US Government Efficiency Failure - Understanding Enterprise Risk

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 Federal agencies fail to understand enterprise risk linking agency performance and built infrastructure performance. This is evidenced through chronically underfunding built infrastructure renewal requirements. This results in the waste of limited resources and depletion of productive capability reported as deteriorating built infrastructure condition and rising maintenance backlogs.

A simplified observation is that Federal agencies are happy to spend money on new things while letting the rest rot. This is a failure in asset management and enterprise risk management. Indicators of good enterprise risk management are:

• Federal agencies use an asset management system to manage risk. The means to do this must be stated in policy and define the Asset Management (AM) Framework used for risk-based resource and investment decision making.
• This AM Framework must define leading Key Performance Indicators (KPIs) that:
• This AM Framework must define decision support models that use these KPIs. These models must be able to:

There is no evidence of Federal agencies demonstrating these minimum enterprise risk capabilities supporting built infrastructure management. These are minimum capabilities inherent to disciplined asset management. They are fundamental to approaches that conform to ISO 55000 – Asset Management System principles and requirements. The issue that no Federal agency demonstrates these capabilities is evidence of systemic failure.

This is alarming because the Federal government does have very good enterprise risk management requirements and guidance. These requirements and guidance are contained in sources such as that apply to all Federal agencies:

• Office of Management and Budget (OMB) Circular A-123: Management’s Responsibility for Enterprise Risk Management and Internal Control,
• Government Accountability Office (GAO) – GAO-14-704G – Standards for Internal Control in the Federal Government (The Green Book)
• Council of the Inspectors General on Integrity and Efficiency – Inspectors General Guide to Assessing Enterprise Risk Management

The National Academies’ Strategies to Renew Federal Facilities report’s genesis can be traced back to this very issue. This report covers this systemic failure in detail.

So why do Federal agencies fail in enterprise risk management? And, why is this failure systemic? Is it not obvious that built infrastructure assets are critical to and enable agency performance., and therefore their care is likewise critical? The above sources make it clear that enterprise risk management for this purpose is a fiduciary responsibility.

Causes for this systematic failure are outlined in the front half of this miniseries, see prior articles above. Two root causes for this systemic failure are:

• As stated clearly in Strategies to Renew Federal Facilities: “The Federal budget process is a cash-based budget and does not differentiate operating expenses from capital or investment costs”
• Accountability. There are no consequences or personal accountability related to built infrastructure investment decisions, i.e. we’ll get to it in next year’s budget…

Knowledge of these root causes to the systemic fiduciary failure of Federal agencies is critical to solution development. There are solutions on how to fix this problem. Some will require Congress to pass new laws, and some can be implemented right now by Federal agencies. The second half of this miniseries will be dedicated to solution development.

If you found this post valuable, please like and repost it, and subscribe to the AMP Newsletter. The way to help fix the US Government’s fiduciary failure to manage its built infrastructure portfolio is to help more people understand the problem and its solution.

Written to Jack Dempsey | December 17, 2024

AMP Newsletter #102

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