The issue of silos, overlaps and policy coherence between administrative branches has been discussed for many years but the problem is how to tackle them. The FOD analysis developed by the United States Government Accountability Office (U.S. GAO) provides auditors and evaluation researchers with a new method. Audits carried out on the basis of the FOD analysis may help central government actors and policy makers to identify and solve these challenges.
Fragmentation, Overlap, and Duplication analysis (pdf) is a method developed by the U.S. GAO to identify efficiency problems in public administration, such as silo mentality and overlaps. The method was developed in the aftermath of the financial crisis as the U.S. federal government was seeking ways to cut spending by making the public sector more efficient. The focus was on the challenges arising from fragmentation, overlaps and duplication, which reduced the efficiency of the public sector.
Between 2011 and 2020, the U.S. GAO carried out ten FOD reviews and the recommendations based on them have already resulted in savings totalling USD 429 billion. In the latest FOD analysis, the agency has reviewed the activities of the Department of Energy and the Department of the Interior of the United States. The analyses indicate that the Department of Energy could potentially save tens of billions of dollars by adopting alternative approaches to treating some of its low-activity radioactive waste, while the Department of the Interior could increase revenues by more than USD 1.7 billion over ten years by better managing oil and gas resources.
The method has also attracted interest outside the United States. It has been developed further in Latin America where the method has been extensively used in environmental policy audits. The FOD(G) method was the result of the work of the Brazilian Federal Court of Accounts (the supreme audit institution of Brazil) and the letter G was added to the abbreviation to describe the gaps identified in public sector activities. In Latin America, the FODG analysis has been used in a parallel audit on protected areas, in which the participating countries reviewed the relationship between the protection policy and other public administration practices.
The FODG analysis, developed by the Brazilian Federal Court of Accounts, which also includes the surveying of gaps, was the subject of this methodological testing. The FODG analysis has four stages, in the first of which the aim is to identify the challenges in activities arising from fragmentation, overlaps, duplication and gaps.
Fragmentation – A situation in which multiple actors operate in the same sector and there is room for efficiency improvements in the activities.
Overlap – A situation in which multiple actors or multiple government programmes have the same goals or they are promoting the same goals or strategies.
Duplication – A situation in which multiple actors promote the same goal in the same manner.
Gap – A situation in which gaps are identified in the activities but nobody is responsible for tackling them.
The first part of the evaluation and management guide prepared by the U.S. GAO describes the stages of the FOD analysis to auditors. In the second part, the benefits of the analysis are described to policy makers. For supreme audit institutions, the guide offers a range of useful tools for conducting audits and for preparing useful recommendations. It also opens up new perspectives on these issues.
Could the method work in Finland? Using the plastic waste theme as a test case
In the United States, FOD reviews have been carried out to examine a wide range of federal government activities and programmes, and depending on the design, their total number has varied between 100 and 300. In addition to the size of the country and its public sector, the large number of activities and programmes is also explained by a federal structure in which the activities are performed at several different levels of public administration. The structure of the Finnish public administration is simpler and the mandate of the National Audit Office of Finland only covers central government. This means that most local government activities are outside the mandate.
In Finland, the number of activities selected for a review would probably be smaller than in the United States, regardless of the subject. However, this does not exclude the use of the FODG analysis method and its logic in the examination of Finland’s central government.
The National Audit Office of Finland (NAOF) has drawn attention to the importance of policy coherence: Policy coherence is the foundation of sustainable development and sound financial management and INTOSAI WGEA Seminar Summaries (2021): Policy coherence and sustainability transition – inspiration for auditors and evaluators (pdf), but the NAOF has not yet used the FODG method. However, as part of the work of the Working Group on Environmental Auditing (WGEA) of INTOSAI (International Organization of Supreme Audit Institutions), it was decided to subject FODG to experimental methodological testing. The test was carried out on plastic waste, which is one of the key themes of WGEA during the current three-year period.
According to the U.S. GAO guide, activities and programmes can be selected for review using a variety of different criteria. These criteria include the goals set for the activities, the beneficiaries of the activities or the institutions involved in the activities.
The activities and programmes of Finland’s central government targeting plastic waste were not an ideal test subject. However, despite the limitations, it was decided to use them because the theme is highly relevant. For resource and scheduling reasons, it was not possible to review all central government activities, such as legislative, economic and administrative steering instruments. For this reason, the methodological testing was limited to a small number of central government activities and programmes.
It should also be noted that in Finland, most of the activities concerning plastic waste are the responsibility of the local government and the private sector. Thus, the methodological testing should not be used as a basis for broader conclusions on the state of plastic waste activities in Finland. From the central government perspective and from the viewpoint of assessing the efficiency of the activities, the absence of separate budget funding for the plastic waste activities in question limited the usefulness of the methodological testing.
The ability to identify fragmentation, overlaps and duplication also depends on the design
The first stage of the FODG analysis is critical because the whole review is based on the selections made during it. First, the criteria for including programmes in the review must be determined. Following this, a maximum amount of data on the programmes is collected and this data is used as a basis for analysing whether there are any FODG challenges between the activities and the programmes. Determining the links between the programmes helps to produce an overview of the subject to be analysed.
The following documents signed by the Ministry of the Environment complementing legislation were selected by the NAOF for the methodological testing on plastic waste: 1) National plastic road map (2018), the plastic bag agreement (2016) and 3) the European Plastic Pact (2020). The goals laid out in these documents and potential FODG challenges arising from them were examined in the methodological testing.
Even though only a small number of documents was examined, the NAOF was able to identify a total of 70 goals on which a brief FODG-based fragmentation and overlap review could be carried out. The analysis was based on the waste hierarchy laid down in the European Union’s waste directive (2008/98/EC), and the goals set in the national plastic road map, plastic bag agreement and the European Plastic Pact were placed in the segments of the hierarchy.
The goals of the analysed actions within the framework of the waste hierarchy mainly concern the prevention and recycling of plastic waste (Figure 2). This is a positive thing as it is in line with the priority order of the waste hierarchy: it can be noted with satisfaction that most of the actions are carried out at the top of the waste hierarchy and efforts are made to keep plastic in circulation and to prevent it from falling to the lower levels of the hierarchy. This is also in line with the slogan ‘Reduce and avoid, recycle and replace’ of the national plastic road map.
None of the programme goals is directed at the lowest segments of the waste hierarchy and there are only a small number of goals in the ‘Preparing for reuse’ segment. The first mentioned gap exists because there is intentional emphasis on waste prevention, while legislation plays a strong role in the lowest part of the waste hierarchy. At the same time, the segment ‘Preparing for reuse’ is almost empty mainly because this activity is the responsibility of consumers and companies.
The fact that most of the goals of the national plastic road map, the plastic bag agreement and the European Plastic Pact are located in two segments does not in itself indicate overlap. However, there is a risk that the goals set out in them are overlapping and that the actors tasked with achieving them are doing overlapping work when promoting the same objectives or are not aware of each others’ efforts. This means that the benefits of potential synergies cannot be used.
A closer look at the goals of the national plastic road map and the European Plastic Pact showed that there are overlaps between them. Many of the goals focusing on the prevention of plastic waste involved the development and exports of plastic replacements. This observation does not in itself indicate that the overlapping nature of the goals would have negative or positive effects and more detailed analyses of the matter are needed.
Interviews with stakeholders helped to identify the effects of fragmentation, overlaps and duplication
In the second and third stages of the FOD review, the aim is to identify the effects of fragmentation, overlaps and duplication, produce an in-depth analysis supplementing original data and validate the observations with relevant actors. The data used in the methodological testing carried out by the NAOF was not adequate for an in-depth analysis validating positive or negative effects, and for this reason, this stage was carried out by interviewing parties preparing the national plastic road map and stakeholders involved in the work.
The stakeholders felt that the overlapping nature of the goals set out in the action plans was to some extent a positive feature. For example, the cooperation forum resulting from the national plastic road map was seen as a good platform for sharing information, and it allowed actors to keep up to date with the latest developments in the European Union’s plastic legislation. Private sector actors also felt that they had benefited from the preparation of the national plastic road map and that the process had opened up opportunities for cooperation.
Synergy benefits included the development of plastic replacements and closer cooperation. Many research projects focusing on plastic and plastic waste have also got off to a good start. Examples include the MYSTEERI project of the Finnish Environment Institute and the Finnish Institute for Health and Welfare, which will produce an overview of the research data on the negative environmental and health effects of plastic. The project was launched in June 2020 and it will be concluded by the end of 2021.
However, challenges arising from the fragmentation of the activities were also highlighted in the interviews. In some cases, there was little cooperation between stakeholders and the parties tasked with achieving the goals, and in a number of projects, achieving the goals was not the responsibility of any specific party. Fragmented responsibilities may partially explain why some of the interviewees told that they had left the programmes and gaps had developed in the activities.
It also seemed that the European Plastic Pact that entered into force in March 2020 has not added much to the national plastic road map prepared in 2018, which already covered most the objectives of the European Plastic Pact. In fact, other topics could also be analysed from the perspective of how many agreements and activities are overlapping rather than complementary.
What was achieved with experimental methodological testing?
The methodological testing did not include the in-depth FOD analysis described in the U.S. GAO guide. Nevertheless, it increased awareness of the fragmentation, overlaps and duplication of the goals contained in the three programmes complementing the plastic waste legislation.
The analysed data (national plastic road map, plastic bag agreement and the European Plastic Pact) contain a wide range of goals on how to prevent and recycle plastic waste. However, there is a risk of overlaps in the actions taken to achieve the goals especially if the responsibilities for implementation are fragmented among several actors. It emerged from the interviews with stakeholders that more extensive coordination and monitoring of the activities could be beneficial and help cooperation-based activities to become more efficient and create synergy benefits.
It is noteworthy that no separate state budget funding has been allocated for any of the action programmes complementing legislation and included in the analysis. It can be asked whether it would have been better if funding had also been allocated to the activities themselves instead of the goal-drafting process.
For the National Audit Office of Finland, the method provides a tool for assessing efficient allocation of central government funds, policy coherence, overlaps, silo mentality and gaps. Even though the methodological testing was carried out cursorily and there were limitations concerning the subject selected for the process, the experience encouraged the NAOF to also apply the method to more extensive and in-depth audits. The method may also help to identify risks and in this way support the audit topic selection process.