FY 2001 Performance and Accountability Report Homepage Management Discussion and Analysis OPM's Mission and Strategic Goals FY 2001 Performance Summary Resources Used to Accomplish Goals Quality of Performance Data Analysis of Our Financial Performance Systems, Controls and Legal Compliance Looking Ahead Limitations of the Consolidated Financial Statements

 

Management Discussion and Analysis

Looking Ahead

 

OPM's Priorities and Management Challenges

Thanks to our significant advances in FY 2001, OPM entered the new fiscal year ready to focus on our leadership responsibilities for strategic human resources management. Considerable challenges remain, however. OPM continues to build the capacity and the credibility to help agencies recruit, manage, and retain the high-quality Federal workforce America needs to accomplish goals important to the nation in the 21st century. We are taking steps to improve service to citizens (that is, Federal job seekers and Federal employees, retirees and their families). And we are working to ensure that OPM internally makes progress toward the President's vision of a well-managed government.

We are also ensuring that our priorities include actions to address each of the seven management challenges that our Inspector General (IG) identified as critical for the agency to succeed. The IG's list of challenges follows; these challenges align closely with the priority actions that OPM has planned:

• Human Resources Management Leadership
  
  
• Retirement Systems Modernization
  
  
• Expanding e-Government
  
  
• Implementation of the Government Performance and Results Act (GPRA)
  
  
• Revolving Fund and Salaries and Expenses Accounts
  
  
• Improving the Performance of the Federal Employees Health Benefits Program (FEHBP)
  
  
• OPM's Financial Management Oversight of the FEHBP

Serving Our Agency Customers

In FY 2001 we clarified that in addition to the President, our primary customers are the Federal departments and agencies that deliver products and services to the American public. We are addressing this customer focus in two ways: through our leadership of strategic human capital management in the government, and through an internal restructuring of OPM.

Leading Human Resources Management

We are leading agencies in implementing the President's human capital initiative, one of five initiatives designed to improve government management. Through this initiative, agencies will focus on strategically managing their most important resource —their human capital—to enable them to achieve their mission and goals. OPM will ensure that agencies have access to the full array of tools and flexibilities that they need in order to hire, manage, and retain a high-performing workforce. OPM will also work closely with OMB to assess each agency's progress on the Executive Branch Management Scorecard, which assigns each agency a red, yellow, or green status light.

To help agencies achieve green status, in early FY 2002 OPM issued a Human Capital Scorecard that outlines specific goals and measures for each agency to integrate into their budget and performance plans. OPM is also developing a human capital survey to be administered to a governmentwide sample of employees in spring of 2002. The results of this survey will be used by departments to identify key areas of human capital that need specific attention.

As we entered FY 2001, raising the image of public service was identified as one of the agency's major challenges. The response of the workforce to the events of September 11 and its aftermath have helped raise respect for government to its highest levels since the 1960s and generated a new interest in public service, especially among young people. Our current challenge is to sustain this high image of public service and capitalize on the opportunity it presents to bring new talent into the government. We will be pursuing innovative approaches and partnerships to reinforce the message that working for America is a meaningful and fulfilling career.

We also will pursue appropriate changes to modernize and balance the government's compensation environment so that agency leaders can compete effectively in their respective labor markets and use rewards strategically to support their mission, goals, and objectives.

We will build on the legislative proposals that were introduced in Congress in early FY 2002 as the Managerial Flexibilities Act by continuing to review existing laws and regulations to look for additional opportunities to add new flexibilities or to remove barriers to effective human resources management.

OPM Restructuring
We identified the workforce planning and restructuring process initiated by the President in the summer of FY 2001 as an opportunity to begin reorganizing OPM to adjust to our new focus on our primary customer, as well as to achieve the President's objectives of citizen-centered, results-oriented, market-driven government. In September 2001 we produced detailed, program-specific plans designed to (1) maximize efficiency and delayering; (2) redirect staff to front-line services, (3) speed decision-making, and (4) position the agency to address the larger human capital issues the government faces.

In FY 2002, a team of OPM employees, including members of all of OPM's major program offices and representatives from our employee unions, AFGE Locals 32 and 2450, took these initial plans a step further, and created a bold new structure for OPM that will enhance OPM's support of departments and agencies, and increase our capacity to lead the human capital initiative. The proposed organizational structure clearly focuses on customers, emphasizes outcomes over process, and fosters the integration of human resources management and accountability across government. Direct reports to the OPM Director in the new, flatter organization are reduced, with a focus on Federal agencies (customers) and core HR disciplines. With this structure, OPM will be better positioned to carry out new responsibilities, such as the HR components of e-Government, the OPM Human Capital Scorecard and other key issues related to the President's Management Agenda.

The Inspector General identified OPM's leadership of human resources management as a top management challenge because it will require significant attention and resources, and will require a strategic alliance with OMB, the Administration and the Congress. The actions OPM has planned for FY 2002 will address these concerns.

Serving Our Public Customers

OPM provides direct service to two groups: individuals seeking employment with the Federal government, and beneficiaries of the retirement and insurance programs.

Improving the Hiring Process
In FY 2002, OPM will take advantage of technology to improve the Federal hiring process by expanding the USAJOBS Federal automated employment information system to provide job seekers with streamlined resume submission, on-line feedback about their status in the employment process, and integrated, automated assessment. This e-Government project, Recruitment One-Stop, will provide employers with a searchable resume database and allow job seekers to enter their resume information once to apply for multiple Federal vacancies and to receive up-to-the-minute information regarding the status of their applications.

Serving Retirees
The Retirement Systems Modernization (RSM) project is our central strategy to meet our long-term customer service, business, and financial management goals for the Retirement Program. Modernizing our systems is a critical step toward providing state-of-the-art benefits counseling and employee self service benefits modeling tools and for effecting significant e-initiatives. RSM will provide for electronic transmission and storage of employee specific data, government-wide, that will ultimately result in real-time claims processing environment. This contemporary approach to benefits administration will make the Federal government a more competitive employer. The Inspector General identified the RSM project as another of OPM's major management challenges, due to the amount of resources dedicated to this multi-year project. OPM is addressing this concern by complying with all of the requirements of the Clinger-Cohen Act, and aggressively monitors expenditures against a comprehensive Capital Asset Plan.

Performance of the Health Benefits Program
The Inspector General also identified improving the performance of the Health Benefits Program as a management challenge for OPM. Our management of this program is affected by health care cost trends and other factors which we can plan for, but cannot control. For instance, the covered population is aging, the use of prescription drugs and medical services is increasing, and the number of health plans participating in the program each year is declining. Our first and foremost concern is keeping the program affordable for employees. To improve the effectiveness of the program in this environment, we will need to implement changes that allow us to maximize resources and incorporate flexibilities that produce the most cost-effective benefits package, and are pursuing these actions in FY 2002.

Implementing the President's Management Agenda in OPM

OPM is taking a comprehensive approach to implementing the five governmentwide and cross-cutting initiatives in the President's Management Agenda. Reflecting the priority assigned to assuring internal progress, a senior career executive has been designated to lead agency efforts and will dedicate 100% of his time to the initiatives in the Agenda. He leads an internal task force that consists of executive owners of each of the five initiatives. They meet formally on a weekly basis, and monthly with their OMB counterparts to track progress on the action plans associated with each of the initiatives. OPM's actions are summarized below.

1) Strategic Management of Human Capital

OPM has created a comprehensive action plan to address all elements of the President's human capital initiative, including the restructuring plans described above. This plan builds upon the initial proposals, strategies and commitments we made in the September 2001 restructuring plan. It includes specific actions to:

• Identify mission-critical occupations in light of the FY 2002 agency restructuring, by May 2002;
  
  
• Identify new or revised competency requirements for these occupations, by October 2002;
  
  
• establish plans for a comprehensive Accountability System, by December 2002;
  
  
• Improve OPM's web pages to promote OPM as an employer of choice, and provide information about specific OPM job vacancies, by August 2002.

2) Competitive Sourcing
In support of the President's Management Agenda, we are committed to pursuing opportunities for competitive sourcing and the promotion of competition. OPM has established and is implementing a competitive sourcing program that includes the following elements for FY 2002:

• Hiring an expert commercial consultant to assist OPM in conducting public-private competitions and direct conversions;
  
  
• Initiating four public-private direct conversions;
  
  
• Hiring a dedicated competitive sourcing specialist; and
  
  
• Developing our FY 2002 FAIR inventory, which will identify additional positions to be competed in FY 2003.

3) Improve Financial Performance
To meet the President's goals for improved financial performance, OPM must take action to reduce erroneous payments and to ensure that our financial systems produce accurate and timely information. OPM has already taken significant steps toward this goal, by implementing the first phase of a new financial management information system. This system went into effect on October 1st, 2001, and will be fully implemented by the end of FY 2002.

• Continue to generate consolidated financial statements that receive unqualified audit opinions, in the face of accelerating year-end and quarterly reporting timeframes and additional disclosures in financial statements.
  
  
• Address all reportable conditions and resolve our weaknesses the noncompliances of our financial management systems with the Federal Manager's Financial Integrity Act (FMFIA) and the Federal Financial Management Improvement Act (FFMIA).
  
  
• Establish fundamental systemic and procedural control over our Revolving Fund and Salaries and Expense account activities. The implementation of our new core financial management system is an enormous step in this direction.
  
  
• Identify all improper payments, and take further measures to reduce the amount of improper payments we make to Retirement Program annuitants and survivors.
  
  
• Enhance our control over the payments we make to community-rated Health Benefits Program carriers, by implementing our enrollment and premium reconciliation system.

Two of the IG's management challenges, improving internal controls over our Revolving Fund and Salaries and Expenses Accounts and improving financial oversight of the FEHBP program are addressed by the actions we are have described above.

4) Expanding Electronic Government
OPM is aggressively moving forward to meet the criteria in the President's e-initiative. We are leading five governmentwide technology projects in FY 2002 that will have wide-reaching implications for saving taxpayer money and improving efficiency, and meeting the mandates of the Government Paperwork Elimination Act. These projects will use information technology to foster e-Government among a wide variety of stakeholders

• The Enterprise HR Integration project will lead to the consolidation and modernization of Federal HR systems. The Human Resources Data Network (HR-DN) is the first step in this process. It began as an initiative of the Federal Human Resources Technology Council (HRTC). The HR-DN will reengineer government-wide HR recordkeeping and reporting practices to facilitate the use of human resources data by a variety of stakeholders, streamline and improve government-wide reporting, eliminate the need for paper employee records, and enable the electronic transfer of HR data throughout the Federal sector. This project will be expanded in FY 2002 to encompass a new vision of fewer HR delivery systems.
  
  
• A related e-Government project will be our leadership of a governmentwide effort to consolidate and modernize Federal payroll systems and services. The goals of this project are to modernize payroll systems, reduce costs of routine operations, consolidate human resource and payroll data, and standardize human resource and payroll policy and processes governmentwide.
  
  
• We are also leading three other e-Government projects: e-Clearance, e-Training, and Recruitment One-Stop. These initiatives will use Internet-based technologies to accelerate and streamline service delivery to citizens, reduce paperwork burdens on business, improve management and responsiveness of joint federal-state-local programs, and apply commercial best practices to improve government operating efficiency.

The IG identified OPM's leadership of these five e-projects as a management challenge, based on the need to simplify the underlying business processes and unify government operations. OPM will need to work closely with OMB and other Federal departments to make these projects successful, and is already pursuing this path.

5) Integrating Performance and Budget
To support the President's Management Agenda, we must implement an improved cost allocation system that will allow us to monitor accurately the performance of our programs and integrate it with associated cost, and develop improved measures of program effectiveness. Beginning in FY 2002, OPM implemented a zero-based budgeting process that is giving us the ability to identify resources by program goal. We also used this information in preparing our FY 2003 Congressional Budget Justification and Annual Performance Plan. Additional specific actions we will take include:

• Realigning staff in the Office of the Chief Financial Officer to improve delivery of budget and financial services to programs, by September 2002;
  
  
• Revising OPM's Strategic Plan, by September 2002;
  
  
• Preparing a comprehensive evaluation and performance measurement plan, mapped against the revised Strategic Plan, by September 2002;
  
  
• Submitting a performance-based budget request for FY 2004, in September 2002; and
  
  
• Completing full implementation of an improved cost allocation system by September 2003.

The President's initiative to integrate performance and budget embodies the basic purpose of the GPRA. The IG identified OPM's implementation of the GPRA as a management challenge for OPM, in part because of the complexity of measuring outcomes for functions which are governmentwide and policy-oriented, and in part because human resources management in the government is decentralized. OPM is addressing these concerns through its actions to implement the President's initiative.

 

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