The National Performance Review and Other Government Reform Initiatives: An Overview, 1993-2001

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The National Performance Review

and Other Government Reform Initiatives:

An Overview, 1993-2001

Updated June 4, 2001

-name redactedSpecialist in American National Government

-name redacted- and -name redactedAnalysts in American National Government

Government and Finance Division

Congressional Research Service ˜ The Library of Congress

The National Performance Review

and Other Government Reform Initiatives:

An Overview, 1993-2001

Summary

Shortly after his inauguration in 1993, President William Clinton announced he

was initiating a National Performance Review (NPR) to be conducted over the next

six months by a task force headed by Vice President Albert Gore, Jr. In September

1993, this task force delivered a report to the President, offering some 380 major

recommendations concerning management reform, reorganization, and government

downsizing. Implementation of these recommendations was to be accomplished

through presidential directives, congressional action, and individual agency initiatives.

A year later, in September 1994, the NPR issued a status report indicating that

90% of its initial recommendations were being implemented; $46.9 billion of its $108

billion in projected savings had been enacted; an additional $16 billion in savings was

pending before Congress; and federal employment had dropped by 71,000 positions.

Shortly after the release of this report, the November 1994 congressional elections

gave the Republicans majority party control of the House and the Senate for the 104th

Congress. Republican leaders had unveiled a Contract with America reform plan in

late September 1994. Its core principles regarded the federal government as being

too big, too expensive, unresponsive to the citizenry, and the perpetrator of

burdensome regulations. Consequently, two distinct agendas for reforming and

restructuring the federal government were before the 104th Congress. At its

conclusion, both the President and Republican congressional leaders could claim some

victories in downsizing government. No department was eliminated, however, and

only a few small agencies were abolished.

Additional NPR status reports, recommendations, and proposals followed in

1996, 1997, and 1998. Republican congressional majorities continued during the

105th and 106th Congresses. Administration and congressional reinvention and reform

efforts resulted in moderate accomplishments during the 105th Congress. Significant

exceptions were the overhaul of the structure and operations of the Internal Revenue

Service and the consolidation of the foreign policy agencies, both of which were

realized as a result of cooperation between the Clinton Administration and Republican

congressional leaders. With the convening of the 106th Congress, it appeared that the

momentum for pursuing major government reinvention and reform had considerably

slowed. The NPR ceased operations with the conclusion of the Clinton

Administration on January 19, 2001.

This report reviews the record of the National Performance Review and its 1998

successor, the National Partnership for Reinventing Government. It chronicles, as

well, related and sometimes competing government reform efforts, and assesses the

overall record of the NPR. The report will no longer be updated.

Contents

The National Performance Review: Phase I . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The NPR Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Implementing the NPR Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . 5

NPR and the 104th Congress: Phase II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

The First NPR Status Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

The New Republican Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

NPR Enters Phase II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

The Budget Impasse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

First-Term NPR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

NPR Renewed: Phase III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Reinventing the Reinvention Effort . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Performance-Based Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

The Report Cards and Beyond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Successes, Problems, and Remaining Questions . . . . . . . . . . . . . . . . . . . . . . . . 26

Successes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Remaining Questions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Closure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

The National Performance Review

and Other Government Reform Initiatives:

An Overview, 1993-2001

During the 20th century, major attempts have been made from time to time to

improve the operation of the federal government—largely the program activities of

the executive departments and agencies—through management reforms,

reorganization, and downsizing.1 One of the more recent efforts was spearheaded by

the Executive Committee of the President’s Private Sector Survey on Cost Control

of the Federal Government, established by President Ronald Reagan with E.O. 12369

of June 30, 1982. Chaired by industrialist J. Peter Grace, the panel, which became

popularly known as the Grace Commission, was composed of 161 corporate

executives and was, according to the chartering order, to “advise the President and

the Secretary of Commerce, and other Executive agency heads with respect to

improving management and reducing costs.”2 Utilizing 36 task forces and the

assistance of some 2,000 business executives, managers, experts, and special

consultants, the Grace Commission, in January 1984, issued a 47-volume report, with

a two-volume summary, which offered 2,478 recommendations.3 A month later, a

General Accounting Office (GAO) and Congressional Budget Office (CBO) joint

assessment of a sample of these recommendations resulted in the following GAO

conclusions:

Specifically, of the 396 recommendations assessed, GAO identified 242 as having

some merit, 83 as not having merit, and 71 for which GAO had no basis for an

opinion. Of the 242 recommendations GAO believed had merit, it had previously

made similar or related recommendations in 150 cases. It is important to note,

however, that many of the recommendations that do not have merit in GAO’s

opinion were among those with large savings estimates in the [Grace Commission]

reports. It is also important to note that GAO does not agree that all of the

proposals for which CBO estimated budgetary savings are feasible or desirable.

Generally, see Peri E. Arnold, Making the Managerial Presidency, 2nd edition (Lawrence, KS:

University Press of Kansas, 1998); Herbert Emmerich, Federal Organization and

Administrative Management (Tuscaloosa, AL: University of Alabama Press, 1971); Paul C.

Light, The Tides of Reform (New Haven, CT: Yale University Press,1997); U.S. Library of

Congress, Congressional Research Service, Reorganizing the Executive Branch in the

Twentieth Century: Landmark Commissions, by (name redacted), CRS Report 92-293 GOV

(Washington: Mar. 19, 1992).

See 3 C.F.R., 1982 Comp., pp. 190-192.

The Grace Commission’s final summary report was commercially published as President’s

Private Sector Survey on Cost Controls, War on Waste (New York: Macmillan, 1984).

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Conversely, GAO believes that many proposals for which CBO was not able to

estimate budgetary savings have merit and deserve further consideration.4

While controversy has continued to attend estimates of savings accruing from

the implementation of Grace Commission proposals, the Office of Management and

Budget (OMB) indicated that 83% of “the unduplicated Grace Commission

recommendations have been accepted by the President and reflected in the 1990 or

prior budgets.”5

Among the themes that Arkansas Governor William Clinton brought to the

presidency a few years later was the pledge “to radically change the way government

operates—to shift from top-down bureaucracy to entrepreneurial government that

empowers citizens and communities to change our country from the bottom up.”6

Some of his proposals in this regard,7 such as regulating post-employment lobbying

activities by senior administration appointees,8 reducing administrative expenses,9

eliminating 100,000 federal employee positions,10 and cutting Executive Office of the

President staff by 25%,11 were partly or fully implemented shortly after his January

1993 inauguration.

The National Performance Review: Phase I

A more ambitious and far-reaching effort at changing government operations

was announced by President Clinton on March 3, 1993. He indicated he was initiating

a National Performance Review (NPR) to be conducted over the next six months by

a task force headed by Vice President Albert Gore, Jr. “Our goal,” said the President,

“is to make the entire Federal Government both less expensive and more efficient, and

to change the culture of our national bureaucracy away from complacency and

U.S. Congressional Budget Office and U.S. General Accounting Office, Analysis of the

Grace Commission’s Major Proposals for Cost Control (Washington: GPO, 1984), p. 2.

U.S. Office of Management and Budget, Management of the United States Government:

Fiscal Year 1990 (Washington: GPO, 1989), p. 5-2.

Bill Clinton and Al Gore, Putting People First: How We Can All Change America (New

York: Times Books, 1992), p. 24.

See ibid., pp. 25-26.

See E.O. 12834, in Federal Register, vol. 58, Jan. 22, 1993, pp. 5911-5916.

See E.O. 12837, in ibid., Feb. 12, 1993, pp. 8205-8206.

See E.O. 12839, in ibid., p. 8515.

Ann Devroy, “Clinton Announces Cut in White House Staff,” Washington Post, Feb. 10,

1993, pp. A1, A7; Thomas L. Friedman, “Clinton Trimming Lower-Level Aides,” New York

Times, Feb. 10, 1993, pp. A1, A20. Also see U.S. Library of Congress, Congressional

Research Service, President Clinton’s Proposed Reduction in White House Staff, by (name r

edacted), CRS Report 93-476 GOV (Washington: May 6, 1993).

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entitlement toward initiative and empowerment. We intend to redesign, to reinvent,

to reinvigorate the entire National Government.”12

Based upon a similar 1991-1992 assessment in the State of Texas, the NPR was

to be assisted by senior department and agency managers, auditors, and front-line

workers; OMB management analysts; advice from federal employees, citizens, and

private sector leaders; and congressional proposals for eliminating waste in

government. The effort was to evaluate the efficiency of every federal program and

service; identify specific spending cuts that could be made in federal programs and

services not operating effectively and no longer advancing the mission they were

intended to serve; recommend ways to streamline the bureaucracy by eliminating

unnecessary layers of management and reducing duplication of effort; and find ways

to improve services by making better use of new information technology and by

making government programs more responsive to the clientele they serve. In brief,

the objective of the NPR was to “reinvent government”—a phrase taken from the

popular 1992 book Reinventing Government.13

By early April, the NPR was organized with 11 “system reinvention” teams and

22 agency-by-agency redesign teams. The former included units on mission-driven,

results-oriented budgeting; transforming organizational structures; reinventing

personnel management; reengineering through information technology; improving

financial management; eliminating internal barriers; improving regulatory systems;

empowering state and local governments; rethinking program design; redesigning

management systems; and minimizing federal damage to the environment.

Agency-by-agency redesign teams were constituted for each of the 14 Cabinetlevel departments and seven specific independent agencies,14 plus one for all other

executive entities. OMB was covered by the budgeting and management systems

reinvention teams; the Office of Personnel Management (OPM) was examined by the

personnel management reinvention team; and the General Services Administration was

scrutinized by the internal barriers reinvention team.

The work of the NPR was formally inaugurated on April 15, 1993, with an

assembly that was addressed by Vice President Gore; David Osborne, coauthor of

Reinventing Government; and Robert Stone, Defense Department deputy assistant

secretary for installations and project director for the NPR. As scheduled, NPR

personnel, most of whom were agency detailees, gathered information during April

and May, and analysis commenced the following month. Recommendations were

formulated in July, and drafts of findings and recommendations were circulated to

Cabinet members for comment in August.

Weekly Compilation of Presidential Documents, vol. 29, Mar. 8, 1993, p. 350.

David Osborne and Ted Gaebler, Reinventing Government (Reading, MA: Addison-Wesley,

1992).

These seven agencies were the Environmental Protection Agency, National Aeronautics and

Space Administration, National Science Foundation, Nuclear Regulatory Commission,

Agency for International Development, Federal Emergency Management Agency, and Small

Business Administration.

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The NPR Report

The initial NPR report, From Red Tape to Results: Creating a Government That

Works Better & Costs Less, was delivered to the President on September 7, 1993.15

Various accompanying supplemental reports on both specific agencies and functional

areas of government were subsequently published during 1994. All of these

documents and later NPR materials are available through the NPR website, which is

now in archival status ([http://govinfo.library.unt.edu/npr/default.html]).

Offering over 380 major recommendations by agency and by affected

governmental systems, the initial report also provided a summary of anticipated

savings deriving from these recommendations. Unlike several previous presidential

study panels on government reform, the NPR did not emphasize executive

reorganization in its recommendations, though it did propose that Congress should

restore the President’s authority to restructure the executive branch through

reorganization plans and did suggest over a dozen specific reorganizations.16 Most

of the NPR recommendations sought to streamline government operations, to

improve management, and to promote efficiency and economy in administration—all

with a view to better service delivery and customer satisfaction. The Grace

Commission had some similar recommendations, but made its offerings to combat

waste, fraud, and abuse in government.

The mission and initial report of the NPR prompted some critical reaction from

the scholarly community concerning the application of some private sector criteria to

essentially different public sector enterprises. One public administration scholar

objected to the NPR endowing entrepreneurial government with “empowered

customers,” competition, markets, reduced regulations, charging fees and making

money, decentralization, and privatization. He cautioned that “promises of better

government for less money are simplistic and misleading, regardless of the ‘principles’

upon which they are based”; “governments are not markets”; “citizens are not

customers ... they are the owners”; “it is incorrect to assume that either those who

work for government or the system of government work are the primary problems”;

and “downsizing, rightsizing, cutback management and the other means of reducing

See Office of the Vice President, From Red Tape to Results: Creating a Government That

Works Better & Costs Less. Report of the National Performance Review (Washington: Sept.

7, 1993).

The President’s authority to prepare reorganization plans and submit them for congressional

approval was initially established temporarily in 1939, and was then renewed periodically a

dozen times between 1945 and 1984, with slightly varying procedural and plan content

conditions. Modification of this authority was made necessary in 1983 when the Supreme

Court, in the Chadha case (462 U.S. 919), effectively invalidated continued congressional

reliance upon the mechanism of a concurrent resolution to disapprove a proposed

reorganization plan. Under the Reorganization Act Amendments of 1984, signed by President

Reagan on Nov. 8, 1984, several significant changes were made in the reorganization plan law

(5 U.S.C. 901-912 (1988)). These amendments, however, continued the President’s

reorganization plan authority only to the end of the year, when it automatically expired.

President Reagan did not request its reauthorization, nor did President George Bush or

President Clinton.

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the size and costs of government, when combined with deregulation, have

significantly diminished the capacities of some units of government to function

effectively.”17

A former Bureau of the Budget specialist in government organization and

management observed that contracting government services for private sector

performance was not “necessarily cheaper, more efficient and more flexible,” and

warned:

Contracting out does not de facto reduce the size of government, promote

efficiency, reduce costs or limit the scope of government responsibility. Nor does

it eliminate the need for public management; it only changes its character.

Because so much of government is contracted out, we urgently need innovation and

the development of new approaches to public management. Thus far, we have

tended to view the government’s role as limited to that of a contract writer and

negotiator, auditor and bill payer.18

Implementing the NPR Recommendations

To pursue its many recommendations, the NPR proposed the creation of a

President’s Management Council to “ensure that quality management principles are

adopted, processes are reengineered, performance is assessed, and other National

Performance Review recommendations are implemented.”19 Subsequently established

by a presidential memorandum of October 1, 1993, the council was composed of the

chief operating officers of 15 major departments and agencies, representatives of the

Administrator of General Services and the director of OPM, and the President’s

secretary of the Cabinet, with the OMB deputy director for management as the

chair.20

Shortly after receiving the initial NPR report, President Clinton began

implementing its recommendations. For example, with a memorandum of September

9, 1993, he created the Community Enterprise Board, with the Vice President as

chair and 17 other top officials as members, to assist with the implementation of

legislation mandating the establishment of empowerment zones, enterprise

communities, and rural development investment areas.21

NPR recommendations also received attention in the Treasury, Postal Service,

and General Government Appropriations Act, 1994, which removed full time

employee equivalent floors for some federal agencies funded by the legislation,

H. George Frederickson, “Painting Bull’s-Eyes Around Bullet Holes,” Governing, vol. 6,

October 1992, p. 13.

Harold Seidman, “Reinventing the Wheel, Not Government,” Government Executive, vol.

25, April 1993, p. 32.

Office of the Vice President, From Red Tape to Results: Creating a Government That Works

Better & Costs Less, p. 89.

3 C.F.R., 1993 Comp., pp. 788-791.

See Weekly Compilation of Presidential Documents, vol. 29, Sept. 13, 1993, pp. 1716-1718.

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directed the Internal Revenue Service and U.S. Customs Service to submit plans for

restructuring each agency to the Committees on Appropriations, and allowed agencies

funded by the legislation to carry over 50% of such unobligated funds for an

additional year, with the other half reverting to the Treasury. 22

The NPR reform effort received added momentum with the October 7, 1993,

announcement of the formation of a bipartisan reinventing government study group

of House freshmen cochaired by Representatives Jane Harman (D-CA) and Ken

Calvert (R-CA). Calling the NPR report “an important first step in laying out specific

proposals for reducing government waste and cutting red tape,” organizers of the

group called upon the Speaker and other House leaders to schedule votes on NPR

proposals during the remaining months of the 103rd Congress.23 President Clinton

provided the opportunity for a major vote in this regard when, on October 26, 1993,

he transmitted to Congress a proposal implementing a number of NPR

recommendations, including reorganization of the Department of Agriculture and U.S.

Army Corps of Engineers, streamlining of the Department of Housing and Urban

Development, and termination of the Alaska Power Administration, the Uniformed

Services University of the Health Sciences, and various individual programs. On

October 28, the measure was introduced as the Government Reform and Savings Act

of 1993 (H.R. 3400), and portions were referred to 17 committees for a period ending

not later than November 15, 1993. Ten of these panels reported and the others were

discharged from further consideration of the bill on November 15. The House

Committee on Rules held a November 19 hearing on the bill and reported a modified

version of it the following day.24 Floor discussion commenced on November 22, and

the House subsequently approved H.R. 3400, as amended, on a 429-1 recorded

vote.25 The bill was referred to the Senate, and the first session of the 103rd Congress

concluded on November 26.

With the beginning of the second session of the 103rd Congress in late January

1994, some Senate committees began examining portions of H.R. 3400, but the bill

was formally referred only to the Committee on Governmental Affairs. A hearing was

held by that committee on February 23 to consider those sections of H.R. 3400 within

its jurisdiction. Testimony was received from Comptroller General Charles Bowsher

and OMB Deputy Director Alice Rivlin. On March 23, the committee voted to report

a new bill (S. 2170) addressing only four of the 17 titles of H.R. 3400. The

committee’s report accompanying the new bill commented that, “Senate action on the

entire H.R. 3400 will most certainly depend on the action taken by other committees

with regard to those provisions within their jurisdiction.”26 However, no other Senate

See 107 Stat. 1226.

Office of Representative Ken Calvert, “Calvert Calls for Votes This Session on Reinvention

Proposals,” press release, Oct. 7, 1993; Karen Foerstel, “Frosh Join Call for Vote This

Session on Gore Plan,” Roll Call, Oct. 7, 1993, pp. 3, 18.

U.S. Congress, House Committee on Rules, Providing for Consideration of H.R. 3400, 103rd

Cong., 1st sess., H.Rept. 103-403 (Washington: GPO, 1993).

See Congressional Record, vol. 139, Nov. 22, 1993, pp. 31990-31991.

U.S. Congress, Senate Committee on Governmental Affairs, Government Management

(continued...)

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committee moved any of the other titles of H.R. 3400 for Senate floor consideration

during the second session. The Senate eventually considered and passed S. 2170 in

late September and the House gave its approval to the bill in early October, clearing

the measure for the President’s signature on October 13, the result being a modest

implementation of NPR recommendations.27

That same day, President Clinton also approved two other bills implementing

NPR recommendations. Reform of government procurement arrangements was

accomplished with the Federal Acquisition Streamlining Act.28 Presidential directives

facilitating the implementation of the new law were coincidently issued when it was

signed.29 The other approved legislation, originally a federal crop insurance reform

bill, had been amended to reorganize the Department of Agriculture.30

Several months earlier, on March 30, 1994, President Clinton had signed another

measure, the Federal Workforce Restructuring Act, implementing an NPR

recommendation.31 It authorized the departments and agencies to begin a downsizing

of their personnel through early retirement buyouts. Another law, the Government

Performance and Results Act, given presidential approval on August 3, 1993, was

recommended in the initial NPR report and the legislation had been endorsed by

President Clinton when it was introduced in the 103rd Congress.32 The proposal,

however, predated the NPR and had been largely developed by Senator William V.

Roth, Jr. (R-DE).

NPR and the 104th Congress: Phase II

With the issuance of its first status report and the Republican takeover of the

House in the fall of 1994, NPR transitioned into a second phase of goals and activity.

This change in goals put the reinventing effort on a parallel track with the reform

efforts advocated in the Contract with America, which formed the cornerstone of the

agenda of the new Republican majority in Congress. Reform advocates in both

branches focused on defining the appropriate scope of government functions, rather

than how government should function, which had been the question undergirding

Phase I of the NPR. The NPR claimed that Phase I, in the executive branch, had been

very successful, and laid out the agenda for a second phase with new

recommendations for saving money, modifying or ending programs, and privatizing

(...continued)

Reform Act of 1994, report to accompany S. 2170, 103rd Cong., 2nd sess., S.Rept. 103281(Washington: GPO, 1994), p. 2.

108 Stat. 3410.

108 Stat. 3243.

See E.O. 12931 and a related presidential memorandum of Oct. 13, 1994, in 3 C.F.R., 1994

Comp., pp. 925-926, 1040.

108 Stat. 3178.

108 Stat. 111.

107 Stat. 285.

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some government functions. The House Republican leadership, under Speaker Newt

Gingrich, pushed for passage of Contract legislation, including bills to reduce the size

and scope of government. Although both branches focused attention on the proper

role and scope of the federal government, their agendas were very different. These

differences contributed to an impasse in budget negotiations that led to a temporary

shutdown of the federal government in the fall and winter of 1995-1996.33 In the

wake of this conflict, the NPR shifted focus to highlight its role in reducing the deficit

and moving toward a balanced budget as Congress and the Clinton Administration

faced the 1996 elections.

The First NPR Status Report

In September 1994, Vice President Gore released the first NPR status report,

which reviewed the progress that had been made in implementing the 1993

recommendations. Among the claims offered for realizing a government that “works

better & costs less” were the following.

! Over 90 percent of National Performance Review recommendations are underway.

! The President has signed 22 directives, as well as performance agreements with seven

agency heads.

! Over 100 agencies are publishing customer service standards.

! Nine agencies have started major streamlining initiatives.

! Agencies are forming labor-management partnerships with their unions.

! Agencies are slashing red tape.

! The Government is buying fewer “designer” products and doing more common-sense

commercial buying.

! 135 “reinvention laboratories” throughout the federal government are fostering

innovation.

! The government is shifting billions of dollars in benefits to electronic payment.

! The federal government is changing the way it interacts with state and local

governments.34

According to the report, government costs were cut as well.

See U.S. Library of Congress, Congressional Research Service, Shutdown of the Federal

Government: Causes, Effects, and Process, by (name redacted), CRS Report 98-844 GOV

(Washington: Jan. 18, 2001).

Office of the Vice President, Creating a Government That Works Better & Costs Less:

Status Report. Report of the National Performance Review (Washington: September 1994),

p. 5.

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! $46.9 billion of NPR’s $108 billion in proposed savings are already enacted.

! $16 billion in savings is pending before Congress.

! Federal employment has dropped 71,000 positions.

! $695 million in savings results from ending federal subsidies for wool and mohair.

! The Defense Department’s overhaul of its travel process will save $1 billion over five

years.

! The Federal Communications Commission’s auctions of new radio frequencies are

raising millions.

! Government’s use of a Visa card for small purchases is saving $50 million this year.35

The report noted that the executive and legislative branches had cooperated in

passing legislation to achieve these results.

! Congress has enacted 21 NPR-related laws, including the first-ever governmentwide

“buyout” authority, and mandated cuts in the federal workforce.

! Congress has provided increased flexibility for a variety of programs involving state

and local government.

! Congress is about to enact the most significant procurement reform in a decade.

! 47 NPR-related actions passed both houses.

! Another 46 passed one house.

! Congress held more than 80 hearings on various NPR recommendations.36

A Brookings Institution report issued at this time also regarded the NPR as

having made progress during its first year, with some cautionary caveats. The

assessment praised the reform effort's work toward cultural change in the bureaucracy

and its success in simplifying some rules and processes, particularly with regard to

personnel and procurement, improved coordination of government management

through the President's Management Council (PMC), and "widespread innovation by

federal managers."37 At the same time, the report expressed concerns about the

sustainability of the NPR reform effort due to four critical problems. First, the NPR

sought to change organizational culture at the same time that it was implicitly

condemning government employees by criticizing government performance, cutting

positions, and challenging entrenched processes. It judged that this two-prong effort

Ibid., p. 7.

Ibid., p. 6.

Donald F. Kettl, Reinventing Government? Appraising the National Performance Review,

CPM Report 94-2 (Washington: Brookings Institution, 1994), p. 2.

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was likely to alienate employees, especially those who had weathered previous

unsuccessful reforms. Second, the report was concerned that the methods of

workforce reduction and other changes overlooked the importance of government

capacity. The report's author, Donald Kettl, wrote of the risk of "an even more

hollow government with far less capacity to do its job and managed by employees

with even less incentive to do their jobs well."38 Third, the report expressed concern

about the lack of clarity in the core NPR ideas; the principles and purposes behind the

reform needed to be more clearly defined or risk losing focus or creating conflicting

agendas. Fourth, the reform effort's plan to decentralize government and empower

employees to be more entrepreneurial risked damage to accountability, particularly

to Congress.

Some in academic circles went beyond the Brookings report in arguing that the

entrepreneurial focus of the NPR was in tension with the President's constitutional

duty to "take Care that the Laws be faithfully executed."39 According to these critics,

public law creates a system of accountability by the bureaucracy to the President and

Congress that is eroded when government functions are decentralized and privatized

in the process of establishing entrepreneurial incentives.

The General Accounting Office (GAO) also evaluated the success of the

implementation of NPR recommendations on their own terms, assessing progress on

each of the 384 major proposals from the September 1993 report as well as the

reform effort as a whole. GAO found that about 40% of the recommendations had

been fully or partly implemented, noting that the recommendations varied widely in

their specificity and scope. It applauded most of the recommendations and

achievements of the NPR, but also expressed concern about its failure to address

critical management issues that GAO had previously identified. As GAO

representatives later testified before the House Subcommittee on Government

Management, Information, and Technology in May 1995:

[The NPR] did not address a number of issues that the Office of Management and

Budget and we consider to be high-risk areas. These issues include defense

inventory management practices that have resulted in unneeded inventory valued

by the Department of Defense at $36 billion and problems plaguing federal

information technology initiatives, such as the Federal Aviation Administration's

air traffic control modernization project. The NPR recommendations also did not

address nearly three-fourths of the issues we identified last year for the former

chairman of this Committee as the most important management problems facing

23 federal agencies. These issues include the lack of effective controls over

Department of Defense disbursements and inadequate project management and

planning in the Department of Energy. Therefore, while we believe the

recommendations NPR made are an important contribution toward improved

federal management, we also believe that significant additional opportunities

remain to make government work better and cost less.40

Ibid., p. 3.

U.S. Constitution, Article II, section 3.

U.S. General Accounting Office, Government Reform: GAO's Comments on the National

(continued...)

CRS-11

Perhaps more significant than the measurement of progress was the GAO call for

closer work between Congress and the executive branch on the reforms, greater

attention to development and maintenance of agencies' capacities in reform efforts,

and more sustained attention to reform by political and career leaders. GAO also

urged reformers to refocus evaluation efforts away from "inputs, outputs, and

processes to an emphasis on outcomes and results – consistent with the Government

Performance and Results Act of 1993."41 In addition, GAO suggested that the NPR

would need a more cohesive statement of its management principles:

NPR performed a service in highlighting many problems that needed to be

addressed and recommending solutions to these problems. However, to be

successful in the long run, NPR will need to sharpen its focus and bind the

recommendations together into a more coherent framework that can better permit

the government reform movement to take root and flourish.42

The New Republican Congress

Shortly after the NPR’s 1994 status report was released, the Republicans won

majority control of the House and Senate in mid-term elections, and the focus of the

congressional agenda with regard to public administration turned to reducing the size

and scope of the federal government. The agenda was based on the Republican's

Contract with America, which called for "the end of government that is too big, too

intrusive, and too easy with the public's money." The new Republican majorities in

the House and Senate facilitated passage of the Line Item Veto Act, which President

Clinton supported and which vested him with more control of unwanted budgetary

expenditures.43 They pressed for passage of the Unfunded Mandates Reform Act of

1995, which limits the ability of the federal government to impose unfunded mandates

on state and local governments and requires the provision of information on the costs

of federal mandates to the private sector.44 The Paperwork Reduction Act of 1995

amended the 1980 law of the same name to reduce further the paperwork burden on

the public.45 The Federal Reports Elimination and Sunset Act of 1995 modified or

eliminated many federal reporting requirements.46 The Contract with America

(...continued)

Performance Review, GAO testimony, GAO/T-GGD-95-154 (Washington: May 2, 1995),

pp. 2-3.

U.S. General Accounting Office, Management Reform: Implementation of the National

Performance Review's Recommendations, GAO Report GAO/OCG-95-1 (Washington: Dec.

5, 1994), p. 2.

Ibid., p. 9.

110 Stat. 1200; the statute was subsequently challenged in federal court and ultimately held

invalid by the Supreme Court in Clinton v. City of New York, 524 U.S. 417 (1998).

109 Stat. 48.

109 Stat. 163.

109 Stat. 707.

CRS-12

Advancement Act of 199647 brought two other promises of the Contract into law and

also raised the public debt limit. Title I reformed Social Security disability programs,

while Title II sought to reduce the regulatory burden on small business and improve

congressional review of new regulations.

This spate of legislation reflected the difference in focus between the

congressional agenda and that of NPR's first phase. While the NPR, in its initial

report, had focused on improving government processes, notably customer service

and procurement, and on reducing the civilian workforce, the new Republican House

majority sought to limit the size and role of the federal government. As one

Republican leader was reported to have characterized the difference:

“The administration's National Performance Review continues to be an important

effort," [Representative William F.] Clinger [(R-PA), chairman of the House

Government Reform and Oversight Committee,] said. "Improving how our

government operates is both necessary and appropriate. But in addition to

improving efficiency in government, Republicans believe that we need to limit the

ever-expanding size and increasingly intrusive role of the federal government in

our lives.”48

NPR Enters Phase II

As Republican congressional leaders pursued their agenda, the NPR altered

course through a change in emphasis.

Without abandoning the 1993

recommendations, the Administration's reform project widened its scope to address

the issues the victorious Republicans had raised. In the wake of the congressional

elections, President Clinton directed Vice President Gore "to conduct a second review

of agencies to identify opportunities for additional savings, program terminations, and

privatization of selected functions."49 In mid-May 1995, OMB Director Alice Rivlin

reported to the Senate Committee on Governmental Affairs that Phase II of NPR was

shifting the focus of the reform effort from how government should operate to what

it should do, saying:

The NPR and OMB set up teams to study every function and activity of

government to decide which ones the Federal Government should continue to

perform, which it should eliminate altogether, and which it should shift to the

States, localities, or private sector .50

By the time of Rivlin's testimony, related major restructuring either had been

announced or was underway in 10 agencies. Although in disagreement about the

110 Stat. 847.

Greg Pierce, "Hearings Eye Government Reinvention," Washington Times, May 3, 1995,

p. A7.

Office of the Vice President, Common Sense Government Works Better & Costs Less: Third

Report of the National Performance Review (Washington: September 1995), p. 119.

U.S. Congress, Senate Committee on Governmental Affairs, Executive Branch

Reorganization, hearing, 104th Cong., 1st sess., May 17-18, 1995, p. 113.

CRS-13

prescription, by the spring of 1995, both the Clinton Administration and Congress, in

their reform discussions, diagnoses, and recommendations, were focused on the

proper administrative role of government.

The Administration released its second status report, Common Sense

Government Works Better & Costs Less, in September 1995.51 It described progress

on the original set of recommendations, and also articulated the administration's new

vision for the NPR. Claiming that one third of the original recommendations had been

completed and that nearly all of the others were underway, the report also announced

more than 180 new recommendations that had arisen for Phase II. As presaged in

Rivlin's testimony, the new recommendations focused on devolving, discontinuing, or

privatizing government functions.

Despite the similarity of stated government reform goals expressed by

Republican congressional leaders and the Administration, wide differences in the scale

and location of the reductions were evident in the rhetoric and proposals of each

camp. Republican congressional leaders had a bold agenda for decreasing the size of

government through contracting out, privatizing government functions, and cutting

the number of programs and agencies. For example, Representative John L. Mica (RFL), chair of the Subcommittee on Civil Service, Committee on Government Reform

and Oversight, reportedly proposed contracting out half of the federal government's

activities to the private sector.52 Privatization efforts spearheaded by Representative

Scott L. Klug (R-WI) focused on the petroleum reserves, helium reserves, power

marketing administrations (PMAs), and the Government Printing Office.53

Congressional intentions for decreasing the size of the federal government were

probably best reflected in the plans of Senate Budget Committee Chairman Pete V.

Domenici (R-NM) and House Budget Committee Chairman John Kasich (R-OH),

which promised to save $806 billion and $1 trillion, respectively. Both plans called

for significant government reductions. Kasich's plan, for example, reportedly called

for the elimination of three Cabinet departments, 13 agencies, 68 boards,

commissions, and authorities, and over 230 programs.54

The savings reported and proposed by the Administration were modest by

comparison. The 1995 status report stated that around $58 billion of the originally

projected savings of $108 billion had been realized and that the remaining $50 billion

was either pending before Congress or "to be acted on in the near future."55 Some

$70 billion in additional savings was projected from the Phase II recommendations.

See citation at note 49.

Ruth Larson, "More Contracting Sought to Cut Costs," Washington Times, Mar. 30, 1995,

p. A8.

Nancy E. Roman, "In GOP's Privatization Drive, Roadblocks Dot Obstacle Course,"

Washington Times, June 12, 1995, p. A1.

"How to Shrink the Federal Government," Washington Times, May 12, 1995, p. A21;

Patrice Hill, "GOP Offers Balanced Budgets: 7-year Plans Cut $1 Trillion," Washington

Times, May 10, 1995, p. A1.

Office of the Vice President, Common Sense Government Works Better & Costs Less: Third

Report of the National Performance Review, p. 149.

CRS-14

Taken together, these savings were far from the target figures of the congressional

Republicans. The federal government reduction envisioned by the NPR also differed

from that of the Republicans. Whereas Republican congressional leaders wanted to

dismantle entire departments and agencies, recommendations for elimination or

revision of regulations by 28 agencies and departments with major regulatory

responsibility formed the focal point of the new phase of the NPR. The NPR report

asserted:

! Agencies are sending 16,000 pages of obsolete regulations to the scrap heap, of

86,000 pages of regulations reviewed.

! Agencies are reworking another 31,000 pages of regulations.

! Regulatory and administrative burdens on the public will be reduced by nearly $28

billion.

! Attitudes are changing; in many cases, fines will be waived for honest mistakes.

! Agencies are closing more than 2,000 field offices.56

According to one observer, Phase II of the NPR was designed to highlight

reform work that was underway in the agencies prior to 1995 and the "refocusing" of

the NPR was essentially a political response to the results of the midterm elections:

Increased activity in regulatory reform during 1995 offers a window onto the

NPR's methods. Substantive work towards reform was undertaken within the

regulatory agencies and not within the task force itself. Those agencies reviewed

regulations in the Code of Federal Regulations and reassessed and proposed

changes in their regulatory procedures. Essentially, at this stage, much of the

substantive work of reform was happening in regulatory agencies and was

overseen by OMB.57

The lack of cooperation between Congress and the executive on government

reform had been noted by GAO regarding the 103rd Congress, when the Democrats

were in the majority in both Houses of Congress. GAO reiterated this concern

regarding the 104th Congress and the Administration in testimony before the Senate

Committee on Governmental Affairs, as the following passages illustrate:

Reorganization demands an integrated approach .... Reorganization plans should

be designed to achieve specific, identifiable goals .... Once the goals are identified,

the right vehicle(s) must be chosen for accomplishing them .... Implementation is

critical to the success of any reorganization .... Oversight is needed to ensure

effective implementation.58

Ibid., p. 3.

Peri E. Arnold, Making the Managerial Presidency, p. 414.

U.S. Congress, Senate Committee on Governmental Affairs, Executive Branch

(continued...)

CRS-15

The administration has taken the National Performance Review beyond its initial

examination of how government should operate to asking questions about what it

should be doing .... In Congress, committees in both Houses have gone even

farther, mobilizing to study and make far-reaching decisions on the role of

government, its basic functions, and organizational structures.59

[O]ne cannot underestimate the interconnectedness of government structures and

activities. Make changes here, and you will certainly affect something over there.

And just as the lack of an overall vision created many of the inefficiencies that

exist in the federal government today, reorganization efforts that ignore the broader

picture could create new, unintended consequences for the future. For this reason,

it is imperative that Congress and the administration form an effective working

relationship on restructuring initiatives and regulatory changes .60

The Administration’s vision of the role of Congress in addressing the proposed

NPR reforms was unclear in the 1995 status report. On the one hand, the report

continued to credit Congress with support, saying:

! Congress has enacted 36 NPR-related laws, including the biggest procurement

streamlining bill ever, with a second in progress.

! Congress has passed 66 of the 280 NPR items requiring legislation (24 percent).

! Nearly 70 NPR-related bills are currently pending in Congress.

! Congress has held more than 120 hearings on various NPR recommendations.61

However, on the other hand, the report criticized the Republican majority in

Congress for its concept of reducing the size of government.

[S]ome people, including many in Congress, have decided that the way to fix

government is just to eliminate as much of it as possible .... The main problem

with taking an axe to the federal government is that it won't fix what remains.

Government would be smaller, but it would still be as inflexible and

bureaucratic.62

The Budget Impasse

The gulf between the conceptions of government reform and reduction

envisioned by Republican congressional leaders and the Clinton Administration

contributed to the budget impasse and government shutdown at the beginning of

(...continued)

Reorganization, p. 103.

Ibid., p. 104.

Ibid., p. 105.

Office of the Vice President, Common Sense Government Works Better & Costs Less: Third

Report of the National Performance Review, p. 3.

Ibid., p. 2.

CRS-16

FY1996.63 Congress proposed legislation that would have made deep cuts in

government agencies, in line with the Contract with America agenda, while the

Administration promoted reductions in government through the efficiencies of

reinvention. The NPR was used to articulate the Administration's position during this

period, but the Administration's ultimate success did not provide a clear mandate for

the future form or scope of government. One analyst observed:

Despite the rhetorical skirmishes, there was little real sorting out of the

government's functions, reorganizing of its operations, or shrinking of its role. In

the end the Clinton administration maneuvered its way out of the crisis by

outflanking congressional Republicans. If the administration was politically

stronger, however, the reinventing government movement was weakened by the

quick shifts in tactics and the diffusion of its focus.64

First-Term NPR

On March 4, 1996, the Vice President consolidated the vision of the NPR to be

carried into the 1996 elections. Building on Phase I and II themes in the post budget

battle environment, Gore delivered a speech entitled "Governing in a Balanced Budget

World." The published documentation accompanying the speech articulated six

goals.65 Most of them, like improving customer service, covered familiar ground. In

addition, Gore advocated the conversion of appropriate agencies to performancebased organizations (PBOs), which would have greater autonomy in their

management practices in return for increased accountability to performance standards.

The third status report, which was released later that year, just two months prior

to the election, made no mention of PBOs, but rather highlighted NPR themes and

summarized the reinvention achievements of the first three years on an agency-byagency basis. It reported $97.4 billion in savings based on agency implementation of

NPR recommendations or their adoption of NPR principles. It also reported

personnel reductions, procurement reform, personnel policy reforms, improved

customer service, reduced, more streamlined, and less coercive regulation of business,

and improved relationships with states and localities.66

Assessments of this period of the NPR have varied. One Brookings Institution

report suggested that, while reform was sustained within agencies, the central effort

See note 33.

Donald F. Kettl, Reinventing Government: A Fifth-Year Report Card, CPM Report 98-1

(Washington: Brookings Institution, 1998), p. 4.

The speech is available at the archived NPR website,

[http://govinfo.library.unt.edu/npr/library/speeches/272e.html], and the supporting

d o c u m e n t a t i o n

m a y

b e

f o u n d

a t

[http://govinfo.library.unt.edu/npr/library/papers/bkgrd/balbud.html].

Office of the Vice President, The Best Kept Secrets in Government: A Report to President

Bill Clinton (Washington: September 1996).

CRS-17

waned.67 Another analysis concluded that, at this point, "the NPR's agenda shifted to

fit [reelection] campaign needs."68 A Heritage Foundation report released in the fall

of 1996 compared NPR achievements to "putting new paint on an old termite-infested

house with a crumbling foundation," criticizing the reform for missing gross

management problems and increasing federal spending even with personnel

reductions.69

NPR Renewed: Phase III

In the third and final phase of its reinvention effort, the NPR sought to redefine

itself, the goals it sought to accomplish, and the means by which it would do so. This

third phase began with the presentation of the Blair House Papers to a new Cabinet

in 1997 and culminated in the formal change of the NPR’s name to the National

Partnership for Reinventing Government in 1998. This period was characterized by

increasing efforts to involve the American public in government reinvention.

Reinventing the Reinvention Effort

In the third phase of its reinvention effort, from 1997-1999, the NPR engaged

in three campaigns to further define its agenda and its strategies, as well as reiterate

its support for past initiatives. The Blair House Papers, Businesslike Government:

Lessons Learned from America’s Best Companies, and the birth of the National

Partnership for Reinventing Government appeared to be attempts to stimulate both

public and intragovernmental support for the reinvention cause. However, according

to one observer, “the NPR has presented different faces without fundamentally

changing its direction, because its overall project of reform has been eclectic from the

beginning.”70

In January 1997, the NPR ushered in its third phase when, as Vice President

Gore explained, “President Clinton and I called the new Cabinet to Blair House to

give them their reinvention marching orders.”71 The Blair House Papers

reemphasized traditional NPR rules and principles regarding the delivery of service,

the fostering of partnerships and community solutions, and the reinvention of

government to “get the job done with less.” However, the Blair House Papers

reiterated and further refined a concept new to the reinventing government debate, the

performance-based organization (PBO).

Donald F. Kettl, Reinventing Government: A Fifth-Year Report Card, p. 5.

Peri E. Arnold, Making the Managerial Presidency, p. 415.

Scott A. Hodge, “Reinvention Has Not Ended the ‘Era of Big Government’,” The Heritage

Foundation, Backgrounder 1095 (Washington: Oct. 15, 1996), p. 30.

Peri E. Arnold, Making the Managerial Presidency, p. 368.

Office of the Vice President, Blair House Papers (Washington: January 1997), p. viii.

CRS-18

Although the PBO plan was first outlined by Vice President Gore in his March

1996 speech,72 the model was further refined and placed at the top of the NPR’s

agenda with the Blair House Papers. While the PBO is a term of art, is not yet

legally defined, and has been used to refer to varying levels of organizational

autonomy, the general PBO concept is spelled out in the Blair House

recommendations.

The PBO model largely relies on business-like practices and is discussed in

market terms. It is inspired by the Next Steps Initiative in Great Britain and is based

on the idea that organizations, when exempt from federal procurement and personnel

rules, will perform more efficiently under new sets of incentives and higher levels of

accountability. PBOs are to be managed by a hired chief executive, who will be held

accountable to the appropriate department secretary, and this relationship is to be

governed by an annual performance agreement. Thus, the chief executive has

incentive to ensure that the organization performs well. This is further reinforced by

making a portion of the chief executive’s salary dependent upon the organization’s

performance.

Underlying the PBO model is the separation of decisionmaking and policymaking

authority from implementation authority, and candidates for PBO status must fulfill

a certain number of prerequisites, which were set out in the Blair House Papers.

! Have a clear mission, measurable services, and a performance measurement system

in place or in development.

! Generally, focus on external, not internal, customers.

! Have a clear line of accountability to an agency head who has policy accountability

for the functions.

! Have top level support to transfer a function into a PBO.

! Have predictable sources of funding.73

Based on these prerequisites, the Clinton Administration identified its first

candidates for PBOs in both the Blair House Papers and the President’s FY1998

budget. They included the National Technical Information Service; the Patent and

Trademark Office (PTO); the Seafood Inspection Program of the Department of

Commerce; the Defense Commissary Agency; the Saint Lawrence Seaway

Development Corporation; the Government National Mortgage Association and the

Federal Housing Administration of the Department of Housing and Urban

Development; the Federal Retirement and Insurance Service of OPM; and the U.S.

Mint.

While the Blair House Papers acquainted government leaders with the

application of business techniques to governmental problems, the NPR’s October

See note 65.

Office of the Vice President, Blair House Papers, p. 42.

CRS-19

1997 publication, Businesslike Government: Lessons Learned from America’s Best

Companies, sought to do the same for the public. With the help of Scott Adams’s

“Dilbert” cartoons, the publication demonstrated that business could be a teacher to

government as Vice President Gore enlisted the aid of top executives from companies

like Disney, Federal Express, and Xerox in the reinvention effort. In the report, Gore

reaffirmed the desire to learn from business, noting that American companies “have

already been through the transformation from industrial-age to information-age

management. They have been through the learning curve, they have made the

mistakes and fixed them ....”74 While the report reiterated the basic NPR tenets, it was

significant for its efforts to make the NPR and its agenda readily accessible to the

American public. In the context of the NPR’s evolution, the report reflected the

changing nature of the NPR and its outreach beyond the Washington beltway to the

general public.

The pinnacle of “reinventing the reinvention effort” was reached in March 1998

when the National Performance Review, on its fifth anniversary, formally became the

National Partnership for Reinventing Government. Along with the new name, the

NPR adopted new strategies and principles. The NPR no longer sought merely to

make government work better and cost less. Instead, it “reorganized into eight teams

focused on partnering with federal agencies, state and local governments, the private

sector and citizen organizations to:”

! Deliver hassle-free service.

! Create a safer, healthier America.

! Develop stronger and safer communities and families.

! Make the economy stronger.

! Technologically transform America.

! Engage Americans in a conversation about reinventing government.

! Create the most well-managed government in history.

! Model the office of the future.75

The NPR sought to achieve these goals by fostering partnerships, encouraging

agencies to use “balanced measures,” creating an electronic government, and

publicizing its message. It focused on 32 “high impact agencies,” those with the most

interaction with the American people. According to NPR officials, the group’s new

plan was to align around a clear vision, value, and goal, and carry on a conversation

with Americans about what they value. The NPR would then use results that

Office of the Vice President, Businesslike Government: Lessons Learned from America’s

Best Companies (Washington: October 1997).

Anne Laurent, “Revamping Reinvention,” Government Executive, vol. 30, April 1998, pp.

31-32.

CRS-20

Americans care about as performance measures. It would partner with “high impact

agencies,” encourage leadership and pursue fundamental reinvention through people,

process and information technology. 76

Some observers believe the NPR was also perceived as potentially benefitting

Vice President Gore’s 2000 bid for the presidency. “NPR will be reviewed as if it

demonstrates the Vice President’s ability to lead, his fiscal understanding of

government, can he run a large organization,” NPR director Morley Winograd is

reported to have commented.77 From this viewpoint, the NPR attempted to broaden

its political appeal by re-focusing its mission.

As the NPR began to commit itself to these broader political goals, the gap

between “megapolitics” and front line management began to grow. While Winograd

contended that the NPR could create safer neighborhoods by publicizing

technological, cultural and process changes made by New York and Boston police,78

the process reforms that the NPR was undertaking, in the view of one observer, had

little or no direct connection with the achievement of the broader goals the NPR had

promised the American public.79 Winograd concluded that, “in seeking political

relevance and moving past process, NPR distanced itself from its ability to identify,

accomplish and measure results through its own actions.”80 He judged that, in Phase

III, the NPR “risked making pledges on which it could not deliver and focusing

government employees on processes indirectly linked at best with Phase III’s broader

policy agenda.”81

Although the NPR spent much of 1997-1998 revamping its image and redefining

its strategies and goals, government reform efforts continued in other quarters.

Overhauling the structure and operations of the Internal Revenue Service (IRS), for

example, was a major accomplishment of the 105th Congress. A number of

developments contributed to this overhaul. In 1984, the IRS began replacing its

outdated computer system. A few years later, GAO questioned the modernization

effort and alleged that the IRS had wasted billions of dollars on “unwisely chosen

computer purchases” due to the lack of any overall plan for the computer system and

a reluctance to engage computer experts outside the IRS. In response, Congress

mandated the National Commission on Restructuring the IRS in late 1995.82 Headed

by Senator Robert Kerrey (D-NE) and Representative Rob Portman (R-OH), the

commission sought to evaluate the IRS and make recommendations regarding its

organization and practices. In November 1997, the panel released its report, A Vision

for a New IRS, which recommended better congressional oversight of the IRS; a

statutorily created independent board of directors to oversee IRS management and

Ibid.

Ibid., p. 32.

Ibid., p. 34.

Ibid.

109 Stat. 509.

CRS-21

operations; a strengthened role for the Secretary of the Treasury in setting tax policy;

and expansion of the authority of the IRS commissioner over personnel and senior

manager accountability.

While legislation advancing the commission’s

recommendations was introduced with bipartisan support in late July 1997, it was met

with strong opposition from the Clinton Administration over the role of the proposed

independent board of directors.

Prior to the dissemination of the commission’s report, the Administration had

announced its intention to reform and reorganize the IRS. Overhaul of the IRS had

been one of the original 1993 recommendations made by the NPR. Eventually, a

comprehensive plan for IRS reform was unveiled by the Administration in October

1997, with an announcement that it would be implemented immediately. Based on

a report by Vice President Gore and Treasury Secretary Robert E. Rubin, the plan

focused on improving customer service, giving taxpayers new ways to solve

problems, expanding taxpayer rights and remedies, and creating a new IRS board of

trustees.83 However, a few days later, the Clinton Administration abandoned its

opposition to congressional reform of the IRS, and legislation embodying the

recommendations of the IRS reform commission was subsequently adopted in the

House.

In January 1998, the Senate Committee on Finance revealed abuses by the IRS

against taxpayers it had accused of non-compliance. These abuses were said to stem

from basing performance evaluations of employees on their success in bringing in

revenue. The chairman of the Committee on Finance, Senator William V. Roth, Jr.

(R-DE), drafted a reform bill and offered it for consideration and markup at a

committee meeting on March 31. Roth’s bill was adopted in May. A conference

report was produced and agreed to by both chambers shortly thereafter, and the

measure was signed into law by the President on July 22, 1998.84

Performance-Based Organizations

While the NPR and the Clinton Administration identified various candidates for

conversion to the PBO model, congressional interest was initially confined to the case

of the Patent and Trademark Office (PTO). Congressional attention to the

reconstitution of the PTO as a PBO began early in 1995, and the 104th Congress

subsequently saw an Administration proposal, three House bills, and two Senate bills

on the matter offered for consideration. All of these measures, even those converting

the PTO into a government corporation, embraced basic PBO concepts of

“marketizing” governmental functions in order to improve the delivery of services.85

Al Gore and Robert E. Rubin, “Report on the IRS: Reinvention, Recourse, Rights, Reform,”

available from [http://www.ustreas.gov/press/releases/prirs1.htm].

112 Stat. 685.

Government corporations are federal agencies established by Congress to serve a public

purpose by performing a market-oriented service which produces enough revenue to meet or

approximate the expenditures of the corporation. They share a number of characteristics with

PBOs, such as the “marketization” of activities and the application of business practices to

(continued...)

CRS-22

However, none of them received final legislative approval, and the issue of PTO

conversion continued into the 105th Congress, when two omnibus bills and an

additional Senate proposal were introduced. Again, the proposed measures were not

passed by Congress, and the Administration indicated that legislation converting the

PTO to PBO status would be offered in the 106th Congress (see H.R. 1907).

In many regards, converting the PTO to PBO status did not succeed because the

NPR seemingly failed to anticipate congressional, union, and intragovernmental

unwillingness to increase the autonomy of the PTO by making it a PBO. Without an

effective strategy for dealing with Congress, the NPR had relied on administrative

action to accomplish many of its goals. However, the conversion of the PTO to PBO

status could occur only through legislative action, and there was a considerable

amount of congressional resistance to relinquishing control over agencies as “[t]he

PBO concept would place more power in the hands of the few, [and] Congress would

lose some of its oversight authority.”86 Furthermore, labor unions strongly opposed

a PBO conversion that would exempt the PTO from existing personnel rules. In

addition, some saw executive branch resistance to PBO conversion legislation freeing

the PTO from the General Services Administration’s monopoly on real property

services, which the Administration’s bill did not do.87

The first PBO was created with the enactment of the Higher Education

Amendments of 1998 when the Department of Education’s student financial services

were vested in a new Office of Student Financial Assistance (OSFA).88 Headed by

a chief operating officer selected by the Secretary of Education, the OSFA was given

independent control of its budget and finances, personnel decisions and processes,

procurements, and other administrative and management functions. Compensation

of the chief operating officer was based partially upon organizational performance.

In return for this independence, the OSFA must improve student services, reduce

costs, and increase the accountability of administration. The office’s performance is

measured in accordance with a five-year plan, developed by the Secretary of

Education and the chief operating officer of the OSFA, that establishes measurable

goals and objectives for the organization. Furthermore, oversight of the organization

is performed through annual reports submitted to Congress through the Secretary,

who maintains authority to direct the PBO in the implementation of its functions.

(...continued)

governmental functions. See U.S. Library of Congress, Congressional Research Service,

Federal Government Corporations: An Overview, by (name redacted), CRS Report RL30365

(Washington: Nov. 1, 2000).

U.S. Congress, House Committee on Government Reform and Oversight, Oversight of

Performance-Based Organizations, hearing, 105th Cong., 1st sess., July 8, 1997 (Washington:

GPO, 1998), p. 5.

Alasdair Roberts, “Performance Based Organizations: Assessing the Gore Plan,” Public

Administration Review, vol. 57, November-December 1997, p. 470.

112 Stat. 1581, at 1604; see Brian Friel, “Congress Creates Performance-Based

Organization,” available at [http://www.govexec.com/dailyfed/0798/071498b1.htm].

CRS-23

The OSFA example highlights the difficulties that the NPR had in converting

government agencies into PBOs. While the Administration had long sought to

convince Congress to convert the PTO and Saint Lawrence Seaway Development

Corporation to PBO status, the Department of Education proposal was easily

accepted. In the House, the Higher Education Amendments of 1998 were adopted

on a 414-4 vote, and in the Senate, they were approved on a 96-1 vote.

Subsequently, the conference report was passed by the House on a voice vote and by

the Senate on a 96-0 recorded vote. The ease of passage may be attributed to the

genesis of this particular initiative. Although the PBO model had been developed and

promoted by the Administration, the initiative for the creation of OSFA came from

the Republicans on the House Committee on Education and the Workforce, which

adapted the Administration’s idea and applied it to the financial aid services.

The creation of the first PBO revitalized Administration efforts to reinvent

government by marketizing governmental functions. In February 1999, the President’s

FY2000 budget indicated that the PTO, Defense Commissary Agency, U.S. Mint, and

Seafood Inspection Service, which had been proposed for conversion to PBO status

in past years, would be offered again as PBO candidates in the 106th Congress.

Other entities recommended for PBO status were the Rural Telephone Bank, the

National Technical Information Service, and the Federal Lands Highway Program.

Late in 1999, the President signed a consolidated appropriations bill that included the

American Inventors Protection Act, which reorganized the PTO as an independent

agency within the Department of Commerce, but, contrary to the claim of the

reconstituted PTO, did not transform it, in the view of many analysts, into a PBO.89

In the closing weeks of his tenure, President Clinton, with E.O. 13180 of

December 7, 2000, directed the Secretary of Transportation, consistent with his legal

authorities, to establish a PBO—to be known as the Air Traffic Organization

(ATO)—within the Federal Aviation Administration (FAA).90 He had recommended

the establishment of such an entity to Congress in 1997 and, more recently, in his

FY2001 budget, but legislators had shown little interest in the proposal. Intended to

produce more efficient management of air traffic services at a time when airline delays

and cancellations were mounting, the new ATO would count some 37,000 FAA

employees engaged in air traffic control, air traffic facilities maintenance and repair,

and selected research and acquisitions activities. However, the statutorily mandated

Chief Operating Office of the current Air Traffic Control System was to head the

ATO, a feature differing from the PBO model advanced by the NPR in 1996.

There were indications in May 2001 that the successor Bush Administration was

interested in converting the Department of State’s Foreign Buildings Operation, which

serves as the landlord for U.S. facilities overseas, into a PBO.

See 113 Stat. 1537-574.

See Federal Register, vol. 65, Dec. 11, 2000, pp. 77493-77494.

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The Report Cards and Beyond

In a late 1998 website bulletin, NPR staff summarized the organization’s 19931998 accomplishments. Coupling this summary with the NPR’s agenda suggests that

the NPR measures succeeded in a number of ways. Included as indicators of success

were cost savings, decreased “red tape” and regulations, downsizing, the use of

reinvention principles by federal employees, and the creation of laws based on NPR

recommendations. The summary proffered the following major accomplishments of

the NPR.

! Savings total[ing] $137 billion.

! Federal agencies have published more than 4,000 customer service standards for more

than 570 organizations and programs.

! Agencies have eliminated more than 16,000 pages of regulations. President Clinton

signed an Executive Order requiring rules and other public documents to be written

in plain language.

! Government was reduced by 351,000 positions. Reductions occurred in 13 of 14

departments. (Justice increased crime fighting.)

! More than 12,000 Hammer Awards have been presented to teams of federal workers

and their partners in industry and state and local governments for using reinvention

principles to create a government that works better, costs less, and delivers results

Americans care about.

! About 340 reinvention labs are reengineering government processes and using

technology to unleash innovations that excite customers and employees alike with

more flexible internal systems and improved services to the public.

! The Congress has passed and President Clinton has signed more than 83 laws so far

enacting NPR recommendations.91

These indicators and measures of success, however, were not accepted in some

quarters. For example, in a July 1999 report, the GAO questioned the amount of

savings claimed by the NPR, saying:

NPR claimed savings from agency-specific recommendations that could not be

fully attributed to its efforts. In general, the savings estimates we reviewed could

not be replicated, and there was no way to substantiate the savings claimed. We

also found that some savings were overstated because OMB counted savings

twice, and two of the estimates were reported incorrectly, resulting in claims that

were understated.92

National Partnership for Reinventing Government, Summary of Accomplishments, 19931998;modified

and

updated

version

available

[http://govinfo.library.unt.edu/npr/whoweare/appendixf.html].

U.S. General Accounting Office, NPR’s Savings: Claimed Agency Savings Cannot All Be

(continued...)

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The NPR was concerned with downsizing as a way to combat “big government”

and to make government work better and cost less. However, one seasoned observer

states, these downsizing efforts proved detrimental to morale among government

employees and failed to win political favor with the American public.93 This

downsizing produced larger cuts in the front-line government employees than in the

middle levels of federal government. This development was contrary to the

Administration’s promise to cut middle management, who “pushed paper and

contributed to the bureaucracy,” and to preserve the top managers, who made

decisions, and the front-line employees, who delivered the services.94

This observer, Donald Kettl, gave the NPR and its government reinvention

efforts a favorable review and an overall grade of B. He acknowledged that the NPR

had forged new ground, sustained the reinvention effort, and realized important

accomplishments. Among these, he gave procurement reform an A and the NPR an

A+ for effort. However, he gave the NPR a D for identifying the objectives of

government and for relations with Congress. Incomplete grades were assigned for

improving results in “high impact” programs and for service coordination.95

While Kettl delivered a favorable, yet, critical, review of the NPR, he brought

to light important challenges that the organization would have to grapple with in order

to continue reinvention efforts in the remaining months of the Clinton Administration.

He indicated that perhaps the greatest challenge to the NPR’s efforts had been a

guarded and, sometimes, resistant Congress.

[T]he NPR’s strategy of integrating government services conflicted with

Congress’s traditional—and fragmented—committee jurisdictions. For the NPR’s

first 18 months, a not always friendly Democratic Congress saw little reason to

tangle with management reform while fighting battles on health care and other

Clinton proposals. For the next three years, a Republican Congress has no interest

in acting on initiatives put forward by the leading candidate for the Democratic

party’s 2000 presidential nomination.96

However, Congress has not been the only entity to challenge NPR reinvention

efforts. Resistance also exists within the executive branch. Kettl further found that

the NPR failed to enlist support for reinvention from the Administration’s own

political appointees and from senior career civil servants. This failure, he noted,

produced an NPR campaign with uneven effects among the agencies, particularly

where appointed leaders failed to connect with the reinvention effort.97 Moreover,

executive branch concerns about deregulation and PBOs have delayed the

implementation of the Administration’s PBO plan. “The delay,” according to one

(...continued)

Attributed to NPR, GAO Report GAO/GGD-99-120 (Washington: July 1999), p. 13.

See Donald F. Kettl, Reinventing Government: A Fifth Year Report Card, pp. 5, 34.

See Ibid., pp. 19-20.

See Ibid., p. ix.

Ibid., p. 34.

Ibid.

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observer, “is largely attributable to difficulties in resolving internal disagreements

about the legislative freedoms that ought to be given to these organizations.”98 This

has been exacerbated by the ambivalence of central management agencies and the

reluctance of parent departments to give greater autonomy and flexibility to their

agencies.

Successes, Problems, and Remaining Questions

Just before the NPR began its final year of activities and operations, it crafted.

In late 1998, a two-year strategy designed to “forever change government” through

five initiatives.

! Achieve outcomes no one agency can achieve alone.

! Agencies use a balanced set of measures.

! Create an electronic government.

! Transform agencies with the greatest impact on Americans.

! Mobilize America’s real heroes to get the message out.99

Although the realization of this plan required more time than would be available

to the NPR, what may be said, in the aftermath of the NPR experience, about its

legacy—successes, problems, and remaining questions?

Successes

Concerning successes, Peri E. Arnold, a veteran analyst of federal reorganization

and reform efforts, has suggested that the NPR be considered in terms of the

implementation of its specific recommendations, the instillation of “a new culture of

administration within the executive branch,” and the creation of “a centrist coalition

to support” the leadership of “a pragmatic Democratic president.”100

Reviewing the record concerning the implementation of NPR recommendations,

Arnold offered the following summary of the situation.

In reports issued in December 1994 and again in June 1996, the GAO tracked

adoption of the NPR’s September 1993 recommendations. The 1994 GAO

assessment of the adoption of the September 1993 NPR recommendations found

that there had been some implementation action taken on 93 percent of those

recommendations; of these 4 percent had been fully implemented, 37 percent had

Alasdair Roberts, “Performance Based Organizations: Assessing the Gore Plan,” p. 470.

John Kamensky, “A Brief History,” National Partnership for Reinventing Government

(Washington:

January

1999),

pp.

6-9,

available

[http://govinfo.library.unt.edu/npr/whoweare/historyofnpr.html]; Bill Landauer, “Gore’s NPR

Must Reform Itself to Survive,” Federal Times, Sept. 6, 1999, p. 5.

100

Peri E. Arnold, Making the Managerial Presidency, p. 419.

CRS-27

been partially implemented, and 50 percent had begun implementation. Another

2 percent had been acted upon in a way consistent with the recommendations’

purposes, 2 percent could not be assessed given limited information, and only 5

percent of the recommendations had seen no action at all. In a 1996 study the

GAO confined examination to just those recommendations for which adoption had

been claimed in the September 1995 Common Sense Government [report]. That

second annual NPR progress report claimed that a third of its recommended

actions had been completed. The GAO’s report demurred, finding that 24 percent

of the recommendations had been fully implemented (and with most others still in

progress, as had been reported by the GAO in 1994). Thus, in one year the rate

of completion of recommendations had grown from 4 percent to 24 percent, and

there seemed general support for action on many of the remaining

recommendations.101

To this record of implementation or partial implementation of many NPR

recommendations may be added some other concrete achievements. For example, as

Arnold noted, while agency action accounted for the implementation of at least 292

recommendations, the NPR was not completely lacking in legislative success.

Legislative action was the second most common means of implementation [of NPR

recommendations]. By December 1994, 169 of the recommendations were

introduced within legislation and 83 recommendations were enacted. Presidential

actions addressed at least 86 recommendations. Also, congressional support for

reinvention continued into the Republican Congress after 1994. There was a

substantial synergy between the new Republican agenda for reducing government

and the NPR’s recommendations for simplifying government. Thus legislation

such as the Unfunded Mandate Reform Act of 1995, the Small Business Lending

Enhancement Act of 1995, and several of the 1996 appropriations acts

incorporated NPR recommendations.102

The NPR later reported that, as of March 1998, for those recommendations

requiring presidential or congressional action, “President Clinton signed 46 directives

and Congress passed and the President signed over 85 laws.”103

Another accomplishment proffered by the NPR: cutting the federal workforce

by 351,000 positions, making it “the smallest since Kennedy held office and, as a

percentage of the national workforce, the smallest since 1931.”104 Donald Kettl noted

that “careful analysis of the long-term employment trends shows that downsizing in

the Pentagon began before the NPR’s launch,” and “cynics contended that the NPR

simply ratified reductions in the Defense Department’s civilian work force that were

101

Ibid., pp. 419-420; the GAO reports mentioned are U.S. General Accounting Office,

Management Reform: Implementation of the National Performance Review’s

Recommendations, GAO Report GAO/OCG-95-1 (Washington: December 1994); U.S.

General Accounting Office, Management Reform: Completion Status of Agency Actions

Under the National Performance Review, GAO Report GAO/GGD-96-94 (Washington: June

1996).

102

Peri E. Arnold, Making the Managerial Presidency, pp. 421-422.

103

John Kamensky, “A Brief History,” p. 5.

104

Ibid.

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going to occur anyway.” Nonetheless, he concluded that, “if the NPR accomplished

nothing else, it certainly produced a substantial and sustained reduction in federal

employment—virtually across the board—in a way never before seen in the federal

government.”105

One other achievement that the NPR reported was the elimination of some

640,000 pages of internal agency rules and about 16,000 pages of federal regulations,

with another 31,000 pages being rewritten in plain language.106

Additionally, the NPR claimed cost savings totaling about $137 billion as a result

of its efforts, although that figure was recently contested by GAO. Nonetheless, Kettl

advised:

While the NPR unquestionably produced cost savings, especially in procurement

and reduction in government employment, assessing which of the NPR’s

recommendations produced how much savings is a virtually impossible job. In

part, this is because it usually proved difficult to predict what costs would have

been without the NPR. In part, this is because the government’s cost account

systems frequently make such analyses impossible. 107

Another consideration offered by Arnold regarding the success of the NPR

concerned the instillation of “a new culture of administration within the executive

branch.” Arnold commented:

Predecessor comprehensive reform efforts have been static. They attempted a

wave of reforms at a point in time, aiming at enhancing presidential managerial

capacities and streamlining federal administrative structure and processes. In

contrast, the NPR seeks to be dynamic. To the degree that anything unites its

recommendations, the NPR’s advocates understand its reforms as creating a

changed economy of incentives within federal administration such that individuals

will be motivated to be creative about the way they work, more productive in their

work, and more responsible for the success of their organization. In the

vocabulary of reinvention, the attitudes consistent with reinvention’s economy of

incentives would constitute a new administrative culture. 108

Concrete achievements claimed in this area include the honoring of over 1,200

federal innovation teams with the Vice President’s Hammer Award and the creation

of over 350 Reinvention Labs to test ways that agencies could improve their

performance and customer service by reengineering work processes and eliminating

unnecessary regulations.109 Reporting on the Reinvention Labs in March 1996, the

GAO indicated that “the labs’ results suggest a number of promising approaches to

improving existing agency work processes,” but noted that “the real value of the labs

105

Donald F. Kettl, Reinventing Government: A Fifth-Year Report Card, p. 18 (emphasis in

original).

106

John Kamensky, “A Brief History,” p. 5.

107

Donald F. Kettl, Reinventing Government: A Fifth-Year Report Card, p. 22.

108

Peri E. Arnold, Making the Managerial Presidency, p. 423.

109

John Kamensky, “A Brief History,” p. 5.

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will be realized only when the operational improvements they initiated, tested, and

validated achieved wider adoption.”110

Another success cited was the commitment of over 570 federal organizations to

more than 4,000 customer service standards.111

Finally, regarding Arnold’s third consideration, how successful had the NPR

been in creating “a centrist coalition to support” the leadership of President Clinton?

Arnold commented:

Bill Clinton initiated the NPR to address a governing context that was

substantially different from that in which presidents had earlier used administrative

reform to construct the managerial presidency. The emergent context of the late

20th century is fragmented and characterized by weak parties, mercurial interest

groupings, weakened public institutions, and a technology allowing intense and

pervasive public focus on presidents. Like Carter and Reagan before him, Clinton

sought to use administrative reform in this emerging context to respond to public

hostility toward government.112

Perhaps the NPR bespeaks success in this regard when reporting:

Most importantly, public trust in the federal government is finally increasing

after a 30-year decline. Various polls have shown a clear and steady increase over

the past four years. While it is not clear this is directly linked to the results of

reinvention, we believe reinvention has made an important contribution.113

Arnold, however, appeared to be more certain about this area of success, and

concluded:

The reinvention of government has been a side show in some respects. After all,

administrative reform is “a second-level issue” in presidential politics. However,

reinvention is an enterprise that reflects well upon Clinton and Gore. It reinforces

their own optimal self-descriptions and gives testimony that these leaders are

addressing the problems that trouble most Americans.114

In September 2000, a GAO report concluded that the NPR reinvention effort had

been largely successful, with more than 90% of key Clinton Administration

recommendations having been fully or partly implemented. The report was based

110

U.S. General Accounting Office, Management Reform: Status of Agency Reinvention Lab

Efforts, GAO Report GAO/GGD-96-69 (Washington: March 1996), p. 3.

111

John Kamensky, “A Brief History,” p. 5.

112

Peri E. Arnold, Making the Managerial Presidency, p. 433.

113

John Kamensky, “A Brief History,” p. 5.

114

Peri E. Arnold, Making the Managerial Presidency, p. 434.

CRS-30

upon a review of 72 NPR recommendations by 10 federal agencies, and found that 33

of them were fully implemented and another 30 were partly implemented.115

Problems

Some of the problems encountered by the NPR were noted previously and those

identified here should not be regarded as constituting an exhaustive list.

Although the NPR enjoyed some cooperation from Congress, as the legislative

record of NPR recommendations legislated into law indicates, the NPR does not

appear to have had a clear strategy for working with Congress. Most NPR

recommendations seem to have been implemented through a strategy of agency

acceptance and presidential orders. The overall record, Arnold observed, reflects

“Congress’s support for individual items” among the NPR recommendations “and its

disinterest in the NPR’s conception of reinvention.”116 Agreeing with this assessment,

Kettl concluded:

Efforts to develop legislative support for NPR initiatives have, with the exception

of procurement reform, been weak and ineffective. Support from Congress:

poor.117

The NPR’s efforts sometimes resulted in a loss of morale among federal civil

servants. Part of reason for this problem, as Kettl noted, was the tension between the

NPR’s emphasis, on the one hand, on downsizing and reengineering and, on the other

hand, customer service.

A flatter organization, driven by customer service, demands energetic and highly

motivated employees. A cost-cutting, reengineered and downsized operation often

discourages employees. Trying to do both risks putting the basic incentives at

cross purposes; focusing on either risks leaving the corporation stuck in old-style,

less productive approaches. The NPR took in the competing ideas without

fundamentally sorting them out.118

Coupling morale deflation with agency leadership in support of NPR reinvention

efforts, Kettl offered the following scenario.

In a 1996 survey conducted by the Merit Systems Protection Board, only 37

percent of federal employees believed that their organization had made reinvention

a top priority. The NPR’s management improvement goals penetrated far less into

the Pentagon than in civilian agencies. Morale in many agencies was poor. Only

20 percent of federal workers said that the NPR had brought positive change to

government. This response, however, varied directly with how much workers

115

U.S. General Accounting Office, Reinventing Government: Status of NPR

Recommendations at 10 Federal Agencies, GAO Report GAO/GGD-00-145 (Washington:

September 2000).

116

Peri E. Arnold, Making the Managerial Presidency, p. 422.

117

Donald F. Kettl, Reinventing Government: A Fifth-Year Report Card, p. ix.

118

Ibid., p. 9.

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believed that their agencies’ officials had made the NPR’s goals a top agency

priority. Where the NPR was a top priority, 59 percent of employees thought

productivity had improved; where it was not, just 32 percent saw productivity

improvements. The lesson: where agency managers promoted the NPR’s goals,

employees were three times more likely to think that government organizations had

made good use of their abilities. They were almost twice as likely to believe that

they had been given greater flexibility. The NPR succeeded in motivating

employees, quite predictably, to the degree to which top government officials made

this an important goal. Where they did not—and the survey suggests that the NPR

deeply penetrated only about a third of all federal agencies—the NPR became

known principally for its downsizing focus and consequently motivation lagged.119

Kettl also suggested that the NPR had a public confidence problem, including

both outreach or visibility and credibility.

A June 1998 Scripps Howard News Service survey showed that citizens tended not

to believe that the NPR had accomplished what it claimed. Although 54 percent

of those surveyed said that they had heard of reinventing government, 59 percent

did not believe that the administration had in fact reduced the number of federal

employees as the NPR claimed, even though those claims were fully accurate.

More respondents—61 percent—did not believe that the federal government had

become more efficient, even though there is a strong case for substantial

improvements. Coupled with the Republicans’ takeover of Congress in 1994 and

the NPR’s constant problems in gaining political traction for its message,

reinventing government ran headlong into tough confidence problems indeed.120

The NPR also had a problem framing its approach to, and focus on, reform. The

NPR effort lacked a theoretical base and cohesion among its broad range of ideas.

The NPR largely devoted its attention to the process of government rather than the

more basic questions of what government should do, which many experts believe

should come first. James D. Carroll, a public administration expert, observed:

In defining government as an appendage of the economy, the NPR strips the

federal government of what is distinctively governmental—ultimately enforcement

of binding norms through legitimate coercion to maintain a legal, normative order.

In treating government as a Wal-Mart, the NPR ignores the fact that many

operational assumptions based on customer service have implications for broader

systems of values such as the rule of law, representative government, separated

and shared powers, and individual liberty.121

Carroll also observed that the NPR gave no attention to the constitutional basis

of American national government or its significance for administration. Ultimately,

he concluded, these theoretical shortcomings resulted in some critical myopia in the

NPR reform effort.

119

Ibid., p. 17.

120

Ibid., p. 36.

121

James D. Carroll, “The Rhetoric of Reform and Political Reality in the National

Performance Review,” Public Administration Review, vol. 55, May-June 1995, p. 310.

CRS-32

Neither phase [I or II] of the NPR directly and systematically addresses

trends that probably will shape much of public administration in the early 21st

century. The first is the imbalance between consumption and savings and

investment in the United States marked by concern with deficits and debt,

entitlement spending, demographic change, and declining private and public

investment. The second is the challenge of sorting out relationships and

responsibilities among levels of government, and governments and other

organizations. The third is reconciling traditions of constitutional governance and

legal accountability with the search for flexibility, innovation, and productivity in

addressing managerial and programmatic issues.122

Kettl found there was a compounding effect to some of the NPR’s shortcomings.

NPR is most notable for its failure to grapple with ... basic organizational

issues. It reduced the number of supervisors without transforming federal

management practice. Its top officials preached the virtues of reducing middle

management just as the private sector was rediscovering the importance of middle

managers as “high-impact players.” The NPR failed to deal with the layering of

government and, especially, with the 3,000 political appointees that encrust the top

of the federal bureaucracy—for the obvious political reasons. That failure,

coupled with its failure to enlist those appointees aggressively in its cause, marked

a major shortcoming of the NPR. It also made it harder for the NPR to deliver on

its promise to downsize middle-level management en route to better customer

service. It is hard to reduce the distance from top managers to the shop floor when

the shop floor—those who actually deliver the government’s goods and

services—increasingly lies outside the government [as a consequence of

contracting out].123

Finally, in addition to prompting a downsizing of frontline federal employees, not

middle managers, and otherwise lowering the morale of many civil servants,124 the

NPR, Carroll noted, did “not propose a systematic agenda for rebuilding the career

service,” and its “overall message ... on the career service is ambivalent or

negative.”125

Remaining Questions

Two of Carroll’s comments concerning problems NPR engendered in its

reinvention effort suggest some matters that may continue to draw policymakers’

attention. The first of these involves addressing trends likely to shape much of public

debate in the early part of the 21st century—the imbalance between consumption and

savings and investment in the United States, entitlement spending, demographic

change, and declining private and public investment; sorting out relationships and

responsibilities among different levels of government as well as governments and

122

Ibid., p. 302.

123

Donald F. Kettl, Reinventing Government: A Fifth-Year Report Card, pp. 21-22.

124

See Ibid., pp. 19-20.

125

James D. Carroll, “The Rhetoric of Reform and Political Reality in the National

Performance Review,” p. 309.

CRS-33

other organizations; and reconciling traditions of constitutional governance and legal

accountability with realizing flexibility, innovation, and productivity in addressing

managerial and programmatic issues.

A second question concerns the need for a systematic agenda for rebuilding the

career civil service and pursuing that agenda to establish new policy. Addressing this

question at the end of 1999, James D. Carroll, noting that the NPR “postponed the

examination of some fundamental realities that future efforts to improve federal

management will have to address, suggested three items for the 21st century

management reform agenda. The first of these derived from “the decline of the

traditional administrative state and the rise of the entitlement state.” Carroll

commented:

In fiscal year 1962, 63 percent of federal spending was discretionary in that it was

appropriated on an annual basis in response to the President’s budget proposal.

In fiscal year 2000, only 33 percent of spending is discretionary. The remainder

is legally committed under entitlement, debt instrument, or other devices.

The administrative state of the 1930s and thereafter was based on a problemsolving model of public management. In this model, in response to constituent and

interest group pressures, politicians defined problems in legislative form. They

then assigned the problems to agencies. The agencies’ managers and technicians

then exercised their skill, judgment, professionalism, and discretion in planning,

budgeting, and otherwise defining and acting upon a problem. In the entitlement

state, the President and Congress establish program structures that constrain

managerial discretion as well as future legislative direction. Budgeting rules,

particularly the Budget Enforcement Acts, have reinforced the emergence of these

algorithmic structures and processes. The challenge for the next agenda for public

management is to determine how the entitlement state can be configured to allow

the exercise of managerial judgment and skills.126

A second item derived from “the emergence of Congress as a co-manager of the

administrative branch,” including government corporations and regulatory

commissions. In Carroll’s view, factors strengthening congressional influence over

administration included “the program structures and other provisions of the

entitlement state”; the congressional role in the budget process; and “the

aggressiveness of Congress in establishing a new, although somewhat fragmented,

framework for federal management in the 1990s,” with such laws as the Chief

Financial Officers Act, the Government Performance and Results Act, and the Federal

Financial Management Improvement Act, among others. The resulting agenda item

was “for the executive and Congress to sort out who is responsible for what in agency

and program management.”127

A third item Carroll cited arises from changes in constitutional law. “Federal

managers,” he said, “increasingly must understand the Supreme Court’s actions in

order to act effectively and legally.” Among these actions, the Court has held that

126

James D. Carroll, “An Agenda for Reforming Federal Management in the 21st Century,”

The Business of Government, Fall 1999, pp. 16-17.

127

Ibid., p. 17.

CRS-34

“privatization and related forms of the new public management are subject to

constitutional scrutiny”; “launched a fundamental re-examination of the distribution

of powers in the federal system, focused on questions of the limitations of the federal

government’s powers”; and “continued to hold individual public administrators liable

in money damages for their failure to consider the constitutional implications of their

actions under federal civil rights legislation and other provisions of law.”

Consequently, the item for the federal management reform agenda is “to develop new

public management frameworks that enable public managers to function effectively

in this new constitutional framework.”128

In testimony offered at a May 4, 2000, Senate Governmental Affairs

subcommittee hearing on reinventing government, a GAO representative identified six

“of the more important management problems that will confront the next Congress

and administration” in the period after the NPR effort:

! adopting an effective results orientation,

! coordinating crosscutting programs,

! addressing high-risk federal functions and programs,

! developing and implementing modern human capital practices,

! strengthening financial management, and

! enhancing computer security. 129

Reinvention downsizing of the federal workforce was seen as resulting in a

problematic legacy. According to the GAO witness:

the manner in which the downsizing was implemented has short- and long-term

implications that require continuing attention. The management control positions

NPR sought to decrease were barely reduced as a proportion of the workforce as

a whole, and at some agencies they increased.

In addition, our reviews have found that a lack of adequate strategic and

workforce planning during the initial rounds of downsizing by some agencies may

have affected their ability to achieve organizational missions. Some agencies

reported that downsizing in general led to such negative effects as a loss of

institutional memory and an increase in work backlogs. ...

128

Ibid.

129

U.S. Congress, Senate Committee on Governmental Affairs, Has Government Been

“Reinvented”?, hearing, 106th Cong., 2nd sess., May 4, 2000 (Washington: GPO, 2000), p. 34.

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Although we found that agencies’ planning for downsizing improved as their

downsizing efforts continued, it is by no means clear that the current workforce is

adequately balanced to properly execute agencies’ missions today.130

Continued improvements in acquisitions management were thought to be needed.

Reform efforts, including the Federal Acquisition Streamlining Act of 1994 and

the Clinger-Cohen Act of 1996, have focused principally on simplifying the

process for buying commercial products and services and on attempting to improve

decisionmaking in acquiring information technology.

Despite these reforms, however, the products and services the government

buys all too often cost more than expected, are delivered late, or fail to perform as

anticipated. No commercial business would remain viable for very long with

results like these. Problems are particularly evident in the two areas where most

of the dollars are spent—on weapons systems and information technology.

Significant improvements in these areas, as well as in the skills of the acquisition

workforce, are needed in order to produce better outcomes.131

Finally, it was also thought that the NPR’s initiatives to improve the federal

regulatory system by streamlining agency rulemaking and cutting regulations had, at

best, “yielded mixed results.”132

By implication, the comment by the GAO witness that prevailing management

problems “continue to demand attention” poses the question of a successor to the

NPR. Options include another temporary task force like the NPR, a temporary

national study commission on government reform, a designated unit in an existing

agency (e.g., OMB, GAO), or the creation of a new agency, such as an Office of

Management, perhaps vested with some of the management responsibilities currently

assigned to OMB.

Closure

The NPR continued operations until the final day of the Clinton Administration,

January 19, 2001. Documents available from the NPR Web site as of that closing

date were subsequently made available via the Internet through a Web site jointly

created and maintained by the Government Printing Office and the University of

North Texas Libraries to facilitate continued access to this electronic archival

repository ([http://govinfo.library.unt.edu/npr/default.html]).

130

Ibid., pp. 40-41.

131

Ibid., p. 42.

132

Ibid., p. 43.

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