Tribal Programs: Resource Constraints and Management Weaknesses Can Limit Federal Program Delivery to Tribes

As Congress affirmed in the Indian Trust Asset Reform Act, the United States has undertaken a unique trust responsibility to protect and support Indian tribes and Indians. Thus, federal agencies have many programs that provide services to tribes. However, in 2018, the U.S. Commission on Civil Rights found that, due to a variety of reasons—including historical discriminatory policies, insufficient resources, and inefficient federal program delivery—Native Americans continue to rank near the bottom of all Americans in terms of health, education, and employment. In February 2017 GAO designated federal management of programs that serve tribes in education, health care and energy as high risk. This designation is neither reflective of the performance of programs administered by tribes nor directed at tribal activities.

This testimony, which is based on reports GAO issued from June 2015 through March 2019 primarily related to education, health care, and energy development, provides examples of (1) capacity and funding constraints and budget uncertainty and (2) management weaknesses that limit the effective delivery of federal programs for tribes and their members.

GAO previously reported that constraints in federal agency capacity and funding and budget uncertainty limit effective delivery of some federal programs and activities serving tribes. Key federal agencies serving tribes include the Department of the Interior's Bureau of Indian Affairs (BIA) and Bureau of Indian Education (BIE), and the Department of Health and Human Services' Indian Health Service (IHS). For example:

High staff vacancies and insufficient staff capacity. In February 2017, GAO reported that IHS had over 1,550 vacancies for health care positions in 2016, and IHS officials said that the agency's insufficient workforce was the biggest impediment to providing timely primary care. In addition, GAO's March 2019 high-risk update reported that about 50 percent of all BIE positions had not been filled, according to recent BIE documentation.

Inadequate funding. In January 2019, GAO reported on agency and tribal perspectives on the adequacy of funding and how it impacts federal programs. GAO found that inadequate program funding to meet tribal needs (e.g., BIA estimated a funding shortfall at 60 percent for one program in a 2013 report to Congress) may limit tribal options for administering federal programs using self-determination contracts or self-governance compacts. Many tribal stakeholders told GAO that they supplement federal funding when there are shortfalls, which diverts funding from economic development and services provided to their communities.

Effects of budget uncertainty. Budget uncertainty arises during continuing resolutions—temporary funding periods during which the federal government has not passed a budget—and during government shutdowns. In a September 2018 GAO report, IHS officials and tribal representatives described the effects of budget uncertainty on their health care programs and operations. GAO reported that these effects include recruitment and retention of staff challenges and additional administrative burden and cost for both tribes and IHS.

In GAO's prior reports and March 2019 high-risk update, GAO found that management weaknesses at some federal agencies limit the effective delivery of some federal programs serving tribes. For example:

Oversight weaknesses. In March 2016, GAO found weaknesses in IHS's oversight of timeliness of patient care leading to long wait times at IHS facilities. GAO recommended that IHS develop standards for patient wait times, monitor these wait times, and take corrective action as needed. IHS has established wait times standards and is developing monitoring capacity.

Management weaknesses . In June 2015, GAO found shortcomings in BIA's management of energy development permitting processes that led to lengthy reviews and negatively impacted energy development on tribal lands. Among other things, GAO recommended that BIA develop a process to track its review and response times. BIA has taken initial steps to develop system enhancements to capture key dates during the review and approval process for energy development documents.

GAO has made more than 50 recommendations related to its high- risk area and more than 40 recommendations for tribal water infrastructure, tribal self-governance and tribal consultation of which 60 recommendations are open. Sustained focus by the respective agencies and Congress on these and other issues are essential to continued progress.

Thank you for the opportunity to discuss examples from our prior work of  resource constraints and management practices that limit the effective  delivery of federal programs that serve Native American tribes and their  members. As Congress found in the Indian Trust Asset Reform Act,  “through treaties, statutes, and historical relations with tribes, the United  States has undertaken a unique trust responsibility to protect and support  Indian tribes and Indians.” As further stated in that Act, the fiduciary  responsibilities of the United States to tribes are also founded in part from  specific commitments made in treaties and agreements, in exchange for  which Indians surrendered claims to vast tracts of land. The act notes that  this history of federal-tribal relations and understandings has benefited  the people of the United States and established “enduring and  enforceable ederal obligations to which the national honor has been  committed.” Federal law directs federal agencies to provide a variety of  services and benefits to Indian tribes and their members.

However, in a 2018 assessment of whether the federal government was  meeting its responsibilities to tribes, the U.S. Commission on Civil Rights  found that Native Americans continue to rank near the bottom of all  Americans in terms of health, education and employment. In its  assessment, the commission attributed this disparity in part due to  historical discriminatory policies of the federal government toward tribes,  insufficient resources, and inefficiencies in federal programs that serve  tribes. We have previously reported that agencies can improve the  efficiency of federal programs under which services are provided to tribes  and their members. Such improvements would be consistent with the  expressed view of Congress in the act as to the federal government’s  trust responsibilities and would strengthen the performance and  accountability of the federal government.

My statement today will focus on examples of (1) capacity and funding  constraints, and budget uncertainty and (2) management practices that  limit the effective delivery of federal programs for tribes and their  members. My statement is based on work we issued from June 2015  through March 2019 related to education, health care, and energy  development programs for tribes and their members designated as high  risk, and other work on tribal water and wastewater infrastructure, tribal  self-governance and tribal consultation. To conduct our previously issued  work, we reviewed relevant federal laws, regulations, and policies;  reviewed agency documentation; and interviewed tribal, federal, and  industry officials. More detailed information on our objectives, scope, and  methodology for that work can be found in the corresponding issued  reports.

We conducted the work on which this statement is based in accordance  with generally accepted government auditing standards. Those standards  require that we plan and perform the audit to obtain sufficient, appropriate  evidence to provide a reasonable basis for our findings and conclusions  based on our audit objectives. We believe that the evidence obtained  provides a reasonable basis for our findings and conclusions based on  our audit objectives.

Federal agencies have many programs that provide services and benefits  to tribes and their members. For example, the Department of the Interior’s  (Interior) Bureau of Indian Affairs (BIA) within the Office of the Assistant  Secretary-Indian Affairs (Indian Affairs) administers programs in natural  resources management, Indian child welfare, and economic  development—among other responsibilities. One key BIA responsibility is  to facilitate tribes’ development of energy resources on and beneath tribal  lands by reviewing and approving leases, permits, and other documents  required when the lands with Indian energy resources are held in trust or  restricted status. The Bureau of Indian Education (BIE), also within  Indian Affairs at Interior, administers education programs to  approximately 41,000 students on or near Indian reservations at 185  schools around the country. The Indian Health Service (IHS) within the  Department of Health and Human Services is charged with providing  health care to approximately 2.6 million Indians through more than 600  IHS or tribally operated facilities as of 2019. When services are not  available at these facilities, IHS may pay for services provided through  external providers. In addition, as part of its disease prevention efforts,  IHS provides technical and financial assistance to Indian tribes for the  cooperative development and construction of drinking water and  wastewater systems and support facilities.

These and other federal programs may also be administered by tribal  governments under a self-determination contract or self-governance  compact under the Indian Self-Determination and Education Assistance  Act of 1975, as amended. BIA and IHS are responsible for administering  self-determination contracts that allow for tribal administration of specific  government programs, including negotiating and approving each contract  and its associated annual funding agreement and disbursing funds to the  tribes. Each federally recognized tribe voluntarily decides whether, and to  what extent, to pursue the administration of federal programs. According  to a 2017 law journal article, by that year, nearly all tribes had used a self- determination contract or self-governance compact to take over the  administration for one or more federal programs.

In February 2017 we added federal management of programs that serve  tribes and their members to our high-risk list of federal areas that are  most vulnerable to fraud, waste, abuse, or mismanagement or that are in  need of transformation to address economy, efficiency, or effectiveness  challenges. In particular, we found numerous challenges facing BIE and  BIA and IHS in administering education and health care services, that put  the health and safety of American Indians served by these programs at  risk. In addition, we reported that BIA mismanages Indian energy  resources held in trust and thereby limits opportunities for tribes and their  members to use those resources to create economic benefits and  improve the well-being of their communities. Our recommendations  identified in the high-risk area do not reflect the performance of programs  administered by tribes nor are they directed at any tribally operated  programs and activities.

In our March 2019 high-risk update, we reported that the three agencies  demonstrated progress to partially meet all five criteria for addressing  high-risk issues: leadership commitment, capacity, action plan,  monitoring, and demonstrated progress. We continue to monitor and  report on progress made by the agencies in addressing issues in these  three program areas.

Federal Agency Capacity, Funding Constraints, and Budget Uncertainty Limit Effective Delivery of Some Federal Programs Serving Tribes

We have previously reported that constraints in federal agency capacity,  funding and budget uncertainty limit effective delivery of some federal  programs for tribes and their members managed by Indian Affairs, BIA,  BIE, IHS, and in other agencies’ tribal consultation activities as shown in  the following examples:

High staff vacancies. In November 2016, we found BIA had high  vacancy rates at some agency offices and that the agency had not  conducted key workforce planning activities to ensure its workforce  resources are appropriately deployed. We recommended that BIA  establish a documented process for assessing its workforce  composition at agency offices taking into account BIA’s mission,  goals, and tribal priorities. In response to our recommendation, BIA  has taken initial steps to assess its workforce composition; however  more work is needed from BIA to establish a process to regularly  assess its workforce composition and ensure it meets BIA and tribes’  needs. In February 2017 when we added improving federal  management of programs that serve tribes and their members to our  high-risk list, we found that high vacancies or declining staff levels  across all three designated high-risk areas—education, health care,  and Indian energy resources programs. For example, we reported  that IHS had over 1,550 vacancies for various health care positions  nationwide in 2016, and IHS officials said that the agency’s insufficient  workforce was the biggest impediment to providing timely primary  care. IHS has made some progress in demonstrating it has the  capacity necessary to address the program risks we identified in our  reports. For example, among other actions, in January 2019, IHS  established an Office of Quality which includes divisions for Enterprise  Risk Management and Internal Controls, Quality Assurance,  Innovation and Improvement, and Patient Safety and Clinical Risk  Management. As of August 2019, the Office of Quality had filled 14  positions. However, there are still key positions in the agency not yet  permanently filled, including the Director of the Office of Finance and  Accounting and the Deputy Director for Management Operations. In  our August 2018 report, we also found that IHS’s overall vacancy rate  for clinical care providers was 25 percent. Additionally, in our March  2019 high risk update and testimony, we reported that about 50  percent of all BIE positions had not been filled, according to recent  BIE documentation, for a variety of reasons, including difficulty  recruiting qualified individuals.

Insufficient staff skills or knowledge. We have also identified  concerns about existing staff having the right skills and expertise to  adequately perform job duties for effective implementation of Indian  energy development programs. For instance, in November 2016, we  found that BIA had not completed key workforce planning activities,  such as an assessment of work skills gaps, that contributed to BIA’s  inability to effectively support energy development. We  recommended that BIA incorporate effective workforce planning  standards by assessing critical skills and competencies needed to  fulfill BIA’s responsibilities related to energy development and by  identifying potential gaps. Interior agreed with this recommendation  and in fiscal year 2019, BIA began identifying the skills and  competencies necessary for select Indian energy-related occupations.  BIA officials told us that, once complete, agency officials will be able  to use the catalog of necessary skills and competencies to identify  training needs for existing staff. Additionally, in our March 2019 report  on tribal consultation, 47 of 100 tribes that provided comments to  federal agencies in 2016 identified insufficient agency officials’  knowledge or training on tribal consultation as a key factor that  hinders effective consultation. Several tribal officials we interviewed  shared similar concerns, and officials from 9 of 21 agencies we spoke  with (43 percent) identified staff knowledge or training as a factor that  hinders effective consultation.

Inadequate funding. We have previously reported on agency and  tribal perspectives on the adequacy of funding and how it impacts  federal programs and also examined spending levels of some  programs. In May 2018, we reported that federal agencies provided  about $370 million to develop, construct, or repair tribal drinking water  and wastewater infrastructure projects to address tribes’ needs in  fiscal year 2016.  This amount is about 11 percent of the more than  $3 billion in total existing tribal drinking water and wastewater  infrastructure needs that IHS had identified that same year. Further,  in January 2019, we found that funding shortfalls— estimated at 60  percent for one BIA program in a 2013 report to Congress— may limit  tribal options for administering federal programs using self- determination contracts or self-governance compacts. Many tribal  stakeholders told us that they supplement federal funding when there  are funding shortfalls. As we have previously reported, when tribes  financially supplement the federal program they take over, it diverts  funds away from other economic development opportunities and other  government functions and services they provide to their communities  and citizens. In our March 2019 report on tribal consultation,  according to tribal comments we reviewed and interviews with tribal  officials we found tribes’ ability to participate in consultations is limited  by availability of funding from the tribe, federal agencies, or other  sources. Tribes and agencies both identified insufficient resources,  including funding to support tribes’ participation in consultation  activities, as a key factor hindering effective consultation.

Effects of budget uncertainty. Budget uncertainty arises during  continuing resolutions—temporary funding periods during which the  federal government has not passed a budget—and during  government shutdowns. Failure to enact annual appropriations for  federal tribal programs in a timely manner may exacerbate the  problem of limited resources. For example, in our September 2018  report examining advance appropriations authority for IHS, IHS  officials and tribal representatives described several effects of budget  uncertainty on their health care programs and operations. Among  other things, we reported that effects of budget uncertainty include (1)  exacerbated challenges related to recruitment and retention of staff,  and (2) additional administrative burden and costs for both IHS and  tribes involved in calculating revised allocations and modification of  hundreds of tribal contracts each time a new continuing resolution is  enacted. IHS officials and tribal representatives said that advance  appropriation authority could mitigate the effects of this uncertainty  because IHS could use this authority to ensure continuity of health  care services during lapses in annual appropriations.

Management Weaknesses at Federal Agencies Hinder Effective Delivery of Some Federal Programs Serving Tribes

In our prior work, we have found a range of management weaknesses  related to internal controls at Indian Affairs, BIA, BIE, and IHS that hinder  effective delivery of some federal programs for tribes as shown in the  following examples:

Oversight weaknesses. In March 2016, we found that weaknesses  in Indian Affairs oversight led to safety and health deficiencies at BIE  school facilities that endangered students. We recommended that  Indian Affairs ensure that all BIE schools are annually inspected for  safety and health, as required by its policy, and that inspection  information is complete and accurate. Indian Affairs has taken steps  toward implementing our recommendations. For example, in April  2019 Indian Affairs provided documentation that it had assessed the  quality of two fiscal year 2018 BIE safety inspection reports. However,  Indian Affairs has not provided us with documentation that it has  assessed the quality of BIE safety inspection reports for fiscal year  2019—the first year BIE was responsible for inspecting all of its  schools. We believe it is important that the agency demonstrate that  BIE is capable of inspecting all schools for safety in fiscal year 2019  and that they produce inspection reports for schools that are complete  and accurate. As of November 2019, we have not received further  updates from the agency on this recommendation’s status.  Additionally, in March 2016, we reported on weaknesses in IHS’s  oversight of the timeliness of patient care that led to long wait times at  IHS facilities. We found that IHS had not set any agency-wide  standards for patient wait times at IHS federally-operated facilities.  We recommended that IHS (1) develop and communicate specific  agency-wide standards for patient wait times in federally- operated  facilities, and (2) monitor patient wait times and ensure corrective  actions are taken when standards are not met. IHS agreed with our  recommendations and implemented the first recommendation by  publishing patient wait time standards as part of its Indian Health  Manual website in August 2017. As of March 2019, IHS officials said  that the agency was working to implement the second  recommendation by developing system-wide monitoring capacity. We  will continue to review IHS’s progress.

Management weaknesses. In June 2015, we found shortcomings in  BIA’s management of permits, and other approvals for energy  development have led to lengthy review times and negatively  impacted energy development on tribal lands. These lengthy review  times have increased energy development costs for tribes, delayed  projects, and led to lost revenue, among other impacts. For example,  according to a tribal official, BIA took as long as 8 years to review  some of its energy-related documents. In the meantime, the tribe  estimates it lost $95 million in revenue that it could have earned from  tribal permitting fees, oil and gas severance taxes, and royalties. We  recommended that BIA develop a documented process to track its  review and response times and enhance its data collection efforts. As  of November 2019, the agency had taken initial steps toward  implementing the recommendation by developing system  enhancements to capture key dates during the review and approval  process for energy-related documents. However, BIA needs to collect  data from its system, develop time frames, and monitor agency  performance to fully address these recommendations. In our January  2019 work on tribal self-governance, we reported that Interior’s  process does not ensure that funds associated with self-determination  contracts and self-governance compacts are disbursed in a timely  manner, according to tribal stakeholders. These funding delays can  therefore be a factor that hinders tribal use of these agreements.  When funds are not disbursed in a timely manner, a tribal stakeholder  told us that tribes may have to use funds from their general revenue  accounts or seek other sources to cover federal program expenses.  According to several tribal stakeholders, when a tribe has to use its  own funds for the administration of federal programs—even  temporarily—it can adversely affect the tribe in various ways. To  help ensure that funds are disbursed in a timely manner, we  recommended that Interior establish a process to track and monitor  the disbursement of funds associated with self-determination  contracts and self-governance compacts. Interior agreed with this  recommendation, and as of November 2019, we are following up on  its status.

Weaknesses in planning. In May 2017, we found that Indian Affairs  did not have a comprehensive capital asset plan to guide funding for  construction projects to maintain, repair, or replace infrastructure at its  185 BIE schools. Specifically, although Indian Affairs had  determined which 10 schools it planned to replace next, it did not  have a long-term capital asset plan for the remaining 175 BIE  schools. Many of the 175 schools were in poor condition and had  safety hazards. We recommended Indian Affairs develop a  comprehensive long-term capital asset plan that includes a prioritized  list of projects with the greatest need of funding. Indian Affairs agreed  with the recommendation. As of October 2018, Indian Affairs provided  a list of deferred maintenance projects for 2018 and documentation of  processes for prioritizing such projects, among other things, but as of  November 2019 had not yet provided documentation that it had  completed a comprehensive long-term capital asset plan.

In conclusion, the resource constraints and management weaknesses in  federal programs that serve tribes limit federal agencies’ effective delivery  of programs to Native Americans. In many cases, we have made  recommendations to agencies to take steps to address identified issues.  While agencies have made some progress addressing recommendations  to improve tribal programs identified in our high-risk and other areas,  continued work to address these and other issues is needed. Sustained  congressional attention to these issues and the relevant factors  contributing to the disparities identified in the U.S. Civil Rights  Commission’s report will help the federal government makes progress in  addressing the needs of Native Americans.

Chairman Gallego, Ranking Member Cook and Members of the  Subcommittee, this completes my prepared statement. I would be  pleased to respond to any questions that you may have at this time.

For further information regarding this testimony, please contact Anna  Maria Ortiz at (202) 512-3841 or ortiza@gao.gov. If you or your staff have  any questions about health care issues in this testimony or the related  reports, please contact Jessica Farb at (202) 512-7114 or farbj@gao.gov.  For questions about education, please contact Melissa Emrey-Arras at  (617) 788-0534 or emreyarrasm@gao.gov. For questions about energy  resource development, please contact Frank Rusco at (202) 512-3841 or  ruscof@gao.gov. Contact points for our Offices of Congressional  Relations and Public Affairs may be found on the last page of this  statement.

Key contributors to this statement include Lisa Van Arsdale (Assistant  Director), Swati Thomas (Analyst-in-Charge), Edward Bodine, Kelly  DeMots, Summer Lingard-Smith, Elizabeth Sirois, Jeanette Soares, Kiki  Theodoropoulos and Leigh White.

This is a work of the U.S. government and is not subject to copyright protection in the  United States. The published product may be reproduced and distributed in its entirety  without further permission from GAO. However, because this work may contain  copyrighted images or other material, permission from the copyright holder may be  necessary if you wish to reproduce this material separately.

According to the U.S. Commission on Civil Rights, the federal government inadequately supports Native Americans’ physical, social, and economic well-being. Inefficient delivery of federal services is one factor.

We testified that a high number of staff vacancies, inadequate funding, management weaknesses, and other factors prevent key agencies—the Bureau of Indian Affairs, the Bureau of Indian Education, and the Indian Health Service—from providing effective services.

Federal management of programs that serve tribes is on our High Risk List, and 60 of more than 90 recommendations we’ve made for high risk and other areas remain open.


Government Reorganization: Issues to Consider in the Proposed Reorganization of the Office of Personnel Management

In June 2018, the administration proposed reorganizing OPM by devolving its responsibilities to other agencies and entities including GSA and the EOP; see the figure for details. OMB's role is to coordinate and oversee the reorganization proposal, with support from OPM and GSA. In June 2018, GAO reported on key practices to assess agency reform efforts.

This testimony focuses on preliminary observations from GAO's ongoing work related to the transfer of functions from OPM to GSA and the EOP. Specifically, we evaluated (1) the extent to which OMB, OPM, and GSA have addressed key practices for effective reforms and reorganizations; (2) legal authorities that may affect the reorganization of OPM, and (3) key capacities important for effective strategic human capital management, which need to be in place regardless of how the leadership over federal human capital is organized.

For the information in this testimony, as of May 17, 2019, GAO met with OMB staff, GSA officials, OPM's and GSA's Inspectors General staff, and analyzed documentation provided by GSA. GAO also reviewed its prior related work.

The Office of Management and Budget (OMB), Office of Personnel Management (OPM), and General Services Administration (GSA) have generally not addressed key practices for agency reform efforts as they have moved forward with their proposal to reorganize OPM. They have not established outcome-oriented goals, developed a cost-benefit analysis or implementation plans, and have not fully involved or communicated their efforts with the Congress, employees, and other key stakeholders. OPM and GSA also have not shown how they will address management challenges that may affect their ability to successfully reorganize the government's central human capital functions.

OMB, OPM and GSA have not identified specific actions, as of May 17, 2019, that can be taken administratively versus those that will require legislative action to reorganize OPM. The administration has acknowledged the need for additional statutory authority to execute certain transfers of functions from OPM to GSA and the Executive Offices of the President (EOP), but has also stated that it will rely on existing authority to move certain functions administratively. Without additional information from OMB and agencies, GAO cannot assess the legal authorities the administration is relying on to implement the reorganization.

As the Congress and administration consider whether or how to restructure OPM, it will be important to retain the capacity to execute certain government-wide, strategic human capital functions, regardless of the decision made about the organizational arrangement. These capacities include an ability to identify future workforce trends and to effectively collaborate with stakeholders—for the purpose of creating, executing, and overseeing human capital policies and programs, and enforcing civil service laws and regulations. This is particularly important because GAO continues to designate strategic human capital management as a high-risk area.

I am pleased to be here today to discuss the administration’s proposal  and ongoing efforts to reorganize the Office of Personnel Management  (OPM). As OPM and the law that created it both turned 40 last year,  policymakers and human capital experts have suggested that changes to  both may be needed for agencies to attract and retain high-performing  employees with the skills necessary to meet their current and evolving  missions. We first added federal strategic human capital management to  our list of high-risk government programs and operations in 2001.  Congress, OPM, and individual agencies have made improvements since  then. However, federal human capital management remains a high-risk  area because mission-critical skills gaps within the federal workforce pose  a high risk to the nation.

In June 2018, the administration released its government-wide reform  plan, Delivering Government Solutions in the 21st Century: Reform Plan  and Reorganization Recommendations (reform plan). It put forward a set  of reorganization proposals aimed at organizational realignments,  changes in mission focus, management improvements, achieving  operational efficiencies, and developing new capabilities. The reform plan  includes proposals to reorganize OPM by devolving its responsibilities to  other agencies and entities including the General Services Administration  (GSA) and the Executive Offices of the President (EOP). The Office of  Management and Budget (OMB) has a central role in coordinating and  overseeing the reform proposals, with support from the lead agencies that  are most directly affected by the reorganization, including OPM and GSA.

My statement today provides our preliminary observations on (1) the  extent to which OMB, OPM and GSA have addressed key practices for  effective reforms and reorganizations in their proposal to reorganize  OPM; (2) legal authorities that could affect the implementation of OPM’s  reorganization; and (3) key capacities important for effective strategic  human capital management which need to be in place regardless of how  the leadership over federal human capital is organized. A second reform  proposal called for the transfer of OPM’s background investigations to  DOD. Our analysis of the proposal to move background investigations  against our key practices is underway, and is not included as part of this  statement.

To assess the extent to which OMB, OPM, and GSA followed key  practices, as of May 17, 2019, we interviewed OMB staff and GSA  officials, and obtained and reviewed documents from GSA related to  leading and managing the OPM transfer. As of May 17, 2019, OMB and  OPM did not provide us with documents we requested on OPM’s  reorganization. We also met with OPM’s Acting Inspector General and his  staff, as well as staff from GSA’s Office of Inspector General (IG), to  discuss their monitoring efforts and reports on major management  challenges affecting OPM and GSA.

We also reviewed the reform plan, the President’s fiscal year 2019 and  fiscal year 2020 budget requests, and relevant congressional hearing  statements to obtain additional information on the administration’s  priorities and time frames. We assessed OMB’s, OPM’s, and GSA’s  activities against relevant key practices from our June 2018 report, and  related work on reorganizations and transformations. The preliminary  findings included in this statement are primarily focused on change  management practices that we determined were most relevant to the  proposed reorganization of OPM. We will apply additional key practices  from our June 2018 report in our assessment of selected government- wide reforms, as we complete our review. We also reviewed our prior  work on fragmentation, overlap, and duplication in federal programs, high- risk issues in the federal government, and other long-standing agency  management challenges, including relevant priority open  recommendations addressed to OPM and GSA.

To assess whether legal authorities may affect the implementation of the  reorganization, we sent written requests to OMB, OPM, and GSA asking  for their legal analysis of the existing authorities that are being used to  implement the reorganization, and any legislative changes that may be  required. As of May 17, 2019, these agencies had not provided us with a  legal analysis responsive to our request. We also interviewed OMB staff  and GSA officials about which authorities were being used, and whether  legislative changes would be needed to fully implement OPM’s  reorganization. In addition, we reviewed the OPM reorganization  proposal, and relevant OMB and agency documentation to determine the  laws and other legal authorities that may affect the reform. To the extent  possible given information provided by OMB and agencies, we evaluated  whether changes to such authorities may be required to fully implement  the reform.

To identify key capacities important for effective strategic human capital  management, we analyzed our prior work on federal human capital  issues. We also reviewed OPM documents, such as OPM’s 2018-2022  Strategic Plan and relevant laws and regulations.

We briefed OPM and GSA officials on the information contained in this  statement. We also offered to brief OMB.

We conducted the work on which this statement is based in accordance  with generally accepted government auditing standards.

Government-wide Reform Plan Requirements

In March 2017, the President issued an executive order requiring  comprehensive reorganization plans for executive branch agencies (see  fig. 1).

In April 2017, OMB provided guidance to federal agencies for developing  their respective reform plans. The government-wide reform plan was to  have been based on the agency reform plans, OMB-coordinated  crosscutting proposals, and public input. According to OMB’s M-17-22  guidance, OMB, in coordination with the President’s Management  Council, was to establish a way to track the progress of the reforms.  OMB’s guidance also stated that it would track progress of the reforms by  leveraging the federal performance planning and reporting framework  originally put into place by the Government Performance Results Act of  1993 (GPRA), and significantly enhanced by the GPRA Modernization  Act of 2010 (GPRAMA), through the use of cross-agency priority (CAP)  goals, agency priority goals, and Performance.gov.

In March 2018, OMB released the President’s Management Agenda  (PMA), which provided information on the preliminary status of  government reorganization efforts and is connected with these reform  efforts. The PMA also identified a set of CAP goals, required under  GPRAMA, to target those areas where multiple agencies must collaborate  to effect change and report progress in a manner the public can easily  track. The PMA gave OPM a key role in fulfilling the administration’s  human capital-related goals. Specifically, OPM, along with OMB and the  Department of Defense (DOD), were tasked to “align and strategically  manage the workforce to efficiently and effectively achieve the federal  government’s mission.”

The administration is planning to transfer OPM’s background  investigations to DOD, policy and workforce strategy functions to the  EOP, and all remaining functions to GSA (see fig. 2). These remaining  functions include human resource solutions, information technology  systems, healthcare and insurance, retirement services, merit system  accountability and compliance, and IG functions.

The President’s fiscal year 2020 budget proposal, which was issued in  March 2019, states that the administration is planning to complete the  reorganization of OPM by the end of fiscal year 2020. As such, the  budget proposal provided no funds for OPM for fiscal year 2020.  According to that budget proposal, “the Administration has been  developing plans to execute transfers of OPM functions to GSA and the  DOD using a combination of existing legal authority and legislation” since  June 2018. The budget proposal also requested $50 million to transfer  certain OPM functions to GSA, including an additional $1 million to cover  costs associated with merging the OPM IG with the GSA IG. On May 16,  2019, the administration proposed new legislation requesting authority to  fully implement its reorganization proposal.

OMB, OPM, and GSA Have Not Fully Addressed Key Reform Practices in Reorganizing OPM

Setting Goals and Measures, and Assessing Costs and Benefits

As we previously reported, a critical first step in the reform and  reorganization process is to define the benefits of the merger, and  describe how the future will be both different from and better than the  past. As of May 17, 2019, OMB, OPM, and GSA had not fully established  outcome-oriented goals and performance measures for, or assessed the  costs and benefits of, the administration’s proposal to reorganize OPM  (see fig. 3).

Specifically, GSA provided one document, a draft Qualitative Business  Case and Value Proposition for the GSA/HRS Merger (October 2018),  which includes some preliminary goals and measures, such as to improve  customer satisfaction. However, this document focuses only on the goals  and measures related to the transfer of human resources solutions from  OPM to GSA, rather than on the entire reform proposal. In addition, that  document explicitly states that it is not a cost-benefit analysis, and OMB  staff have told us that they have not conducted a cost-benefit analysis of  the reform. In our prior work on organizational mergers and  transformations, we have found that establishing a coherent mission and  integrated strategic goals to guide the transformation involves adopting  leading practices for results-oriented strategic planning and reporting.

We have previously reported that organizational transformations should  be led by a dedicated team of high-performing leaders within the  agency, and GSA has provided some evidence of this leadership focus  and attention, but OMB, OPM, and GSA have only partially addressed  this key practice (see fig. 4). According to GSA officials and documents  we reviewed, the agency designated a member of its Senior Executive  Service as the leader of the reorganization within GSA, and has  established a Project Management Office with dedicated staff and  resources which will take on the responsibility of supporting the transfer of  OPM’s functions to GSA. Also, GSA officials told us that OMB leads the  reform by, for example, leading meetings under the Six Sigma  management approach to manage progress on implementing the  reorganization. However, as of May 17, 2019, OMB did not provide  documents we requested about the role of these management meetings  for the reorganization, and OPM did not provide relevant information or  documents.

Our past work has also found that leadership should articulate a succinct  and compelling reason for the reform, as this helps build morale and  commitment to the organizational changes. OMB provided the case for  change in several public documents, such as the government-wide reform  plan, which primarily state that the administration’s reason for moving  OPM’s functions to GSA and the EOP is that these changes would create  greater efficiencies and elevate the importance of human resources  policy. However, sharing the case for change is only one key factor in  successful reforms and reorganizations. As we stated above, illustrating  what success looks like is also important, and involves articulating the  specific goals and costs and benefits of the reform.

Involving and Communicating with Congress, Employees and Key Stakeholders

Our prior work has shown that it is important for agencies to directly and  continuously involve their employees, Congress, and other key  stakeholders in the development of any major reforms. OMB and GSA  have taken some actions to involve and communicate with Congress,  employees, and other key stakeholders, but these initiatives lack  documentation (see fig. 5). For example, GSA officials told us that they  have met with members of Congress, conducted town hall meetings in  which they provided information to and answered questions from GSA  officials, and established an email inbox for communication between GSA  leaders and employees on the reform. However, as of May 17, 2019,  GSA officials had not provided us with documentation of their meetings  and communications with employees, and neither OMB nor OPM had  provided relevant documents on employee outreach and inclusion.

Developing and Communicating Implementation Plans with Milestones and Time Frames

We have previously reported that organizational transformations must be  carefully and closely managed by developing an implementation plan with  key milestones and deliverables to track and communicate  implementation progress, among other actions. However, as of May 17,  2019, OMB, OPM, and GSA had not developed an implementation plan  or publicly reported on key milestones (see fig. 6). This is the case  despite the fact that the President’s fiscal year 2020 budget states that  the reform is underway in fiscal year 2019, and that all remaining portions  of the reform would be completed in fiscal year 2020 through legislation.  Moreover, these agencies have not ensured transparency of their efforts  by publicly reporting on implementation progress.

Addressing Existing Management Challenges

Our prior work has shown that successful reorganizations seek to  implement best practices in the systems and processes wherever they  may be found, and guard against automatically adopting the approaches  used by the largest or acquiring component. The risk is that the new  organization may migrate less-than-fully efficient and effective systems  and processes merely because those systems and processes are most  often used. Accordingly, OPM’s proposed reorganization should  address agency management challenges, such as those in our high-risk  program, priority open recommendations, or those identified by agency  IGs. OMB, OPM, and GSA are aware of our related prior work, including  major management challenges, but have not demonstrated how the  proposed reorganization will help address these challenges (see fig. 7).

Based on a document released by the administration on May 15, 2019  discussing its rationale for the merger of OPM and GSA, the  reorganization should better support human capital delivery across the  federal government by centralizing the services provided by both  agencies, and reducing duplication. The reform plan also acknowledges  that federal human capital management remains a high-risk area due to  mission-critical skills gaps within the federal workforce. The reform plan  further states that OPM does not have the capacity to address the high- risk issues we have identified, and progress would be achieved more  efficiently by transferring OPM’s responsibilities to other government  entities, including GSA and the EOP. However, as of May 17, 2019,  OMB, OPM and GSA had not provided any documentation or analysis to  demonstrate how the proposed reorganization would help resolve high- risk issues.

The reform plan also draws attention to the OPM security breach that  occurred several years ago, and cites it as a reason for moving  information technology systems to GSA. We have five open priority  recommendations to OPM regarding information security, as we reported  to OPM in April 2019. For example, in May 2016, we recommended that  OPM update security plans to ensure controls specific to high-impact  systems are addressed, provide and track training for individuals with  significant security responsibilities, and ensure that security control  assessments specific to high-impact systems are comprehensive. To fully  implement these recommendations, we reported that OPM needs to  complete its ongoing efforts in each of these areas by implementing an  automated system for management of security controls and security  plans, defining and completing its planned corrective actions on training,  and reviewing completed security control assessments.

It is unclear whether OMB, OPM, and GSA have fully considered how  relevant major management challenges identified by OPM’s and GSA’s  IGs may affect the proposed reorganization (see fig. 7). For example, the  GSA IG’s 2018 report on management challenges contains a number of  findings that call into question GSA’s capacity to take on certain  responsibilities the administration proposes transferring to GSA as part of  the reorganization. Specifically, the report discusses GSA’s challenges with managing internal controls, prioritizing cybersecurity, and managing  human capital. By addressing major management challenges and  adopting best practices and processes as part of the reorganization effort,  the administration will be better positioned to successfully implement their  proposal.

More Information Needed to Fully Assess Legal Authorities to Reorganize OPM

As of May 17, 2019, OMB, OPM and GSA had not provided  documentation that they had identified specific actions that can be taken  administratively versus those that will require legislative action to  reorganize OPM. We asked OMB, OPM, and GSA for their views on what  legal authority, including appropriations, they are relying on to reorganize  OPM, including any additional authority that may be needed. As  described earlier in this statement, these agencies have not provided  implementation plans or other details on the reorganization. Similarly,  they have not provided details on the statutory underpinnings for OPM’s  reorganization. To the extent the administration identifies the legal  authority it is it relying on to support this proposed reorganization, or the  additional legal authority it needs, we will continue to assess it.

OPM is statutorily created as “an independent establishment in the  executive branch.” In addition, the Director of OPM is vested with certain functions by statute, and the Director (or OPM designee) is  required to perform those functions, including executing, administering,  and enforcing civil service requirements. While the Director of OPM may  delegate selected human capital management functions to other  agencies, OPM remains statutorily responsible for certain oversight  activities, such as establishing standards that apply to such delegated  activities and making written findings, where appropriate, if an agency to  which OPM delegated human capital management functions acts contrary  to law, rule, regulation, or standard, and requiring that the agency take  corrective action, among other activities. OPM has various statutorily  required responsibilities related to administering civil service retirement,  insurance, health benefits, and life insurance programs, among others.

OPM is funded primarily through its revolving fund—which is made up of  fees or reimbursements provided by agencies for services OPM provides,  such as background investigations and human resources services— transfers from OPM’s Earned Benefits Trust Funds for administrative  services, and discretionary appropriations for OPM’s general activities  and the Office of IG.

To execute certain transfers of functions from OPM to GSA, the  administration has acknowledged the need for additional statutory  authority, but has also stated that it will rely on existing authority to move  certain functions administratively. For example, the Analytical  Perspectives accompanying the President’s fiscal year 2020 budget  acknowledges that the transfer of OPM functions to GSA will be  completed using a combination of existing legal authority and  legislation. However, the administration does not identify which  functions will require legislation and which OPM functions may be  transferred administratively. In particular, OMB’s Deputy Director for  Management stated, in July 2018, that many of the administration’s  reorganization proposals can be implemented in whole or in part through  existing administrative authorities. The conference report accompanying the 2019 Appropriations Act directed OPM to submit a report that  included, among other things, the legal authority under which OPM  proposed to transfer the human resources solutions function within the  OPM revolving fund to GSA.

OPM’s report stated that it and GSA, in consultation with OMB, continue  to deliberate upon the application and use of administrative authorities to  transfer the OPM functions to GSA. In addition, in April 2019, the General  Counsel of OPM told us that the agency is unable to provide its legal  analysis to us because it was still in progress and the agency was waiting  for certain executive branch actions to be finalized. Without this  information, we cannot assess the legal authorities the administration is  relying on to implement the reorganization of OPM.

Key Capacities Important for Effective Strategic Human Capital Management

As Congress and the administration consider whether or how to  restructure OPM, regardless of the eventual decision about the  organizational arrangement, we believe that it will be important to retain  the capacity to execute certain government-wide, strategic human capital  functions. These include the capacity to (1) identify trends affecting the  future of the federal workforce; (2) effectively collaborate and coordinate  with key stakeholders to address these government-wide trends; (3) lead  the design of government-wide solutions to shared human capital  challenges; and (4) administer and enforce civil service laws and  regulations. As noted in our prior work, these functions are desirable and  appropriate because they generate broad consistency across federal  agencies, which is critical for, among other things, ensuring that each  federal employee has certain safeguards and protections regardless of  where he or she works. They also produce certain efficiencies and  economies of scale that come from central coordination, and help  maintain a reasonably level playing field among federal agencies when  competing for talent. This is particularly important because we continue to  designate strategic human capital management as a high-risk area.

While many day-to-day human capital responsibilities have been  delegated from OPM to individual agencies over the years, OPM  continues to play an important strategic role including in the creation,  execution, oversight, and strengthening of human capital policies and  programs. For example, OPM’s 2018-2022 strategic goals are to:

Transform hiring, pay, and benefits across the federal government to  attract and retain the best civilian workforce.

Lead the establishment and modernization of human capital  information technology and data management systems and solutions.

Improve integration and communication of OPM services to federal  agencies to meet emerging needs.

Moreover, OPM was given a key role in fulfilling the human capital-related  goal of the most recent President’s Management Agenda, in which the  administration noted its intention to partner with Congress on “overhauling  the statutory and regulatory rules that have, over time, created an  incomprehensible and unmanageable civil service system.” OPM, along  with OMB and DOD was tasked with the goal of aligning and strategically  managing the workforce to efficiently and effectively achieve the federal  government’s mission.

To carry out these government-wide, strategic responsibilities, the  following capabilities, whether possessed by OPM or some other entity,  will be essential for ensuring cost-effective leadership, management, and  oversight of the federal workforce.

The Capacity to Identify Trends Affecting the Future of the Federal Workforce

In our March 2019 report, we noted that such trends as technological  advances, an increased reliance on nonfederal partners, and changing  demographics and shifting attitudes toward work, are affecting how  federal work is done, and consequently the skills and competencies that  workers need to accomplish agency missions. Moreover, recent  publications by the administration and others have raised concerns about  whether the government’s employment policies and practices are still  relevant and desirable to the current and future workforce.

As far back as 1989, we reported that OPM had not provided the  leadership necessary to sustain attention to identifying and resolving  critical human resource problems affecting government operations and  preparing for the future. Although OPM has made progress in this area  and provides a variety of services, its progress has been inconsistent and  issues still remain.

For example, in 2018, OPM issued its Federal Workforce Priorities  Report, which identifies changes in the external environment that will  likely affect federal human capital management, including the evolving  role of workers, changes in technology, employee health, and shifting  generational demographics. OPM has also hosted a series of symposia  that provide human capital specialists insight on addressing workforce  challenges of the future.

While these and other efforts are all important steps in the right direction,  more work is needed in other areas. For example, as discussed in our  March 2019 report, over the years we have made a number of  recommendations to OPM to help agencies better meet their missions in  an era of changing technology, demographics, fiscal constraints, and  other challenges. OPM agreed with most of these recommendations  and has made some progress, but additional actions are needed. They  include, for example, identifying existing skills and competencies,  assessing gaps in existing and future skills and competencies, and  monitoring progress toward closing skills gaps. Moreover, in our March  2019 High Risk report, we noted that OPM needs to fully address the  recommendations in our January 2015 report. Our recommendation  called on OPM to make more strategic use of government workforce data  to build a predictive capacity for identifying and mitigating emerging skill  gaps across government.

The Capacity to Effectively Collaborate and Coordinate with Key Stakeholders

Certain human capital issues, such as addressing mission critical skills  gaps, are crosscutting in nature and require the coordinated efforts of  multiple stakeholders. However, a key challenge we identified in our May  2014 report on strategies to help agencies meet their missions in an era  of highly constrained resources was that the federal human capital  community is highly fragmented, with multiple actors both inside and  outside of government informing and executing human capital policies  and initiatives in ways that are not always aligned with broader,  government-wide human capital efforts.

Within government, OPM, OMB, the Chief Human Capital Officers  (CHCO) Council, and individual agencies create, implement, and oversee  human capital initiatives. Those initiatives are shaped, in part, by input  provided by labor unions and federal management councils such as the  President’s Management Council. The federal chief human capital officers  with whom we spoke noted that each of these actors possess its own  mission, initiatives, agendas, chain of command, budgets, and oversight.  While this is to be expected given their various roles and responsibilities,  these same factors can create disincentives to collaborating to achieve  common human capital goals.

In response to this issue, we recommended in 2014 that OPM work with  the CHCO Council to, among other actions, strengthen coordination and  leadership on government-wide human capital issues. OPM agreed with  our recommendation and issued a final regulation, effective in April 2017,  requiring it and agencies take significant steps in identifying, prioritizing,  and coordinating efforts to address critical human capital issues. We  believe this final regulation represents an important step toward  addressing fragmentation within the federal human capital community.  Going forward, it will be important for OPM, or another entity, if  reorganized, to work with the CHCO Council and other stakeholders to address our open recommendations concerning specific human capital  functions. Indeed, many of our open recommendations, including those  that require priority attention from OPM, call on OPM to work in  conjunction with the CHCO Council.

The Capacity to Lead and Design Government-Wide Solutions to Shared Human Capital Challenges

Government-wide or “enterprise” solutions are important because they  can integrate the efforts of multiple departments and agencies to address  crosscutting human capital challenges more effectively by leveraging  agencies’ expertise, experience, technology, and other resources.  However, in our 2014 report, we found that while agencies have many  common human capital challenges, they tend to address these issues  independently without looking to enterprise-wide solutions that could  resolve them more effectively.

Across government, there are examples of agencies and OPM initiating  enterprise solutions to address crosscutting issues, including the  consolidation of federal payroll systems into shared-services centers.  While these and other actions are important steps in the right direction,  the CHCOs we spoke with in 2014 identified certain barriers to greater  coordination to address common problems. For example, federal  budgeting and account structures reinforce the prevailing tradition of  controlling agency resources within a single agency. Moreover, agencies  may be reluctant to contribute resources to a government-wide approach  because they may not get an equitable return on their investment, or may  get a product that does not fit their needs.

According to the CHCOs in 2014, two areas that are ripe for greater  government-wide collaboration are human resource information  technology (HR IT), and strategic workforce planning. Specifically, the  CHCOs said agencies could be missing cost-savings opportunities by not  coordinating HR IT investments within and across agencies. They noted  that agencies are individually procuring identical systems rather than  leveraging the purchasing power of multiple agencies to negotiate better  prices or services, or use shared service centers. Similarly, several  CHCOs we spoke with said agencies are not consistently leveraging  lessons learned or collaborating to address difficulties they encounter with  workforce planning models.

To further agencies’ use of government-wide approaches, we  recommended that the Director of OPM, in conjunction with the CHCO  Council, should explore the feasibility of expanded use of enterprise  solutions to more efficiently and effectively address shared or  government-wide human capital challenges. Such actions could include:  (1) seeking cost savings and improved functionality through coordinated  government-wide human resources information technology planning and  acquisition; (2) seeking agency input to ensure OPM’s workforce planning  tools provide effective guidance for agencies; and (3) sharing workforce  planning lessons learned and successful models across the government.

OPM agreed with the recommendation and in September 2018, it  reported that in spring 2019, data will be available to indicate whether  surveys and tools to address government-wide human capital challenges  are meeting their intended goals. In March 2019, OPM told us that it was  conducting Human Capital Reviews with relevant agencies. However, to  fully implement the recommendation, OPM, or another entity, if  reorganized, needs to demonstrate continued progress in addressing  government-wide human capital challenges.

The Capacity to Administer and Enforce Civil Service Laws and Regulations

Broad consistency across federal agencies is important for ensuring that  all federal employees have the same safeguards, rights, and protections  regardless of where they work. These include, for example, merit  principles; protection from prohibited human capital practices; the ability  to organize, bargain collectively, and participate through labor  organizations; and due process that is fair, fast, and final.

OPM is responsible for executing, administering, and enforcing the civil  service rules and regulations, and the laws governing the civil service.  Additionally, OPM is required to establish and maintain oversight over  delegated human capital activities, including delegated competitive  examining activities, to ensure agencies are acting in accordance with the  merit system principles and the relevant standards established by OPM,  such as compliance with applicable laws, rules, regulations, executive  orders, and OPM policies. OPM monitors overall implementation and  identifies corrective actions when deficiencies are found. OPM conducts  this oversight through three primary means: delegated examining unit  audits, human resource management evaluations, and special studies.

However, in our prior work, we have identified the need for more effective  oversight in such areas as agencies’ use of hiring authorities, agencies’  classification programs, the conversion of political appointees to career  positions, and the Senior Executive Service performance-based pay  system. With respect to agencies’ use of hiring authorities, for example,  to help strengthen the government’s ability to compete in the labor market  for top talent, and to improve the federal hiring process, we  recommended in 2016 that the Director of OPM, in conjunction with the  CHCO Council, should determine whether opportunities exist to refine,  consolidate, eliminate, or expand agency-specific authorities to other  agencies and implement changes where OPM is authorized.

OPM agreed with the recommendation and in December 2018, OPM said  that it continues to research and examine streamlining opportunities, such  as those identified in its July 2018 study on excepted service hiring  authorities, as part of the broader initiative to modernize federal hiring  practices under the President’s Management Agenda. However, OPM did  not provide a time frame for implementation. In its March 2019  Congressional Justification for the fiscal year 2020 budget request, OPM  included legislative proposals for new hiring authorities such as highly  qualified experts and temporary appointments to help agencies meet  critical needs as well as a change to the criteria for granting direct hire  authority.

While OPM has made some progress in this area, it will be important for  the agency to follow through on its planned actions to streamline hiring  authorities. To fully implement the recommendation, OPM or another  entity, if reorganized, needs to complete these efforts and, as appropriate,  develop legislative proposals in consultation with the CHCO Council.

Thank you, Chairman Connolly, Ranking Member Meadows, and  Members of the Subcommittee. This concludes my testimony. I would be  pleased to answer any questions.

If you or your staff has any questions concerning this testimony, please  contact Triana McNeil at (202) 512-6806 (McNeilT@gao.gov). Contact  points for our Offices of Congressional Relations and Public Affairs may  be found on the last page of this statement. In addition to the contacts  named above, Sarah Veale (Assistant Director), Peter Beck (Analyst-in- Charge), Colenn Berracasa, Robert Goldenkoff, Chelsa Gurkin, Shelby  Kain, Steven Putansu, Janet Temko-Blinder, Peter Verchinski, and Alicia  White made key contributions to the testimony. Other staff who made  contributions to the reports cited in the testimony are identified in the  source products.

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In June 2018, the administration proposed moving the Office of Personnel Management's responsibilities to other organizations, including the General Services Administration.

We gave Congress preliminary observations from our related ongoing work. These agencies and the Office of Management and Budget have generally not addressed key practices for reforms, such as developing an implementation plan.

As the Congress and administration consider whether or how to restructure OPM, it will be important to retain the capacity to carry out certain strategic human capital functions. Strategic human capital management is on our High Risk List.