Federal agencies this year will be subject to a new statutory requirement. A new law requires the Office of Management and Budget to annually determine if agency programs meet goals set out in their annual performance plans. To do this, OMB has created a new review process.
A provision of the Government Performance and Results Modernization Act of 2010 kicks in this year. It requires OMB to “determine whether the agency programs or activities meet performance goals and objectives outlined in the agency performance plans.” If not, then OMB has to prepare a report to the Congress on unmet goals.
To meet this requirement program-by-program would be virtually impossible, given the scale of the government, so OMB decided to assess “buckets” of programs, using agency strategic objectives – a subset of agency strategic plans — as the unit of analysis. Agency strategic plans will be released along with the President’s fiscal year 2015 budget proposal in early March. OMB staff estimate that there are about 400 strategic objectives across the government.
So how will this new process work? OMB issued guidance last year and OMB staff participated in a governmentwide forum last week, sponsored by the National Academy of Public Administration (NAPA), where the process was described and discussed.
What Is a Strategic Review? OMB says that the annual strategic review is “designed to inform strategic and budgetary decision-making, improve longer-term program outcomes, and identify opportunities for performance improvement.” It also notes that “this policy may in some cases represent a significant change to agencies operations” so it encourages agencies to develop a maturity model to chart out future improvements. OMB also encourages agencies to integrate these reviews “into existing agency management processes, such as the budget development process.”
Christopher Mihm, an observer at the NAPA forum from the Government Accountability Office, says that if used effectively, the strategic reviews are a “leadership device that helps answer what’s the connection between what we are trying to do and what goes on day-to-day.”
Agencies are encouraged to design their own strategic review processes and consult with OMB no later than February 17, 2014 on what their process will look like (e.g., timing, roles, responsibilities, sources of evidence to be used, etc.)
Conducting the Reviews. OMB says agencies will begin their baseline strategic review cycle after the publication of their fiscal year 2014 – 2018 strategic plans (which will be released along with the fiscal year 2015 budget in March).
OMB says that agencies should make relative assessments of progress for each of their strategic objectives, using “multiple perspectives and sources of evidence, both qualitative and quantitative,” and that “agency leaders must use their judgment when determining relative levels of progress.” Nevertheless, agencies must place 10-20 percent of their strategic objectives into each of two categories – those that demonstrate “noteworthy progress” and those that have “significant challenges.”
After their initial assessments, agencies must provide OMB a Summary of Findings for each strategic objective reviewed, by May 16, 2014. Agencies are given the flexibility to define the format for their Summary of Findings. However, agencies will be expected to “identify areas of significant progress and challenges for each strategic objective.”
Several agencies have already begun to design and pilot their strategic review processes this past year. For example, the Department of Housing and Urban Development conducts 20 “topic review” – 12 are policy-oriented (such as reducing homelessness) and 8 are management-oriented (such as reducing improper payments).
Using the Results of the Reviews. According to OMB, the Summary of Findings will not be publicly released, but rather will be used as an input into both the budget process and the agency annual report process. OMB will provide feedback to agencies on their Summary of Findings in June, and agencies will provide progress updates for each strategic objective back to OMB in September along with their draft budget and annual performance plan for fiscal year 2016.
OMB says “The progress update will be published as part of the FY 2014 Annual Performance Report in February 2015.” It also says the agencies will include in this report the strategic objectives classified as “noteworthy” or “challenged.”
Challenges Facing Agencies. The creation of a new set of governmentwide processes is daunting. GAO’s Mihm observes that the strategic review cycle will pose a number of challenges to agencies. For example:
· To be effective, agencies need to ensure they have created results-oriented strategic objectives.
· Agencies need to assess the full range of policy tools as a part of the discussion in the strategic reviews. This would include grants, loans, contracts, tax expenditures, and regulations – areas that agencies typically have not assessed before, or are under the purview of other agencies.
· Create an effective governance structure that ensures the programs that contribute to a strategic objective are effectively coordinated and managed together to achieve the objective.
· Need to understand the quality of the data being used and whether is good enough to use to make decisions.
· Ensure the results from the strategic reviews are actionable by decision makers.
While those implementing the new strategic review process will face these and other challenges, the phased approach laid out by OMB, along with the learning network it is putting in place, should allow the flexibility needed to learn and adjust over time.
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