long-term planning documents, none has developed a comprehensive capital plan that defines all of its long-term investment decisions. OMB worked with agencies to update its Capital Programming Guide, which was released in June 2006. OMB staff also told us that OMB requires agencies to comply with the principles and practices in its guide. However, OMB does not routinely request all the information recommended by its guide. For example, although OMB's guide encourages agencies to develop long-term capital plans, OMB staff told us they do not request copies of these plans, so it is not clear whether all agencies develop them. Instead, OMB staff said they are able to determine if an agency has a capital planning process based on other required documents. Although these documents contain some elements of a long-term capital plan, they do not include all expected aspects. Congressional staff with whom we met believed additional capital planning information would be useful. Specifically, those responsible for resource allocation for and oversight of SC, EM, and CBP told us they would like to receive the type of information that would be found in a long-term capital plan. Congressional staff said that this information would help Congress make better-informed appropriations and oversight decisions.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: As of February 2012, Congress has not issued such a requirement and no bills are pending.

    Matter: To ensure that it is receiving the capital planning information it needs to make informed decisions, Congress may wish to require agencies to develop comprehensive, long-term capital plans and submit them for congressional review.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: Although DOE concurred with our recommendation to undertake comprehensive alternatives evaluation, in comments on our draft report DOE stated that by following DOE Order 413.3A, they believe they have met the intent of OMB guidance.

    Recommendation: The Secretary of Energy should ensure that comprehensive alternatives evaluations of capital investments, including consideration of noncapital alternatives as appropriate, are conducted and discussed in agency planning documents.

    Agency Affected: Department of Energy

  2. Status: Closed - Implemented

    Comments: Acquisition Directive 102-01 requires analysis to identify the alternatives for providing the desired capability and to develop multiple products. Directive 102-01 is in the last step of the clearance process to prepare the policy document for the Under Secretary for Management's (USM) signature. The USM has already reviewed it for content, so a signed version is expected by the end of February. On 5/26/10 via email, DHS provided GAO with the final Acquisition Directive 102-01, which requires analysis to identify the alternatives for providing the desired capability and to develop multiple products including a life-cycle cost estimate and an integrated logistics support plan. In addition, the directive requires program managers to present an Operational Requirements Document selecting the best of the various alternative options based on a comparison of capability, cost and schedule parameters.

    Recommendation: The Secretary of Homeland Security should direct the Commissioner of CBP to ensure that comprehensive alternatives evaluations of capital investments, including consideration of noncapital alternatives as appropriate, are conducted and discussed in agency planning documents.

    Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security: Bureau of Customs and Border Protection

  3. Status: Closed - Implemented

    Comments: CBP established an Investment Review Council effective 12/12/07. One of the responsibilities and activities of this council is to develop, review, evaluate, recommend, and employ selection criteria used to prioritize investments as well as to make investment recommendations based on comparisons and trade-offs among competing programs.

    Recommendation: The Secretary of Homeland Security should direct the Commissioner of CBP to require the development of criteria to rank and select capital projects.

    Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security: Bureau of Customs and Border Protection

  4. Status: Closed - Implemented

    Comments: Effective 12/12/07, all CBP investments fall within the purview of the investment management process overseen by CBP's Investment Review Council.

    Recommendation: The Secretary of Homeland Security should direct the Commissioner of CBP to lower the dollar amount of the review threshold for non-information technology capital projects to ensure that all capital projects are linked to the agency's strategic goals and objectives and receive an appropriate level of review.

    Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security: Bureau of Customs and Border Protection

  5. Status: Closed - Implemented

    Comments: On 12/5/07 CBP issued instructions for developing a 5-year Resource Allocation Plan. CBP teams organized by agency strategic goal are to develop an investment plan for the 5-year period needed to implement the new Strategic Plan, including cost estimates for each programmatic activity included in the plan.

    Recommendation: The Secretary of Homeland Security should direct the Commissioner of CBP to require the development of a single, agencywide, long-term capital plan to reflect all long-term capital investment decisions.

    Agency Affected: Department of Homeland Security: Directorate of Border and Transportation Security: Bureau of Customs and Border Protection

  6. Status: Closed - Implemented

    Comments: DHS Acquisition Directive 102-01, effective January 20, 2010, requires analyses to identify the alternatives for providing a desired capability and to develop multiple products including a life-cycle cost estimate and an integrated logistics support plan. In addition, the directive requires program managers to present an Operational Requirements Document selecting the best of the various alternative options based on a comparison of capability, cost and schedule parameters. Furthermore, the directive created common acquisition standards and practices for capital assets, among other things, across all components and headquarters offices.

    Recommendation: The Secretary of Homeland Security should finalize the Investment Review Process and its related guidance.

    Agency Affected: Executive Office of the President: Office of Management and Budget

  7. Status: Closed - Not Implemented

    Comments: In comments on the report draft, OMB said that although there are benefits from OMB review of agency long-term capital plans on an as needed basis, it did not agree that all agencies should be required to submit long-term capital plans. It stated that a summary might be sufficient for the Congressional authorization process or justifications for the appropriate committees.

    Recommendation: The Director of the Office of Management and Budget should instruct agencies to make their agencywide, long-term capital plans available to congressional decision makers.

    Agency Affected: Department of Energy

  8. Status: Closed - Not Implemented

    Comments: Acquisition Directive 102-01 requires analysis to identify the alternatives for providing the desired capability and to develop multiple products. Directive 102-01 is in the last step of the clearance process to prepare the policy document for the Under Secretary for Management's (USM) signature. The USM has already reviewed it for content, so a signed version is expected by the end of February. On 5/26/10 via email, DHS provided GAO with the final Acquisition Directive 102-01 (effective January 20, 2010), which requires analysis to identify the alternatives for providing the desired capability and to develop multiple products including a life-cycle cost estimate and an integrated logistics support plan. In addition, the directive requires program managers to present an Operational Requirements Document selecting the best of the various alternative options based on a comparison of capability, cost and schedule parameters. Furthermore, the directive created common acquisition standards and practices for capital assets, among other things, across all components and headquarters offices.

    Recommendation: Further, the Secretary of Energy should require the development of a single, agencywide, long-term capital plan to reflect all long term capital investment decisions.

    Agency Affected: Department of Homeland Security

  9. Status: Closed - Implemented

    Comments: Acquisition Directive 102-01 requires analysis to identify the alternatives for providing the desired capability and to develop multiple products. Directive 102-01 is in the last step of the clearance process to prepare the policy document for the Under Secretary for Management's (USM) signature. The USM has already reviewed it for content, so a signed version is expected by the end of February. On 5/26/10 via email, DHS provided GAO with the final Acquisition Directive 102-01 (effective January 20, 2010), which requires analyses to identify the alternatives for providing the desired capability and to develop multiple products including a life-cycle cost estimate and an integrated logistics support plan. In addition, the directive requires program managers to present an Operational Requirements Document selecting the best of the various alternative options based on a comparison of capability, cost and schedule parameters. Furthermore, the directive created common acquisition standards and practices for capital assets, among other things, across all components and headquarters offices.

    Recommendation: The Secretary of Homeland Security should also consider if similar changes need to be made at other DHS component agencies.

    Agency Affected: Department of Energy

 

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