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Office of the Vice President

For Immediate Release September 7, 1993

From Red Tape to Results

Creating a Government


Works Better

& Costs Less

Report of

the National Performance Review

Vice President Al Gore

September 7, 1993


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


Appendix B: National Performance Review summary of savings


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



Al Gore

Vice President




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


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


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


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


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


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


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.)


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


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


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


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:

ù Cutting unnecessary spending

ù Serving its customers

ù Empowering its employees

ù --Helping communities solve their own problems

ù Fostering excellence

Here's how. We will:

ù Create a clear sense of mission

ù Steer more, row less

ù Delegate authority and responsibility

ù Replace regulations with incentives

ù Develop budgets based on outcomes

ù Expose federal operations to competition

ù --Search for market, not administrative, solutions

ù 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


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.