US Government Efficiency Failure - Transparency and Accountability

This Asset Management Partnership (AMP) Newsletter continues a miniseries that covers how the US Government is failing to manage its built infrastructure and how this problem can be solved.

See preceding articles at:

• US Government Efficiency Failure – Built Infrastructure Accounting
• US Government Efficiency Failure – Real Property Inventory Management
• US Government Efficiency Failure – Program Management Blind Spot
• US Government Efficiency Failure – Understanding Enterprise Risk

This article concludes a litany of the US Government’s fiduciary failure to efficiently and effectively manage its built infrastructure that consumes around $70 billion in funding each year. The focus of this week’s article is a capstone perspective on decision making transparency and accountability. The preceding articles listed above identify specific failure root causes as follows:

• Built Infrastructure Accounting: the Federal accounting system defined in OMB Circular A-11, Section 83 – Object Classification focuses funds management on activities and not assets. This makes it impossible to determine how much money is spent on different assets and asset types, such as built infrastructure/real property, real estate, and their subgroupings.
• Real Property Inventory Management: the Federal government has invested immensely in the improvement of built infrastructure inventories over decades (plural), yet many agencies cannot pass an audit as to its accuracy, and all are challenged in doing so. The dirty secret to this is because having accurate inventory data is not consequential to getting money or being trusted to spend it.
• Program Management Blind Spot: OMB Capital Programming Guidance published as part of in OMB Circular A-11 is heavily biased toward program management of funding expenditures. It lacks asset management rigor that could guide and direct effective, efficient built infrastructure management.
• Understanding Enterprise Risk: despite excellent guidance detailing risk management and management control requirements, such as OMB Circular A-123: Management’s Responsibility for Enterprise Risk Management and Internal Control and GAO-14-704G – Standards for Internal Control in the Federal Government, most agencies don’t know how to manage enterprise risk through built infrastructure nor are they challenged to so.

This leads to the culminating failure of the US Government not being transparent nor holding itself accountable for fulfillment of its fiduciary responsibility to effectively and efficiently manage its vast built infrastructure portfolio.

Much of this is a failure of ignorance and omission. It is also a failure of leadership. Ignorance stems from Federal Agencies not understanding the difference between “managing assets” and “asset management”. See Managing Assets in the Context of Asset Management and the Asset Management Paradox for more on this topic. This leads to the failure of omission. If you don’t know it’s a thing, how can you be accountable for not doing it…? Finally, this leads to a failure in leadership. If you are in a leadership position and have a job to do that is dependent on assets and the care of these assets, you should be able answer the question: “Am I doing this well?”. If you cannot immediately answer this question in an effective, efficient manner you have failed the test.

The National Academies’ Strategies to Renew Federal Facilities focuses exactly on the US Federal government’s transparency and accountability fulfilling its fiduciary responsibility to effectively and efficiently manage its built infrastructure portfolio. This report makes this point clear through use of the word “fiduciary”. You can download this report for free at the link above. Do so and search for the word “fiduciary”. It is used 15 times in the context of making two points:

• The US Government’s fiduciary responsibilities to manage built infrastructure must be made clear, and
• Fiduciary responsibilities must be assigned to a person who is / can be made accountable to ensure they are fulfilled.

Current US Government policy does not do this. This is a failure. This failure can be seen as a tragedy of the commons, but its ultimate source is the US Congress. The 5 recommendations contained in the National Academies’ Strategies to Renew Federal Facilities define a pathway to rectify this failure.

Implementation of these recommendations can be accomplished through a simple addendum to the Federal Property Reform Act of 2016. This addendum would be to direct the Federal Real Property Council to implement the five recommendations contained in Strategies to Renew Federal Facilities, or to report to Congress within one-year legislative barriers or impediments on its inability to do so. These five recommendations, stated as requirements, are summarized below:

• Agencies shall implement Federal Facility Asset Management Systems that conform with ISO 55000 - Asset Management System principles and requirements. The purpose of the Agency’s Facility Asset Management System is to reconcile, ensure, and assure alignment between Agency mission objectives, budget, and real property management activities.
• Agency Chief Financial Officers, Budget Officers, and Senior Real Property Officers shall use the Agency’s Facility Asset Management System to develop and approve of the Agency’s Real Property Capital Plan. In turn, the Agency’s Real Property Capital Plan shall be used to manage risk and justify real property budgets needed to achieve Agency mission and performance objectives.
• The President, through the Federal Real Property Council, shall publish and update annually an Integrated National Strategy for the Efficient Use of Real Property. The purpose of this strategy is to report and monitor efficient and effective management of the US Federal real property inventory.
• The President, through the Federal Real Property Council, shall establish key performance indicators (KPIs) that objectively measure and report real property performance at the asset and portfolio levels for condition, functionality, availability, and utilization as well as metrics and criteria that report the mission dependency Agencies have on individual real property assets. The means to do so shall be integral to Agency Facility Asset Management Systems and use of the resulting data shall be integral to the development of Agency Real Property Capital Plans and the Integrated National Strategy for the Efficient Use of Real Property.
• The President, through the Federal Real Property Council, shall generate and update each year an addendum to the Integrated National Strategy for the Efficient Use of Real Property dedicated to continual improvement of Federal asset management competencies and capabilities. Among topics to be covered is funding and budget management strategies that integrate and optimize use of real property capital, operating, maintenance, and renewal budgets and capabilities needed to achieve US Federal Government mission objectives.

Of special note, these recommendations, consistent with the National Academies’ Strategy to Renew Federal Facilities, do not recommend that the US Government or its Agencies be ISO 55001 certified, unless there is a specific business reason and benefit to do so. The recommendation is that the ISO 55000 Asset Management Standards series be used as a timeless, independent, objective statement of best practice for the effective and efficient built infrastructure management.

The balance of this miniseries will further develop each recommendation outlined above. In the meantime, have a Happy Holidays and I look forward to reconnecting in the New Year.

If you found this post helpful please like and repost it. The way to fix the problem of the US Government’s fiduciary failure in managing its built infrastructure portfolio is to help more people understand the problem. Also, check out the AMP Newsletter for more on disciplined asset management.

Written by Jack Dempsey | December 24, 2024

AMP Newsletter #103

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