Whistle Not, Want Not

o this is what they were talking about in that executive training course. As a career manager you are free to marshal facts, provide analysis, cite precedents, discuss and persuade when you disagree with your political boss's interpretation of a mandate. But when the debate is over and you see imminent harm to the organization or a waste of its resources, do you go over your boss's head, blow the whistle or look for another job? There's no schoolbook answer to turn to-only your conscience.

Just three months into Pat Johnson's appointment as director of program evaluation, a new political team arrived at the Community Development Administration. Johnson was apprehensive, but quickly became comfortable with his new boss, Ben Cavendish. The assistant administrator was a dynamic and articulate corporate project manager. Cavendish not only picked Johnson's brain for information, but also solicited his advice and gave him broad latitude in operating his division.

Perhaps most reassuring was the assistant administrator's focus on the President's mandate to expand successful community development initiatives while eliminating dollar-draining activities. Cavendish and his management team quickly launched efforts to streamline, consolidate and move functions to the private sector. Although the new administration faced opposition from Congress, both branches were turning away from budget-eating construction programs and emphasizing rehabilitation of existing buildings.

The old mainstay, federal loan guarantees, would be needed to stimulate purchases or refinancing of properties, but neither the President nor Congress was inclined to spare the agency from personnel cuts. So legislation calling for private institutions to administer loans, with the federal government as coinsurer, was passed. The logic was that private lenders, underwriters and insurers could do the work more swiftly and cheaply than a lumbering government workforce could. The new program would spare the federal Treasury costly construction and the expense of supporting a finance and insurance bureaucracy. A federal audit and evaluation staff would have to be maintained, but fewer people would be needed.

Johnson, engrossed in the day-to-day management of his division, had not kept close tabs on the coinsurance initiative. However, his three-year stint in construction finance had left him with a number of contacts in that organization. He knew some of the old hands were uneasy about the new program's vulnerability to laxness, fraud and exploding costs. But it wasn't until the proposed guidelines arrived on Johnson's desk for review that the dangers really leapt out at him.

"Ben, I don't see how we can concur with the coinsurance instructions," he began the next morning's session with his boss.

"What do you mean, Pat?" Cavendish said with surprise. "Are there technical problems? I think the basic design fits the principles we've all agreed on. Or am I wrong?"

Johnson said he feared the details could undermine what started out as a good idea. He ticked off his concerns:

• The lack of standard capitalization and other qualification requirements for organizations seeking to participate in the program.
• The rich fee structure provided for those organizations.
• Vague procedures for review and audit.

"The instructions leave it open to fly-by-nighters," Johnson said. "And we've got barely half the audit and review staff of a year ago." Some folks without a track record would be able to commit the full faith and credit of the United States while passing ultimate responsibility for 90 percent of each loan to the government, Johnson concluded.

"Aren't you exaggerating, Pat?" Cavendish said, adding that the initiative was designed to save billions in construction and overhead. "If we want to reduce the federal role and federal dollars, we have to take some risks. You're assuming private institutions are thieves and we're incompetent."

Johnson's recitation of past financial debacles in the wake of loosely designed programs had only slightly ruffled Cavendish. The bottom line, he said, is that the administration and Congress had chosen to break with old thinking to save worthwhile programs and reduce the burden on taxpayers. "It's our job to make their idea work," he told Johnson. "I'm counting on you to help."

Johnson hadn't quite been ordered to concur, but neither had he been left any room for debate. He could put his objections in writing, but what would that accomplish other than covering his posterior and antagonizing his superiors?

Were his former colleagues in construction finance willing to stick their necks out for him? Would anyone higher up in the political echelon be impressed with misgivings about the capability and integrity of the private sector or a reduced federal presence? Would anyone on the Hill want to hear that their fuzzy legislative language might empower unqualified financiers to raid the Treasury?

The answers he came up with were not encouraging.

David Hornestay, a Washington-area consultant, served in government for more than 30 years, primarily in human resources and institutional management.