Excellence in Government

It's achievable. Here's how.

These are, to say the least, not the best of times for the federal government. The first round of debt reductions took a rusty meat ax to federal agencies, and the next round will be even blunter. Congress and the president might just as well put Howie Mandel in charge of the coming Deal or No Deal disaster: Just ask agencies to pick any silver case and express their shock at the cut within. The only difference between this exercise and the actual game show is that federal agencies won't have the option to stop opening the cases.

There's no doubt that Americans are fed up with what they see as wasteful spending, and they have lost confidence in the federal government's ability to respond effectively to national and international, economic and political prob­lems. Some of the complaints are no doubt fueled by the Tea Party's rhetoric on big, bad government, the constant headlines about government shutdowns at the national and state levels, and the vicious posturing at both ends of Pennsylvania Avenue. But they reflect a kernel of reality.

The polls may show a deep disquiet about whether Washington can actually honor the promises it makes, but most Americans still want more of virtually everything the government delivers for helping the economy, the elderly, students, small businesses, and their own cities and towns. They also want safe streets, smooth roads, new bridges, clean water, honest markets, and a host of regulations for preventing disease, oil spills, pollution, airline accidents, terrorism, and tainted food and drugs.

Equally important, Americans are still convinced that the big problem in Washington is not the wrong priorities-unless Americans are asked whether the tax code should favor the super-wealthy. Rather, most believe the big problem is inefficiency in delivering basic goods and services at the lowest possible cost. They want just what former Vice President Al Gore once promised: a government that works better and costs less. They want value for their money. The good news is, there's a way to give it to them.

Three Challenges

It has been 70 years since the last comprehensive review of the federal government's basic structure and operations. Now there's simply no time for another blue-ribbon commission for restructuring government like the two that were led by President Herbert Hoover in 1947 and 1953. We need immediate action.

For most Americans, the problem is not so much what government does, but how it works. Every president since Franklin Roosevelt has entered office promising government reform, but none has quite succeeded. Instead, today's federal bureaucracy remains anchored in organizational strategies and structures invented in the 1930s. As former Federal Reserve Board Chairman Paul A. Volcker said this spring, "If major financial, health and education overhauls are indeed sorely needed to improve the quality of life of Americans, so too is a federal service reform that will equip the federal government with the tools that it needs to successfully implement reforms and carry out existing missions."

This is not to argue that the federal government fails at every turn. Federal employees accomplish miracles every day, often struggling against the bureaucracy to create measurable impacts through their work. Moreover, most Americans agree with the federal government's basic mission. No sensible person wants to weaken efforts to boost cancer research, protect the food supply and ensure drug safety, enhance the nation's leadership in science and technology, and provide an affordable national defense. But for the federal government to perform at its highest level, comprehensive reform is needed to solve three challenges: accountability, effectiveness and productivity.

Accountability

With the government's ever expanding mission, it is often impossible to know where the buck stops or what agency is responsible for the execution of which task. Not only is the federal government's program agenda riddled with duplication and overlap, it remains encumbered by administrative structures that diffuse accountability and confuse the chain of command.

The problem is easiest to see in the proliferation of management layers at the top of the federal organizational chart. There have never been more layers in government or more leaders per layer. The total number of senior federal officers increased from 451 in 1960 to more than 2,600 in 2008. More than 500 of these posts require Senate approval, but they move through the White House and Senate vetting processes at such a sluggish pace that it now takes more than a year on average for an administration to finally fill the top positions.

Accountability is not only lost up the vertical hierarchy within departments and agencies, but also along the horizontal chain of coordination between duplicative and overlapping programs. According to the Government Accountability Office, seven agencies work on U.S.-Mexican border water quality, and 20 are involved in managing federal cars, trucks and airplanes.

Also, there are two dozen agencies involved in preventing bioterrorism; the FBI and the Bureau of Alcohol, Tobacco, Firearms and Explosives are still working in separate silos on controlling explosives; 15 agencies are assigned to food safety; each of the armed services has separate health programs; and there are 18 programs for food assistance, 44 for employment and training, 54 for financial literacy, 80 for economic development, 82 for teacher quality and 100 for surface transportation.

Effectiveness

Virtually every study from GAO, the Office of Management and Budget, and think tanks across the political spectrum suggests that Americans have reason to be worried about the federal government's ability to deliver services.

Some of the angst is a direct result of the woefully understaffed acquisition pro­cess. In 2008, the federal government spent $188 billion on noncompetitive contracts, up 229 percent since 2002. During the same period, cost- reimbursement contracts nearly doubled to $135 billion, while the size of the acquisition workforce remained slightly smaller than it was in 1992, just before Gore's reinventing government campaign. The acquisition workforce is only one of many problems with government's administrative infrastructure:

• Thirty years after Congress and the president created agency inspectors general to monitor government's economy, efficiency and effectiveness, their offices are understaffed and rarely focus on how to prevent mistakes early in the regulatory and legislative processes.
• Twenty years after Congress and the president created chief financial officers in every agency to produce audited financial statements, there continues to be a lack of fiscal discipline and systems for reducing wasteful expenditures.
• Many years after Congress and the president enacted the 1993 Government Performance and Results Act, many agencies are unable to measure the impact of their programs as a tool for rewarding high performance and winnowing failure.
• More than a decade after Congress and the president created chief human capital officers and chief information officers in every agency, the government's personnel system continues to fall short, and information networks remain antiquated and poorly designed.

Rebuilding this infrastructure is essential for assuring the highest possible performance across government. Statutes must be revitalized and enforced, while agencies must provide the leadership to assure managers and executives fully embrace the need for change.

Productivity

The government's ability to prevent, respond to and solve public problems depends on what the Founding Founders called "vigor and execution" in the workforce. But vigor and execution have corroded with budget cut after cut, neglect and mismanagement, and growing problems attracting and supporting the best and the brightest for federal careers.

Start with the senior leadership. Whether political or career, the government's leaders are so focused on scoring policy victories that they don't spend enough time on management. This is certainly what federal employees think. According to the government's own surveys, only 44 percent of employees believe that the leaders of their organizations generate high levels of motivation and commitment among employees. Similarly, just 45 percent said they were satisfied with the policies and practices of their senior leaders. This leadership crisis is especially critical now as a large portion of the workforce faces retirement.

Further down the ranks, the federal government continues to struggle with providing incentives for high performance, especially in the pay, promotion and disciplinary processes. In fact, 45 percent of federal employees believe pay raises do not depend on how well employees perform their jobs, and 41 percent do not believe that steps are taken to deal with poor performers. Although many agencies have been given the authority to create their own pay systems to improve productivity, efforts to implement pay-for-performance systems generally have been unsuccessful.

A Chance to Act

Luckily, there are big-ticket savings that Congress and the president could easily reap by addressing these challenges. A comprehensive reorganization package would give President Obama the government overhaul he promised in February, while House Republicans would get many of the bureaucratic reforms they pledged to enact in last year's midterm campaigns. Reorganization has yet to reach the bargaining table, however, in no small part because Congress simply does not understand why organization and management matter. Other than a handful of members, such as Sens. Mark Warner, D-Va., and Tom Carper, D-Del., both former governors, members of Congress view organization and management as the all-time "my eyes glaze over" issue.

Yet, technical and boring though government organization and management might be, Congress and the president would be wise to consider the enormous cost savings and enhanced performance they could bring. A set of seven reforms suggests government could reap $1 trillion or more in savings over 10 years and untold gains in accountability, effectiveness and productivity. In short, there is a path to a government that works better and costs less. The only question is whether Congress and the president can get past the polarization and posturing to bring the following reforms to fruition:

• Reduce the number of presidential appointees by half, whether Senate confirmed or at will, full or part time. Eliminate all department and agency chief of staff offices and positions. Count and cut management layers between the top and bottom of government.
• Freeze hiring at the senior and middle levels of government unless and until the president certifies that a given vacancy must be filled to meet one of the national priorities set by the 2010 Government Performance and Results Modernization Act.
• Harvest all the money that is already owed to the federal government. Eliminate all mistaken or fraudulent payments to federal beneficiaries, providers, contractors and corporations. Collect what the Treasury Department calls the federal government's nontax debts, including unpaid loans and fees such as leases, fines and import taxes. And eliminate the $300 billion backlog of delinquent federal income taxes owed by federal and congressional employees, contractors and stimulus recipients.
• Streamline operations. Eliminate duplication and overlap across the federal government's programs and administrative systems. The creation of the Homeland Security Department, for example, merged 22 agencies that contained multiple administrative systems for payroll, procurement, information technology and more.
• Focus the federal bureaucracy on productivity. Restore and strengthen productivity measures that were abandoned in 1994 and then use the new measures as a component of a results-based bonus pay system with possible application to a simplified classification and pay system.
• Eliminate automatic time-on-the-job pay increases. Reverse grade inflation in the employee performance appraisal process by establishing quotas for each rating category. Get rid of pass-fail appraisal systems. Build a fair and efficient disciplinary process for terminating poor performers quickly-requiring, for example, that all disciplinary proceedings be completed within four months of filing. Allow only 10 percent of employees to receive the highest grade in the performance process. Require annual productivity gains of at least 3 percent.
• Cut the number of contract employees by 500,000. Create a results-based pay system for the estimated 7 million contractors who would remain, and demand annual productivity gains of at least 3 percent.

There's little doubt the total savings from such a series of steps would add up to more than $1 trillion. The two key questions are who would lead the effort and how it would be done.

Who Leads and How?

It is difficult to imagine that anyone in the House could lead this comprehensive reform campaign. Nor has President Obama shown much interest in the issue. Warner, however, could credibly build such a government-reform package from his perch as chairman of the Senate Budget Committee's Task Force on Government Performance. He made a small fortune in the private sector, was a successful governor of Virginia and has built a reputation as the Senate's expert on government reorganization.

Implementation is a more difficult challenge. The White House seems to favor either renewing the authority that once allowed presidents to submit re-organization plans to Congress, or establishing a quasi-independent commission to draft proposals for up-or-down votes in Congress. Either could work, but for the rancor that will taint proposals moving up Pennsylvania Avenue from a Democratic White House to a Republican House.

Reorganization plans would be more appealing if they came from a quasi- independent entity. Such an entity could be modeled on the Resolution Trust Corporation. Launched during the savings and loan crisis in 1989, RTC produced one miracle after another during its seven years at work. Given full authority to act; an absolute sunset; and ample freedom to hire, pay and fire at will, RTC dumped almost $400 billion in troubled assets and closed or reorganized almost 750 thrifts.

A seven-year Government Reorganization Corporation might work similar miracles for the federal bureaucracy. Given the same authority and freedom to act, it could dispose of the federal government's useless property; hire enough employees to collect the delinquent debt; and fire off legislative proposals for up-or-down votes on hiring, flattening and consolidation. After seven years, it would disappear.

Whatever the tool, Congress and the president still have a chance to use this year's budget crisis to capitalize on the opportunity for deep reform. Overhauling government may not be exciting, but it does provide a way to capture savings and establish momentum for reform.

Paul C. Light is Paulette Goddard Professor of Public Service at New York University and the author of several books, including Thickening Government (Brookings Institution Press, 1995) and The Tides of Reform (Yale University Press, 1998).