Budget and Performance Integration

This initiative follows through on the President's commitment to build a results-oriented government that funds effective programs and reforms or terminates ineffective programs.

FHWA

FHWA moved aggressively to implement managerial cost accounting during FY 2004. The Agency hired Grant Thornton (GT) in FY 2003 to assist in the implementation process. GT has significant experience implementing cost accounting in both the private and public sector, including such federal agencies as the U.S. Patent Office, Department of Interior, and Internal Revenue Service. GT identified three cost accounting approaches for FHWA. This includes activity-based costing for the general operating appropriation, project costing for Federal Lands funding, and standard costing for Federal Aid funding. This combination of cost accounting methodologies will ensure full costing.

In FY 2004, an implementation strategy was developed and approved by senior FHWA management and implementation began in FY 2004. In this regard, FHWA completed development of its High Level Design, which includes identification of all products and services provided by the Agency and all supporting work activities conducted by employees in support of the products and services (labor distribution).

This design will be piloted in early FY 2005 and then Agency-wide deployment will begin shortly thereafter. FHWA will use the Department's new Consolidated Automation System for Time and Labor Entry (CASTLE) labor distribution system to capture employee activities. Finally, FHWA identified the requirements for cost accounting software that will be used to produce reports and costs by products/services and goals, and acquired a widely used software tool for cost accounting in both the public and private sector. There is strong support for cost accounting within the Agency as a more informed means of resource distribution and program oversight and delivery.

FTA

FTA made progress in two areas that will increase its efficiencies. In FY 2004 FTA better identified performance measures and key outcomes for its major programs.

FTA also solicited contractor support in FY 2004 to identify and implement a cost accounting methodology that will satisfy mandatory managerial and legal requirements and will improve FTA's cost assignment efforts. FTA plans to make significant progress in FY 2005 to implement cost accounting.

NHTSA

NHTSA revised its performance appraisal system to link employee actions to goals. As part of submitting the FY 2006 Budget, NHTSA participated in the Department's pilot with the Office of Management and Budget (OMB) to provide marginal cost of performance information for new safety initiatives. This activity is part of the Department's implementation of cost accounting Agency-wide.

FMCSA

FMCSA's FY 2004 budget request was recognized as one of the first budget submissions in the Department to fully integrate performance strategies, targets, and plans directly into the budget. This integration of performance measures into the Agency's budget provided a direct connection between program resources and accountability for program performance. In addition, FMCSA made significant progress in developing its Managerial Cost Accounting (MCA) project, which is focused on developing an analytical tool to identify the costs of Agency business processes in order to guide its managers in more efficient utilization of Agency resources.

BTS

BTS made limited progress on this PMA initiative during FY 2004. BTS has been operating without a director for a year and a new director has not been named. Until a new director has been named, a new strategic plan cannot be developed to fully integrate budget and performance.