Limitation on Administrative Expenses

Not to exceed [$377,556,000] $394,880,000, together with advances and reimbursements received by the Federal Highway Administration, shall be paid in accordance with law from appropriations made available by this Act to the Federal Highway Administration for necessary expenses for administration and operation. (Department of Transportation Appropriations Act, 2008.)

Detailed Justification for Limitation on Administrative Expenses

(in thousands of dollars)

Operating Expenses (Ob. Lim.)
FY 2009 Request:	$394,880
FY 2008 Enacted:	$377,556

Overview:
This account provides for resources to maintain the agency's administrative operations. Funding will support activities related to the goals of the President's Management Agenda, implementing the requirements of the SAFETEA-LU authorization, and meeting other Federal mandates.

FY 2008 Base:
The Limitation on Administrative Expenses funds salaries and benefits, travel, rent, communications, utilities, printing, contractual services, supplies and equipment. As shown in Exhibit II-6, the FY 2008 enacted level totals $377.6 million. This level includes $262.9 million for the salaries and benefits for 2,272 full time equivalents (FTE), which is 158 FTE below the authorized staffing level. The FY 2008 base level also includes $26.4 million for rent, $14.6 million for the Working Capital/IT Franchise Fund, $9.6 million for travel, and $64.1 million for other activities critical to maintaining the agency's administrative operations.

Anticipated FY 2008 Accomplishments:

Strategic Management of Human Capital

Human Capital Plan, Succession Planning, Closing Gaps. The FHWA's Human Capital Plan will be revised to implement a new model for achieving a multidisciplinary workforce. The Agency will strengthen succession planning initiatives by revising supervisory, management, and leadership learning strategies and by establishing a more focused approach on executive development. The FHWA anticipates that significant numbers of employees will be retiring and that an aggressive recruitment program will be needed to replace the retiring workforce and strengthen our core functions, including congestion management and mitigation, structures and materials research and analysis, budget development and execution, transportation management and operations, and safety. While continuing to assess needed skill changes of FHWA employees through workforce planning, the Agency will make continued progress in closing gaps in mission critical occupations (e.g., financial management, engineering, information technology, and human resources).

Initiatives to Achieve a Multidisciplinary Workforce While Continuing our Succession Planning Efforts. The Professional Development Program will be used to recruit, hire, and develop entry-level individuals in mission-critical disciplines (e.g., financial management). In addition, there will be an increase of new mid-career hires, and recruitment initiatives and incentives will be critical to attracting diverse candidates with the needed multidisciplinary skills. Also, the Agency will implement new initiatives to reduce the under-representation of Hispanic employees and individuals with disabilities.

The FHWA will continue to implement its Diversity Action Plan and create an organizational climate that enables a multidisciplinary workforce to achieve the strategic goals of the Agency. Recommendations from the FHWA Disability Task Force will be implemented. Mediation will be used to address organizational issues when appropriate.

The Agency's Learning and Development Program will train increasing numbers of employees to ensure continued improvements in stewardship, program oversight, and financial management. A multidisciplinary approach and an emphasis on accountability will be incorporated at all levels of training. Many learning activities will be offered using video and web conferencing technologies. Using a blended approach to learning enables the FHWA to respond more quickly to the learning needs of our employees. In addition, the Agency plans to fund rotational assignments for mid-career hires to ensure that they have the skills needed to successfully administer the various FHWA programs.

The Agency's other accomplishments will include the implementation of the new Federal-aid Academy which is designed to foster improved stewardship and oversight of Federal-aid programs in accordance with requirements of SAFETEA-LU, the new Leadership Academy for new mid-career managers, and acquisition training. Implementation of changes to acquisition training requirements will call for additional FHWA resources. The number of individuals affected by this change has increased; at the same time, the number of training hours has increased as well. Without additional funding, the impact of this change may require a reprioritization of learning and development activities.

The Agency will launch improved learning activities with an emphasis on just-in-time delivery and reinforce learning at regular intervals during the initial two years of supervisory tenure, to ensure that supervisors can effectively manage performance while operating in a continually changing environment. The Agency will continue to enhance current supervisor skills and focus greater attention on the skills needed to effectively manage performance when supervising staff that telecommute, are employed in shared positions, or work in alternative duty locations.

The FHWA plans to implement recommendations for pilot field organizational alignments that lead to increased organizational flexibility to respond to changes in Agency mission and funds will be used for telework sites and related training for employees and managers in remote worksites.

Improving performance management skills will also be a high priority item. The FHWA and OPM employee survey results indicate there is a strong need to provide training for supervisors and employees. Both supervisors and employees will receive additional training on how to improve metrics in performance standards, how to hold employees accountable for achieving organizational goals, and how to deal with performance problems.

Also, feedback from OPM on the FHWA's Performance Appraisal Assessment Tool will be addressed. The FHWA will ensure that awards are used to recognize achievements that advance our goals and objectives. The FHWA will carefully monitor that these goals and objectives, as stated in the Agency's Performance Plan and the Administrator's Performance Agreement with the Secretary, are cascaded down to Senior Executives' performance objectives and to the performance plans of individual employees, and are used as the basis for recognizing and rewarding employee accomplishments. The Agency has requested GOE funds for its employee recognition and awards budget to support the strengthening of the performance culture in the FHWA.

The FHWA will continue to implement its Employee Survey Action Plan (which also includes actions to address Human Capital Survey (HCS) and Diversity Management Council recommendations) and create an organizational climate that enables its workforce to achieve the strategic goals of the Agency. New approaches will be used to address low-scoring and/or downward trending items. The Agency will implement new initiatives to improve employee satisfaction. In addition, action items by the FHWA Human Resources Management Committee (HRMC) will be implemented.

Implementing OPM's Hiring Model. Under the OPM 45-day hiring model, the measurement of success has changed to "percentage selected within 45 days." The goal for FY 2008 is for selecting officials to sign the certificate within 45 days of the announcement closing in 65 percent of the cases. For the SES, the FHWA has developed a guideline to assist selecting officials in making selections and clearing the ERRC within 75 days.

Accountability Reviews. The FHWA is participating in Department-wide accountability reviews. In 2008, the FHWA will implement improvements and corrective actions identified in the accountability reviews of the employee recognition system. It will conduct an accountability review of selected staffing and recruitment programs. Further accountability review activity will be coordinated with the DOT Accountability Review Program Plan.

Background Investigations. Homeland Security Presidential Directive-12 (HSPD-12) requires that all Federal employees have at a minimum a basic background investigation on file, and many employees need to have their clearances updated

Electronic Government (E-Gov)

The FHWA will begin the implementation of best practices arising from the information technology (IT) field study, support E-Gov initiatives through contributions and participation, and continue to support the Department in its Lines of Business and Smartbuy initiatives and its IT efforts such as infrastructure consolidation, use of enterprise licenses, and lowering IT-related costs.

The FHWA will continue to lead a departmental E-Gov subcommittee working on crosscutting IT initiatives. The Director of the Office of Information and Management Services co-chairs the DOT E-Gov Subcommittee. The subcommittee meets regularly throughout the year to discuss the E-Gov scorecard and strategies for "getting to green."

The FHWA will continue to expand its Enterprise Architecture (EA) by identifying and developing a target architecture for one or more business areas, implement governance processes, and build-out and utilize the transition strategy and sequencing plan. We will continue to work with our EA extended core team, comprised of Headquarters and field office representatives, to identify new business improvement opportunities and to collect and validate information for the EA information repository. We will continue to educate Headquarters and field offices on the uses and benefits of EA, such as enhanced decision-making and long-range planning. In addition, the recently implemented Business Need Request process will integrate EA and capital planning, ensuring that investments are driven by a specific business need. Also, a board will ensure that enterprise-wide solutions are considered to achieve better return-on-investment and review investments annually, as part of the capital planning process, to ensure continuity and consistency with the target architecture.

Competitive Sourcing

As in our 2005 and 2006 Federal Activities Inventory Reform (FAIR) Act submissions, our recent 2007 inventory was based on identification of the "functions and activities" for which the FHWA is responsible. Our approach in 2005 to examine all of our work at the activity level resulted in a solid baseline that continues to require only minor adjustments from year-to-year. We believe that development of the annual FAIR Act inventory provides a resource to support the Department's human capital/workforce planning processes, while also helping our Agency to achieve its organizational goals. In this regard, we are prepared to be active participants in Departmental planning initiatives that may offer a potential for added cross-modal efficiency.

The use of contractor support is a well-established business practice of our Agency that continues to serve us well. The FHWA's reliance upon a contractor workforce to contribute to accomplishment of critical work signifies a continuing commitment to the efficient integration of public and private sector talent to assure the best use of taxpayer dollars. Competitive sourcing is a tool that we will continue to consider and apply in our effort to reduce operational costs and incorporate the best and most effective business practices.

Planned accomplishments include: (1) continuing to align our human capital management strategies with competitive sourcing; (2) participating in OST cross-cutting reviews of Departmental operations where the FHWA has an FTE presence; and (3) continuing to train Agency employees who may be involved in the competitive sourcing process, to ensure they have the necessary skills and qualification to fulfill their roles and assignments.

We are also benefiting from an improved process for developing our annual FAIR Act commercial and inherently governmental inventories, as well as the strengthened relationship between our workforce planning and competitive sourcing programs.

Financial Performance

By the end of 2008, the FHWA will have completed three full years under the Financial Integrity Review and Evaluation (FIRE) Program. Training will continue to be provided to the Federal-aid Division Office Administrators and Financial Managers regarding the objectives of the oversight program and techniques for achieving them. As this review and oversight program continues with the Federal-aid program, we will incorporate best practices from both Federal-aid and Federal Lands Highway organizations into an expanded agency-wide program. It will include reviews of financial processes, financial transactions, and funds management activities, along with external audit coordination, and evaluations of the key internal administrative processes.

A "National Lessons Learned Program" will be developed and cost estimating training will be continued. In addition, staff plans to complete the risk roll-up report on the second round of agency-wide risk management initiative; and develop guidance for improving program management practices in the agency. Both of these activities are follow-up actions from the recent Highway Infrastructure PART.

Budget and Performance Integration

The FHWA will continue efforts to integrate budget and performance by linking strategic goals and objectives.

The FHWA undertakes annual performance-based planning to continually align its goals and objectives with those in the DOT Strategic Plan. The FHWA includes representatives from the Federal Transit Administration and the National Highway Traffic Safety Administration in these planning discussions. Responsibility for achieving some of the DOT performance goals, such as reducing the highway fatality rate, is shared by the FHWA with other DOT modal administrations. In addition, the FHWA is collaborating with other Federal agencies to achieve shared goals and objectives such as improving park roads and bridge condition, freight movement at border crossings, international trade and commerce, environmental streamlining, and transportation security.

The FHWA is in the process of refining the methodology developed for attributing costs to DOT strategic objectives, and to more than one performance goal. These refinements will provide the basis for a Managerial Cost Accounting (MCA) model. In FY 2008, the FHWA will continue implementation of the Labor Distribution Reporting (LDR) module in the DOT Consolidated Automated System for Time and Labor Entry (CASTLE).

FY 2009 Budget Request:

The FHWA requests $394.9 million for the Limitation on Administrative Expenses (LAE). In addition, Title 23, U.S.C. authorizes $3 million in contract authority for administrative expenses of the Appalachian Regional Commission (ARC) and $3.5 million in contract authority for audits conducted by the DOT Office of Inspector General.

The FY 2009 request reflects increases to the FY 2008 base for cost of living adjustments (COLA), rent costs, Working Capital Fund costs, travel costs and inflation in other activities critical to maintaining the agency's administrative operations. The adjusted base totals $394.9 million, which is an increase of $17.3 million.

The FHWA is refocusing its workforce to use resources differently and accomplish needed changes to FHWA operations. Through this effort, an FTE level of 2,313 FTE in FY 2009 is estimated to be sufficient to successfully carry out agency operations. This level is 117 FTE below the authorized FTE ceiling of 2,430.

Strategic Management of Human Capital

Human Capital Plan, Succession Planning, Closing Gaps. The FHWA's Human Capital Plan will be modified to reflect new organizational approaches for implementing the Federal-aid Highway Program. The Succession Plan will be implemented to ensure its workforce has depth in leadership skills to replace retiring employees. The FHWA anticipates that significant numbers of employees will be retiring and that an aggressive recruitment program will be needed to replace the retiring workforce and strengthen our core functions, including congestion management and mitigation, structures and materials research and analysis, budget development and execution, transportation management and operations, and safety. While continuing to assess needed skill change of FHWA employees through workforce planning, the Agency will make continued progress in closing gaps in mission critical occupations (e.g., financial management, engineering, and government wide information technology and human resources).

The Professional Development Program will be used to recruit, hire, and develop the increasing number of entry-level individuals in mission-critical disciplines (e.g., financial management). The funding will support individuals needed to fill FTE positions in Headquarters, and the increasing number of individuals needed to fill FTE positions in Division Offices.

Recruitment incentives will be critical to attracting new mid-career hires with the requisite multidisciplinary skills. With the increasing number of retirements and vacancies agency-wide, continuous efforts need to be made to attract a diverse workforce through various recruitment sources such as advertisements, print media, web sites, etc.

The FHWA will implement actions necessary to change the skills mix of the financial management workforce. The Agency's Learning and Development Program will train increasing numbers of employees in stewardship, program oversight, and financial management including the implementation of the new Federal-aid Academy which is designed to foster improved stewardship and oversight of Federal-aid programs in accordance with requirement under SAFETEA-LU, the new Leadership Academy for new mid-career managers, and acquisition training. A multidisciplinary approach and an emphasis on accountability will be incorporated at all levels of training. The Agency will continue to fund rotational assignments for mid-career hires to ensure that they have the skills needed to perform on the job.

The Agency will continue our efforts to support a learning environment that supports new supervisors with the information and skills they will need immediately in their new supervisory role and then by providing additional training in regular installments through the first two years of their supervisory tenure. Managing employee performance will continue to be a high priority item in 2009. The Agency will continue to enhance current supervisor skills and focus on managing performance under flexible work arrangements such as teleworking, shared positions, and alternative duty locations. The Agency will also continue to fund rotational assignments for mid-career hires to ensure that they have the skills needed to perform on the job. Numerous training programs will be offered using video and web-conferencing, or other e-learning technologies. Additional funding is necessary to develop and/or convert instructor-led courses to an e-learning environment.

Over the last four years, the FHWA has sustained reductions to the training budget as a result of Agency-wide funding constraints. Employee survey results indicate employees do not have sufficient training to meet their immediate work and career needs. The Agency plans to build the training program so that critical multidisciplinary training needs are addressed. Continued implementation of changes to acquisition training requirements will require additional FHWA resources. The number of individuals affected by this change has increased; at the same time, the number of training hours has increased as the well. Without additional funding resources, the impact of this change may require a reprioritization of learning and development activities.

The FHWA will evaluate the pilot field realignments to identify issues and make changes to increase organizational effectiveness for teleworking sites and related training for employees and managers in flexible work arrangements such as shared positions are alternative duty locations.

The FHWA will carefully monitor to ensure the Agency's goals and objectives, as stated in the Agency's Performance Plan and the Administrator's Performance Agreement with the Secretary, are cascaded down to Senior Executives' performance objectives and to the performance plans of individual employees, and are used as the basis for recognizing and rewarding employee accomplishments. The Agency's focus on pay-for-performance will be results-driven, producing a distribution of pay adjustments and awards based on individual contribution, organizational performance, and/or team performance. Follow-up assessments will be conducted to measure the effectiveness of program improvements implemented as a result of previous Accountability Reviews.

The Agency also plans to ensure that awards are used to recognize achievements that advance the Agency's goals and objectives. The Agency request includes funding for employee recognition and awards funding to support this strengthening of the performance culture in the FHWA.

The FHWA will continue to implement its Employee Survey Action Plan (which also includes actions to address Human Capital Survey (HCS) and Diversity Management Council recommendations) and create an organizational climate that enables its workforce to achieve the strategic goals of the Agency. New approaches will be used to address low-scoring and/or downward trending items. The Agency will implement new initiatives to improve employee satisfaction. In addition, action items by the FHWA Human Resources Management Committee (HRMC) will be implemented.

The FHWA will continue to implement its Diversity Action Plan and create an organizational climate that enables a multidisciplinary workforce to achieve the strategic goals of the Agency. Mediation will be used to address organizational issues when appropriate.

Under the OPM 45-day hiring model, the measurement of success has changed to percentage selected within 45 days. The goal for FY 2008 is for selecting officials to sign the certificate within 45 days of the announcement closing in 65 percent of the cases. If the measurement for success changes for FY 2009, the FHWA will make any changes necessary to work toward achieving the new goal. For the SES, the FHWA has developed a guideline to assist selecting officials in making selections and clearing the ERRC within 75 days.

The FHWA will continue to integrate into our business processes additional components of an accountability system that provides consistent means to monitor and analyze Agency performance on all aspects of human capital management policies, programs, and activities, which must themselves support mission accomplishment and be effective, efficient, and in compliance with merit system principles. This includes greater integration and enhancement of current systems, to provide for greater customer service response and focus, greater system integration between the training system (eLMS) and other personnel systems such as Hiring Management and the Federal Personnel and Payroll System (FPPS), and enhanced management-automated tools to improve overall processes.

The FHWA will participate in Department-wide accountability reviews. The FHWA will continue to implement improvements and corrective actions identified in the accountability reviews of the selected staffing and recruitment programs in the "Talent" area. Further accountability review activity will be coordinated with the DOT Accountability Review Program Plan.

Under the implementation of HSPD-12, there are new and more rigorous background investigations required on all new Federal employees and contractors working for the FHWA. As a result, individuals need security clearances and many employees need to have their clearances updated. The Agency requests that funds be allocated for personnel security area. These funds will assist with finalizing the appropriate clearances for employees that are selected for positions that have higher-level clearance requirements.

Electronic Government (E-Gov)

The FHWA will continue to co-chair a departmental E-Gov subcommittee working on crosscutting IT initiatives.

The FHWA will continue to refine and use its Enterprise Architecture (EA) to guide IT investments in support of the DOT and the FHWA strategic goals and expand the target architecture by adding one or more business areas. Some of the areas that we will be focusing on will include streamlining business processes, ensuring business and information technology alignment, increasing information/knowledge sharing, and expanding reuse. In addition, the FHWA will continue to ensure the integration of EA and capital planning.

The FHWA will continue to improve and refine management of the FHWA IT portfolio. In particular, we will establish standards for the maintenance of all documentation concerning the business cases, construct an easily retrievable storage area for our electronic project data, and update the outlays on a yearly basis for past budget years.

To enhance IT security, we will implement the provisions of Homeland Security Presidential Directive - 12 (HSPD-12) applicable to FY 2009. We will also continue the consolidation of IT infrastructure in FHWA field offices

The FHWA will support E-Gov initiatives through contributions and participation; continue to support the Department in its Lines of Business and Smartbuy initiatives and its IT efforts such as infrastructure consolidation, use of enterprise licenses, and lowering IT-related costs.

The FHWA Exhibit 300 is posted at the following web site: http://www.dot.gov/exhibit300.

Financial Performance

The FHWA will continue implementation of the FIRE program and ongoing efforts to improve financial stewardship and oversight.

The FHWA will deliver a National Lessons Learned Program to field offices for major project stewardship and oversight. Also, training on cost estimation for major projects has been developed and will be provided to select States. The training presents fundamental concepts to be used for major project cost estimate validations that will assist in ensuring that major project cost estimates are accurate and complete throughout the project development process. The FHWA will continue to support project management training for Major Project oversight managers and employees actively involved in the projects. The training will help ensure that the project management plans required for major projects are consistent with Agency guidance.

The FHWA will continue to implement the next iteration of an agency-wide risk management initiative. A training course on risk management practices has been developed and will be provided to FHWA employees and its state and local partners. The FHWA will continue to develop strategies for improving program management practices in the agency.

Budget and Performance Integration

The FHWA will continue to align program strategies and activities to support the DOT Strategic Objectives, as outlined in the revised DOT Strategic Plan for FY 2006-2011, and continue to develop an annual Strategic Implementation Plan and Accountability Contract to link organizational and managerial performance. To advance the implementation of managerial cost accounting and activity-based budgeting, the current Managerial Cost Accounting (MCA) model will be developed to fully map budget accounts and program activities to strategic objectives and performance goals. The FHWA will continue to improve the MCA and unit performance reports.

Explanation of Funding Changes for
Limitation on Administrative Expenses
(in thousands of dollars)

Overview: This account provides for the necessary resources to support Limitation on Administrative Expenses (LAE) activities and maintain the agency's administrative infrastructure. Funding will support activities related to the goals of the President's Management Agenda, implementing the requirements of the SAFETEA-LU legislation, and meeting other Federal mandates.
LAE, FY 2008	$377,556
Adjustments to Base:
Salaries and Benefits The requested increase is needed to fund the COLA, Locality Pay, and other pay increases.	$12,588
GSA Rent and Utilities The requested increase for GSA rent is due to increased rent costs for FHWA field office facilities.	$2,588
Working Capital Fund The requested increase for the Working Capital Fund is assigned by the Department due to an increase in the services provided.	$1,162
Other Activities The requested increase for other services contracts accommodates inflation and is necessary to support departmental initiatives and activities central to carrying out the agency's mission.	$986
Total Adjustments to Base:	$17,324
LAE, FY 2009 President's Budget	$394,880