Improving Budgeting for Federally Owned Capital

Especially during times of constrained budgets, agencies need to plan acquisitions to target resources in the most strategic and efficient manner. While OMB requires agencies to prepare long-term capital plans, it does not require agencies to submit them. As a result, OMB cannot ensure that agencies’ processes adhere to capital planning principles, and GAO was unable to find evidence of long-term capital plans at any of the six capital intensive agencies where GAO reviewed implementation of leading capital planning principles.
Full Report of GAO/AIMD-99-32 (PDF, 74 pages), Highlights of GAO-07-274 (PDF)
Leading practices in capital planning include analyzing alternative approaches to financing capital. Full accountability for budget decisions is best guaranteed by recognizing the full costs of federal initiatives at the time decisions are made to commit federal resources. Nonetheless, agencies have been authorized to use alternative financing mechanisms that allow them to acquire certain assets by spreading the full cost over a number of years, even when the cost of doing so is greater than if these costs were paid up front in the budget. The pursuit of these alternative financing mechanisms is often not driven by best value.
Highlights of GAO-05-55 (PDF), Highlights of GAO-03-1011 (PDF)

^ Back to topWhat Needs to Be Done

require agencies to develop and submit agencywide, long-term capital plans to OMB and make these plans available to Congress; and
Highlights of GAO-07-274 (PDF), Highlights of GAO-05-55 (PDF)
instruct agencies that use energy saving performance contracts to report to OMB and their committees of jurisdiction an annual analysis comparing the total cycle costs of the contracts entered into during the fiscal year with estimated up-front funding costs for the same asset.