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                    From Red Tape to Results


                    Creating a Government
                            that
                         Works Better
                         & Costs Less



                         Report of
             the National Performance Review


                    Vice President Al Gore


                      September 7, 1993




































Contents

Preface                                                     i

Introduction                                                1

Chapter 1 Cutting Red Tape                                  11

Step 1: Streamlining The Budget Process                     14
Step 2: Decentralizing Personnel Policy                     20
Step 3: Streamlining Procurement                            26
Step 4: Reorienting The Inspectors General                  31
Step 5: Eliminating Regulatory Overkill                     32
Step 6: Empower State And Local Governments                 35
Conclusion                                                  41

Chapter 2 Putting Customers First                           43
Step 1: Giving Customers A Voice--And A Choice              44
Step 2: Making Service Organizations Compete                54
Step 3: Creating Market Dynamics                            60
Step 4: Using Market Mechanisms To Solve Problems           62
Conclusion                                                  64

Chapter 3 Empowering Employees To Get Results               65
Step 1: Decentralizing Decisionmaking Power                 69
Step 2: Hold All Federal Employees Accountable For Results  72
Step 3: Giving Federal Workers The Tools
They Need To Do Their Jobs                                  77
Step 4: Enhancing The Quality Of Worklife                   84
Step 5: Forming A Labor-Management Partnership              87
Step 6: Exert Leadership                                    88
Conclusion                                                  91

Chapter 4 Cutting Back To Basics                            93
Step 1: Eliminate What We Don't Need                        94
Step 2: Collecting More                                     104
Step 3: Investing In Greater Productivity                   110
Step 4: Reengineering Programs To Cut Costs                 112
Conclusion                                                  120

Conclusion                                                  121

Endnotes                                                    125

Appendix A: --National Performance Review Major Recommendations
By Agency1
                                                            133

Appendix B: National Performance Review summary of savings
                                                            155
Appendix C: --National Performance Review Major Recommendations
Affecting Governmental Systems                              159


                                        September 7, 1993


The President
The White House
Washington, DC

Dear Mr. President,

       The National Performance Review, the intensive, 6-month
study of the federal government that you requested, has completed
its work.  This report represents the beginning of what must be,
and -- with your leadership -- will be, a long-term commitment to
change.  The title of this report reflects our goals: moving from
red tape to results to create a government that works better and
costs less.

       Many talented federal employees contributed to this
report, bringing their experience and insight to a difficult and
urgent task.  We sought ideas and advice from all across America:
from other federal workers, from state and local government
officials, from management experts, from business leaders, and
from private citizens eager for change. This report benefitted
greatly from their involvement, and we intend for them to benefit
from the reforms we are proposing here.

       It is your vision of a government that works for people,
cleared of useless bureaucracy and waste and freed from red tape
and senseless rules, that continues to be the catalyst for our
efforts.  We present this report to you confident that it will
provide an effective and innovative plan to make that vision a
reality.
                                        Sincerely,



                                        Al Gore
                                        Vice President


THE--VICE--PRESIDENT
WASHINGTON
















Preface

**********************************
We can no longer afford to pay more for--and get less from--our
government. The answer for every problem cannot always be another
program or more money. It is time to radically change the way the
government operates--to shift from top-down bureaucracy to
entrepreneurial government that empowers citizens and communities
to change our country from the bottom up. We must reward the
people and ideas that work and get rid of those that don't.
Bill Clinton and Al Gore
Putting People First1
***********************************

     The National Performance Review is about change--historic
change--in the way the government works. The Clinton
administration believes it is time for a new customer service
contract with the American people, a new guarantee of effective,
efficient, and responsive government. As our title makes clear,
the National Performance Review is about moving from red tape to
results to create a government that works better and costs less.
     These are our twin missions: to make government work better
and cost less. The President has already addressed the federal
deficit with the largest deficit reduction package in history.
The National Performance Review can reduce the deficit further,
but it is not just about cutting spending. It is also about
closing the trust deficit: proving to the American people that
their tax dollars will be treated with respect for the hard work
that earned them. We are taking action to put America's house in
order.
     The National Performance Review began on March 3, 1993, when
President Clinton announced a 6-month review of the federal
government and asked me to lead the  effort. We organized a team
of experienced federal employees from all corners of the
government--a marked change from past efforts, which relied on
outsiders.
     We turned to the people who know government best--who know
what works, what doesn't, and how things ought to be changed. We
organized these people into a series of teams, to examine both
agencies and cross-cutting systems, such as budgeting,
procurement, and personnel. The President also asked all cabinet
members to create Reinvention Teams to lead transformations at
their departments, and Reinvention Laboratories, to begin
experimenting with new ways of doing business. Thousands of
federal employees joined these two efforts.

     But the National Performance Review did not stop there. From
the beginning, I wanted to hear from as many Americans as
possible. I spoke with federal employees at every major agency
and at federal centers across the country--seeking their ideas,
their input, and their inspiration. I visited programs that work:
a Miami school that also serves as a community center, a
Minnesota pilot program that provides benefits more efficiently
by using technology and debit cards, a Chicago neighborhood that
has put community policing to work, a U.S. Air Force base that
has made quality management a way of life.

     We also heard from citizens all across America, in more than
30,000 letters and phone calls. We sought the views of hundreds
of different organizations, large and small. We learned from the
experience of state and local leaders who have restructured their
organizations. And we listened to business leaders who have used
innovative management practices to turn their companies around.
     At a national conference in Tennessee, we brought together
experts to explore how best to apply the principles of
reinventing government to improving family services. In
Philadelphia's Independence Square, where our government was
born, we gathered for a day-long "Reinventing Government Summit''
with the best minds from business, government, and the academic
community.

     This report is the first product of our efforts. It
describes roughly 100 of our most important actions and
recommendations, while hundreds more are listed in the appendices
at the end of this report. In the coming months, we will publish
additional information providing more detail on those
recommendations.
     This report represents the beginning of what will be--what
must be--an ongoing commitment to change. It includes actions
that will be taken now, by directive of the President; actions
that will be taken by the cabinet secretaries and agency heads;
and recommendations for congressional action.

     The National Performance Review focused primarily on how
government should work, not on what it should do.  Our job was to
improve performance in areas where policymakers had already
decided government should play a role. We examined every cabinet
department and 10 agencies. At two departments, Defense and
Health and Human Services, our work paralleled other large-scale
reviews already under way. Defense had launched a Bottom-Up
Review to meet the President's 1994-1997 spending reduction
target. In addition, comprehensive health and welfare reform task
forces had been established to make large-scale changes in
significant  parts of Health and Human Services. Nevertheless, we
made additional recommendations in both these departments and
passed other findings on to the relevant task force for review.

     The National Performance Review recommendations, if enacted,
would produce savings of $108 billion over 5 years. As the table
below indicates, $36.4 billion of these savings come from
specific changes proposed in the agencies and departments of the
government.

     We also expect that the reinventions we propose will allow
us to reduce the size of the civilian, non-postal workforce by 12
percent over the next 5 years. This will bring the federal
workforce below two million employees for the first time since
1967. This reduction in the workforce will total 252,000
positions--152,000 over and above the 100,000 already promised by
President Clinton.

     Most of the personnel reductions will be concentrated in the
structures of over-control and micromanagement that now bind the
federal government: supervisors, headquarters staffs, personnel
specialists, budget analysts, procurement specialists,
accountants, and auditors. These central control structures not
only stifle the creativity of line managers and workers, they
consume billions per year in salary, benefits, and administrative
costs. Additional personnel cuts will result as each agency
reengineers its basic work processes to achieve higher
productivity at lower costs--eliminating unnecessary layers of
management and nonessential staff.

     We will accomplish as much of this as possible through
attrition, early retirement, and a time-limited program of cash
incentives to leave federal service. If an employee whose job is
eliminated cannot take early retirement and elects not to take a
cash incentive to leave government service, we  will help that
employee find another job offer through out-placement assistance.

     In addition to savings from the agencies and savings in
personnel we expect that systematic reform of the procurement
process should reduce the cost of everything the government buys.
Our antiquated procurement system costs the government in two
ways: first, we pay for all the bureaucracy we have created to
buy things, and second, manufacturers build the price of dealing
with this bureaucracy into the prices they charge us. If we
reform the procurement system, we should be able to save $22
billion over 5 years.

     As everyone knows, the computer revolution allows us to do
things faster  and more cheaply than we ever have  before.
Savings due to consolidation and modernization of the information
infrastructure amount to $5.4 billion over  5 years. Finally, by
simplifying paperwork and reducing administrative costs, we
expect to save $3.3 billion over 5 years in the cost of
administering grant programs to state and local governments.

     Many of the spending cuts we propose can be done by
simplifying the internal organization of our departments and
agencies. Others will require legislation. We recognize that
there is broad support in Congress for both spending cuts and
government reforms, and we look forward to working with Congress
to pass this package of recommendations. As President Clinton
said when he announced the National Performance Review:

     This performance review is not about politics. Programs
passed by both Democratic presidents and Republican presidents,
voted on by members of Congress of both parties, and supported by
the American people at the time, are being undermined by an
inefficient and outdated bureaucracy, and by our huge debt. For
too long the basic functioning of the government has gone
unexamined. We want to make improving the way government does
business a permanent part of how government works, regardless of
which party is in power.

     We have not a moment to lose. President Kennedy once told a
story about a French general who asked his gardener to plant a
tree. "Oh, this tree grows slowly," the gardener said. "It won't
mature for a hundred years."

     "Then there's no time to lose," the general answered. "Plant
it this afternoon."


Al Gore
Vice President of the United States


************************************************************** *
Clinton/Gore NPR Savings
(FY-1995-1999 $ in Billions)
Agencies                                                    36.4
Streamlining the Bureaucracy                                40.4
through Reengineering
Procurement                                                 22.5
     5% annual savings in total
       procurement spending

Information Technology                                      5.4
    Savings due to consolidation and
       modernization of the information
       infrastructure

Intergovernmental                                           3.3
 Offer fee-for-service option in lieu
    of existing administrative costs
Total                                                       108
(For a fuller description see Appendix A and Appendix B.)

*****************************************************************





Introduction

******************************
Our goal 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 entitlement
toward initiative and empowerment. We intend to redesign,  to
reinvent, to reinvigorate the entire national government."
President Bill Clinton
Remarks announcing the National Performance Review
March 3, 1993
*****************************

     Public confidence in the federal government has never been
lower. The average American believes we waste 48 cents of every
tax dollar. Five of every six want "fundamental change" in
Washington. Only 20 percent of Americans trust the federal
government to do the right thing most of the time--down from 76
percent 30 years ago.1

     We all know why. Washington's failures are large and
obvious. For a decade, the deficit has run out of control. The
national debt now exceeds $4 trillion--$16,600 for every man,
woman, and child in America.

     But the deficit is only the tip of the iceberg. Below the
surface, Americans believe, lies enormous unseen waste. The
Defense Department owns more than $40 billion in unnecessary
supplies.2 The Internal Revenue Service struggles to collect
billions in unpaid bills. A century after industry replaced
farming as America's principal business, the Agriculture
Department still operates more than 12,000 field service offices,
an average of nearly 4 for every county in the nation--rural,
urban, or suburban. The federal government seems unable to
abandon the obsolete. It knows how to add, but not to subtract.
     And yet, waste is not the only problem. The federal
government is not simply broke; it is broken. Ineffective
regulation of the financial industry brought us the savings and
loan debacle. Ineffective education and training programs
jeopardize our competitive edge. Ineffective welfare and housing
programs undermine our families and cities.

     We spend $25 billion a year on welfare, $27 billion on food
stamps, and $13 billion on public housing--yet more Americans
fall into poverty every year.3 We spend $12 billion a year waging
war on drugs--yet see few signs of victory. We fund 150 different
employment and training programs--yet the average American has no
idea where to get job training, and the skills of our workforce
fall further behind those of our competitors.4

     It is almost as if federal programs were designed not to
work. In truth, few are "designed" at all; the legislative
process simply churns them out, one after another, year after
year. It's little wonder that when asked if "government always
manages to mess things up," two-thirds of Americans say "yes."5
     To borrow the words of a recent Brookings Institution book,
we suffer not only a budget deficit but a performance deficit.6
Indeed, public opinion experts argue that we are suffering the
deepest crisis of faith in government in our lifetimes. In past
crises- -Watergate or the Vietnam War, for example--Americans
doubted their leaders on moral or ideological grounds. They felt
their government was deceiving them or failing to represent their
values. Today's crisis is different: people simply feel that
government doesn't work.7

     In Washington, debate rarely focuses on the performance
deficit. Our leaders spend most of their time debating policy
issues. But if the vehicle designed to carry out policy is
broken, new policies won't take us anywhere. If the car won't
run, it hardly matters where we point it; we won't get there.
Today, the central issue we face is not what government does, but
how it works.

******************************
We need a federal government that delivers more for less. We need
a federal government that treats its taxpayers as if they were
customers and treats taxpayer dollars with respect for the sweat
and sacrifice that earned them.

Vice President Al Gore
May 24, 1993
******************************

     We have spent too much money for programs that don't work.
It's time to make our government work for the people, learn to do
more with less, and treat taxpayers like customers.

     President Clinton created the National Performance Review to
do just that. In  this report we make hundreds of recommendations
for actions that, if implemented, will revolutionize the way the
federal government does business.  They will reduce waste,
eliminate unneeded bureaucracy, improve service to taxpayers, and
create a leaner but more productive government. As noted in the
preface, they can save $108 billion over 5 years if those which
will be enacted by the President and his cabinet are added to
those we propose for enactment by Congress. Some of these
proposals can be enacted by the President and his cabinet, others
will require legislative action. We are going to fight for these
changes. We are determined to create a government that works
better and costs less.


A Cure Worse Than The Disease

     Government is not alone in its troubles. As the Industrial
Era has given way to the Information Age, institutions--both
public and private--have come face to face with obsolescence. The
past decade has witnessed profound restructuring: In the 1980s,
major American corporations reinvented themselves; in the 1990s,
governments are struggling to do the same.

     In recent years, our national leaders responded to the
growing crisis with traditional medicine. They blamed the
bureaucrats. They railed against "fraud, waste, and abuse." And
they slapped ever more controls on the bureaucracy to prevent it.
But the cure has become indistinguish-able from the disease. The
problem is not lazy or incompetent people; it is red tape and
regulation so suffocating that they stifle every ounce of
creativity. No one would offer a drowning man a drink of water.
And yet, for more than a decade, we have added red tape to a
system already strangling in it.

     The federal government is filled with good people trapped in
bad systems: budget systems, personnel systems, procurement
systems, financial management systems, information systems. When
we blame the people and impose more controls, we make the systems
worse. Over the past 15 years, for example, Congress has created
within each agency an independent office of the inspector
general. The idea was to root out fraud, waste, and abuse. The
inspectors general have certainly uncovered important problems.
But as we learned in conversation after conversation, they have
so intimidated federal employees that many are now afraid to
deviate even slightly from standard operating procedure.

     Yet innovation, by its nature, requires deviation.
Unfortunately, faced with so many controls, many employees have
simply given up. They do everything by the book- -whether it
makes sense or not. They fill out forms that should never have
been created, follow rules that should never have been imposed,
and prepare reports that serve no purpose--and are often never
even read. In the name of controlling waste, we have created
paralyzing inefficiency. It's time we found a way to get rid of
waste and encourage efficiency.


The Root Problem:  Industrial-Era Bureaucracies  in an
Information Age

     Is government inherently incompetent? Absolutely not. Are
federal agencies filled with incompetent people? No. The problem
is much deeper: Washington is filled with organizations designed
for an environment that no longer exists--bureaucracies so big
and wasteful they can no longer serve the American people.
     From the 1930s through the 1960s,  we built large, top-down,
centralized bureaucracies to do the public's business. They were
patterned after the corporate structures of the age: hierarchical
bureaucracies in which tasks were broken into simple parts, each
the responsibility of a different layer of employees, each
defined by specific rules and regulations. With  their rigid
preoccupation with standard operating procedure, their vertical
chains of command, and their standardized services, these
bureaucracies were steady--but slow and cumbersome. And in
today's world of rapid change, lightning-quick information
technologies, tough global competition, and demanding customers,
large, top-down bureaucracies--public or private--don't work very
well. Saturn isn't run the way General Motors was. Intel isn't
run the way IBM was.

**************************
Our people, of course, work hard for their money.... They want
quality in the cars they buy. They want quality in their local
schools. And they want quality in their federal government and in
federal programs.

Senator John Glenn
Remarks introducing a hearing
on federal planning and performance
May 5, 1992
**************************


     Many federal organizations are also monopolies, with few
incentives to innovate or improve. Employees have virtual
lifetime tenure, regardless of their performance. Success offers
few rewards; failure, few penalties. And customers are captive;
they can't walk away from the air traffic control system or the
Internal Revenue Service and sign up with a competitor. Worse,
most federal monopolies receive their money without any direct
input from their customers. Consequently, they try a lot harder
to please Congressional appropriations subcommittees than the
people they are meant to serve. Taxpayers pay more than they
should and get poorer service.

     Politics intensifies the problem. In Washington's highly
politicized world, the greatest risk is not that a program will
perform poorly, but that a scandal will erupt. Scandals are
front-page news, while routine failure is ignored. Hence control
system after control system is piled up  to minimize the risk of
scandal. The  budget system, the personnel rules, the procurement
process, the inspectors general--all are designed to prevent the
tiniest misstep. We assume that we can't trust employees to make
decisions, so we spell out in precise detail how they must do
virtually everything, then audit them to ensure that they have
obeyed every rule. The slightest deviation prompts new
regulations and even more audits.

     Before long, simple procedures are too complex for employees
to navigate, so we hire more budget analysts, more personnel
experts, and more procurement officers to make things work. By
then, the process involves so much red tape that the smallest
action takes far longer and costs far more than it should. Simple
travel arrangements require endless forms and numerous
signatures. Straightforward purchases take months; larger ones
take years. Routine printing jobs can take dozens of approvals.
     This emphasis on process steals resources from the real job:
serving the customer. Indeed, the federal government spends
billions paying people who control, check up on, or investigate
others--supervisors, headquarters staffs, budget officers,
personnel officers, procurement officers, and staffs of the
General Accounting Office (GAO) and the inspectors general.8 Not
all this money is wasted, of course. But the real waste is no
doubt larger, because the endless regulations and layers of
control consume every employee's time. Who pays? The taxpayer.
*******************************
During Vice President Gore's town hall meeting with employees of
the Department of Housing and Urban Development (HUD), the
following exchange took place:

Participant: We had an article in our newsletter several months
ago that said -- the lead story was "I'd rather have a lobotomy
than have another idea." And that was reflecting the problem of
our Ideas Program here in HUD.

Many of the employees have wonderful ideas about how to save
money and so on, but the way it works is that it has to be
approved by the supervisor and the supervisor's supervisor and
the supervisor's supervisor's supervisor before it ever gets to
the Ideas Program ...

Many of the supervisors feel threatened because they didn't think
of this idea, and this money is wasted in their office, and they
didn't believe or didn't know it was happening and didn't catch
it.  So they are threatened and feel that it will make them look
bad if they recognize the idea.

Vice President Gore: So they strangle that idea in the crib,
don't they? Participant: And then they strangle the person that
had the idea.

Participant: And then they strangle the person that had the idea.
***************************************

     Consider but one example, shared with Vice President Gore at
a meeting of federal employees in Atlanta. After federal marshals
seize drug dealers' homes, they are allowed to sell them and use
the money to help finance the war on drugs. To sell the houses,
they must keep them presentable, which includes keeping the lawns
mowed. In Atlanta, the employee explained, most organizations
would hire neighborhood teenagers to mow a lawn for $10. But
procurement regulations require the U.S. Marshals Service to bid
out all work competitively, and neighborhood teenagers don't
compete for contracts. So the federal government pays $40 a lawn
to professional landscape firms. Regulations designed to save
money waste it, because they take decisions out of the hands of
those responsible for doing the work. And taxpayers lose $30 for
every lawn mowed.

     What would happen if the marshals  used their common sense
and hired neighborhood teenagers? Someone would notice--perhaps
the Washington office, perhaps the inspector general's office,
perhaps even the GAO. An investigation might well
follow--hindering a career or damaging a reputation.

     In this way, federal employees quickly learn that common
sense is risky--and creativity is downright dangerous. They learn
that the goal is not to produce results, please customers, or
save taxpayers' money, but to avoid mistakes. Those who dare to
innovate do so quietly.

     This is perhaps the saddest lesson learned by those who
worked on the National Performance Review: Yes, innovators exist
within the federal government, but many work hard to keep their
innovations quiet. By its nature, innovation requires a departure
from standard operating procedure. In the federal government,
such departures invite repercussions.

     The result is a culture of fear and resignation. To survive,
employees keep a low profile. They decide that the safest answer
in any given situation is a firm "maybe." They follow the rules,
pass the buck, and keep their heads down. They develop what one
employee, speaking with Vice President Gore at a Department of
Veterans Affairs meeting, called "a government attitude."


The Solution: Creating Entrepreneurial Organizations

     How do we solve these problems? It won't be easy. We know
all about government's problems, but little about solutions. The
National Performance Review began by compiling a comprehensive
list of problems. We had the GAO's 28-volume report on federal
management problems, published last fall. We had GAO's High-Risk
Series, a 17-volume series of pamphlets on troubled programs and
agencies. We had the House Government Operations Committee's
report on federal mismanagement, called Managing the Federal
Government: A Decade of Decline. And we had 83 notebooks
summarizing just the tables of contents of reports published by
the inspectors general, the Congressional Budget Office, the
agencies, and think tanks.

     Unfortunately, few of these studies helped us design
solutions. Few of the investigating bodies had studied success
stories--organizations that had solved their problems. And
without studying success, it is hard to devise real solutions.
For years, the federal government has studied failure, and for
years, failure has endured. Six of every ten major agencies have
programs on the Office of Management and Budget's "high-risk"
list, meaning they carry a significant risk of runaway spending
or fraud.

     The National Performance Review approached its task
differently. Not only did we look for potential savings and
efficiencies, we searched for success. We looked for
organizations that produced results, satisfied customers, and
increased productivity. We looked for organizations that
constantly learned, innovated, and improved. We looked for
effective, entrepreneurial public organizations. And we found
them: in local government, in state government, in other
countries--and right here in our federal government.

     At the Air Combat Command, for example, we found units that
had doubled their productivity in 5 years. Why?  Because the
command measured performance everywhere; squadrons and bases
competed proudly for the best maintenance, flight, and safety
records; and top management had empowered employees to strip away
red tape and redesign work processes. A supply system that had
once required 243 entries by 22 people on 13 forms to get one
spare part into an F-15 had been radically simplified and
decentralized. Teams of employees were saving millions of dollars
by moving supply operations to the front line, developing their
own flight schedules, and repairing parts that were once
discarded.9

     At the Internal Revenue Service, we found tax return centers
competing for the best productivity records. Performance on key
customer service criteria--such as the accuracy of answers
provided to taxpayers--had improved dramatically. Utah's Ogden
Service Center, to cite but one example, had more than 50
"productivity improvement teams" simplifying forms and
reengineering work processes. Not only had employees saved more
than $11 million, they had won the 1992 Presidential Award for
Quality.10 At the Forest Service, we found a pilot project in the
22-state Eastern Region that had increased productivity by 15
percent in just 2 years. The region had simplified its budget
systems, eliminated layers of middle management, pared central
headquarters staff by a fifth, and empowered front-line employees
to make their own decisions. At the Mark Twain National Forest,
for instance, the time needed to grant a grazing permit had
shrunk from 30 days to a few hours--because employees could grant
permits themselves rather than process them through
headquarters.11

     We discovered that several other governments were also
reinventing themselves, from Australia to Great Britain,
Singapore to Sweden, the Netherlands to New Zealand. Throughout
the developed world, the needs of information-age societies were
colliding with the limits of industrial-era government.
Regardless of party, regardless of ideology, these governments
were responding. In Great Britain, conservatives led the way. In
New Zealand, the Labor Party revolutionized government. In
Australia and Sweden, both conservative and liberal parties
embraced fundamental change.

     In the United States, we found the same phenomenon at the
state and local levels. The movement to reinvent government is as
bipartisan as it is widespread. It is driven not by political
ideology, but by absolute necessity. Governors, mayors, and
legislators of both parties have reached the same conclusion:
Government is broken, and it is time to fix it.

     Where we found success, we found many common
characteristics. Early on, we articulated these in a one-page
statement of our commitment. In organizing this report, we have
boiled these characteristics down to four key principles.

1. Cutting Red Tape


     Effective, entrepreneurial governments cast aside red tape,
shifting from systems in which people are accountable for
following rules to systems in which they are accountable for
achieving results. They streamline their budget, personnel, and
procurement systems--liberating organizations to pursue their
missions. They reorient their control systems to prevent problems
rather than simply punish those who make mistakes. They strip
away unnecessary layers of regulation that stifle innovation. And
they deregulate organizations that depend upon them for funding,
such as lower levels of government.


2. Putting Customers First


     Effective, entrepreneurial governments insist on customer
satisfaction. They listen carefully to their customers--using
surveys, focus groups, and the like. They restructure their basic
operations to meet customers' needs. And they use market dynamics
such as competition and customer choice to create incentives that
drive their employees to put customers first.

     By "customer," we do not mean "citizen."  A citizen can
participate in democratic decisionmaking; a customer receives
benefits from a specific service. All Americans are citizens.
Most are also customers: of the U.S. Postal Service, the Social
Security Administration, the Department of Veterans Affairs, the
National Park Service, and scores of other federal organizations.

     In a democracy, citizens and customers both matter. But when
they vote, citizens seldom have much chance to influence the
behavior of public institutions that directly affect their lives:
schools, hospitals, farm service agencies, social security
offices. It is a sad irony: citizens own their government, but
private businesses they do not own work much harder to cater to
their needs.


3. Empowering Employees to Get Results


     Effective, entrepreneurial governments transform their
cultures by decentralizing authority. They empower those who work
on the front lines to make more of their own decisions and solve
more of their  own problems. They embrace labor-management
cooperation, provide training and other tools employees need to
be effective, and humanize the workplace. While stripping away
layers and empowering front-line employees, they hold
organizations accountable for producing results.


4. Cutting Back to Basics: Producing Better Government for Less


     Effective, entrepreneurial governments constantly find ways
to make government work better and cost less--reengineering how
they do their work and reexamining programs and processes. They
abandon the obsolete, eliminate duplication, and end special
interest privileges. They invest in greater productivity, through
loan funds and long-term capital investments. And they embrace
advanced technologies to cut costs.

     These are the bedrock principles on which the reinvention of
the federal bureaucracy must build--and the principles around
which we have organized our actions. They fit together much like
the pieces of a puzzle: if one is missing, the others lose their
power. To create organizations that deliver value to American
taxpayers, we must embrace all four.

     Our approach goes far beyond fixing specific problems in
specific agencies. Piecemeal efforts have been under way for
years, but they have not delivered what Americans demand. The
failure in Washington is embedded in the very systems by which we
organize the federal bureaucracy. In recent years, Congress has
taken the lead in reinventing these systems. In 1990, it passed
the Chief Financial Officers Act, designed to overhaul financial
management systems; in July 1993, it passed the Government
Performance and Results Act, which will introduce performance
measurement
throughout the federal government. With Congress's leadership, we
hope to reinvent government's other basic systems, such as
budget, personnel, information, and procurement.

**************************
Americans voted for a change last November. They want better
schools and health care and better roads and more jobs, but they
want us to do it all with a government that works better on less
money and that is more responsive.

President Bill Clinton
Remarks announcing the
National Performance Review
March 3, 1993
****************************

     Our approach has much in common with other management
philosophies, such as quality management and business process
reengineering. But these management disciplines were developed
for the private sector, where conditions are quite different. In
business, red tape may be bad, but it  is not the suffocating
presence it is in government. In business, market incentives
already exist; no one need invent them. Powerful incentives are
always at work, forcing organizations to do more with less.
Indeed, businesses that fail to increase their productivity--or
that tie themselves up in red tape--shrink or die. Hence, private
sector management doctrines tend to overlook some central
problems of government: its monopolies, its lack of a bottom
line, its obsession with process rather than results.
Consequently, our approach goes beyond private sector methods. It
is aimed at the heart and soul  of government.

     The National Performance Review also shares certain goals
with past efforts to cut costs in government. But our mission
goes beyond cost-cutting. Our goal is not simply to weed the
federal garden; it is to create a regimen that will keep the
garden free of weeds. It is not simply to trim pieces of
government, but to reinvent the way government does everything.
It is not simply to produce a more efficient government, but to
create a more effective one. After all, Americans don't want a
government that fails more efficiently. They want a government
that works.

     To deliver what the people want, we need not jettison the
traditional values that underlie democratic governance--values
such as equal opportunity, justice, diversity, and democracy. We
hold these values dear. We seek to transform bureaucracies
precisely because they have failed to nurture these values. We
believe that those who resist change for fear of jeopardizing our
democratic values doom us to a government that continues--through
its failures--to subvert those very values.

**************************
Principles of the National Performance Review

We will invent a government that puts people first, by:
╖ Cutting unnecessary spending
╖ Serving its customers
╖ Empowering its employees
╖ --Helping communities solve their  own problems
╖ Fostering excellence

Here's how. We will:
╖ Create a clear sense of mission
╖ Steer more, row less
╖ Delegate authority and responsibility
╖ Replace regulations with incentives
╖ Develop budgets based on outcomes
╖ Expose federal operations to competition
╖ --Search for market, not administrative, solutions
╖ Measure our success by customer satisfaction
***************************

Our Commitment: A Long-Term Investment in Change

     This is not the first time Americans have felt compelled to
reinvent their government. In 1776, our founding fathers rejected
the old model of a central power issuing edicts for all to obey.
In its place, they created a government that broadly distributed
power. Their vision of democracy, which gave citizens a voice in
managing the United States, was untried and untested in 1776.  It
required a tremendous leap of faith.  But it worked.

     Later generations extended this experiment in democracy to
those not yet enfranchised. As the 20th century dawned, a
generation of "Progressives" such as Teddy Roosevelt and Woodrow
Wilson invented the modern bureaucratic state, designed  to meet
the needs of a new industrial society. Franklin Roosevelt brought
it to  full flower. Indeed, Roosevelt's 1937 announcement of his
Committee on Administrative Management sounds as if  it were
written today:

     The time has come to set our house in order. The
administrative management of the government needs overhauling.
The executive structure of the government is sadly out of date
.... If we have faith in our republican form of government ... we
must devote ourselves energetically and courageously to the task
of making that government efficient.

     Through the ages, public management has tended to follow the
prevailing paradigm of private management. The 1930s were no
exception. Roosevelt's committee--and the two Hoover commissions
that followed--recommended a structure patterned largely after
those of corporate America in the 1930s. In a sense, they brought
to government the GM model of organization.

     By the 1980s, even GM recognized that this model no longer
worked. When it created Saturn, its first new division in 67
years, GM embraced a very different model. It picked its best and
brightest and asked them to create a more entrepreneurial
organization, with fewer layers, fewer rules, and employees
empowered to do whatever was necessary to satisfy the customer.
Faced with the very real threat of bankruptcy, major American
corporations have revolutionized the way they do business.
Confronted with our twin budget and performance
deficits--which so undermine public trust in
government--President Clinton intends to do the same thing. He
did not staff the Performance Review primarily with outside
consultants or corporate experts, as past presidents have.
Instead, he chose federal employees to take the lead. They
consulted with experts from state government, local government,
and the private sector. But as Vice President Gore said over and
over at his meetings with federal employees: "The people who work
closest to the problem know the most about how to solve the
problem."

     Nor did the effort stop with the men  and women who staffed
the Performance Review. President Clinton asked every cabinet
member to create a Reinvention Team to redesign his or her
department, and Reinvention Laboratories to begin experimenting
immediately. Since April, people all across our government have
been working full time to reinvent the federal bureaucracy.
The process is not easy, nor will it be quick. There are changes
we can make immediately, but even if all of our actions are
enacted, we will only have begun to reinvent the federal
government. Our efforts are but a down payment--the first
installment of a long-term investment in change. Every expert
with whom we talked reminded us that change takes time. In a
large corporation, transformation takes 6 to 8 years at best. In
the federal government, which has more than 7 times as many
employees as America's largest corporation, it will undoubtedly
take longer to bring about the historic changes we propose.12
     Along the way, we will make mistakes. Some reforms will
succeed beyond our wildest dreams; others will not. As in any
experimental process, we will need to monitor results and correct
as we go. But we must not confuse mistakes with failure. As Tom
Peters and Robert Waterman wrote in In Search of Excellence, any
organization that is not making mistakes is not trying hard
enough. Babe Ruth, the Sultan of Swat, struck out 1,330 times.
     With this report, then, we begin a decade-long process of
reinvention. We hope this process will involve not only the
thousands of federal employees now at work on Reinvention Teams
and in Reinvention Labs, but millions more who are not yet
engaged. We hope it will transform the habits, culture, and
performance of all federal organizations.

*****************************
I would invite those who are cynical about the possibility of
this change to ask themselves this question: What would your
reaction have  been 10 years ago if someone had said that in the
summer of 1993 American automobile companies would be making the
highest quality, most competitively priced cars in  the world? I
know my reaction would have been, "No way. I am sorry, but I've
bought too many clunkers. They can't do it. The momentum toward
mediocrity is just too powerful." But that change has taken
place. And if an industry as large and as stodgy as the
automobile industry can undergo that kind of transformation, then
the federal government can as well.

Vice President Al Gore
Town Hall Meeting,
Department of Energy
July 13, 1993
******************************


     Some may say that the task is too large; that we should not
attempt it because we are bound to make mistakes; that it cannot
be done. But we have no choice. Our government is in trouble. It
has lost its sense of mission; it has lost its ethic of public
service; and, most importantly, it has lost the faith of the
American people.


     In times such as these, the most dangerous course is to do
nothing. We must have the courage to risk change.