MEMORANDUM

U. S. Department of Transportation
Office of the Secretary of Transportation

Date: July 8, 1999

ACTION: Department of Transportation (DOT)
Capital Programming Framework

original signed by
The Deputy Secretary

Secretarial Officers
Heads of the Operating Administrations
Director, TASC

The Clinger-Cohen Act (CCA) requires that executive agencies establish a capital programming process for making Information Technology (IT) planning, investment, and asset evaluation decisions. In our deliberations over the implementation of this legislation, our key objective has been to create an effective and efficient process consistent with our ONE DOT philosophy.

A second major objective has been to ensure DOT achieves the benefits of a rigorous capital programming process for the current fiscal year 2001 budget cycle. Therefore, we will implement the attached capital programming framework immediately pending preparation and coordination of a DOT Order. The information requested in the fiscal year 2001 budget datacall and many of the discussions that have already taken place this spring are consistent with the themes of the Capital Programming Framework.

This Capital Programming Framework embraces the ONE DOT philosophy promoting cooperation where it would clearly benefit everyone, but allowing the operating administrations (OAs) the freedom to manage their own programs. The key features are described below:

• It covers all OAs, as well as the Transportation Administrative Service Center and Office of the Secretary (OST) offices.
  
• It applies to all capital assets, not just information technology (IT).
  
• It allows each DOT organization to manage its own capital assets, but describes some minimum standards which they must follow.
  
• It focuses OST efforts on crosscutting issues.
  
• It provides for "virtual" capital plans by establishing a web-based database of major DOT capital assets and other IT investments.
  
• It builds on existing processes to minimize the impact (e.g., the Capital Programming Profile form is derived from the Office of Management and Budget required information and is the same form the Chief Information Officer's office is already using to collect data on all IT investments over $1 million).
  

An OST integrated program team will be established and will be available to assist those organizations who do not already have a structured capital programming process in place. It may be possible to adapt current organizational structures to meet the requirements of the capital programming framework.

The Major Acquisition Policies and Procedures (MAPP), which had previously governed DOT's major acquisitions, will be deleted as policy and restructured as a best practices document. The Transportation Systems Acquisition Review Council (TSARC) will be disestablished and replaced by the ONE DOT Capital Planning Council (OCPC) described in the framework. The OCPC's functions will be significantly different from the TSARC. Accordingly, I hereby delegate my authority as the Transportation Acquisition Executive to the Agency Acquisition Executives for any Key Decisions that need to be made in the context of A-109. We will work with the individual OA's to address the transition of programs currently under TSARC guidance.

DOT's previous major acquisitions policy was limited to acquisitions over $50 million. The new Capital Programming Framework has a much broader applicability and will affect all Departmental organizations. Although currently limited to IT investments (supplies and services) and other capital assets (including real property), it will be expanded to cover a broad range of services as well once anticipated OMB guidance has been issued. DOT organizations should take that into account in developing their internal procedures.

The attached Capital Programming Framework is effective immediately, and we will begin to put the necessary infrastructure in place. We will also coordinate a DOT Order so everyone will have an opportunity to participate in shaping the final policy.

If you have any questions, please e-mail Walt Guenther at Walter.Guenther@ost.dot.gov.

We look forward to working together with you to make this new process a success.

Attachment

Attachment

1. Purpose

   To build a ONE DOT Framework to ensure that the planning, budgeting, acquisition, and management of capital assets support the Department of Transportation's (DOT) strategic goals and objectives.

2. Overview

   The ONE DOT Framework for capital programming implements the principles of the Office of Management and Budget (OMB) Capital Programming Guide (CPG) and the requirements of OMB Circular A-11, Part 3, FASA, and the Clinger-Cohen Act. The Framework is built on the concept that the major DOT organizations are responsible for executing the capital programming process and working in conjunction with the Office of the Secretary (OST) to identify and take advantage of crosscutting opportunities.

3. Definitions

   A capital asset is land, structures, equipment and intellectual property (e.g., software) that are used by the federal government and have an estimated useful life of 2 years or more. The cost of capital assets programs includes its full life cycle costs including all direct and indirect costs for planning, procurement (purchase price and all other costs incurred to bring it to a form and location suitable for its intended use), operations and maintenance including service contracts, and disposal.

   More details on what qualifies as a capital asset can be found in Appendix 1 to the OMB CPG.

   Capital Programming is the overall process used to plan, budget for, acquire (whether through purchase or lease) and manage capital assets.

   A DOT organization is an operating administration, a departmental office, a secretarial office, and the Transportation Administrative Service Center.

   Other terms used in this Framework are consistent with the terminology found in the OMB CPG or OMB Circular A-11, Part 3.

4. Applicability

   This policy applies to all DOT organizations:

   1. With existing or planned capital assets exceeding $50 million (total life cycle cost); or
      
   2. With an individual capital asset with a total life cycle cost exceeding $10 million; or
      
   3. With an individual information technology (IT) investment with a total life cycle cost exceeding $1 million.
      

   The processes described below are applicable when the source of the funding for the capital asset is a DOT organization. Working capital and fee-for-service organizations need only address capital assets for their internal use or that support multiple organizations (e.g., capital assets that will be billed out to all DOT organizations). Otherwise, the customer organization is responsible for meeting the requirements of this policy.

5. DOT Organization Responsibilities
   1. Each DOT organization with capital assets meeting any one of the criteria described in paragraph 4 above shall prepare an Organization Capital Plan (OCP) in accordance with paragraph 7 below. The OCP and annual updates should be made available electronically for posting on or linking to a DOT Capital Programming website no later than the time of the annual submission of the initial stage budget to OST. The OCP should also be updated after the annual appropriation is passed.
      
      
   2. In addition to preparing an OCP, those DOT organizations that have capital assets that meet the thresholds under paragraph 4(a) or 4(b) above shall have a defined capital programming process in place. This process is generally intended to apply to individual capital assets with a total life cycle cost over $10 million but should also be applied if the organization's total capital assets exceed $50 million even if no one asset totals $10 million. It applies to the entire life cycle of a capital asset from planning through disposal. A DOT organization may tailor its capital programming process to address any unique needs of its capital portfolio. The process shall include the following minimum procedures for selecting, evaluating, acquiring (whether through lease or purchase), and managing capital assets:

             (1)  Analysis of mission needs and consideration of alternative solutions for meeting mission
                    requirements including non-material solutions (e.g., regulation, contracting out, etc.).

             (2)  Defined criteria for selecting capital assets which are linked to the organization's strategic
                    plan (and IT architecture if appropriate). Criteria should address affordability, risk, cost benefit,
                    and total life cycle cost. If an acquisition alternative is pursued, there should be a strong preference
                    for commercial solutions.

             (3)  Structured executive review for selecting and monitoring capital programs. This review should
                    include at a minimum budget (CFO), acquisition (HCA), and IT (CIO) staffs as appropriate. All
                    programs subject to this process must have been through the executive review before being
                    included in a budget submission to OST.

             (4)  Establishment of cost, schedule, and performance goals, including a structured approach
                    to measuring performance against those goals and reporting deviations to the executive review.

             (5)  Post-deployment evaluation of the asset's ability to meet performance expectations and support
                    strategic goals.

6. OST Responsibilities

   OST will also establish a cross-functional ONE DOT Capital Planning Council (OCPC) which will:

   1. Review OCPs to ensure they are consistent with the DOT strategic plan.

   2. Identify crosscutting opportunities and overlapping or common requirements and determine how best to ensure that DOT utilizes its scarce resources wisely in those areas.

   3. Review program performance data to identify problem programs and work with DOT organizations to define corrective actions.

   The OCPC will be chaired by the Deputy Secretary and include P, B, M, and S-80. Other DOT organizations will be included in OCPC activities as appropriate.

   The OCPC will meet to review OCPs annually. The review will occur no later than the initial OST budget submission. Other OCPC meetings may include a post-appropriations assessment and meetings at other times as needed--including supporting strategic planning efforts.

   OST will establish an Integrated Program Team to support the OCPC with members from each of the organizations on the OCPC. Staff functions will include:

   • Reviewing OCPs.

   • Developing a data base which includes performance metrics for all DOT capital assets.

   • Preparing material for OCPC meetings including a systematic presentation of program performance data.

   • Developing and maintaining a DOT Capital Programming website and required resources for the site (e.g., forms and formats). The site will also include needed reference materials to assist DOT organizations in carrying out their capital programming responsibilities. The DOT Capital Programming website will include examples of OCPs and best practices for DOT organizations to consult.

7. Content of OCPs.

   OCPs shall contain, as a minimum, the following information:

   1. Details about all capital assets existing, in process, and planned that are over $10 million (including IT) as well as all other IT investments over $1 million. This listing can be accomplished by filling out electronically DOT Form 1380.1, Capital Programming Profile (CPP), attached hereto and currently available under the Capital Programming/Financial Profile hotlink on the CIO website.

      The CPP requires differing amounts of information depending on the dollar value of the capital asset.

   2. If the DOT organization meets the criteria under paragraph 4(a) or 4(b) above, the OCP should include a description of the DOT organization's capital programming process, how that process links to the organization's strategic planning process, and how it links to the organization's budget process. (NOTE: If there are existing organizational processes and structures that meet the requirements described in this Framework guidance, they should be described in the OCP.)

8. Supersession of Other Guidance

   This guidance supersedes DOT guidance contained in Appendix A, Chapter 1234 of the Transportation Acquisition Manual, "Major Acquisition Policies and Procedures".