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How DOE Assesses its Acquisition System under OMB Circular A-123 Using the GAO Framework. Breakout Session # 504 Michael P. Fischetti, Director, Office of Procurement and Assistance Policy Department of Energy Date April 15, 2008 Time 10:45 am. Agenda. Introduction Background

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Breakout session 504

How DOE Assesses its Acquisition System under OMB Circular A-123 Using the GAO Framework

Breakout Session # 504

Michael P. Fischetti, Director, Office of Procurement and Assistance Policy

Department of Energy

Date April 15, 2008

Time 10:45 am


Agenda
Agenda A-123 Using the GAO Framework

  • Introduction

  • Background

  • DOE’s Balanced Scorecard Approach

  • What is the GAO Framework?

  • The Cornerstones

  • The Evaluation Team

  • Performing the Assessment

  • OMB Circular A-123: DOE’s Approach and Results

  • An Example

  • Final Outcome

  • Summary

  • Compliance Model


Introduction
Introduction A-123 Using the GAO Framework

  • DOE is striving to be removed from the “High Risk List” for contract management

  • DOE addressing GAO agency criteria for removal

    • Demonstrate strong commitment and leadership

    • Demonstrate progress in implementing corrective measures

    • Develop a corrective action plan that identifies

      • Root causes

      • Effective solutions

      • Near-term plan for implementing the solutions


Background
Background A-123 Using the GAO Framework

  • DOE learned of the “Framework” in September 2003

    • Obtained a draft for agency comment

  • Monitored development with GAO through FY2004 until formal publication in September 2005

  • Developed evaluation criteria in the form of questions

  • Completed an internal assessment during FY2005 and FY2006

  • Monitored use of “Framework” criteria as part of GAO audits of TSA, INS, and DHS procurement functions


Doe s balanced scorecard approach
DOE’s Balanced Scorecard Approach A-123 Using the GAO Framework

  • Maintaining BSC performance measures in four strategic assessment areas:

    • Customer Perspective

    • Internal Business Perspective

    • Learning and Growth Perspective

    • Financial Perspective


Doe s balanced scorecard approach1
DOE’s Balanced Scorecard Approach A-123 Using the GAO Framework

  • DOE initiated an internal BSC project to assess its procurement system using the “Framework” developed by the GAO to assess the health of its procurement system

    • Identified areas requiring management attention or early mitigation

  • Followed up with an action plan for achievement

  • Incorporated into existing FY-2006 Balanced Scorecard (BSC), self-assessment procurement performance reviews, and management system


Doe s balanced scorecard approach2
DOE’s Balanced Scorecard Approach A-123 Using the GAO Framework

  • Objective

    • Using “Framework” developed a DOE

      • Risk evaluation model for internally assessing DOE’s procurement system

      • Approach for implementation

  • Approach

    • Review the DOE BSC Self Assessment Guide against the “Framework”

    • Coordinate with the BSC Program Manager and Senior Procurement Management

    • Assess current procurement functions

    • Establish permanent process for proactive, continuous evaluation of procurement areas


Doe s balanced scorecard approach3
DOE’s Balanced Scorecard Approach A-123 Using the GAO Framework

  • Documentation was:

    • Collected

    • Independent evaluation performed

    • Final report completed

    • Remediation conducted providing iterative improvement

  • Follow-up actions:

    • Internal management control assessments under OMB Circular A-123 guidelines

    • Development of follow-on BSC initiatives addressing lower-rated areas


What is the gao framework
What is the GAO Framework? A-123 Using the GAO Framework

  • Cornerstones

    • Organizational Alignment and Leadership

    • Policies and Processes

    • Human Capital

    • Knowledge and Information Management

  • Elements

  • Critical Success Factors

  • Key Questions, Things to look for,

    Cautions


The cornerstones
The Cornerstones A-123 Using the GAO Framework

  • Organizational Alignment and Leadership

    • Aligning Acquisition with Agency Mission and Needs

    • Commitment from Leadership


The cornerstones1
The Cornerstones A-123 Using the GAO Framework

  • Plans and Processes

    • Planning Strategically

    • Effectively Managing the Acquisition Process

    • Promoting Successful Outcomes of

      Major Projects


The cornerstones2
The Cornerstones A-123 Using the GAO Framework

  • Human Capital

    • Valuing and Investing in the Acquisition Workforce

    • Strategic Human Capital Planning

    • Acquiring, Developing, and Retaining Talent

    • Creating Results-Oriented Organizational Cultures


The cornerstones3
The Cornerstones A-123 Using the GAO Framework

  • Knowledge and Information Management

    • Identifying Data and Technology to Support Acquisition Decisions

    • Safeguarding the Integrity of Operations and Data

    • Not part of review


The evaluation team
The Evaluation Team A-123 Using the GAO Framework

  • Selected senior procurements analysts new to the Department

    • Why?

      • Not familiar with existing processes

      • Significant diversity of procurement knowledge and experience

        • This is not just a “file review”

        • Benchmarking against other organizational experience

      • Objectivity

      • Dedicated resources


Performing the assessment
Performing the Assessment A-123 Using the GAO Framework

  • Understanding the “Framework”

  • Collecting documentation (biggest challenge)

  • Benchmarking other organizations

  • Document

  • Adhere to principles in OMB A-123

  • Stay on schedule


Omb circular a 123 doe s approach and results
OMB Circular A-123: DOE’s Approach and Results A-123 Using the GAO Framework

“Agencies should strive to integrate control related activities within the control framework outlined in A-123. In particular, management should identify opportunities to integrate and coordinate in order to leverage the internal reviews already being performed” (Implementation Guide dated July 2005)

  • A-123 provides a vehicle to assess and evaluate internal controls

    • Assurance they are well designed and operated

    • Appropriately updated to meet changing conditions

  • A-123 assesses internal controls for:

    • Effectiveness and efficiency of operations

    • Reliability of financial reporting

    • Compliance with laws and regulations

  • OFPP circulated draft Guide for using the Framework for review

    • DOE provided comments to the draft based on its experience


Omb circular a 123 doe s approach and results1
OMB Circular A-123: DOE’s Approach and Results A-123 Using the GAO Framework

  • DOE developed:

    • Test plan

    • Tested pre-defined areas for impact, likelihood of occurrence, and design effectiveness

  • Test sub-categories included:

    • Management’s commitment to competence

    • Management of Human Capital

    • Proper execution of transactions and events

    • External relevant, reliable, and timely communications

    • Risk analysis and actions


Omb circular a 123 doe s approach and results2
OMB Circular A-123: DOE’s Approach and Results A-123 Using the GAO Framework

  • The Office of Procurement and Assistance Management provided reasonable assurance that:

    • Internal controls for financial reporting were working effectively

    • There were no material weaknesses identified in the design or operation of the specific Headquarters controls over financial reporting evaluated


An example
An Example A-123 Using the GAO Framework

  • Human Capital: Having the capacity (people and resources) to resolve the problems

    • Framework Assessment

      • Demographic trends analysis

      • Educational Levels

      • Internal training database (now migrated to ACMIS)

      • Funding levels

      • Position Descriptions

    • Risks identified

      • Recruitment, retention, and training of the workforce


An example1
An Example A-123 Using the GAO Framework

  • Responses to identified risks translated to BSC initiatives

    • “Talent Management Plan”

    • Human Capital Survey

      • Survey

      • Conducted demographically representative focus groups with a summary report to the Director

      • Leadership Interviews

      • Documentation review


An example2
An Example A-123 Using the GAO Framework

  • Responses to identified risks translated to BSC initiatives

    • Department-wide Acquisition Career Development (ACD) Policy and Program Handbook (revised and issued)

      • Outlines certification requirements for the acquisition workforce

    • “Acquisition Letters” issued

      • Strengthened organizational relationships between Department Headquarters and field operational contracting elements, including re-emphasizing ACD policy

    • Performed Skill-Gap Analysis of 1102 workforce

    • Met with DOE IG in drafting an Advisory Memo to the Deputy Secretary

      * See the follow-on briefing on DOE’s ACD program


Final outcome continuous monitoring of procurement system effectiveness
Final Outcome A-123 Using the GAO Framework Continuous Monitoring of Procurement System Effectiveness

  • “Monitor and independently validate the effectiveness and sustainability of corrective measures”

  • BSC continuous review and identification of system improvements

    • Using the “Framework” tool

    • Conducting periodic reviews and monitor field operations self- assessments of contracting office operations

    • Implementing field Procurement Management Review

    • Review Contract Management Plans

    • Review contractor purchasing systems


Final outcome
Final Outcome A-123 Using the GAO Framework

  • Support interagency working groups in procurement and acquisition regulatory development

  • Monitor procurement risks, issues, or vulnerabilities of other organizations

    • Government Accountability Office (GAO) reports

    • Agency Inspector General (IG) reports

    • Internal financial and management audits and reviews

    • Professional and trade association periodicals

    • Procurement news sources or other documents

    • Benchmarking/surveying other agencies

  • Validation under A-123 Review


  • Summary
    Summary A-123 Using the GAO Framework

    • Corrective Feedback using BSC

    • Use of the GAO Framework

    • Reporting and compliance under OMB Circular A-123, as implemented by the DOE Chief Financial Officer


    Compliance model

    Headquarters Strategic Direction A-123 Using the GAO Framework

    Balanced Scorecard

    Procurement Management Reviews

    Best Practices

    *

    *

    *

    *

    Policy Development

    PMRs

    Contracting Activities complete

    Compliance Self Assessment and PMR Checklist

    Compliance Self Assessment and PMR

    Compliance Self

    Checklist revised as necessary

    Assessment team and PMR review

    Compliance Self Assessment and PMRs

    summary and trend data compiled

    Compliance Self Assessment and PMR

    -

    Assessment Team

    recommendations

    Compliance Model


    Omb circular a 123 doe next steps
    OMB Circular A-123 A-123 Using the GAO FrameworkDOE Next Steps

    • Implementing the “Framework” tool and A-123 in the field

      • Establishing policy/oversight/review functions in field offices

      • Procurement Management Review Program