Government Reinvention Revisited.
The "reinvention" of the executive branch began in late 1993 and is now completing its projected life span. It is most appropriate, therefore, to assess the accomplishments, the failures, the permanent, and the transitory aspects of this ambitious exercise. Most observers, understandably, emphasize the effort's accomplishments, leavening the praise with some doubts. As a witness before the US Congress recently, I was requested to address those areas where the results have been problematical and where basic issues of purpose have been raised. Since time was limited, I addressed those questions that appear to go to the very heart of the philosophical debate underway over the future direction of government management, and especially the role of Congress in this future.
The reinvention exercise is not simply a number of new practices adopted by the several agencies that together make for better management; rather it is an exercise that could fundamentally alter the character of the executive branch and the executive and congressional oversight roles. The goal of the reinvention exercise is to make the executive branch entrepreneurial in character, structured and operated like a large private corporation. General Electric is often cited as the model. The fundamental issue facing Congress is whether the entrepreneurial management model, with its private corporate approach, is appropriate for the executive branch and whether the role of Congress, as co-manager of the executive branch, is enhanced or diminished by this model. To assist in answering these questions, five issues appear to merit our attention.
* Are the governmental and private sectors essentially alike, or essentially unalike, in their critical legal attributes?
* What values are promoted by entrepreneurial management?
* What values are promoted by public law management?
* What are the congressional interests in this debate over management philosophy?
* What issues were not addressed by reinvention, or addressed negatively?
Are the Governmental and Private Sectors Alike, or Unalike?
The underlying premise of much of the "reinventing government" exercise is that the governmental and private sectors are essentially alike in their characteristics and best managed according to certain generic business sector principles. The entrepreneurial management model outlined first in Osborne and Gaebler's popular book, Reinventing Government, and later in Vice President Al Gore's National Performance Review report, seeks to replace the "old, broken way," their phrase, with the "new entrepreneurial management." To their mind, the executive branch of the future should be managed in much the same way as large private corporations are managed today. Good government managers, for instance, should be risk takers, In the new government management model, "four key principles" of reinvention should guide behavior:
* cast aside red tape;
* satisfy customers;
* decentralize authority; and
* work better and cost less.
Casting Aside Red Tape
This set of principles is not cast in a theoretical context, that is, propositions subject to proof and disproof. Rather it is a listing of aphorisms, calls to right behavior. Let us stop for a moment at the first of these calls for right behavior--casting aside red tape. What does it mean? As with much of the reinventing exercise, meaning lies below the surface. At first blush, this call to cast aside red tape is appealing and has few straightforward opponents. Who could argue in favor of red tape? Yet, one person's "red tape" may turn out to be another person's "fundamental right." The term red tape is generally employed as a metaphor for laws, executive orders, regulations, and directives, the system of rules that reinventors believe is the principal cause of the executive branch being obsolete and broken. Hence, good managers will cast aside red tape.
What the entrepreneurial management advocates are really seeking in this instance is to free government managers from as many laws and regulations as possible so they will have the necessary discretion to achieve high performance and results. Performance and results are the end objective of the entrepreneurial management school generally and of the reinventors specifically. Judge them, they argue, on their results, however defined and measured.
The traditional theory of government management, in contrast to the contemporary entrepreneurial theory, is based on the premise that the governmental and private sectors are fundamentally distinct. The foundation of governmental management, according to traditionalists, is to be found in public law, not in behavioral principles of management. The fact is, they argue, that the private and governmental sectors are distinct with the distinctions to be found in legal theory.
With respect to management, the distinction between the sectors has been described as follows: The distinguishing characteristic of governmental management, contrasted to private management, is that the actions of governmental officials must have their basis in public law, not in the financial interests of private entrepreneurs and owners or in the fiduciary concerns of corporation managers. In short, under the traditional view of government management, the primary objective of keeping the sectors legally distinct is to protect the rights of the citizenry against possible arbitrary government action. This public law objective takes precedence, in their view, over the management objectives of performance and results.
Lest this discussion appear a bit abstract, it needs to be recognized that the financial collapse of the recently privatized US Enrichment Corporation and the rising debate over the status and practices of Fannie Mae and other government-sponsored enterprises, could be seen as a direct consequence of the problems associated with mixing the governmental and private sector in an entrepreneurial management model.
What Values are Promoted by Entrepreneurial Management?
Entrepreneurial management is intended to provide for high performance and results, however they may be defined and measured. The understandable tendency of entrepreneurial, or performance-based, management is to favor government activities that are measurable over those not easily measured. This tendency toward favoring the measurable is not without its risks, however, as demonstrated by the recent problems affecting the US Internal Revenue Service (IRS).
Of all the agencies, the IRS is the most measurable. It had an elaborate performance-based management system with targets, or quotas, for collecting revenues down to the lowest agent. A full set of performance incentives and penalties were functioning when the agency ran into problems of alleged excesses by the staff seeking to satisfy management's performance objectives. The IRS Commissioner subsequently apologized and pledged that revenue-based performance goals would no longer be pursued at the expense of fundamental due process norms for citizens. In a conflict between maximizing measured performance and due process of law requirements, the IRS story suggests that the latter ultimately prevails in the governmental sector.
The point to be drawn from this discussion is that while good performance is to be preferred over poor performance, maximum performance by itself is not the primary purpose of government management.
What Values Are Promoted by Public Law Management?
In the public law model, the purpose of agency management is to implement the laws, both the wise and the less wise, passed by Congress as the elected representatives of the people. As a matter of direct delegation under Article I of the Constitution, Congress makes the laws, establishes offices and departments, and appropriates necessary funding. The missions and goals of agencies are determined by law, not by the president or by agency heads, either collectively or separately. While comity and cooperation among Congress, the president, and the agencies are the bases for most relationships among the branches, the authoritative element in the relationship is clear. Oversight of the executive branch is ultimately the responsibility of Congress. Repeatedly, private sector executives brought in to "reinvent" or "reengineer" this or that agency or program along private sector lines are shocked to find that they must meticulously obey laws and regulations, and that they are answerable to Congress for their action s.
The highest value promoted by the public law management theory is political accountability. The debate over the future of government management, therefore, is not so much over whether the specifics of the reinvention exercise resulted in better, or worse, short-term executive management, or whether or not actual "savings" were achieved, but is over which of two fundamental value systems will prevail. Will it be the entrepreneurial management model with its priority of performance or the public law management model with its priority of political accountability?
It would be pleasant to believe that these distinctions present a false, or at least overstated, dichotomy. Unfortunately, it is not really possible, or even desirable, to dismiss the fundamental distinctions between the competing management theories.
What Future Role for Congress?
Congress, as an institution, has a direct stake in the outcome of this debate. Congress co-manages the executive branch through both general management laws, such as the Administrative Procedure Act, Chief Financial Officers Act, Government Corporation Control Act, Title V Personnel Act, some 80 laws in all, and agency-specific acts. The Senate Governmental Affairs Committee was originally established in the late 1940s to continue the work of the Hoover Commission and to develop the managerial capacity and accountability of executive agencies through sound general management acts. The Committee was intended to be the legislative counterpart of the management side of the present-day Office of Management and Budget (OMB). Congress is arguably best able to perform its oversight role when developing and implementing general management principles and laws. The reason for this lies in the reality that the US Code provides for universal coverage unless an agency is specifically exempted. Thus, the burden of proof f or exemption from, say, the Freedom of Information Act, lies with the requesting agency. Congress is able thereby to maintain sound general principles while permitting exemptions and flexibility where the burden of proof is met.
The entrepreneurial management school generally finds fault with this traditional public law approach preferring instead that management laws be agency specific and that the agencies be given maximum flexibility over their own management affairs. Thus, in 1996, the Federal Aviation Administration was largely exempted from Title V personnel acts. The US Mint, as well as a number of other agencies, have been exempted from the various procurement laws. While at first glance, this represents flexibility to the advantage of agency management, it also means executive management can become much more difficult. Under the agency specific approach, the burden of proof for issues involving accountability to law tends to shift from the agencies to Congress. Congress then may find itself in the unenviable position of having to impose order and accountability after the fact and on an agency by agency basis.
The recent situation involving the US Postal Service (USPS) illustrates the congressional dilemma. Congress has directed the USPS to be entrepreneurial and performance driven and has given it numerous exemptions from general management laws. Recent press accounts indicate, however, that the postmaster general may have given to selected executives substantial increments to their income through manipulation of the relocation allowance for housing. And suddenly, Congress finds itself directly involved again because the exception involves public monies and the hint of abuse.
As part of the entrepreneurial retreat from general, or executive-branch-wide, management, the central management agencies have been downsized and downgraded in authority. In the case of OMB, the management side of the agency was eliminated altogether in 1994 and personnel put into budget-based teams. The nonstatutory NPR team of detailees and consultants run out of the vice president's office was viewed by some as the counter-OMB. Now, the NPR itself is scheduled to go out of business. Is there any place in the executive branch where trained, experienced staff personnel are available to develop, implement, and supervise the type of government-wide institutional changes that will be necessary for the 21st century? If, today, the Senate Committee on Government Affairs wished to discuss the government corporation option for the troubled US Enrichment Corporation with a seasoned executive branch expert on government corporations generally, would there be anyone to call upon?
What Issues Went Unaddressed by Reinvention, or Were Addressed Negatively?
While the reinvention project was portrayed as a comprehensive exercise, and in many respects it was, there nonetheless remained a number of major issues unaddressed or addressed in what critics believed to be a negative manner. Four such issue areas merit mention.
Political and Career Appointments in Top Management
An issue of long-standing debate involves the large number and the placement of political appointees in key management positions, typically in departments from the secretary down through four levels of management. Critics believe that it is difficult to have the necessary competence and continuity for capacity-oriented management with short-term appointees whose incentives do not favor long-term management initiatives. Calls for substantial cutbacks in the number of political appointees have come from a number of sources including the Volcker Commission in 1988.
Defenders of present practices contend that it is the political appointees that make it possible to change the policy direction of the executive branch and that they are more responsive to presidential leadership than career executives. The NPR never addressed the political appointee issue and its impact on executive branch management, thereby indirectly endorsing the status quo. Indeed, the ratio of political appointees to federal employees substantially increased during the Clinton administration.
Future Role of the Central Management Agencies
Through much of the 20th century, executive branch management accountable to the president was the sought-after objective. Key to enforcement of the general management laws and the protection of the interest of the president were the central management offices: 0MB, General Services Administration, and the Office of Personnel Management. The critical role of the central management agencies was generally not assigned a high priority by the NPR which tended to favor the creation of nonstatutory bodies, such as the President's Management Council, to guide overall management initiatives. Critics of NPR's emphasis on processes, such as those integral to the Government Performance and Results Act, tend to argue that renewed attention on institutions is necessary, especially the establishment of a separate Office of Federal Management to serve the president's interests.
As it stands, they aver, major issues, such as the "transition process" following the November 2000 presidential election, have no natural home in the executive branch and are likely to go by default to private organizations, such as the Brookings Institution and the Heritage Foundation. In any event, there was no comprehensive review undertaken by the NPR on the future role for the central management agencies.
Implications of Third-Party Management
Increasingly, Congress and the executive branch have turned to the use of third parties to deliver governmental services and provide policy and management assistance. While contracting out by the government for services is as old as the republic, recent trends, such as contracting for the operation of US Immigration and Naturalization Service detention facilities, have raised questions as to whether there are proper limits to what should be contracted for, and what should be retained in-house for performance by officers of the United States.
In short, what core competencies must the government retain, not only to protect the citizenry from private abuse, but to insure that it is able to oversee the management of this vast array of contractors? In some agencies the ratio of contractors to federal employees is quite high. In any case, the profound, long-term implications for political accountability of this growing reliance upon third parties for goverment operations and management did not receive significant attention by the NPR.
Growth of the Quasi Government
In recent years, both Congress and the president have increasingly turned to hybrid organizations for the implementation of public policy functions traditionally assigned to executive departments and agencies. Their preference has often been to assign administrative responsibilities to organizations with legal characteristics of both the governmental and private sectors. These hybrid organizations (e.g., Fannie Mae, National Park Foundation, Polish-American Enterprise Fund, National Milk Council) have been collectively referred to as the "quasi government."
The NPR has generally supported this trend toward greater reliance on quasi-governmental bodies, arguing that the private and governmental sectors are essentially alike and subject to the same economically derived behavioral norms. This being so, close partnerships between the sectors should be encouraged.
Critics of this trend counter by asserting that increased use of hybrid organizations contributes to a weakened capacity of government to perform its core constitutional duties and to an erosion in political accountability. They consider the governmental and private sectors as being legally distinct, with relatively little overlap in behavioral norms. Like a number of other major philosophical issues, the NPR has not directly addressed the issue of quasi-governmental growth and its implications for governance.
The reinventing government exercise has undoubtedly had its successes, that is, decisions and actions that would not have taken place but for the existence of NPR, resulting in better performance and results. These should be properly recognized and the right lessons learned and applied. But as we have noted, agency performance is only a part of the equation of quality management. Ultimately, good management follows from good judgment by managers. Process and measurement cannot substitute for good judgment.
As to the question that promoted the congressional hearing: "Has Government Been Reinvented?"--the answer is mixed. At the operational level there has been significant change, much of it for the better, in the way operations are managed and operated. And for this, NPR properly receives its share of credit. Yet, many of these changes have not been without their questionable side effects. For instance, is it a positive, or negative, policy to encourage the naval command at Patuxent Naval Air Station, in the name of "profit," to contract out its high-tech planes and personnel to the State of Maine to hunt for healthy blueberry patches? There can be a legitimate clash of opinion over whether it is wise and creative for Patuxent to go entrepreneurial, or whether this initiative results, if not immediately then soon, in a perversion of the mission and character of government management. What may appear initially as a rather simple operational decision may, in fact, be a decision with considerable policy and legal implications. These types of tough issues were not addressed by the NPR, or by any one else for that matter.
At the legal and institutional level, Congress might reasonably be more critical. When all is said and done, the fundamental purpose of government management remains what it has been since 1789--the implementation of the laws passed by Congress. This purpose has not been altered or "reinvented." The "reinventing government" exercise has essentially been an exercise in altering certain incentives in the management practices and operations of government. Because it is concerned principally with processes, and since processes have been in constant change since the Progressives pushed for "efficiency" and scientific management" a century ago, there is every reason to believe that much of the reinvention exercise will have transitory impact. If history is a guide, "reinventing government" will be criticized and superseded by the next generation's "tide of reform," a tide with its own management principles and peculiar language.
Ronald C. Moe is a specialist in government management and finance at the Congressional Research Service, Library of Congress. This article is adapted from his testimony of spring 2000 before the Subcommittee on Oversight of Government Management, Restructuring, and the District of Columbia, Senate Committee on Governmental Affairs.
Moe, Ronald C., "The 'Reinventing Government' Exercise: Misinterpreting the Problem, Misjudging the Consequences," Public Administration Review, 54 (March/April 1994), pp. 111-122.
--- and Robert S. Gilmour, "Rediscovering Principles of Public Administration: The Neglected Foundation of Public Law," Public Administration Review, 55 (March/April 1995), pp. 135-146.
---, "The Importance of Public Law: New and Old Paradigms of Government Management," in Handbook of Public Law and Administration, eds. Phillip J. Cooper and Chester A. Newland, San Francisco: Jossey-Bass Publishers, 1997, pp. 41-57.
---, "At Risk: The President's Role as Chief Manager," in The Managerial Presidency, 2nd ed., James Pfiffner, ed., College Station, TX: Texas A&M University Press, 1999, pp. 265-284.
---, "The Emerging Federal Quasi Government: Issues of Management and Accountability," Public Administration Review (forthcoming issue, 2001).
|Printer friendly Cite/link Email Feedback|
|Title Annotation:||National Partnership for Reinventing Government's executive branch reform|
|Author:||MOE, RONALD C.|
|Publication:||The Public Manager|
|Date:||Sep 22, 2000|
|Previous Article:||Focusing on Performance: Thinking, Doing, and Learning.|
|Next Article:||Balanced Scorecards in the Federal Government.|