Performance-Based Organizations: Assessing the Gore Plan

Abstract

In March 1996, Vice-President Gore announced a new initiative that would dramatically change the way federal agencies provide services to the public. Gore's proposal is to establish many service delivery functions' within the federal as performance-based organizations (PBO's). This model has two key elements: organizations would be freed from many of the laws, regulations, and policies that normally constrain managers within government; and new incentives would be created to improve performance. Executives working in performance-based organizations would be hired on short-term contracts, with pay and tenure contingent on their success in meeting annual performance targets (National Performance Review, 1996a, 6-7). This plan is modeled on a reform of the British public service begun by the of Prime Minister Margaret Thatcher in 1988. In the last eight years, most of the British civil service has been reorganized into a set of executive agencies that are given more flexibility in administration and expected to meet annual performance targets. The heads of these executive agencies are no longer career civil servants; instead, they are recruited from either the private or public sector, hired on limited-term contracts, and given performance-related pay. Similar reforms have been made within the New Zealand public service (Boston et al, 1996), and on a much smaller scale in Canada (Aucoin, 1995, 146-48). Ten organizations, accounting for about 2 percent of the federal civilian work force have been identified as candidates for this reform (Table 1). However, advocates of the plan suggest that it can be applied much more widely. David Osborne, a coauthor of Reinventing Government, says that three-quarters of the federal bureaucracy could be transformed into performance-based organizations by the year 2004 (1997, 97-98). A senior official of the Office of Management and Budget also says that significant areas of the federal government would benefit from this reorganization (Koskinen, 1996). During the 1996 election campaign, President Clinton suggested that hundreds of performance-based orgainizations might be established within the federal (Clinton, 1996). The President recently said that this plan will be a priority for his second term (OMB, 1997, 37). Table 1 Candidates for Performance-Based Organization Status Organization Department Patent and Trademark Office Commerce National Technical Information Service Commerce Defense Commissary Agency Defense Animal and Plant Health Inspection Service Agriculture Federal Housing Administration HUD Government National Mortgage Association HUD Office of Retirement Programs OPM St. Lawrence Seaway Development Corporation Transportation U.S. Mint Treasury Sea-food Inspection Program Commerce Organization 1996 FTEs Patent and Trademark Office 5,237 National Technical Information Service 406 Defense Commissary Agency 17,612 Animal and Plant Health Inspection Service 5,300 Federal Housing Administration 4,544 Government National Mortgage Association 72 Office of Retirement Programs 921 St. Lawrence Seaway Development Corporation 168 U.S. Mint 2,347 Sea-food Inspection Program 200 Organization Date Announced Patent and Trademark Office September 1995 National Technical Information Service September 1995 Defense Commissary Agency March 1996 Animal and Plant Health Inspection Service March 1996 Federal Housing Administration March 1996 Government National Mortgage Association March 1996 Office of Retirement Programs March 1996 St. …