Agencies' management grades continue to rise

Federal agencies have made significant progress in the past year implementing the President's Management Agenda, with the greatest improvements coming in financial performance and e-government, Bush administration officials said Thursday.

Clay Johnson, deputy director for management at the Office of Management and Budget, was brimming with confidence as he unveiled the results of the PMA score card for the final quarter of 2007 and compared the grades with the poor performance record the administration reported seven years ago.

In 2001, only 20 percent of large federal agencies had scores of green or yellow, indicating that they were performing at least moderately acceptably; the rest were rated red for unsatisfactory. Now, 87 percent have reached at least yellow status, a 9 percent uptick from last year.

"We've come a long way, baby," Johnson told reporters at a briefing. "From nearly total unsatisfactory to a lot of preferred and desired situations."

In total, agencies had 10 status upgrades in the past year and 28 marks of improvement over the previous quarter. The bulk of that progress can be tracked to agencies implementing an IT breach notification policy that many failed to develop in the fall of 2007.

Three agencies, meanwhile, earned all green ratings on each of the five initiatives: human capital, competitive sourcing, financial performance, e-government and performance improvement.

The Social Security Administration improved its e-gov performance by two grades to reach a perfect score, while the Environmental Protection Agency moved up one level in its human capital rating to reach all green status. The Labor Department has maintained a perfect score since the second quarter of 2005.

Johnson credited the "highly motivated" employees at those three agencies for displaying "a greater ability to be effective" than other 23 agencies OMB rated. And, in an unusually blunt moment, he urged reporters to be "horsey; even a little bit nasty" toward agencies that fail to show effective stewardship of taxpayer funds.

One of the most significant improvements, officials said, was in financial performance, where four agencies were able to improve, in spite of tougher auditing standards that sprung from the 2002 Sarbanes-Oxley Act.

Danny Werfel, acting controller at OMB, said that "even with that additional level of scrutiny," scores are going up, with 13 agencies now reaching green. Financial performance, however, remains the category with the most room for improvement, with nine agencies -- including the Defense and Homeland Security departments -- still registering the lowest grade possible.

Three agencies, meanwhile, were able to improve their e-gov scores, while one agency, the State Department, showed some decline. The remaining categories showed comparatively little movement, with only one increase indicated in each of the three initiatives.

Despite the lack of change in competitive sourcing on the score card, that area likely will become the most difficult PMA challenge for agencies and OMB alike.

The fiscal 2008 Omnibus and Defense authorization bills include several measures that are likely to favor in-house teams and could result in a decline in competition from the private sector. Meanwhile, two agencies graded annually on the score card -- the Labor and the Army Corps of Engineers -- are prevented from holding any future competitions, most likely until a new administration is in place.

Paul Denett, administrator for the Office of Federal Procurement Policy, said those two agencies will be provided with other means to show a good faith effort to tackle cost management issues. Other agencies, he said, will be urged to continue public-private competitions.

The Bush administration plans to review 90 previously decided competitions this year, covering roughly $3.5 billion in projected savings, to validate that the estimates are accurate. Early results, Denett said, are positive. The Health and Human Services Department recently examined the results of five competitions and found that the savings exceeded expectations by $2.5 million.

"The important thing is that the savings are real and they are being validated by a third party," he said.

With President Bush planning to unveil his fiscal 2009 budget on Monday, the most critical category for agencies could be performance improvement.

According to the most recent Program Assessment Rating Tool list, three out of every four programs evaluated by OMB were operating at least somewhat effectively. However, 30 percent still are not achieving self-imposed efficiency measures, and one in four is not meeting long-term goals.

During his State of the Union address Monday, Bush said his new budget "terminates or substantially reduces 151 wasteful or bloated programs, totaling more than $18 billion."

OMB officials said that while there is not a direct correlation between funding and performance scores, some of the programs that have been rated ineffective or have shown major shortcomings could be targets in the budget.