Pondering PBOs

Officials from three agencies appeared on Tuesday before a House subcommittee to explain how becoming performance-based organizations (PBOs) would improve their performance.

Retired Gen. Richard Beale, director of the Defense Commissary Agency, Edward Kazenske, deputy assistant commissioner for patents at the Patent and Trademark Office, and David Sanders, deputy administrator of the Saint Lawrence Seaway Development Corp., told the House Government Reform and Oversight Committee's Subcommittee on Government Management, Information and Technology that becoming PBOs would make their agencies more efficient and allow them to provide better service to their customers.

The PBO model, announced by Vice President Al Gore in March 1996, separates an agency's service delivery functions from its policy functions. For example, the Patent and Trademark Office's plan to become a PBO would keep intellectual property policymaking in the Commerce Department but creates a new organization to perform the function of issuing patents. The new organization would be granted personnel and procurement flexibilities and its chief operating officer would agree to a fixed-term contract that would include incentives for improving the organization's efficiency.

In his last appearance before a congressional committee before leaving his post, John Koskinen, deputy director for management at the Office of Management and Budget, said PBOs will demonstrate how flexibility affects performance.

"While it is probably impossible to show a one-to-one correlation between a specific flexibility and a specific increase in performance, we think it is imperative for candidates to commit to increases in performance in exchange for obtaining desired flexibilities," Koskinen said.

Little Interest
Earlier this year the House passed a bill that would transform the Patent and Trademark Office into a government corporation that would include aspects of the PBO model, such as a fixed term for the chief operating officer and the possibility of bonuses for the COO depending on his or her performance. The Defense Commissary Agency and the Saint Lawrence Seaway Development Corp.'s PBO proposals have not generated much interest on Capitol Hill.

Employees haven't been quick to jump on the PBO bandwagon, either. Craig Bolick, president of the union representing Saint Lawrence Seaway workers, said his organization is opposed to the seaway's PBO plan.

"As an elected official of the seaway employees, I can convey to you categorically that my employees are not in favor of PBO," Bolick said. The union is against the provision granting the COO a potential bonus and is concerned that workers' rights would be stripped away, Bolick said.

The Information Industry Association submitted written testimony for the hearing outlining its concern that "paperwork reduction flexibilities" included in the PBO model would allow agencies to exempt themselves from requirements of the Paperwork Reduction Act.

Lessons Learned
Chris Mihm, acting associate director for federal management and workforce issues at the General Accounting Office, described lessons agencies can learn from Britain's Next Step agencies, which provided the model for the PBO concept.

First, he said, agencies should be careful to clearly define the relationship between PBOs and their parent departments. Otherwise, if a PBO does not meet its performance goals, the organization and its parent department may play the blame game over whose fault it was. Similarly, Mihm said, policymakers must make clear who is accountable for a PBO's performance. Finally, he said, experience shows that PBOs will have difficulty setting measurable performance goals.

Despite such concerns, the Defense Comissary Agency's Beale argued that government should at least try giving agencies the flexibility and freedom to improve themselves.

"How successful PBOs will be is directly proportional to how willing we are to loosen the reins of traditional government control and slay those 'sacred cows,' " Beale said.