USOGE FY06 PAR - Management's Discussion and Analysis

HIGHLIGHTS OF FY 2006 ACCOMPLISHMENTS

OGE's accomplishments in FY 2006 reflect the successful outcomes of our activities in the final year of our former Strategic Plan. Our report of those achievements is described in detail below and is organized by the broad goals of the former plan. A few highlights of OGE's FY 2006 accomplishments include:

· Tackling emerging issues. During FY 2006, OGE focused on anticipating and responding to current issues that impact how agencies ensure high ethical standards. For example, OGE organized a group of nearly 40 departments and agencies to study the ethical implications of emergency response. This initiative resulted in a conference, a report, and new materials to assist agencies in ensuring that ethical considerations are addressed when the Government responds to emergency situations such as natural disasters. The Office also completed a comprehensive review of the criminal conflict of interest statutes, many of which had not been evaluated for decades. Based on the review, OGE submitted a report on the statutes to the President and the Congress recommending improvements to various provisions.

· Improving the identification of conflicts of interest through financial disclosure. In FY 2006, OGE published proposed and final rules designed to streamline financial disclosure for nearly 300,000 employees who file confidential forms. OGE also developed a new confidential reporting form to help eliminate errors. The revised form conforms to the more streamlined reporting requirements of the new rule and may be completed electronically.

· Providing quality education and other resources to ethics officials and employees. In FY 2006, OGE held symposia and individual training events for approximately 1500 ethics officials working in the Washington metro area, in regional offices, and at military bases. The mini-conferences focused on ethics rules and laws, as well as on the Hatch Act, travel regulations, and prohibited personnel practices.

· Promoting good governance. OGE took a lead U.S. role in coordinating GRECO's (Council of Europe's Group of States Against Corruption) evaluation of the U.S.'s anti-corruption efforts.

Annual Program Performance Report

Office of Government Ethics for FY 2006

The strategic plan for the Office contains four strategic goals. In our FY 2006 annual performance plan, OGE set forth additional performance goals for each of these strategic goals. This report describes OGE's success in meeting those performance goals.

FY 2006 Results

Strategic Goal One: Provide Overall Policy Direction to the Executive Branch Ethics Program

OGE provides overall policy direction to the executive branch ethics program by serving as the primary authoritative source of Federal executive branch ethics policy. To execute that responsibility, OGE undertook a number of projects in FY 2006 designed to improve the effectiveness of the advice the Office gives through legal and policy guidance, to address emerging issues, and to promote intergovernmental good governance policies and practices.

Issued Legal and Policy Guidance

OGE undertook projects to provide clear and up-to-date direction for the executive branch ethics program by reviewing existing laws and policies and issuing new regulations and guidance. One such project was a review of the Standards of Ethical Conduct, a comprehensive set of ethics rules that apply to all employees in the executive branch. This review has resulted in a set of internal recommendations to revise the Standards. In addition, OGE published proposed and final rules on the applicability of the Standards of Ethical Conduct to individuals detailed to work in the Government under the Intergovernmental Personnel Act (IPA). These rules clarify the standards that apply to IPA detailees, many of whom are expert scientists who work in various science agencies. Because these IPA detailees are essentially on a leave of absence from their non-governmental employers, typically there are a number of conflict of interest issues that need to be resolved.

To improve the confidential financial disclosure system, OGE published a final rule in FY 2006 that streamlines the disclosure requirements and changes the dates for filing so that they align with the calendar year. The Office also developed a new, simpler reporting form that is designed to be completed electronically rather than on paper. The new reporting system will become effective beginning calendar year 2007.

Focused on Emerging Ethics Issues

OGE also actively addressed several critical emerging ethics issues including contractor ethics and Federal emergency response. Because of the increasing use of contractors in the Federal workplace and the myriad ethics issues that can arise when employees and contractors work side by side, OGE issued a comprehensive memorandum to agency ethics officials on this topic. In addition, OGE continued to draw attention to the question of whether some form of ethics rules needs to apply to the employees of Government contractors. OGE spoke to several groups about this topic (including the staff of the Senate Armed Services Committee) and participated in a working group examining the multi-sector workforce being undertaken by the National Academy of Public Administration.

To address the pressing issue of the ethical implications of emergency response, OGE established a working group in October of 2005. Federal agencies that had either been affected by Hurricanes Katrina and Rita or were involved in the response and recovery efforts came together to discuss lessons learned. Representatives of 15 departments and 21 agencies attended one or more of the working group sessions held between October 2005 and March 2006. The working group meetings culminated in a conference: “Ethical Implications of Emergency Response,” held on March 21 and 22, 2006. The conference emphasized the need for all ethics officials to better position themselves to be part of, and thereby ensure that ethics remains an integral part of, future response efforts. In June 2006, OGE published and distributed the conference presentations to the ethics community so that it can better prepare for the next emergency. OGE also distributed a draft document that addressed questions ethics officials have on the acceptance of gifts and fundraising efforts that flow from a national emergency.

OGE also established a “value added group” whose goal is to enhance executive branch ethics programs by creating an environment in which model practices, knowledge, and experiences are shared. Ethics officials representing 20 executive branch departments and agencies began a discourse about adding value. Thus far, the group has focused on assessing their own ethics programs, developing model practices, and exploring other opportunities to leverage the resources and accomplishments of individual agencies to better serve the mutual interests of the ethics community.

Promoted Intergovernmental Good Governance Activities

OGE's Congressional efforts in FY 2006 focused on two principal areas. First, OGE completed a comprehensive review of the criminal conflict of interest laws relating to executive branch employment, in consultation with the Department of Justice, and submitted a report to the President and Congress evaluating those laws in accordance with the Intelligence Reform and Terrorism Prevention Act of 2004. In addition, because OGE's current authorization lapses at the end of this fiscal year, the Office pursued reauthorization legislation in the House and Senate including preparing and presenting testimony, preparing an extensive response to post-hearing questions and working with House and Senate committees on proposed reauthorization legislation. OGE also drafted testimony and responded to Congressional and Office of Management and Budget (OMB) requests for comment on draft bills, legislation, bill reports and testimony.

The Office's recognized ethics program and policy expertise within the executive branch and its ability to see the role of an ethics program in a broader good governance context has made the Office a substantial resource to the United States in meeting its commitments in international anti-corruption agreements and promoting concepts of good governance. The use of OGE expertise was particularly substantial for those agreements that involve multi-disciplinary mutual evaluation. During this fiscal year, the Departments of State and Justice asked OGE to take the principal role in coordinating the Council of Europe's Group of States Against Corruption's (GRECO) evaluation of portions of the United States' anti-corruption efforts.

Also, based upon recognized policy and program expertise, members of the OGE staff served as expert evaluators from the U.S. for the GRECO evaluation process and for the Follow-up Mechanism for the Inter-American Convention Against Corruption (MESICIC). OGE staff also served as the U.S. representative in expert meetings on conflicts of interest and ethics policies for the Organization for Economic Cooperation and Development (OECD) Public Governance and Territorial Development Directorate and served as a member of an internal working group on policy objectives for implementation of the U.N. Convention Against Corruption.

Strategic Goal Two: Support the President, Executive Branch Agency Heads and Employees in Administering Effective, Fair, and Consistent Ethics Programs with the Branch and Individual Agencies

OGE took significant steps to support executive branch ethics programs in FY 2006. The Office reviewed agency ethics programs, began improvements to the review and certification process of public financial disclosure reports, streamlined the confidential financial disclosure rules and form, and enhanced ongoing communication with executive branch agencies.

Provided Additional Agency Ethics Program Review and Feedback

OGE conducted on-site reviews of ethics programs at executive branch departments and agencies to: (1) identify and report on strengths and weaknesses of the programs and, as appropriate, make specific recommendations for program enhancements designed to help ensure integrity in Government operations; and (2) provide technical assistance to agencies in order to implement well-run and employee-helpful agency ethics programs. This assistance includes: sharing model practices observed during reviews at other agencies; providing suggestions on how to correct identified deficiencies; and assisting agencies in developing plans, processes, and procedures to implement report recommendations and suggestions. In FY 2006, OGE reviewed 31 executive branch agency ethics programs.

OGE also conducted six-month follow-up reviews to address the recommendations and suggestions contained in its reports. Through discussions with ethics officials and an examination of relevant documentation, OGE determined whether appropriate practices and procedures had been put into place to provide reasonable assurances that the identified program weaknesses had been appropriately addressed.

In addition, OGE updated and formalized its procedure for administering the Agency Program Review Evaluation Process, which is designed to provide: (1) insight into how ethics program reviews can be improved and (2) benchmarks for the performance measures established in the FY 2007-11 strategic plan. The Office streamlined this process by developing an electronic evaluation form and instituting a formal follow-up mechanism.

In response to a specific agency request, OGE formed a task force to assist the Federal Emergency Management Agency (FEMA) in meeting a broad range of its ethics program challenges, including promoting program compliance, raising awareness, and allocating resources. This special project complemented a series of program reviews of other components of the Department of Homeland Security, provided a basis for developing improvements to OGE's general review process, and established a framework for a more value-added approach to program review.

The Office also administered various surveys to evaluate agency ethics programs and establish baseline data for OGE's FY 2007 strategic plan. The Office administered a survey to attendees of the Ethical Implications of Emergency Response Conference held in March 2006, to evaluate the effectiveness of the conference, to assess the usefulness of the working group structure, and to assist OGE in developing future plans to address emerging ethics program issues. Another survey instrument OGE administered to employees was designed to measure their perceptions of their agencies' ethical culture and ethics program. OGE also administered a third survey to ethics officials throughout the executive branch – approximately 130 departments and agencies − to measure their perceptions of the services provided by the Office and to help establish benchmarks for performance measures defined in OGE's new strategic plan.

Improved Financial Disclosure Processes

OGE took strides in FY 2006 to improve its performance of one of its key responsibilities, the review and certification of public financial disclosure reports, through a range of improvements that included the retooling of OGE's internal process for reviewing the reports.

Improvements in FY 2006 addressed two separate aspects of the public financial disclosure process: (1) the review of reports filed by individuals nominated by the President for Senate-confirmed executive branch positions (nominee reports); and (2) the review of their annual and termination reports. With regard to annual and termination public financial disclosure reports, to reduce the follow-up required on the 1,000 reports for which OGE is the final certifying authority, OGE published guidance on certain technical review deficiencies that routinely raise “red flags” and result in automatic follow-up with agency ethics officials. OGE developed and implemented new internal policies that reduced its backlog of uncertified reports by 50%. The Office worked with OMB to develop an E-Gov initiative on electronic filing of the public and confidential financial disclosure reports, which are filed each year by approximately 330,000 employees and Presidential nominees throughout the executive branch

OGE began an effort to improve the review and certification process for nominee reports. The Office instituted an inter-office review team and completed a work flow study on the existing report review process for these reports to identify the policies and procedures to be improved. An advisory team is making suggestions and creating training documents on review procedures for new reviewers as the examination of current processes progresses. In addition, the reviewers now meet regularly to build skills and discuss more complex reporting issues as they arise. OGE is continuing to monitor the compliance of more than 500 Presidential appointees with ethics agreements in which they have agreed to take specific actions to address actual or potential conflicts of interest with financial or fiduciary arrangements disclosed in their financial disclosure reports. OGE also timely filled requests from 143 individuals and organizations for 500 copies of those public financial disclosure reports of senior executive branch officials for which OGE conducts a second-level review.

OGE made improvements to the confidential financial disclosure process through the issuance of new rules and a new form that will streamline these reporting requirements. (See discussion in Strategic Goal One.) In addition, the Office continued to encourage and approve the use of alternative confidential financial disclosure procedures in order to more effectively permit agencies to obtain information about specific kinds of financial interests that could present conflicts for their employees. In FY 2006, OGE approved the use of alternative confidential financial disclosure procedures for the U.S. Commission on Civil Rights, National Archives and Records Administration, Department of Defense, Department of the Army, and Department of Veterans Affairs. Discussions on alternative procedures are underway with the Department of Agriculture.

Finally, the Office fully implemented new Executive Order 13392 regarding the Freedom of Information Act (FOIA). OGE completed the review plan and report required by that Order.

Enhanced Agency Communication

OGE instituted a practice of inviting agency leadership to meet with OGE's leadership in connection with ethics program reviews. In addition to promoting the importance of the ethics program, this practice serves to help ensure personal commitment to the program by agency leadership as well as to define and allocate sufficient agency resources for the program. The Office also maintained strong liaison services provided to ethics officials in executive branch departments and agencies through the OGE desk officer program and the random call desk. These 12 desk officers answered over 3,800 questions from ethics officials on the conflict of interest statutes, Standards of Conduct regulations, program operations and financial disclosure and over 2,100 questions from the public. These were in addition to the numerous legal and policy questions answered by OGE attorneys. In addition, OGE increased by 11 percent the number of ethics officials and enforcement personnel with whom the Office communicates through the OGE email ListServe on such topics as emerging issues, best practices, general news, and job vacancies in the Federal ethics community.

Strategic Goal Three: Develop and Make Available to Agencies Innovative Training and Ethics Education Materials and Promote and Provide Quality Education and Training Experiences for Agency Ethics Officials and Employees

The Office provided extensive education and training opportunities and materials to an array of ethics officials and employees during FY 2006. From the development of new courses to the creation of new materials and initiatives, OGE worked to ensure that Federal employees have the information necessary to perform their jobs with integrity.

Created Innovative Training and Education Materials

OGE developed several job aids aimed at helping ethics officials to more efficiently perform their jobs. These include: (1) a flow chart on analyzing post-employment conflicts, (2) an analysis of conflicts of interest, (3) an analysis of the impartiality rule, (4) guidance on post-employment, (5) remedies for seeking employment conflicts, and (6) a flow chart on ethics agreements. OGE distributed these job aids to ethics officials who attended ethics training either as a stand-alone event or as part of the regional symposia or national ethics conference. Also, OGE developed a comprehensive training program for new ethics officials. The highly interactive, two-day program is designed to prepare new ethics officials to give advice and to help them hit the ground running. The Office conducted approximately 50 instructor-led training programs for ethics officials in headquarters and in the regions, with most sessions filled within 48 hours of being announced. The end-of-course evaluations demonstrate that the ethics officials found the training very helpful (as evidenced by an average rating of 4.3 on a 5-point scale). Lastly, OGE developed several crossword puzzles on ethics. The puzzles are to be hosted on the OGE website.

OGE also generated new guides and evaluation tools. The Office developed instructor and participant guides for three courses to be distributed to ethics officials for use in training their employees. These materials include one online course and two instructor-led courses. Ultimately, each ethics topic will be presented in both online and instructor-led versions so that ethics officials have the option of selecting the medium that best addresses their needs. In addition, OGE developed two new evaluation products: an objective multiple choice test to measure the extent to which employees acquired knowledge and skills as a result of the training provided and a subjective assessment that asks ethics officials at the start and end of the training to rate their perceived knowledge and skills.

Provided Quality Ethics Education and Training

OGE developed and delivered numerous training sessions tailored to the specific needs of individual agency ethics programs. These sessions covered such topics as making the appropriate determinations of positions meeting the requirements for filing confidential financial disclosure reports, determining the rules applicable to special Government employees, and carrying out other aspects of the duties and responsibilities associated with the position of Designated Agency Ethics Official (DAEO). OGE routinely evaluated and revised its ethics training programs based on information provided by ethics officials who attended OGE training, feedback from the instructors, and observations made by the instructional designers. These annual revisions help to ensure that products are up-to-date. To further ensure the quality of its products, OGE formalized the internal review and approval process for employee and ethics officials' course materials. Also, OGE convened a meeting of ethics officials representing a range of executive branch agencies in order to better focus employee ethics training.

OGE also continued its efforts to provide clear guidance to Federal advisory committees. In FY 2006, the Office revised the training it offers in coordination with GSA to agency advisory committee management officials. OGE also worked with GSA to develop a template to be used by agencies to draft advisory committee charters.

To recognize educational achievements and enhance the ethics community's ability to leverage its resources, OGE launched an initiative to give awards to agency ethics training programs. By identifying creative and innovative products, OGE can underscore the responsibility of the ethics community to go beyond merely fulfilling minimum ethics training requirements. This initiative also is aimed at promoting efficiency by allowing agencies to avoid unnecessarily starting from scratch or duplicating the efforts of others. The awards will be presented at OGE's national conference in March, 2007.

Finally, OGE conducted three symposia, two of which covered ethics laws as well as such diverse topics as the Hatch Act, travel regulations, prohibited personnel practices and contractors in the workplace. The third symposium addressed ethics issues that arise during and after emergencies. OGE also began planning the 15th National Government Ethics Conference to be held in Orlando, Florida in March, 2007.

Strategic Goal Four: Administer an Effective Outreach Program

The Office focused its outreach efforts on two tracks in FY 2006: externally, by disseminating ethics information to private sector, nonprofit, and international organizations, as well as state, local and foreign governments; and internally, by participating in Federal government conferences, working groups and councils to address ongoing and emerging ethics issues.

External Outreach

OGE administered an effective outreach program by sharing its programmatic and policy development experiences with those outside the U.S. Government. This outreach included governments, non-profits, corporations, professional and trade associations, and institutions of higher education that are developing or enhancing their own educational or ethics programs.

Primary examples of OGE's effective sharing of programmatic and policy development experiences through international organizations and directly with foreign governments include: (1) OGE's well-received service as a U.S. expert for conflict of interest and good governance projects of the OECD including the Good Governance for Development in the Arab countries of the Middle East and North Africa; and (2) service as a member of the delegation to the U.S.-China Joint Liaison Group bilateral meetings on anti-corruption held this fiscal year in China. OGE also worked directly with individual country programs such as the Commission for the Prevention of Corruption of Slovenia, and through the Network of Ethics Offices of the Americas with Argentina, Uruguay, Chile, Brazil, Mexico, China and Puerto Rico.

In addition, repeat requests for OGE's service as a primary resource for the State Department's International Visitors Program, particularly in the areas of ethics, conflicts of interest and good governance programs, indicated the continued value of those presentations. During the fiscal year, OGE met with over 45 delegations comprised of more than 378 foreign visitors representing over 80 countries. OGE also has continued to be an active member of the Council of Governmental Ethics Laws (COGEL), an organization of Federal, state and local government agencies with expertise in ethics, campaign finance, lobbying registration and access to information.

Internal U.S. Government Outreach

OGE's internal U.S. Government outreach included consistent participation in the activities of the President's Council on Integrity and Efficiency (PCIE), the Executive Council on Integrity and Efficiency, the Interagency Ethics Council, and the Small Agency Council. OGE implemented an outreach program aimed at small boards and commissions to better tailor and more efficiently provide OGE services. The Office also worked with agencies that have a significant number of scientists to address ethics issues particularly pertinent to the scientific community. The Office plans to follow up in FY 2007 by identifying and disseminating model practices. Finally, OGE also sought to improve and modernize the Office's web page in order to streamline the information available, enhance its usefulness to the ethics community and the general public, and better position it as a tool for meeting OGE's strategic goals.

Enhanced Internal Administrative Support

Without critical, internal administrative supports, OGE could not successfully pursue or reach its strategic goals. During FY 2006, OGE strove to maintain strong, effective leadership by undertaking vital services related to budget and finance, human resources, graphics, facilities and property management, travel, procurement, telecommunications, records management, and information and web site technologies.

In addition to this array of services, OGE undertook a significant number of internal, mission-support initiatives. To assist OGE in attracting and retaining a highly efficient workforce, the Office received OPM recertification of its SES pay-for performance system and developed or revised eight Human Resource Manual chapters. In addition, the Office developed and conducted reviews of OGE's awards, telecommuting, and training programs. OGE also improved recruiting by providing electronic notifications to African-American and Hispanic serving colleges and universities and by enhancing performance on OPM's 45-day hiring model.

In FY 2006, to harness technology to improve business processes, the Office upgraded its email system, converted its IT network backup system from tape to disk, and provided the capability to transmit live or recorded video. In addition, as part of the Office's efforts to improve the financial disclosure system, it implemented a web-based Financial Disclosure Tracking System and continued the development of a web-based Review Tracking System. The Office also provided OGE's telecommuting employees with the capability to access their network files remotely, replicate their “C drive” data into a network drive for remote access, make and receive telephone calls remotely via an OGE notebook computer, and instant message. OGE met all FY 2006 OMB deadlines concerning the transition to a new Internet Protocol (IPv6).

Finally, to provide as safe a work environment as possible and ensure continuity of OGE operations, in FY 2006 the Office established an off-the-premises OGE Intranet site to store record information that can be accessed during an emergency, oversaw the development of a pandemic continuity of operations plan, and in light of the pandemic effort, initiated a review of the existing non-pandemic continuity plan. The Office also updated its Federal Protective Service alarm system, developed an Administrative Manual chapter on information privacy, and continued the transition to the government-wide standard identification card.

MANAGEMENT ASSURANCES

Annual Assurance Statement on Internal Controls and Internal Control over Financial Reporting

OGE's management is responsible for establishing and maintaining effective internal control and financial management systems that meet the objectives of the Federal Managers' Financial Integrity Act (FMFIA). OGE conducted its assessment of internal control over the effectiveness and efficiency of operations and compliance with applicable laws and regulations in accordance with OMB Circular A-123, Management's Responsibility for Internal Control. Based on the results of this evaluation, OGE can provide reasonable assurance that its internal control over the effectiveness and efficiency of operations and compliance with applicable laws and regulations as of September 30, 2006 was operating effectively and no material weaknesses were found in the design or operation of the internal controls.

In addition, OGE conducted its assessment of the effectiveness of internal control over financial reporting, which includes safeguarding of assets and compliance with applicable laws and regulations, in accordance with the requirements of Appendix A of OMB Circular A-123. Based on the results of this evaluation, OGE can provide reasonable assurance that its internal control over financial reporting as of June 30, 2006 was operating effectively and no material weaknesses were found in the design or operation of the internal controls over financial reporting.

Robert I. Cusick

Director

November 15, 2006

___________________________________________________________________________________________________

SCHEDULE OF PERFORMANCE INDICATORS