Capital programming for results: A framework for federal government agencies.

• Author: DeSeve, G. Edward

Drawing on valuable lessons from state and local governments, the federal government has developed a capital programming process that connects planning, budgeting, procurement, and management of a capital asset to improve the way agencies manage this large expenditure of funds.

In recent years, the White House's Office of Management and Budget (OMB) and Congress have reviewed the federal government's performance in planning, budgeting, risk management, and the acquisition of capital assets. These reviews have indicated that the performance is uneven across the government - news that is of little surprise to the public. Since the early 1980s, many pages of newsprint have been devoted to stories about multi-hundred-million dollar "zombie systems" and other capital assets that fell too far short of expected performance levels to be called alive, yet continued to consume too many taxpayer dollars through vain retooling and re-retooling efforts to be called dead.

The federal government is the country's largest investor in capital assets. It does not select capital assets based on their rate of return, nor does it finance capital assets in the public markets. The challenge is to instill the discipline of adherence to the basic principles of good capital asset planning and management, which too often has been ignored in the past, across all federal agencies. As part of the drive to balance the budget and respond to the growing volume of taxpayer demands for greater return for tax dollars spent, the president and congress have put in place a framework to improve the way agencies manage their $1.3 trillion stock of existing capital assets and plan, budget, and annually acquire $65-$70 billion of new capital assets. OMB has defined "capital assets" to consist of federal information technology, buildings, land, and other facilities and major equipment, including software, weapon and space systems, and environmental remediation. (Not included are grants to states and others for their acquisition of capital assets.) Not only are large sums of taxpayer funds at stake; the performance of the assets determines, to a large extent, how well agencies are able to achieve their missions and provide service to the public.

The legislative framework consists of three parts:

* The Government Performance and Results Act of 1993 (GPRA), designed to help ensure that agencies have clear missions and that program objectives and annual goals are clearly defined - with resources focused on meeting performance goals in annual and five-year plans.

* The Clinger-Cohen Act of 1996, designed to ensure that information technology (IT) acquisitions support agency missions developed pursuant to GPRA. The act also requires a performance-based planning, budgeting, and management approach to acquiring IT assets.

* The Federal Acquisition Streamlining Act of 1994 (FASA), Title V, established that agencies should achieve at least 90 percent of the cost, schedule, and performance goals used to justify funding for major acquisitions. Acquisitions not achieving 90 percent of original goals are to be reviewed by the agency head for continued funding or termination.

Capital Programming Cycle

A team of more than 80 staff from 14 agencies and interagency groups, including the Federal Chief Information Officers Council and the Chief Financial Officers Council, integrated the legislative initiatives discussed above with administration initiatives to develop a unified process to manage capital assets across the federal government. That process is contained in the Capital Programming Guide, which OMB issued as formal guidance in July of 1997. The guide provides best practices to ensure that capital assets contribute to the achievement of agency strategic goals and objectives within budget limitations. The General Accounting Office helped develop the...