Inspector General's Statement

MANAGEMENT CHALLENGES FOR FY 2015

Four of the most significant management challenges facing the U.S. Equal Employment Opportunity Commission (EEOC) in FY 2015 are in financial management, strategic management of human capital, strategic performance management, and reduction of the private sector charge inventory.

In August, 2014, President Obama appointed Jenny R. Yang to serve as the Chair of the EEOC. Chair Yang has noted that the EEOC "must strengthen our national systemic program, harness the collective knowledge across our agency, align our objectives, and collaborate on common strategies." In our view, to make substantial progress on these and other priorities, the EEOC needs to be successful in meeting the following four challenges: financial management, strategic management of human capital, strategic performance management, and reduction of the private sector charge inventory.

Financial Management

In FY 2014, the EEOC contracted for migration of its financial system support services from Global Computer Enterprises (GCE) to Department of Interior/Interior Business Center (DOI/IBC). The migration resulted from GCE indicating it would file for bankruptcy by the end of FY 2014 and cease providing services to the EEOC. In addition to paying DOI/IBC an initial installment of over $600,000 to begin providing these services in FY 2015, EEOC paid $1.7 million to the General Services Administration[1] to provide access, for one year (September 18, 2014-September 17, 2015), to essential financial system data that GCE previously maintained for EEOC.

The unanticipated cessation of services and the unbudgeted costs for obtaining the data led to operational and financial challenges for the EEOC, which will carry over to FY 2015. Due to the critical importance of financial services (e.g., recording obligations, making payments, etc.) and the complicated technical nature of the migration, the EEOC's management needs to carefully monitor the technical aspects of the migration process to successfully meet the FY 2015 deadline for completion.

The unanticipated FY 2015 financial system migration presents a technical challenge and a potential financial challenge. The EEOC FY 2015 budget request is $365.5 million, a minor $1.5 million dollar increase over its FY 2014 budget. Thus, any additional significant unanticipated costs associated with the migration to DOI/IBC may substantively adversely impact agency resources. Therefore, the EEOC needs to implement thorough planning, including contingency planning, to account for unanticipated cost increases driven by the migration, and related matters. The OIG will continue to monitor the process through its completion.

Strategic Management of Human Capital

Strategic management of human capital, including personnel security, is a significant management challenge affecting the EEOC's ability to perform its mission. In July 2014, the EEOC completed a human capital accountability plan and provided other information to the Office of Personnel Management (OPM) resulting in OPM closing out its Human Capital Management Evaluation of the EEOC. The evaluation focused on the five Human Capital Assessment and Accountability Framework (HCAAF) systems: Strategic Alignment, Leadership and Knowledge Management, Results-Oriented Performance Culture, Talent Management, and Accountability. This framework was used to evaluate major human capital initiatives underway and system linkages needed to further achieve desired results. The evaluation also determined the EEOC's adherence to merit system principles, law, and regulations, and to assess its efficiency and effectiveness in administering human capital management programs and systems.

Having passed the OPM review, the agency should now seek opportunities to improve its accountability system in FY 2015 and beyond. First, the EEOC is scheduled to conduct an independent accountability assessment and report its results to OPM in FY 2015. In addition, as OIG noted in the 2013 Summary of Significant Management Challenges, OPM recommended that the EEOC conduct a competency gap analysis of mission critical occupations. The EEOC completed a gap analysis survey in FY 2014. Completion of survey data analysis and of the gap analysis itself is planned for FY 2015. The gap analysis will include proposed activities such as hiring and training activities that are intended to close the gaps. Because this is the first time the EEOC will conduct such audit and gap analyses, the EEOC must diligently oversee these activities to ensure timely and effective completion.

The OIG issued a Performance Audit of the Agency's Personnel Security Program on September15, 2014. The objectives of this audit were to: 1) ensure that the EEOC has implemented a Personnel Security Program that adheres to policies and procedures as described by the Office of Personnel Management (OPM) and the Code of Federal Regulations, as well as to determine whether the EEOC's personnel security program was effective and efficient; and 2) ensure that the agency adequately protected classified information that it uses in performance of its Equal Employment Opportunity work for National Security Agencies.

The report states that the EEOC has not developed a cohesive agency-wide classified information management policy to address the safeguarding, training, transfer, storage, or disposal of classified information. Classified information is managed by several EEOC headquarters offices and field offices based on verbal guidance from the originating federal agencies. Without a cohesive agency-wide policy, the EEOC cannot provide assurance to the proper oversight, consistent training and safeguarding of classified information. Although the EEOC designed an overall compliant personnel security program, it needs to improve the implementation of the program in order to achieve optimum effectiveness and efficiency. Absent improvements to the implementation of the program, the EEOC may not be able to provide assurance that there are no individuals holding positions for which they are unqualified, thereby limiting the EEOC's ability to protect national security, privacy-related information.

Strategic Performance Management

As we noted in last year's Management Challenges, the EEOC needs to successfully implement the Strategic Enforcement Plan, including a key subcomponent, the Quality Control Plan (QCP). If the EEOC successfully implements a stringent QCP, it could bring about more effective and efficient charge processing, which should result in a significant improvement in reducing the discrimination charge inventory without sacrificing charge processing quality. The QCP, as described in the Strategic Plan, establishes criteria to measure the quality of investigations and conciliations and develops a peer review assessment system. Work began on the QCP in FY 2013 with completion targeted for April 30, 2013; but it remains incomplete as of the close of FY 2014.

Completing the QCP in FY 2015 should be a high priority for the EEOC. The QCP is important in ensuring quality and consistent processing of private sector charges while the agency also works to reduce that inventory. As called for in the Strategic Plan, the agency needs to complete the quality control system for investigations and conciliations, and a framework for developing measures to ensure that established quality benchmarks are met.

We also believe the EEOC can meet some of the performance management goals through adopting several outcome-based performance measures by amending the Strategic Plan. In September 2012, the OIG commissioned an evaluation of the strategic plan's performance measures (Evaluation of EEOC's Performance Measures, 2012-10-PMEV). In its March 2013 report, the OIG concluded, in part, that "the current measures do not cover the nation's progress towards achieving the [EEOC's] overarching goal: to reduce employment discrimination in the United States." The report also concluded that these measures were not outcome-based.

In our view, the EEOC can meet this challenge by adopting outcome measures for each of the EEOC's three strategic objectives and track progress towards reducing employment discrimination in the United States. Developing and tracking such measures may be formidable, but well worth the investment so that the EEOC can continually pursue the highest and best use of its resources in reducing employment discrimination.

Reduction of the Private Sector Charge Inventory

The EEOC again faces a major challenge in addressing the pending inventory of private-sector discrimination charges, while improving the quality of charge processing. After reducing the inventory an aggregate 18.6 percent in FY 2011-2012, the inventory increased by less than one percent in FY 2013. In FY 2014, the inventory increased from 70,781 to 75,935 (an Agency estimate), a 7.28 percent increase. Two major factors in the increase were the shutdown of the federal government in early FY 2014 and the decrease of investigators from FY 2012 to FY 2013.

Reducing the charge inventory requires adequate numbers of staff (investigators in particular). From FY 2012 to FY 2013, the EEOC's investigative staff shrank significantly, from 726 to 656. However, based upon information provided by the Office of the Chief Human Capital Officer and the Office of Field Programs, in FY 2014, the EEOC increased the investigative staff by approximately 60, increasing the number of investigators to approximately 716. This means that the agency should be able to process more charges in FY 2015 than 2014. Because of fluctuations in charges received, this will not necessarily translate into reduced inventory.

While moving ahead with activities aimed at making charge processing more efficient, the EEOC's management also needs to ensure high quality standards for charge processing (as discussed in the strategic performance management challenge above) and maintain accurate information in the Information Management System (IMS).

Office of the Inspector General to the Chair

November 14, 2014

MEMORANDUM

TO:	Jenny R. Yang Chair
FROM:	Milton A. Mayo, Jr Inspector General Imagen
SUBJECT:	FY 2014 Agency Compliance with the Federal Managers' Financial Integrity Act (OIG Report No. 2014-06-AIC)

The Federal Managers' Financial Integrity Act (FMFIA), P.L. 97-255, as well as the Office of Management and Budget's (OMB) Circular A-123, Management Accountability and Control, establish specific requirements for management controls. Each agency head must establish controls to reasonably ensure that: (1) obligations and costs are in compliance with applicable laws; (2) funds, property and other assets are safeguarded against waste, loss, unauthorized use, or misappropriation; and (3) revenues and expenditures applicable to agency operations are properly recorded and accounted for in order to permit the preparation of reliable financial and statistical reports, as well as to maintain accountability over the assets. FMFIA further requires each executive agency head, on the basis of an evaluation conducted in accordance with applicable guidelines, to prepare and submit a signed statement to the President disclosing that the agency's system of internal accounting and administrative control fully comply with requirements established in FMFIA.

EEOC Order 195.001, Internal Control Systems requires the Office of Inspector General (OIG) to annually provide a written advisory to the Chair on whether the management control evaluation process complied with OMB guidelines. On November 7, 2014, the Office of Research, Information and Planning (ORIP) submitted EEOC's Fiscal Year 2014 FMFIA Assurance Statement to the Chair and to the OIG for review. The OIG reviewed: (1) assurance statements submitted by headquarters and district directors attesting that their systems of management accountability and control were effective and that resources under their control were used consistent with the agency's mission and complied with FMFIA; (2) all functional area summary tables, and functional area reports; and (3) ORIP's Fiscal year 2014 Federal Managers' Financial Integrity Act Assurance Statement, and Assurance Statement Letter, and attachments. Based on our limited independent assessment of this year's process, OIG is pleased to advise you that the Agency's management control evaluation was conducted in accordance with OMB and FMFIA regulations.

Further, based on the results of audits, evaluations, and investigations conducted by OIG during Fiscal Year 2014, OIG concurs with ORIP's assertion that the Agency had no material weaknesses during this reporting cycle.

OIG concurs with ORIP's reporting of one financial non-conformance where a corrective action plan has been implemented to resolve it in FY 2015.