gao-01-761 department of agriculture: status of achieving ...2 observations on the u.s. department...

Report to the Ranking MinorityMember, Committee on GovernmentalAffairs, U.S. Senate

United States General Accounting Office

GAO

August 2001 DEPARTMENT OFAGRICULTURE

Status of AchievingKey Outcomes andAddressing MajorManagementChallenges

GAO-01-761

Page i GAO-01-761 USDA's Status in Achieving Key Outcomes

Letter 1

Results in Brief 2Background 6Assessment of USDA’s Progress and Strategies in Achieving

Selected Key Outcomes 8Comparison of USDA’s Fiscal Year 2000 Performance Report and

Fiscal Year 2002 Performance Plan With the Prior Year Reportand Plan for Selected Key Outcomes 15

USDA’s Efforts to Address its Major Management ChallengesIdentified by GAO 18

Conclusions 18Recommendations for Executive Action 19Agency Comments 19Scope and Methodology 21

Appendix I Observations on the U.S. Department of

Agriculture’s Efforts to Address Its Major

Management Challenges 23

Appendix II GAO Contact and Staff Acknowledgments 33

Table

Table 1: Major Management Challenges 24

Figure

Figure 1: Estimated Percent of Total Outlays for USDA’s MajorActivities 7

Contents

GAO-01-761 USDA's Status in Achieving Key Outcomes

August 23, 2001

The Honorable Fred ThompsonRanking Minority MemberCommittee on Governmental AffairsUnited States Senate

Dear Senator Thompson:

As you requested, we reviewed the U. S. Department of Agriculture’s(USDA) fiscal year 2000 performance report and fiscal year 2002performance plan required by the Government Performance and ResultsAct of 1993 (GPRA) to assess the agency’s progress in achieving selectedkey outcomes that you identified as important mission areas for theagency.1 USDA presented one performance report with agency-by-agencycoverage and 1 departmental and 24 agency and office performance plans.We reviewed the same outcomes we addressed in our June 2000 review ofthe agency’s fiscal year 1999 performance report and fiscal year 2001performance plans to provide a baseline by which to measure the agency’sperformance from year-to-year.2 These selected key outcomes are

• ensuring an adequate and reasonably priced food supply;

• opening, expanding, and maintaining global market opportunities foragricultural producers;

• reducing hunger and ensuring food for the hungry;

• ensuring a safe and wholesome food supply; and

• reducing food stamp fraud and error.

As agreed, using the selected key outcomes for USDA as a framework, we(1) assessed the progress USDA has made in accomplishing theseoutcomes and the strategies the agency has in place to achieve them; and

1 This report is one of a series of reports on the 24 Chief Financial Officers (CFO) Actagencies’ fiscal year 2000 performance reports and fiscal year 2002 performance plans.

2 Observations on the U.S. Department of Agriculture’s Fiscal Year 1999 Performance

Report and Fiscal Year 2001 Performance Plan (GAO/RCED-00-212R, June 30, 2000).

United States General Accounting Office

Washington, DC 20548

http://www.gao.gov/cgi-bin/getrpt?GAO/RCED-00-212R


(2) compared USDA’s fiscal year 2000 performance report and fiscal year2002 performance plan with the agency’s previous year performancereport and plan for these outcomes.3 Additionally, we agreed to analyzehow USDA addressed its major management challenges, including thegovernmentwide high-risk areas of strategic human capital managementand information security, that we and USDA’s Office of Inspector Generalidentified. Appendix I provides detailed information on how USDAaddressed these challenges.

USDA made progress in achieving the selected key outcomes whilerecognizing that, in some areas, more progress is needed to meet its goals.As advised by the Congress and as we suggested, USDA developed for thefirst time a departmentwide annual performance plan, which contains fivebroad departmental strategic goals. USDA’s new plan represents asignificant improvement by focusing on the department’s centralmissions—a focus that was absent last year when USDA’s plans contained1,700 goals and did not identify the department’s priorities. While the newplan is improved, it is a work-in-progress that could more clearly link thedepartmental strategies and goals and individual agency performanceplans. Information related to each outcome follows:

• Planned Outcome: Ensuring an Adequate and Reasonably Priced FoodSupply

Although USDA did not select this outcome as a key departmental goalin its fiscal year 2002 plan, the department views this as an importantoutcome and reported making some progress. For example, USDAreported that it met its goals for stabilizing peanut and tobacco pricesand maintaining the economic viability of peanut and tobaccoproducers. USDA includes important annual performance goals relatedto this outcome under the department’s first strategic goal ofexpanding economic and trade opportunities for U.S. agriculturalproducers. This departmental strategic goal is mainly concerned withdeveloping creative solutions to ensure the long-term profitability and

3 Under GPRA, annual performance plans are to clearly inform the Congress and the publicof (1) the annual performance goals for agencies’ major programs and activities, (2) themeasures that will be used to gauge performance, (3) the strategies and resources requiredto achieve the performance goals, and (4) the procedures that will be used to verify andvalidate performance information. These annual plans, issued soon after transmittal of thepresident’s budget, provide a direct linkage between an agency’s longer-term goals andmission and day-to-day activities. Annual performance reports are to subsequently reporton the degree to which performance goals were met.

Results in Brief


sustainability of U.S. agriculture. The plan contains performance goalssuch as those to improve farmers’ incomes, reduce pest and diseaseoutbreaks, and expand international sales opportunities for U.S.agricultural products.

• Planned Outcome: Opening, Expanding, and Maintaining Global MarketOpportunities for Agricultural Producers

USDA reported progress in achieving this outcome. However, it isdifficult to isolate and measure the extent of USDA’s progress becausesome of the key measures are affected by variables that extend beyondthe department’s authority and capability. For example, the decrease inthe value and volume of U.S. agricultural exports over the last severalyears is generally recognized to be the result of deteriorating economicconditions in the Asian market that could not be overcome by USDApolicy or activities. In its fiscal year 2002 performance plan, USDApresents a number of strategies that are relevant to this importantfederal activity. USDA states its intention to develop an integrated long-range marketing plan to work with the private sector to expand sales ofagricultural products abroad. In most instances, these strategies do notyet contain adequate explanations of the key elements that willfacilitate success such as operational concepts and methods andhuman capital and technological resources that are necessary toachieve its goals. Moreover, the department does not providemitigation strategies to explain how it would adapt to changing globalconditions.

• Planned Outcome: Reducing Hunger and Ensuring Food For theHungry

USDA reported continued progress in fiscal year 2000 toward achievingthis outcome and that its performance exceeded that of fiscal year1999. For example, the department reported meeting its goals fordistributing food nutrition education information to low-incomeAmericans. USDA’s fiscal year 2002 departmental performance plancontains general strategies for achieving this outcome—such as thestrategy to “effectively deliver assistance to eligible people” thatprovides little insight into how progress is to be achieved. USDA’s Foodand Nutrition Service—the agency primarily responsible for achievingthese strategies—has not yet drafted a performance plan for fiscal year2002—so we could not determine how well its agency goals andmeasures support the departmental plan.


• Planned Outcome: Ensuring a Safe and Wholesome Food Supply

USDA reported that it met or exceeded nearly all of its fiscal year 2000performance goals related to this outcome. It reported, for example,that it met its target for implementing the new scientific-based foodsafety system for federally inspected meat and poultry plants. InUSDA’s fiscal year 2002 departmental performance plan, it generallyprovides clear strategies for achieving this outcome. For example, oneclear set of strategies to improve USDA’s reviews of foreign food safetyprograms includes intensifying the reviews of animal feeds, animalidentification, and process control systems in countries exporting meatand poultry products to the United States.

• Planned Outcome: Reducing Food Stamp Fraud and Error

USDA reported continued progress toward achieving this outcome andit met or exceeded many of its fiscal year 2000 performance goals. Thedepartment, for example, reported exceeding its target for paymentaccuracy in delivering Food Stamp Program benefits. It also reportedcollecting about $216 million in overpayments to recipients in fiscalyear 2000, exceeding its original target of collecting $194 million. Thefiscal year 2002 performance plan contains strategies for meeting thisoutcome, but they are too general to demonstrate how it would furtherreduce fraud and error in its Food Stamp Program. For example, theplan does not include a discussion of sanctions against retail storesthat traffic in food stamps—a violation of program requirements. Arecent Food and Nutrition Service study estimated that stores eachyear illegally provided cash for benefits (trafficking of benefits) totalingabout $660 million.

Although USDA has additional work to do on the outcomes that wereviewed, its fiscal year 2000 performance report and fiscal year 2002performance plan show improvement over the prior year’s report and plan.In particular, the fiscal year 2002 performance plan presented USDA as asingle department with clear missions, rather than a collection of separateagencies with a diversity of loosely related roles. While this plan is awelcome development, we found that it is also a work-in-progress. Theplan could be strengthened by improving linkages among important keyoutcomes, goals and indicators, and the strategies for achieving the keyoutcomes. For example, the plan recognized departmentwide strategichuman capital management issues, such as emerging skill gaps and theneed for staff to shift to a greater use of technology. However, the plan didnot link measurable goals and strategies for addressing these and other


human capital management issues discussed in the plan. Additionally, wefound that the departmental plan could more consistently link to some ofUSDA’s individual agencies’ plans, and thereby improve accountability forachieving the departmental goals. In transmitting USDA’s fiscal year 2002performance plan, the Secretary recognized the plan as a beginning effortthat will be replaced, once USDA’s new leadership team is in place, byanother plan that better reflects the administration’s priorities.

Of the 10 management challenges identified by GAO, we found thatUSDA’s performance report and plan generally discussed the department’sprogress, except that the fiscal year 2000 performance report did notinclude the two governmentwide major management challenges identifiedby GAO—strategic human capital management and information security.USDA acknowledged multiple strategic human capital management issuesin its fiscal year 2002 plan, such as skill gaps in its workforce, but it doesnot include performance goals and measures for addressing the specificchallenges it identified. Similarly, USDA identified the need to strengthendepartmentwide information security, but it does not provide performancegoals or measures for addressing this management challenge. Finally,USDA did not recognize or address all of the management challengesidentified by its own Office of Inspector General (OIG). We found that theOIG did not provide a copy of its letter to congressional requestersidentifying major management challenges to each affected USDA agency.

We are recommending that the Secretary of Agriculture set priorities forimproving the timeliness of data used for reporting on performance goalsand measures; provide more consistent discussions of data verificationand validation; better match the department’s goals with its capabilities forexpanding and maintaining global market opportunities; includeperformance goals and measures for strategic human capital managementand information security in USDA’s departmental plan; and include in itsdepartmental plan an annual performance goal for reducing food stamptrafficking. We are also recommending that the Secretary address themajor management challenges identified by USDA’s OIG in its futureperformance plans.

We obtained oral comments on a draft of our report from the Departmentof Agriculture. USDA generally agreed with the information presented inthe draft report. However, USDA OIG officials disagreed with onerecommendation that calls for them to facilitate the discussion of majormanagement challenges in USDA’s performance plan. We modified ourrecommendation based on these comments. USDA officials also disagreedwith our recommendation to improve the departmental strategic


performance goal and maintained that its measure—U.S. global marketshare—is the ultimate performance measure describing overall changes ininternational markets. We retained our recommendation because webelieve that USDA has relatively little influence on overall U.S. globalmarket share and therefore should select a departmental performance goalthat is more in keeping with USDA’s actual influence over internationalmarket events.

GPRA is intended to shift the focus of government decisionmaking,management, and accountability from activities and processes to theresults and outcomes achieved by federal programs. New and valuableinformation on the plans, goals, and strategies of federal agencies has beenprovided since federal agencies began implementing GPRA. The fiscal year2002 performance plan is the fourth of these annual plans under GPRA.The fiscal year 2000 performance report is the second of these annualreports under GPRA. The issuance of the agencies’ performance reports,due by March 31, 2001, represents a new and potentially more substantivephase in the implementation of GPRA—the opportunity to assess federalagencies’ actual performance for the prior fiscal year and to consider whatsteps are needed to improve performance and reduce costs in the future.

USDA is one of the nation’s largest federal agencies, employing over110,000 people and managing a budget of over $78 billion. Its agencies andoffices are responsible for operating more than 200 programs. Theseprograms support the profitability of farming, promote domesticagricultural markets and the export of food and farm products, providefood assistance for the needy, ensure the safety of the nation’s foodsupply, manage the national forests, protect the environment, conductbiotechnological and other agricultural research, and improve the wellbeing of rural America.

Background


Figure 1: Estimated Percent of Total Outlays for USDA’s Major Activities

Fiscal Year 2000 estimated outlays—$78.6 Billion

Source: USDA’s Strategic Plan for Fiscal Year 2000-2005.


This section discusses our analysis of USDA’s performance in achievingthe selected key outcomes and the strategies the agency has in place toachieve these outcomes, particularly for strategic human capitalmanagement and information technology.4 In discussing these outcomes,we have also provided information drawn from our prior work on theextent to which the department provided assurance that its reportedperformance information is credible.

USDA’s fiscal year 2000 performance report, which was issued in March2001, indicated that the department continued to make some progresstoward achieving this outcome. For example, USDA reported that it metits goals for stabilizing peanut and tobacco prices and maintaining theeconomic viability of peanut and tobacco producers. However, it isdifficult to assess USDA’s progress because the department did notprovide an overall evaluation of this outcome in its report. According tothe performance report, USDA met about 72 percent of the performancegoals related to this outcome, less than last year when USDA reported itmet over 80 percent of its goals.

USDA did not select the outcome of providing an adequate and reasonablypriced food supply as a key departmental strategic goal in its fiscal year2002 performance plan, which was issued in June 2001. Some of USDA’sefforts to achieve this outcome are discussed under the top rankeddepartmental strategic goal of expanding economic and tradeopportunities for U.S. agricultural producers and a USDA official statedthat this outcome continues to be important for the department. USDA’sdiscussion of this strategic goal stated that farming and ranching is beingtransformed by changes in biological and information technology,environmental and conservation concerns, greater threats from pests anddiseases spreading across continents, natural disasters and theindustrialization of agriculture, and globalization of markets. Under thisgoal, USDA chose as its first objective to provide an effective safety netand to promote a strong, sustainable U.S. farm economy.5 USDA explained

4 GAO has selected strategic human capital management and information technology asgovernmentwide high-risk areas. Key elements of modern human capital managementinclude strategic human capital planning and organizational alignment; leadershipcontinuity and succession planning; acquiring and developing staffs whose size, skills, anddeployment meet agency needs; and creating results-oriented organizational cultures.

5 A safety net for farmers is mainly providing farm income assistance to help farmersmaintain a profitable operation when there are collapses in market commodity prices,decreases in crop yields, and/or natural disasters.

Assessment of USDA’sProgress andStrategies inAchieving SelectedKey Outcomes

An Adequate AndReasonably Priced FoodSupply


that if it is to achieve its goal of promoting a strong farm economy that isless dependent of government support, then it must also place a heavyemphasis on helping farmers proactively manage the risks inherent inagriculture and improve farmers income. USDA’s second objective underthis strategic goal is to expand export markets—USDA illustrated theopportunity for exports by estimating that 96 percent of Americanagriculture’s potential customers reside outside the United States. Some ofthe performance goals presented for this strategic goal are to improvefarmers’ incomes, reduce pest and disease outbreaks, and expandinternational sales opportunities.

USDA reported progress in fiscal year 2000 that was similar to itsperformance last year in that it met some of its goals and indicators forthis outcome. USDA stated that it exceeded its targets for two key goals.The gross trade value of markets created, expanded, or retained annuallydue to market access activities reached $4.35 billion, significantly higherthan its $2 billion target. USDA attributed $2 billion of this gain tonegotiations on China’s accession to the World Trade Organization infiscal year 2000. Similarly, annual sales, which were reported by U.S.exporters from on-site sales at international trade shows, reached $367million in fiscal year 2000, compared to USDA’s target of $250 million.Despite these successes, USDA fell short in meeting other goals. Thedepartment reported $837 million in U.S. agricultural exports resultedfrom the implementation of trade agreements under the World TradeOrganization, below its target of $2 billion. It also reported that the totalvalue of U.S. agricultural exports supported by its export credit guaranteeprograms reached $3.1 billion, falling short of its $3.8 billion target.

USDA uses a questionable methodology for measuring the success of itsefforts to expand and maintain global markets for U.S. agriculturalproducts. USDA’s goals and indicators emphasize growth in the U.S. shareof the global agricultural market—measured by changes in the dollar valueof exports resulting from the implementation of trade agreements, marketaccess enhancements, sales from annual trade shows, and agriculturalexports. Yet, the dollar value of exports is subject to powerful externalvariables that transcend USDA’s authority and ability to affect change ininternational trade. These variables include exchange rates, governmentpolicies, global and national economic conditions, climactic changes, andnumerous other factors over which USDA has no control or strategies toaddress. For example, the decrease in the value and volume of U.S.agricultural exports over the last several years is generally recognized byeconomists, government officials, and private sector representatives to bethe result of deteriorating economic conditions, particularly in the Asian

Opening, Expanding, andMaintaining Global MarketOpportunities forAgricultural Producers


market, over which USDA has no control. USDA’s Economic ResearchService has consistently held that U.S. agricultural export performanceresults more from market forces, which include multiple variables beyondthe control of USDA, than from the actions of the U.S. government toexpand international market opportunities. Along with other researchinstitutions, it has confirmed that the decline in the value of U.S.agricultural exports from $60 billion in fiscal year 1996 to $50.9 billion infiscal year 2000 was not attributable to U.S. government trade policies,programs, and activities. It further observed that USDA programs typicallyhave a limited effect on the dollar value of U.S. exports and market share.We have previously raised questions about the extent of the relationshipbetween USDA’s export policies and programs and increased exports.6

USDA’s fiscal year 2002 plan is based on the assumption that governmentpolicies, programs, and activities have a significant influence on the U.S.share of the global agricultural market. USDA has set a goal to increaseexports by $14 billion by fiscal year 2010, or about 22 percent of the globalmarket. This level would return the United States to the same globalmarket share it held in the early 1990s. USDA’s plan is consistent with theassumption that the government’s impact is enhanced when thegovernment works with the private sector to create a facilitativeenvironment to expand sales of agricultural products abroad. USDA’sstrategies are to include a long-range integrated marketing plan, whichwould provide a generalized framework that goes beyond the traditionalnarrow and short-term programmatic and reactive export orientedapproaches. Among its goals are those for (1) developing a long-rangemarketing plan that enlists USDA’s network of domestic and foreign fieldoffices in an effort to assist U.S. producers in capturing new marketopportunities, (2) partnering with private U.S. market development groupsto leverage resources aimed at expanding market opportunities abroad forU.S. food and agricultural products, (3) expanding U.S. access to foreignmarkets through active participation in the World Trade Organization andinternational trade forums, and (4) continuing to monitor internationaltrade agreements and negotiating new agreements to open overseasmarkets to U.S. food and agricultural products. However, what is not yetspelled out are the key elements of the integrated marketing plan that willmove beyond a generalized concept to the reality of specific actions that

6 U.S. Agricultural Exports: Strong Growth Likely But U.S. Export Assistance Programs’

Contribution Uncertain (GAO/NSIAD-97-260, Sept. 30, 1997) and Agricultural Trade:

Changes Made to Market Access Program, but Questions Remain on Economic Impact

(GAO/NSIAD-99-38, Apr. 5, 1999).

http://www.gao.gov/cgi-bin/getrpt?GAO/nsiad-97-260

http://www.gao.gov/cgi-bin/getrpt?GAO/nsiad-99-38


will lead to success. Among the elements that could be further addressedwould be the organizational structure, the human capital andtechnological resources, and the operational concepts and methods thatwill actually enable USDA to meet its global marketing objectives.

USDA’s Foreign Agricultural Service said that its plans are necessarilygeneralized at this point in time and should be considered as their firststeps in developing an integrated marketing plan. The Service also saidthat it would be instituting quarterly reporting to track progress. Inaddition, the Service disagreed with our views about its departmental levelstrategic performance goal to affect U.S. market share, and said that itbelieved it had selected the ultimate measure of change for internationalagricultural markets. However, as previously discussed, we disagree withthe selection of this goal because USDA’s activities have little influence onthe overall level of international market shares. Since the GPRA wasdesigned to lead to better insights into the performance of government,USDA will need to adopt a realistic departmental performance goal tomeet this purpose.

According to its performance report, USDA reported continued progresstoward this outcome and met about 80 percent of its goals. USDA’sperformance exceeded that of fiscal year 1999. For example, thedepartment reported meeting its goals for distributing food nutritioneducation information to low-income Americans, for increasing thenumber of schools that meet USDA’s dietary guidelines, and for improvingthe effectiveness and efficiency of commodity acquisition and distributionto support domestic and international food assistance programs. Some ofthe goals do not have specific performance targets, so it is not always clearwhat USDA is actually accomplishing. For example, USDA determinedthat it is meeting its goal of improving the nutritional status of Americansby such actions as distributing revised dietary guidelines and by promotingmedia coverage, and observing seminar attendance and web-page usagerelated to improved nutrition and diet. These measures of performance donot tell us whether USDA’s actions are improving Americans’ nutritionalstatus.

USDA’s fiscal year 2002 departmental performance plan contains manygeneral strategies for achieving its goals and measures. For example, onegeneral strategy called for reallocating funds from areas with excess fundsto areas with high demand for the Special Supplemental Nutrition Programfor Women, Infants, and Children. However, some of the general strategiesmake it difficult to assess USDA’s progress. For example, USDA’s goal toimprove food security for children and low-income individuals calls for

Food for the Hungry


expanding program access to the needy—and the plan’s strategies fordoing this involves “effectively delivering assistance” and “continuingefforts” to ensure that the Food Stamp Program is accessible. Suchstrategies provide little insight into the specific actions USDA intends totake to achieve its goals. In addition, at the time of our review, USDA’sFood and Nutrition Service, the agency primarily responsible for thisoutcome, had yet to draft a performance plan for fiscal year 2002. Thedetailed goals and strategies that the agency level plan would contain areneeded to support USDA’s departmental plan. The Acting Administrator ofthe Food and Nutrition Service reported that the agency is assembling apolicy team and will issue a draft performance plan after the team isselected.

According to its performance report, USDA met or exceeded nearly all ofits fiscal year 2000 performance goals for ensuring a safe and wholesomefood supply. USDA stated that it met its goals for key areas, such as thepercentage of federally inspected meat and poultry slaughter and/orprocessing plants that had implemented the basic hazard analysis andcritical control points (HACCP) requirements. GAO issued a report on thissubject in 1997.7 USDA also reported that it exceeded its goal for thenumber of reviews it conducted of foreign meat and poultry food safetyprograms to ensure their compliance with U.S. safety standards. GAO alsoissued a report on this subject in 1998.8 When performance goals were notmet, USDA generally provided specific explanations, including describingexternal factors when applicable, for not achieving the performance goals.For example, USDA reported that it fell short of meeting its goal fordeploying 607 computers to state inspection programs because 4 states didnot have the funding available to meet their 50-percent share of thecomputers’ costs. In another example, USDA did not meet its goal toperform 68,000 laboratory tests, falling short of its target by 8,000 tests.USDA did not provide any additional strategies for achieving this goal inthe following fiscal year, but it stated that it believed many of thedifficulties in meeting the goal have been alleviated by the implementationof the new HACCP system.

7 Food Safety: Fundamental Changes Needed to Improve the Nation’s Food Safety System

(GAO/T-RCED-98-24, Oct. 8, 1997).

8 Food Safety: Federal Efforts to Ensure the Safety of Imported Foods Are Inconsistent

and Unreliable (GAO/RCED-98-103, Apr. 30, 1998).

A Safe and WholesomeFood Supply

http://www.gao.gov/cgi-bin/getrpt?GAO/T-rced-98-24

http://www.gao.gov/cgi-bin/getrpt?GAO/rced-98-103


USDA’s fiscal year 2002 performance plan describes several strategies toensure a safe and wholesome food supply. Such strategies include(1) strengthening laboratory and risk assessment capabilities,(2) implementing a HACCP system for eggs, and (3) strengthening itsforeign food safety program efforts. These strategies generally provided aclear description of USDA’s approach for reaching its performance goals.For example, USDA described a strategy that seeks to improve its foreignfood safety program review efforts by intensifying reviews of animal feeds,animal identification, and process control systems in countries exportingmeat and poultry products to the United States. However, the strategiesdid not show how USDA plans to address and overcome the fundamentalproblem it faces in this area—the current food safety system is fragmentedwith as many as 12 different federal agencies administering over 35 lawsregarding food safety. USDA’s plan states that the creation of a singlefederal food safety agency, as previously recommended by us, extendsbeyond the legal scope of any one federal agency. We have maintained thatuntil this fragmented system is replaced with a risk-based single foodagency, the U.S. food safety system will continue to under perform.9 USDApointed out that it does not have the authority to merge with other federalagencies and form a single food safety agency. (See app. I.)

According to its performance report, USDA met or exceeded many of itsfiscal year 2000 goals and made progress toward reducing food stampfraud and error.10 The department, for example, reported exceeding itsgoal for payment accuracy rate in the delivery of Food Stamp Programbenefits and stated that it would support continued improvements byseeking opportunities to simplify program rules—a recommendation madeby us in a recent report on reducing payment errors.11 It also reportedcollecting about $219 million in overpayments to recipients in fiscal year2000, which exceeded its original target of collecting about $194 million. Insome instances, USDA fell short of meeting its goals for this outcome. Forexample, USDA did not meet its goal for increasing the percentage of debtowed by retailers who were delinquent on their food stamp payments thatwas referred to Treasury, and it narrowly missed its goal for the number of

9 Food Safety: U.S. Needs a Single Agency to Administer a Unified, Risk-Based

Inspection System (GAO/T-RCED-99-256, Aug. 4, 1999).10 Food stamp fraud is a crime, and error refers to administrative problems such asincorrectly calculated benefit payments.

11 Food Stamp Program: States Seek to Reduce Payment Errors and Program Complexity

(GAO-01-272, Jan. 19, 2001).

Food Stamp Fraud andError

http://www.gao.gov/cgi-bin/getrpt?GAO/T-rced-99-256

http://www.gao.gov/cgi-bin/getrpt?GAO-01-272


retailers sanctioned for not meeting regulatory requirements. In thoseinstances when goals were not met, USDA generally provided specificexplanations for not achieving them. For example, the departmentreported that it did not meet its goal for referring to the TreasuryDepartment cases of food stamp retailers with delinquent debts forcollection because it did not submit cases in a timely manner and becauseof shortcomings in the processing of such referrals.

USDA did not base its fiscal year 2000 performance report assessments onactual performance data in some cases. For example, for two performancegoals—maintain payment accuracy in the delivery of Food Stamp Programbenefits and the number of states qualifying for enhanced funding basedon high payment accuracy—the department reported progress from fiscalyear 1999, and it stated that it would meet its fiscal year 2000 performancegoals based on “early indications” and planned activities. USDA alsorecognized that actual data would be available 3 months after theperformance report was issued, which represents an improvement in datareporting. Nevertheless, the absence of timely performance data makes itdifficult for USDA and others to annually assess performance anddetermine if changes in strategies are needed.

USDA’s fiscal year 2002 departmental performance plan contained severalstrategies for reducing food stamp fraud and error. USDA stated that itintended to continue to improve the accuracy and consistency of itsquality control system and support state efforts to improve food stampbenefit accuracy through technical assistance and by using the bestpractices for information-sharing. However, the departmental plan did nothave specific strategies to demonstrate how USDA would achieve itsstrategic goals and objectives. In some instances, a discussion of goals,objectives, and strategies directly related to this key outcome were notincluded. For example, the plan did not include a discussion of how itwould deal with retail stores that violate program requirements. A recentFood and Nutrition Service study estimated that stores each year illegallyprovided cash for benefits (trafficking of benefits) totaling about$660 million. USDA’s departmental plan also did not specifically discussthe Food and Nutrition Service’s targets or measures for reducingtrafficking in food stamps, and it does not contain details on the strategiesto be used to reduce fraud and error in the Food Stamp Program. Thedetails of these strategies may be included in the Food and NutritionService’s agency level performance plan for fiscal year 2002, which has notyet been prepared. Additionally, we have identified efforts to reduce fraudand error in the food stamp program as a major management challenge.(See app. I.)


For the selected key outcomes, this section describes major improvementsor remaining weaknesses in USDA’s (1) fiscal year 2000 performancereport in comparison with its fiscal year 1999 report, and (2) fiscal year2002 performance plan in comparison with its fiscal year 2001 plan. It alsodiscusses the degree to which the agency’s fiscal year 2000 report andfiscal year 2002 plan addresses concerns and recommendations by theCongress, GAO, USDA’s OIG and others.

USDA’s fiscal year 2000 performance report presentation has remainedlargely unchanged compared with the prior year’s report. Specifically, thereport continued to be an agency-by-agency discussion of its progresswithout an overview presenting a picture of the department’s overallperformance. As discussed previously, the fiscal year 2000 performance

Comparison ofUSDA’s Fiscal Year2000 PerformanceReport and FiscalYear 2002Performance PlanWith the Prior YearReport and Plan forSelected KeyOutcomes

Comparison ofPerformance Reports forFiscal Years 1999 and 2000


report has limitations such as its reliance on narrative measures that trackagency actions but that do not provide information about the impacts ofthe agency’s performance. There are also areas where the data is limitedand of questionable reliability—USDA has reported that the vast scale andcomplexity of its programs present major management challenges in termsof the availability of accurate, credible, and timely performance data. Forexample: (1) the Foreign Agricultural Service reported that it has limitedresources for tracking issues related to the World Trade Organization andbarriers in foreign markets leading to errors and limitations in dataverification; (2) USDA’s estimates of the populations that are participatingin food stamp and other nutrition assistance programs are generally notavailable in time for preparing its annual performance reports; (3) USDAhas relied on data about school food services that is collected informallyand without standardized procedures because of opposition to thecollection of this data; and (4) USDA reported that its data on agriculturalproducers’ awareness of risk management alternatives had not beencollected consistently from state to state.

In addition, the fiscal year 2000 performance report varied from providinga detailed discussion of USDA’s data verification and validation efforts, tolittle or no information about its data accuracy. In many cases, USDA didnot provide information on the steps that were taken to verify and validatethe data. For example, concerning the performance goal to eradicate acommon animal disease, the report simply stated that staff members areresponsible for ensuring the reliability and accuracy of the data. Also,UDSA did not report on the reliability of the information reported by theCooperative State Research, Education, and Extension Service, whichrelies on the accomplishments and results reported by the universitiesreceiving its research funds.

USDA developed a new departmental plan for fiscal year 2002 that issignificantly different than its 2001 plan. The fiscal year 2002 planprovided, for the first time, a departmentwide approach to performancemanagement. This streamlined presentation consolidated the more than1,700 agency specific performance goals and measures it presented in 2001into 5 departmental strategic goals, 56 annual performance goals, and 79measures for fiscal year 2002. The departmental strategic goals USDAselected were as follows: (1) expand economic and trade opportunities forU.S. agricultural producers; (2) promote health by providing access tosafe, affordable, and nutritious food; (3) maintain and enhance the nation’snatural resources and environment; (4) enhance the capacity of all ruralresidents, communities, and businesses to prosper; and (5) operate anefficient, effective, and discrimination-free organization. The new

Comparison ofPerformance Plans forFiscal Years 2001 and 2002


departmental plan is supported by agency-level annual performance plansthat offer more detailed information on evolving strategies, priorities, andresource needs.

We found USDA’s new plan to be a work-in-progress, as discussedthroughout this report. USDA did not consistently provide the detailedstrategies that were needed for achieving its departmental goals. Of the 56annual performance goals in the departmental plan, 33 goals do notcontain overall performance targets against which to measure overallprogress. For each of these 33 goals, USDA provided various performanceindicators, some of which contain performance targets that arerepresentative measures of progress. Also, there were goals that weresubstantially affected by external factors beyond the scope of USDA’sactivities. Examples include the goals to (1) grow the U.S share of theglobal agriculture market, even though USDA’s programs have a limitedeffect on the total dollar value of U.S. exports, and (2) enhance thecapacity of all rural residents, communities, and businesses to prosper,when the scope of USDA’s rural assistance programs is not designed toprovide for a comprehensive federal effort in this area. Moreover, in theSecretary’s message transmitting the fiscal year 2002 plan, the Secretarystated that she had not thoroughly reviewed the new strategic plan, did nothave a full leadership team in place, and recognized that more needed tobe done. The Secretary also stated that once USDA’s full leadership teamis in place, it will be working to conduct a top-to-bottom review of thedepartment’s programs, and will develop new strategic and annualperformance goals to carry out this administration’s priorities.

Additionally, in response to our prior GPRA reviews, USDA included twonew sections in its 2002 performance plan—one that includes a discussionof data verification and validation by each performance goal and one thatrecognizes major management challenges identified by GAO. Thediscussion of USDA’s data and its sources is a valuable addition to USDA’splan because it provides a more consistent picture of the data USDA uses,the steps USDA takes to verify its data, and the limitations that need to betaken into account.


GAO has identified two governmentwide high-risk managementchallenges: strategic human capital management and information security.Regarding human capital management, USDA’s plan contains a keyoutcome—to ensure USDA has a skilled, satisfied workforce and strongprospects for retention of its best employees. The plan recognizedemerging skill gaps, high retirement eligibility rates, and the need for staffto shift to a greater use of technology as departmental strategic issues.However, USDA has identified only one human capital performancemeasure—an employee satisfaction survey—which would not measure theclosing of skill gaps, the retention of critical employees, or changes relatedto the use of new technology. Furthermore, the extent of the discussion ofhuman capital strategies in USDA’s individual agency plans varies. Forexample, the plans of the Farm Service Agency and the Food Safety andInspection Service did not discuss human capital issues, and the Food andNutrition Service has not completed a plan. With respect to informationsecurity, we found that the Chief Information Officer’s performance reportdid not explain its progress in implementing its August 1999 action planfor improving departmentwide information security, or time frames andmilestones for doing so. In addition, USDA’s performance plan did nothave departmental goals and measures related to this important area. Incommenting on a draft of this report, USDA officials stated that progresshad been made in implementing their August 1999 action plan tostrengthen information security and agreed that USDA’s annualperformance plan could be improved by including information securityperformance goals and measures.

GAO has also identified 10 major management challenges facing USDA.USDA’s performance report discussed the agency’s progress in resolvingmany of its challenges, and its performance plan had (1) goals andmeasures that were directly related to seven of the challenges, (2) goalsand measures that were indirectly applicable to two of the challenges, and(3) no goals and measures related to one of the challenges. Appendix Iprovides detailed information on how USDA addressed these challengesand high-risk areas as identified by both GAO and the agency’s InspectorGeneral. However, USDA did not recognize or address some of themanagement challenges identified by its own Inspector General becauseaccording to USDA officials, the Office of the Inspector General did notsend a copy of its letter to the affected USDA agencies.

USDA’s fiscal year 2000 performance report and fiscal year 2002performance plan have the potential for focusing the department’smissions, but these efforts are compromised in a number of areas. USDA’sgoals and measures are too general to give insight into the actual

USDA’s Efforts toAddress its MajorManagementChallenges Identifiedby GAO

Conclusions


achievements that USDA is striving to make. In particular, it is difficult toassess USDA’s progress when it uses unrealistic goals to achieve strategicoutcomes and when it uses untimely data that has not been consistentlyverified. In two particular areas—strategic human capital managementand information security—the process of measuring USDA’s performancecould be improved by including goals and measures in USDA’s annualperformance plan. Finally, USDA missed the opportunity to developstrategies and plans to respond to the major management challengesidentified by the OIG.

To improve USDA’s performance reporting and planning, we recommendthat the Secretary of Agriculture (1) set priorities for improving thetimeliness of the data that USDA is using for measuring its performance;(2) improve USDA’s performance report by including more consistentdiscussions of data verification and validation; (3) better match thedepartment’s goals and outcomes with its capabilities for expanding andmaintaining global market opportunities; (4) include performance goalsand measures for strategic human capital management issues andinformation security issues in the departmental performance plan;(5) make reducing food stamp trafficking an annual performance goal inUSDA’s plan; and (6) address and include the Office of Inspector General’smajor management challenges in future performance plans. To facilitateour last recommendation, we also recommend that the Inspector Generalwork with the Chief Financial Officer and USDA agency officials inidentifying and including major management challenges in USDA’sperformance plans.

We provided USDA with a draft of this report for its review and comment.USDA chose to meet with us to provide oral comments, and we met withthe Acting Chief Financial Officer and other officials from the departmenton August 13, 2001, to discuss these comments. The Acting ChiefFinancial Officer said that the department generally agreed with theinformation presented in the draft report. USDA officials also providedthe following comments.

Regarding major management challenges, USDA agency officialsquestioned whether there is a requirement for USDA to report on majormanagement challenges as part of its performance plan and to includerelated performance goals. Our review, as requested, included anassessment of USDA’s progress in addressing its major managementchallenges. In addition, OMB Circular A-11 states that federal agenciesshould include a discussion of major management challenges in their

Recommendations forExecutive Action

Agency Comments


annual performance plans and present performance goals for thesechallenges.

USDA’s OIG disagreed with our recommendation calling for the OIG todistribute future OIG letters on major management challenges to affectedUSDA agencies. The OIG commented that its audit reports alreadyidentify management challenges and that these are discussed with theaffected agencies. The OIG also stated that its letter to congressionalrequesters identifying major management challenges was providedinformally to the department and that the OIG is required by Public Law106-531 to report on the most serious management challenges in USDA’sannual report to the president and the Congress.

We are well aware that the OIG identifies management challenges in auditreports and reports separately on these challenges. Nevertheless, asstated in our draft report, our recommendation is directed at facilitatingthe inclusion and discussion of the OIG identified major managementchallenges in USDA’s annual performance plan. The OIG’s reporting of themanagement challenges to congressional requesters in December 2000appeared to us to be a document that could have served as a timelystarting point for the major management challenge section of USDA’sdepartmental annual performance plan. We continue to believe that theOIG should play a role in facilitating the major management challengesection of the departmental performance plan, and have modified ourrecommendation to directly call for the OIG to participate in thedevelopment of this section of USDA’s plan.

The Foreign Agricultural Service disagreed with our recommendation tobetter match the department’s goals and outcomes with its capabilities forexpanding global market opportunities. It stated that the measure it isusing—global market share—is the ultimate performance measure fordescribing overall changes in international markets and that the Congressis interested in U.S. international market share. However, in discussingthis concern, the Service itself acknowledged that market forces are theprincipal cause of changes in exports rather than its activities. Therefore,we continue to believe that it would be appropriate to use more realisticgoals for performance that are more closely related to the outcomes thatUSDA activities can achieve. The Service’s agency level performance plancontains some performance indicators that are more limited and betterreflect the government’s role in changing export values and market share.

The Foreign Agricultural Service also expressed concern that if it were tomake detailed information on its strategies available to the public, it could


be used by foreign competitors to offset U.S. efforts. Because of thelimited federal role in affecting international market share, we believe thatmore specific information on U.S. role and activities would notcompromise U.S. efforts.

USDA officials stated that that they had made progress in improvinginformation security and strategic human capital management.Specifically, USDA officials said that progress had been made inimplementing their August 1999 action plan to strengthen informationsecurity. However, USDA officials recognized that this information, alongwith information security goals and measures, was generally not includedin the department’s performance plan or report and that the process ofmeasuring USDA’s performance would be improved by including it. Also,concerning strategic human capital management, USDA’s performancereport and plan did not summarize key actions that USDA officials saidhave been taken on workforce planning, recruitment, and the retention ofemployees. USDA will have the opportunity to summarize its progress inthese areas in its future performance reports and plans.

Department officials also provided technical clarifications, which we madeas appropriate.

As agreed, our evaluation was generally based on a review of the fiscalyear 2000 performance report and the fiscal year 2002 performance planand the requirements of GPRA, the Reports Consolidation Act of 2000,guidance to agencies from the Office of Management and Budget (OMB)for developing performance plans and reports (OMB Circular A-11, Part 2),previous reports and evaluations by us and others, our knowledge ofUSDA’s operations and programs, GAO identification of best practicesconcerning performance planning and reporting, and our observations onUSDA’s other GPRA-related efforts. We also discussed our review withagency officials in the Office of the Chief Financial Officer and with theUSDA Office of Inspector General. The agency outcomes that were used asthe basis for our review were identified by the Ranking Minority Memberof the Senate Governmental Affairs Committee as important mission areasfor the agency and generally reflect the outcomes for key USDA programsor activities. The major management challenges confronting USDA,including the governmentwide high-risk areas of strategic human capitalmanagement and information security, were identified by us in ourJanuary 2001 performance and accountability series and high-risk updateor were identified by USDA’s Office of Inspector General in December2000. We did not independently verify the information contained in theperformance report and plan, although we did draw from our other work

Scope andMethodology


in assessing the validity, reliability, and timeliness of USDA’s performancedata. We conducted our review from April 2001 through August 2001 inaccordance with generally accepted government auditing standards.

As arranged with your office, unless you publicly announce its contentsearlier, we plan no further distribution of this report until 30 days after thedate of this letter. At that time, we will send copies to appropriatecongressional committees; the Secretary of Agriculture; and the Directorof the Office of Management and Budget. Copies will also be madeavailable at to others on request.

If you or your staff have any questions, please call me at (202) 512-9692.Key contributors to this report are listed in appendix II.

Sincerely yours,

Lawrence J. DyckmanDirector, Natural Resources and Environment

Appendix I: Observations on the U.S.

Department of Agriculture’s Efforts to

Address Its Major Management Challenges

Page 23 GAO-01-761 USDA's Status in Achieving Key Outcomes

The following table identifies the major management challengesconfronting the U.S. Department of Agriculture (USDA), which includesthe government-wide high-risk areas of strategic human capitalmanagement and information security. USDA has one performance reportand a departmentwide plan with supporting plans from the department’sindividual agencies. The first column lists the challenges identified by ouroffice and USDA’s Office of Inspector General. The second columndiscusses what progress, as discussed in its fiscal year 2000 performancereport, USDA made in resolving its challenges. The third column discussesthe extent to which USDA’s fiscal year 2002 performance plan includesperformance goals and measures to address the challenges that we and theUSDA’s OIG identified. While USDA’s fiscal year 2000 performance reportaddressed progress in resolving some of the 17 management challenges,the department did not have goals for the following: strategic humancapital management, information security, Forest Service land exchangeprogram, grant agreement administration, grant competitiveness, researchfunding accountability, and Rural Business Cooperative Service andtherefore did not discuss progress in resolving these challenges. USDA’sfiscal year 2002 performance plans provided some goals and measures orstrategies for all but five of its management challenges. USDA did not havegoals for the management challenges involving the Forest Service landexchange program, grant agreement administration, grantcompetitiveness, research funding accountability, and Rural BusinessCooperative Services. For the remaining 12 major management challenges,its performance plan had (1) goals and measures that were directly relatedto 8 of the challenges, (2) goals and measures that were indirectlyapplicable to 3 of the challenges, or (3) had no goals and measures relatedto 1 of the challenges, but discussed strategies to address it. Incommenting on a draft of this report, USDA stated that it made additionalprogress in resolving its management challenges that had not beenreflected in its fiscal year 2000 performance report and fiscal year 2002performance plan.

Appendix I: Observations on the U.S.Department of Agriculture’s Efforts toAddress Its Major Management Challenges





Table 1: Major Management Challenges

Major management challenge

Progress in resolving major managementchallenge as discussed in the fiscal year2000 performance report

Applicable goals and measures in thefiscal year 2002 performance plan

GAO-designated governmentwide high riskStrategic Human Capital Management:GAO has identified shortcomings atmultiple agencies involving keyelements of modern human capitalmanagement, including strategic humancapital planning and organizationalalignment; leadership continuity andsuccession planning; acquiring anddeveloping staffs whose size, skills, anddeployment meet agency needs; andcreating results-oriented organizationalcultures.

USDA’s fiscal year 2000 report did notaddress this management challenge. Itcontained no performance goals andindicators for measuring progress in humancapital management. The departmentwidereport section cited a human capitalobjective—that of ensuring consistent,uniform key administrative policies toincrease employee productivity and improvethe well being of the workforce. It furthernoted that sound leadership and adequateperformance incentives help create a workenvironment for serving customerseffectively. However, the cited goal was notrelated to the desired outcome.

In commenting on a draft of this report,USDA officials said that their performancereport and plan did not reflect all of theprogress that has been made on thismanagement challenge. For example,USDA officials stated that they havecompleted and submitted a departmentalworkforce plan to the Office of Managementand Budget.

The Forest Service acknowledged humancapital management challenges andreferred to its own recently developedcomprehensive workforce strategy but didnot link the strategy to specific objectivesand goals. Several USDA agencies includedhuman resource performance goals toaddress Equal Employment Opportunityconcerns and improve program delivery.

USDA’s fiscal year 2002 plan takes, for thefirst time, a single-entity approach toperformance management. It alsorecognizes, for the first time, selectedUSDA-wide human capital managementchallenges related to emerging skill gapsand the “brain drain” that may result from ahigh retirement eligibility rate. However, itsperformance goal to improve employeework satisfaction will not measure progressin addressing these challenges. Indeed,human capital management is subsumed inan objective that focuses on greater use oftechnology to improve organizationalproductivity, accountability, andperformance. However, the plan does notlink the objective to goals or indicators forkey human capital management challenges,such as progress in strategic human capitalplanning, organizational alignment,leadership continuity, and successionplanning, that will be necessary to achievetechnology advances. Furthermore, the planwill not facilitate USDA’s ability to acquireand develop staffs whose size, skills, anddeployment meet agency needs or to createa results-oriented organizational culture.

Information Security: Our January 2001high-risk series update noted thatgovernmentwide efforts to strengtheninformation security have gainedmomentum and expanded.Nevertheless, recent audits continue toshow federal computer systems areriddled with weaknesses that make themhighly vulnerable to computer-based

USDA’s Office of Chief Information Officer’s(OCIO) fiscal year 2000 performance reportdiscussed actions underway or planned toaddress performance goals for establishinga department-level risk managementprogram and developing an information andtelecommunications security architecture.However, it did not discuss either thedepartment’s overall progress in

USDA’s fiscal year 2002 performance planhas some general discussion of efforts tostrengthen departmentwide informationsecurity; however, no information securityperformance goals or measures wereprovided. USDA did list one performancegoal with indicators for establishing acommon computing environment for USDAService Centers, which includes hardware,








attacks and place a broad range ofcritical operations and assets at risk offraud, misuse, and disruption.

GAO and USDA’s OIG have identifiedsignificant weaknesses in thedepartment’s information securityprogram and its two major data centersthat place the department’s computersystems, which support billions ofdollars in benefits, at risk. USDA hastaken positive steps to improve itsinformation security by developing itsAugust 1999 action plan to addressvulnerabilities and potential threats.However, at the time of our August 2000report, little progress had been made toimplement many components of theaction plan that are critical tostrengthening departmentwideinformation security1. USDA also neededto develop and document a detailedstrategy with time frames andmilestones to fully implement the actionplan. Because of this, we alsorecommended that USDA report itsinformation security weaknesses as amaterial internal control weakness underthe Federal Managers’ FinancialIntegrity Act (FMFIA).

The OIG also identified informationresources management as amanagement challenge. Specifically, theOIG reported on widespreadweaknesses in information technologysecurity controls.

implementing USDA’s August 1999 actionplan for improving departmentwideinformation security or the time frames andmilestones for doing so.

OCIO’s performance report included a keyperformance goal for establishing a centralcyber security office, which the departmentsays it has met. However, the performancereport stated that key performance goals forestablishing a department-level riskmanagement program and developing aninformation and telecommunicationssecurity architecture have not been met. Forexample, the report stated that only somesecurity risk assessments had been done,but they were often incomplete andconducted in a nonstandard manner.

software, security, websites,telecommunications, and databases.

USDA’s fiscal year 2002 performance plandid identify the need to strengthendepartmentwide information security alongwith other major management challengesand program risks identified by GAO. Theplan also discussed work on the OCIO’sAugust 1999 action plan to strengtheninformation security and referred to OCIO’sseparately prepared annual performanceplan for information on measures fortracking performance.

OCIO’s fiscal year 2002 performance planincluded performance goals and indicatorsfor (1) ensuring that USDA agenciesidentified security vulnerabilities andimplemented strategies to mitigate them and(2) developing and implementing aninformation and telecommunicationssecurity architecture. While these actionsare important to address part of USDA’ssecurity needs, performance goals orindicators for implementing the department’sAugust 1999 overall action plan tostrengthen information security are notdiscussed. Moreover, OCIO’s plan did notaddress USDA’s designation of informationsecurity as a material control weakness inthe department’s fiscal year 2000 FMFIAreport and how this issue will be resolved.

GAO-designated major management challengeFarm Service Delivery: USDA has animportant role in distributing benefits andaddressing farmers’ concerns. Since1995, USDA has been engaged in areorganization and modernization effort

USDA developed performance goalsrelating to customer satisfaction with bothprogram delivery and service quality.However, USDA did not provide its actualperformance percentages as of the end of

USDA’s fiscal year 2002 performance planstated that it is working to improve customerservice and operational efficiency bybuilding a modern information technologyinfrastructure—named Common Computing

1Information Security: USDA Needs to Implement Its Departmentwide Information

Security Plan (GAO/AIMD-00-217, Aug. 10, 2000).

http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-00-217








to achieve operational efficiencies andbetter customer service. While USDAhas co-located its county field officesinto service centers, it needs to improvehow these centers deliver programbenefits to their customers.

fiscal year 2000. Thus, USDA’s progresstoward resolving this managementchallenge could not be measured.

Environment (CCE)—at its service centersand moving many of its commontransactions to Internet-based systems.USDA established fiscal year 2002 goals of100 percent for the CCE implementationand to transition to a fully integrated Internetsystem.

Food Stamp Program: Millions of dollarsin overpayments occur because eligiblepersons are paid too much or ineligibleindividuals improperly participate in theprogram. In addition, trafficking of foodstamps continues to be a problem.

USDA’s fiscal year 2000 performance reportstated that the Food and Nutrition Service’s(FNS) had a performance goal formaintaining payment accuracy and a goalrelating to recovering overpayments toparticipants. Although the report stated thatFNS data was not yet available to measurefiscal year 2000 progress in maintainingpayment accuracy, FNS officials stated thatearly indications are that it would achieve itspayment accuracy goal of 90.5 percent infiscal year 2000.

USDA reported that FNS collected about$216 million in overpayments to recipients infiscal year 2000, which exceeded its originaltarget of collecting $193.6 million. As aresult, FNS increased its target to $215.8million for fiscal year 2001.

USDA reported that FNS sanctioned 1,349stores that violated program regulations,thus it narrowly missed its target ofsanctioning 1,365 stores. Also, FNS cited anumber of recent program evaluations thatcontributed to its knowledge base aboutpreventing illegal use of benefits.

USDA reported that FNS exceeded itstarget of maintaining the baseline of 1.54percent of authorized stores that did notmeet regulatory requirements for type andamount of food sold. The actual percentachieved was 1.48.

A recent FNS study estimated that storeseach year illegally provided cash for benefits(trafficking of benefits) totaling about $660million. USDA’s report did not specificallydiscuss FNS’ targets or measures forreducing trafficking.

USDA’s fiscal year 2002 performance planestablished a target goal for food stampbenefit accuracy of 90.8 percent in fiscalyear 2002 (same as for fiscal year 2001).Strategies for meeting this goal includecontinuing to improve the accuracy andconsistency of the food stamp benefit qualitycontrol system and supporting state effortsto improve benefit accuracy throughtechnical assistance and “best practices”information-sharing.

USDA’s plan did not discuss improving therecovery of overpayments to recipients.

USDA’s plan contained a general goal ofimproving the stewardship of federalnutrition assistance programs and containedstrategies to achieve this but does notspecifically discuss this issue.

USDA’s plan had a goal of improvingstewardship of federal nutrition assistanceprograms, but it does not specificallydiscuss goals, strategies, and measures forminimizing illegal use of benefits byparticipants or retailers.

USDA’s plan did not discuss trafficking ofbenefits.








Food Stamp Program: ImplementElectronic Benefit Transfer (EBT)Nationwide and Ensure AdequateControls.

(This management challenge is alsodiscussed in this report under the “FoodStamp Fraud and Error” caption.)

USDA reported that FNS met its fiscal year2000 goal of having 42 states issue benefitsby EBT. FNS stated that 41 states and theDistrict of Columbia had operational EBTsystems (39 of these systems wereoperating statewide). USDA did not addresswhether the state EBT systems containedadequate controls.

USDA’s plan contained a target of having 89percent of food stamp benefits issued byEBT for fiscal year 2002. To achieve itstarget, USDA plans to work aggressivelywith states needing to implement statewidesystems. The plan pointed out the need forUSDA to address other EBT-related costand service challenges.

Child and Adult Care Food Program(CACFP): This Program provides for thenutritional well being of young childrenand adults in day-care homes andcenters and for teenagers in after schoolprograms.

Improve state and local managementand program controls to reduce fraudand abuse.

USDA reported that FNS was premature toassess the effectiveness of its goal of bettertargeting and higher quality programreviews by state agencies because fiscalyear 2000 was a start up year forcomprehensive management evaluationsand data was not available to measure thisactivity. Instead, FNS focused its efforts onconducting comprehensive and aggressiveprogram oversight in the form ofmanagement evaluations of state agencyoperations. FNS revised its indicators forimproving CACFP management in the fiscalyear 2001 performance plan, and it willbegin reporting based on the new indicatorsin that year’s performance report. However,the report did not specify any of theseindicators.

USDA’s plan contained a goal ofstrengthening state and local managementof CACFP. It established the following twotargets for fiscal year 2002: (1) USDA toconduct management evaluations of allstate agencies administering the programand (2) USDA to work with state agencies toensure that all states train programsponsors on new regulations.

GAO- and OIG-designated major management challengesCivil Rights Complaints: There continuesto be problems in the timely processingof discrimination complaints in USDA’sCivil Rights Office. Processing delayshave caused a significant backlog inboth program and employeediscrimination complaints, resulting inUSDA’s failure to comply with federalregulations that affect the livelihood andwell-being of individuals who believethey have been discriminated against.Complaints involve the treatment ofminority farmers when they applied forfarm loans or loan servicing andemployee’s civil rights. The OIG recentlyreported that this backlog was not beingresolved fast enough.

Although USDA continued to address thisissue, the Office of Civil Rights did not meetits fiscal year 2000 performance goalreduction of 15 percent from the previousyear in the number of days for processingfarmer program and employment civil rightscomplaints. USDA’s Long TermImprovement Plan for civil rights activities,completed in October 2000, cited thesystems and processes for handling civilrights complaints as inadequate, resulting inlost files, delays, inaccurate accounting, andother problems. The plan also identifiedinsufficient staffing, lack of expertise,insufficient employee training, and inefficientautomated tracking systems as reasons forcontinued delays in processingdiscrimination complaints. These problemswere similar to the weaknesses previouslyidentified by the OIG and us. USDAbelieved that focused attention on caseprocessing, professional training, and otherefforts should help close more complaintseach year.

According to USDA’s fiscal year 2002performance plan, USDA revised itsperformance measure, lowering itsignificantly from fiscal year 2000. For fiscalyear 2001, the measure is to reduce by 5percent the amount of time it takes toresolve the average civil rights complaints.For fiscal year 2002, USDA will aim toreduce the processing time by yet another 5percent. USDA plans to continue theseefforts until it reaches its long-term strategicgoal of resolving all program and employeecomplaints by issuing its reports of civilrights investigations within its regulatoryrequirement of 180 days by fiscal year 2005.However, USDA will not meet its goal byapplying this performance measure to itscurrent average processing time forprogram and employee discriminationcomplaints. It could take over a decade forUSDA to come into compliance.Nevertheless, USDA plans that by fiscalyear 2005 it will be in compliance withregulations by issuing its reports of civil







Applicable goals and measures in thefiscal year 2002 performance planrights investigations within its regulatorytime frame of 180 days.

Financial Management: USDA continuesto lack financial accountability overbillions of dollars in assets. As such,USDA does not have meaningful andaccurate financial information toevaluate its financial performance andprovide assurance that its consolidatedfinancial statements are reliable andpresented in accordance with federalaccounting standards. In January 2001,because major barriers to achievingfinancial accountability at the ForestService remain, we continued todesignate the Forest Service’s financialmanagement a high-risk area vulnerableto waste, fraud, abuse, andmismanagement.

USDA reported meeting its performancegoal of 50 percent of its agency componentsreceiving an unqualified audit opinion ontheir stand-alone financial statements. Thisrepresented an important step towardimproving financial accountability. USDAalso reported meeting its performance goalof partially implementing a new accountingsystem, the Foundation FinancialInformation System (FFIS) that will assistUSDA in its preparation of meaningful andaccurate financial information. In addition,the Forest Service reported that it hadpartially met its performance goal ofcompleting its real property inventory, along-standing problem that has contributedto our high-risk designation of the ForestService’s financial management as well asUSDA’s lack of financial accountability overbillions of dollars in assets. Progressreported by the Forest Service includedcompleting its physical verification of realproperty, issuing protocols for maintenanceand capital improvements of real property,and determining the value of its forestroads.

USDA’s fiscal year 2002 performance planincluded performance goals and measuresto address the lack of financialaccountability. Specifically, to promotefinancial accountability throughout thedepartment, USDA has established goalsand measures that included achieving anunqualified opinion on its consolidatedfinancial statements for fiscal year 2002 andimplementing FFIS departmentwide. USDAreported that its new financial managementsystem will provide the integration andcapabilities to improve the delivery of timelyand meaningful financial managementinformation and will allow USDA to complywith external legislation including the ChiefFinancial Officer Act of 1990. Furthermore,USDA reported that the implementation ofthis financial information system will provideauditable financial data that can be used toprepare the USDA consolidated financialstatements. The Forest Service’s fiscal year2002 performance plan includesperformance goals and measures thataddress achieving an unqualified auditopinion on its financial statements andproviding timely, accurate, and reliablefinancial information, which are consistentwith those established departmentwide.However, the Forest Service’s plan does notspecifically address how it will correct itsfinancial management weaknesses relatedto real property, a component that hascontributed to our high-risk designation ofthe Forest Service’s financial management.

Food Safety: The number of food-borneillnesses has heightened concernsabout the effectiveness of the federalfood safety system. GAO has found thecurrent multi-agency federal food safetysystem needs to be replaced by a singlefood safety agency. (This managementchallenge is also discussed in this reportunder the “A Safe and Wholesome FoodSupply” caption.)

The OIG reported that the Food Safetyand Inspection Service (FSIS) needs toimprove activities relating toimplementation of the Hazard Analysis

USDA’s fiscal year 2000 performance reportcontained an objective to establish effectiveworking relationships with other agencies.

USDA reported that FSIS had madesubstantial progress in resolving thismanagement challenge. FSIS had met orexceeded most of its goals relating toHACCP system implementation, complianceand enforcement activities, safety ofimported meat and poultry products, and thecontamination and adulteration of foods.However, FSIS did not meet its fiscal year2000 target goal to perform 68,000laboratory tests, falling short of its target by

The fiscal year 2002 performance plan didnot contain a performance goal to create asingle federal food safety agency. USDA’splan stated that concerns about the need forfundamental changes in food safetyprograms and about food safetyfragmentation are being addressed through“cross-Departmental partnerships” and othercoordination activities. USDA stated thatFSIS is a mandated federal program andthat FSIS can take no action to dismantleitself or to merge with other agencies.USDA stated that it did not have the legalauthority to create a single food safetyorganization, and therefore did not mention








and Critical Control Point (HACCP)system, compliance and enforcementactivities, laboratory testing of meat andpoultry products, safety of importedmeat and poultry products, and thecontamination and adulteration of foods.

Also, the OIG reported that USDA needsto identify and halt criminal activityinvolving the intentional contamination offood products.

8,000 tests. In commenting on a draft ofthis report, FSIS stated that it does notconsider this OIG issue to be a majormanagement challenge because the OIGfindings concerned incompletedocumentation rather than inadequateperformance.

USDA did not directly discuss thismanagement challenge. However, itreported that FSIS met a relatedperformance goal to establish standardoperating procedures for coordinating food-borne illness outbreaks and other foodsafety emergencies, both unintentional andintentional in nature.

a merger of agencies in the USDA plan orFSIS plan.

FSIS’ fiscal year 2002 performance planincluded tangible and measurableperformance goals relating to the safety ofimported foods. However, the plan did notinclude measurable performance goals forthe other elements of this managementchallenge.

FSIS’ fiscal year 2002 performance plan didnot have a performance goal related toidentifying and halting criminal activityinvolving the intentional contamination offood products. In commenting on a draft ofthis report, FSIS stated that it was unawarethat the OIG considered this to be a majormanagement challenge and that it hadenhanced its efforts to review high-risk firmsin the last few years.

Farm Loan Programs: USDA needsmonitoring to ensure improvements tothe programs continue to further reducethe significant level of delinquent farmdebt. The OIG reported that it iscontinuing to work on determiningwhether borrowers are meeting eligibilityrequirements and whether loanproceeds are being used for theirintended purposes.

In January 2001, we removed the FarmLoan Programs from our high-risk list.We did so because the financialcondition of the programs had improvedsince we first designated the programsas high-risk in 1990 and becauseactions taken by the Congress andUSDA, many of which werecommended, have had a significantand positive impact on the operationsand condition of USDA’s farm loanprograms.

USDA reported overall improvement in theFarm Service Agency farm loan portfolio. Itmet its performance goals of thedelinquency rate for direct loans and theloss rates for direct and guaranteed loans.

More specifically, since the end of fiscalyear 1995, the amount of outstandingprincipal owed by borrowers who weredelinquent on their direct farm loans and thepercentage of debt owed by such borrowersdeclined each year—from $4.6 billion, orabout 41 percent of the outstandingprincipal, in fiscal year 1995 to $1.8 billion,or about 21 percent of the outstandingprincipal, in fiscal year 2000.

The Farm Service Agency’s plan includedperformance goals to reduce delinquenciesand losses on direct loans and to maintainthe loss rate for guaranteed loans at orbelow 2 percent. USDA planed to achieve alow loss rate by using prudent underwritingpractices, borrower supervision, and its loanservicing tools. However, USDA commentedthat maintaining a low loss rate will be asignificant challenge in fiscal years 2001and 2002 because commodity prices mayremain weak and producers will berecovering from the effects of recent naturaldisasters.

Forest Service-Improving PerformanceAccountability:The Forest Service is refocusing itsactivities, resulting in a significantchange in its mission and fundingpriorities. We concluded that it is

The Forest Service reported that it isimplementing a new process and a newapproach to performance accountability thatit believes will provide the Congress and thepublic with a clear understanding of what itaccomplished with its appropriated funds.

In fiscal year 2001, the Forest Servicerevised its strategic plan to better focus onoutcomes and results to be achieved overtime and to better link strategic goals andobjectives to long-term measures and 5-year milestones. The agency’s fiscal year








important for the Forest Service toprovide the Congress and the publicwith a better understanding of what isachieved with the funds that are beingspent.

In addition, the OIG found that theForest Service’s strategic and annualplans lacked meaningful goals andobjectives with relevant performancemeasures and past performancemeasurement data were irrelevant andlacked basic accuracy.

The new process and approach include (1)developing the annual performance planbefore formulating the related fiscal yearbudget; (2) using the plan to set prioritiesand to sequence milestones and goals; and(3) developing clear links among the budgetstructure, program activities and outputs,annual goals and measures, and long-termstrategic outcomes and measures. Inaddition, in response to OIG reviews, theagency made several improvements to itsdata collection processes during fiscal year2000.

2002 performance plan begins to provide abridge between the strategic plan and theon-the-ground activities funded through theannual budget process by linking annualperformance goals and associated annualperformance measures to the strategicplan’s goals and objectives. Moreover, infiscal year 2002, the Forest Service plans touse an Activity-Based Costing system totrack the costs of about 80 core businessactivities that describe on-the-ground workaccomplished. However, the agencyrecognizes that much work still needs to bedone to be fully accountable.

IG-designated major management challengesForest Service Land ExchangeProgram: OIG audits have disclosedsignificant weaknesses in themanagement and controls over landexchanges. Private/public landexchanges did not reflect current marketconditions and resulted in undervaluedpublic property and overvalued privateproperty. In addition, some transactionsresulted in limited or no public value.

USDA’s fiscal year 2000 performance reportdid not address progress for this challenge.

The Forest Services’ fiscal year 2002performance plan did not includeperformance goals, measures, or strategiesapplicable to this management challenge.Also, this management challenge was notincluded as one of USDA’s majormanagement challenges in USDA’s fiscalyear 2002 plan.

Grant and Agreement Administration:The Forest Service did not effectivelymanage grant agreements to ensurefunds were expended for their intendedpurposes. OIG audits have disclosedseveral issues, for which the agency hastaken limited action. Managementdecisions have not been made on sixaudit recommendations made over 2years ago.


The Forest Services’ fiscal year 2002performance plan did not includeperformance goals and measures applicableto this management challenge. Also, thismanagement challenge was not included asone of USDA’s major managementchallenges in USDA’s fiscal year 2002 plan.

Crop Insurance: Crop insurance hasbecome a major USDA farmer “safetynet.” OIG audits have identified areaswhere crop insurance program integrityneeds to be strengthened:Oversight and monitoring procedures toevaluate the effectiveness of theinsurance companies quality controlprocesses are weak.Conflicts of interest problems existamong policyholders, sales agents,claims adjusters, and insurancecompanies’ employees.Material weaknesses and shortcomingsduring the verification process byadjusters have resulted in claim

The Risk Management Agency’s (RMA)performance report for fiscal year 2000 didnot directly address the managementchallenge. The report indicated that it metthe four broad performance indicators toimprove the integrity of the federal cropinsurance program. However, the reportprovided no support to substantiate thisclaim, and it noted that data used tomeasure progress were unavailable forthree of the indicators and unreliable for thefourth. The report explained that RMA istransitioning to new performance measuresthat should help it to better address thismanagement challenge in fiscal year 2001.

RMA’s performance plan for fiscal year2002 did not directly address themanagement challenge. The plan containedan overall performance goal to reduce cropinsurance program vulnerabilities andimprove program integrity. However, themeasure for the goal was generallyinadequate. For example, the plan did notidentify a target for the goal and noted thatdata used to measure the goal may beunreliable.








overpayments and other programabuses.

Insurance claim overpayments resultingfrom overstated or unreasonable cropyields and replacement cost for lostcrops.

OIG audits have also found that thecatastrophic insurance program may notbe providing the expected safety netcoverage to all farmers, particularly low-income or other socially disadvantagedfarmers.

RMA’s performance report for fiscal year2000 did address insurance availability to allproducers.

RMA’s performance plan contains a goal toimprove insurance availability to small andlow-income farmers by funding projects thatprovide information and technical assistancenecessary to participate in the insuranceprograms. However, the report relies on ameasure that focuses on outputs rather thanon outcomes. The measure is based on thenumber of outreach projects jointly fundedrather than on the number of small and low-income producers actually participating inRMA’s insurance programs.

Research Funding Accountability:USDA’s Cooperative State Research,Education, and Extension Service’s(CSREES) management controls do notensure sufficient monitoring, review, andaccountability for the use of its funds.


CSREES’ fiscal year 2002 performance plandid not include performance goals,measures, or strategies applicable to thismanagement challenge. Also, thismanagement challenge was not included asone of USDA’s major managementchallenges in USDA’s fiscal year 2002 plan.

Competitive Grants ProgramCompliance: OIG reviews of currentgrant programs have found that theyfavor large institutions and thatapplicants questioned the fairness of thegrants awarded. In addition, TheCongress recently authorized two newcompetitive grants: the Fund for RuralAmerica and the Initiative for FutureAgriculture and Food Systems. The OIGwill continue reviewing this program.


USDA’s fiscal year 2002 performance plandid not include performance goals andmeasures applicable to this managementchallenge. Also, this management challengewas not included as one of USDA’s majormanagement challenges in USDA’s fiscalyear 2002 plan.

Rural Business-Cooperative Service:The Rural Business-CooperativeService needs to address severalmanagement challenges that haveaffected the integrity it’s program. Forexample, the OIG reported thatmanagement action is needed to assurethat (1) grants and loans are made onlyto eligible recipients located in qualifiedrural areas, (2) improper exceptions toloan making requirements are not made,and (3) lender underwriting reviews andservicing are adequate.


In commenting on a draft of this report, RBSstated that the issues raised by the OIGhave been and are being addressed: (1) therural area concerned only Puerto Rico and adifference of opinion on the eligible area; (2)the improper exceptions to loan makingrequirements involved a former official whowas removed, and new procedures havebeen adopted; and (3) lender underwritinghas been addressed through several

USDA’s fiscal year 2002 performance plandid not include performance goals andmeasures applicable to this managementchallenge. Also, this management challengewas not included as one of USDA’s majormanagement challenges in USDA’s fiscalyear 2002 plan.

In commenting on a draft of this report, RBSstated that it has addressed these issuesand does not believe that performancegoals or measures are needed becausethese items were not chronic problems.








actions, including further reviews of states,assistance from the Farm CreditAdministration, and by obtaining software toassist field staff making credit decisions andin monitoring lender recommendations.

Rural Rental Housing: There has been ahistory of fraud and abuse in the RuralHousing Service’s (RHS) Rural RentalHousing (RRH) Program. Owners andmanagement companies have shownindifference toward the health and safetyof low-income and elderly tenants.

The Rural Development mission area’sreport did not specifically address progressin reducing fraud and abuse in the RRHProgram. The report also did not addressreducing the indifference shown bymanagement companies toward the healthand safety of low-income and elderlytenants. RHS measured progress by thenumber of new units built, the number ofunits rehabilitated, and the direct resourcesgiven to those rural communities andcustomers with the greatest need. Thereport did include a new performanceindicator to minimize loan delinquencies andfuture losses. It established a fiscal year2001 target to reduce the number of RRHprojects with accounts more than 180 dayspast due to 130 projects. The actual fiscalyear 2000 number was 153.

The Rural Development mission area’s plandid not include goals and measures thatspecifically addressed this managementchallenge. The plan did acknowledge thatwe and the OIG have identified a continuinghistory of fraud and abuse by owners andmanagement companies, along withinstances of indifference toward the healthand safety of low-income and elderlytenants. According to the plan, theperformance indicator “to develop systemsand processes which strengthen themanagement of Multifamily Housing (MFH)projects and help preserve the portfolio” andencourage a sound life-cycle managementwas added for fiscal year 2001 to addressthis issue. However, we do not believe thatthe addition of this indicator adds enoughdetail or discussion of the fraud and abuseissues.

Appendix II: GAO Contact and Staff

Acknowledgments


Charles Adams (202) 512-8010

Erin Barlow, Andrea Brown, Jacqueline Cook, Thomas Cook, CharlesCotton, Angela Davis, Andrew Finkel, Judy Hoovler, Erin Lansburgh, CarlaLewis, Sue Naiberk, Stephen Schwartz, Richard Shargots, Mark Shaw, RaySmith, Alana Stanfield, Phillip Thomas, and Ronnie Wood.

Appendix II: GAO Contact and StaffAcknowledgments

GAO Contact

StaffAcknowledgments

(360059)

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