This is GAO's first performance and accountability series report on the Office of Personnel Management (OPM), the federal government's human capital agency. OPM faces challenges in four key areas: leadership, oversight, internal management, and administration of the federal retirement and health insurance programs. The data presented in this report are intended to help sustain congressional attention and an agency focus in addressing these challenges and ultimately overcoming them. This report is part of a special series of reports on governmentwide and agency-specific issues.

OPM has implemented important initiatives and has others under way to improve its mission and management performance. Building on these efforts, OPM has additional opportunities to overcome the following management challenges. Leading strategic human capital management governmentwide: Many agencies continue to experience human capital shortfalls. They want and need greater OPM leadership and assistance to help them strategically manage their human capital and address challenges in recruiting, retaining, and rewarding talented staff--caused, in part, by long-standing problems with the federal pay, classification, and hiring systems. Overseeing agency human capital management systems: Merit system surveys and studies continue to show a need for strong oversight of agency human capital systems. Surveys show employees continue to believe agencies are not adhering to several of the merit principles. Transforming OPM and managing its internal operations: As in other areas, OPM has major efforts under way to address this challenge. It is realigning its organizational structure, has prepared a draft succession plan, is implementing a new financial management system, and is addressing several information security weaknesses. But more remains to be done as OPM transitions to its new structure. For example, OPM should implement workforce and succession planning strategies to address the expected staff losses from retirements and to close skill and knowledge gaps, fully implement an agencywide security program and conduct security risk assessments of its information systems, and continue to take steps to address historical weaknesses in activities of its discretionary appropriation funds. Administering the retirement and health insurance programs: OPM has made major strides in managing these programs, which have received high ratings from customers over the past few years--for example, over 90 percent of federal annuitants are satisfied with OPM's retirement services. But customer satisfaction could fall if OPM is not able to handle the impending retirement wave or implement measures to limit health care premiums.

Below are the reports in this series:

High-Risk Series: An Update GAO-03-119 Jan 1, 2003

High-Risk Series: Strategic Human Capital Management GAO-03-120 Jan 1, 2003

High-Risk Series: Protecting Information Systems Supporting the Federal Government and the Nation's Critical Infrastructures GAO-03-121 Jan 1, 2003

High-Risk Series: Federal Real Property GAO-03-122 Jan 1, 2003

Added later:

Pension Benefit Guaranty Corporation Single-Employer Insurance Program: Long-Term Vulnerabilities Warrant 'High Risk' Designation GAO-03-1050SP Jul 23, 2003

Performance and Accountability Series:

Major Management Challenges and Program Risks: A Governmentwide Perspective GAO-03-95 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Agriculture GAO-03-96 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Commerce GAO-03-97 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Defense GAO-03-98 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Education GAO-03-99 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Energy GAO-03-100 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Health and Human Services GAO-03-101 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Homeland Security GAO-03-102 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Housing and Urban Development GAO-03-103 Jan 1, 2003

Major Management Challenges and Program Risks: Department of the Interior GAO-03-104 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Justice GAO-03-105 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Labor GAO-03-106 Jan 1, 2003

Major Management Challenges and Program Risks: Department of State GAO-03-107 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Transportation GAO-03-108 Jan 1, 2003

Major Management Challenges and Program Risks: Department of the Treasury GAO-03-109 Jan 1, 2003

Major Management Challenges and Program Risks: Department of Veterans Affairs GAO-03-110 Jan 1, 2003

Major Management Challenges and Program Risks: U.S. Agency for International Development GAO-03-111 Jan 1, 2003

Major Management Challenges and Program Risks: Environmental Protection Agency GAO-03-112 Jan 1, 2003

Major Management Challenges and Program Risks: Federal Emergency Management Agency GAO-03-113 Jan 1, 2003

Major Management Challenges and Program Risks: National Aeronautics and Space Administration GAO-03-114 Jan 1, 2003

Major Management Challenges and Program Risks: Office of Personnel Management GAO-03-115 Jan 1, 2003

Major Management Challenges and Program Risks: Small Business Administration GAO-03-116 Jan 1, 2003

Major Management Challenges and Program Risks: Social Security Administration GAO-03-117 Jan 1, 2003

Major Management Challenges and Program Risks: U.S. Postal Service GAO-03-118 Jan 1, 2003