In part to fulfill the requirements of the Results Act, the Department of Energy (DOE) announced the development of its Strategic Management System in 1996. Specifically, we evaluated how well (1) DOE’s program and field units linked their subordinate plans to the departmental strategic plan and (2) DOE linked the goals of its strategic plan to its annual performance plan and the goals for its performance-based management and operating contracts. Because the business lines in DOE’s strategic plan are not aligned with the organizational structure, more than one DOE organization contributes to the same business line. For example, DOE’s three main headquarters program offices are Defense Programs, Energy Research, and Environmental Management. Each of these offices may contribute to the business lines through various headquarters offices. Subordinate Plans Are Not Clearly Linked to DOE’s Strategic Plan

While extensive planning is going on at different levels of DOE, it is not clear how all of the plans prepared by the programs, field offices, and contractors are linked to DOE’s departmental strategic plan. However, DOE’s Strategic Management System does not provide specific directions on how to link the goals of subordinate strategic and multiyear plans to the goals, objectives, and strategies of the departmental strategic plan. As a result, the contractors managing DOE’s facilities began their work before approved goals and incentive fees were made a part of their contracts. 1999 Annual Performance Goals Could Be Linked Better to Requested Budgetary Resources

In its first annual performance plan under the Results Act, DOE met the act’s requirement that an agency’s performance plan be consistent with the agency’s strategic plan by aligning the performance plan’s goals and measures with those in its strategic plan. DOE, in its performance-based management contracts, seeks to have performance goals and incentive fees incorporated in the contracts by the start of the fiscal year. Moreover, incorporating performance goals and incentive fees in performance-based management contracts after contractors have already begun the work reduces the effectiveness of these contracts.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed certain aspects of the Department of Energy's (DOE) implementation of the Government Performance and Results Act of 1993, focusing on the Department's strategic and annual planning.

What GAO Found

GAO noted that: (1) subordinate strategic and multiyear plans prepared by DOE's programs, field offices, and contractors are not clearly linked to the goals, objectives, and strategies of the Department's strategic plan; (2) although DOE's Strategic Management System guidance provides a basic outline of the planning process, it does not provide clear directions on how these subordinate plans should be linked to DOE's strategic plan; (3) additionally, DOE formed its Strategic Management System around its business lines and its organizations are not aligned with the business lines; (4) for example, DOE has three main program offices--Defense Programs, Energy Research, and Environmental Management--whose work is done through various field organizations and management and operating contractors; (5) as a result, these different program offices and their supporting organizations often contribute to the fulfillment of the same business lines through a variety of different, complex, crosscutting relationships; (6) DOE, in its first annual performance plan under the Results Act, links the annual performance plan's goals and measures to those in the strategic plan; (7) DOE also provides a description of how budgetary resources are linked to its strategic goals; (8) however, the annual performance plan could be more useful if it described how the requested budgetary resources are linked to the annual performance goals in the plan; (9) in addition, DOE did not incorporate the approved performance goals and incentive fees in its performance-based management and operating contracts--accounting for 70 percent of DOE's obligations--until after the start of the current fiscal year and after the contractors had already begun their work; (10) the goals and incentive fees agreed to in these contracts are intended to guide and enhance the contractors' performance; and (11) not incorporating the goals and incentive fees until after the contractors begin work reduces the usefulness of performance-based contracting.