Managing for Results

othing is ever as simple as it seems." Those words are a fitting epigram for this year's Federal Performance Report. Though they were uttered by a Forest Service ranger referring to the 10-year ordeal of studies, permissions, legislation and grants required to build a footbridge for hikers across Virginia's James River, they apply more broadly to federal management. In running complex federal operations, there's always far more involved than meets the eye. That is perhaps the biggest challenge to the performance project. It has both guided and bedeviled our efforts as we have produced three annual project reports grading 27 of the federal agencies whose programs have the most significant, direct impact on the public. With our partners at The George Washington University Department of Public Administration and funding from The Pew Charitable Trusts, we are attempting to do nothing less than illuminate the details, complexity and context within which federal agencies function. Yet those very agencies remain, despite slight improvement in the public's perception, easy targets for late-night talk show hosts, politicians, our colleagues in the media and a disaffected and impatient populace. News and opinion about the federal government oozes suspicion, disbelief and indignation. The general view still is that civil servants are lazy and self-serving and that federal agencies are duplicitous, incompetent organizations engaged in conspiracies to defraud and even injure American taxpayers. We annually plunge into this snarling and cynical environment with reports about many things agencies are doing well. We also detail many examples of mismanagement. Yet, even then, we work hard not to simply point fingers, but to explain the many countervailing demands and challenges that result in poor management or performance that falls short. Thus, you won't read in these pages a litany of anecdotes strung together from leaks by interest groups hoping to win a policy change by attacking the agency accountable for executing the policy. You won't see rewrites of legislators' press releases designed to score easy points on the entities they saddle with conflicting missions or fail to adequately fund. You won't find briefs on one side or another of the national budget debate or even the annual battles over funding for one or another department. Instead, what you will discover in these pages are careful, multifaceted examinations of the challenges faced by seven federal agencies and ratings of how well or badly their management systems serve them. Note that we have not simply graded agencies on their results. Instead, we have written feature stories examining what agencies are achieving and why. What we've graded is the capacity of each agency to manage for results-the degree to which each sets realistic goals, communicates them, organizes to achieve them and measures performance against them. This year, we've revamped our grading process to give results-based management more prominence. Each agency's overall grade now is based 50 percent on its ability to manage for results. The other 50 percent is based on how well agencies' management of human resources, finances, information and physical assets serves them in their efforts to produce measurable results. Why not simply grade agency results and be done with it? One reason is that we aren't convinced that we yet understand the exact effects of federal programs well enough to grade them. We doubt that anyone else has that understanding either. After all, government itself only just began asking about results after the bipartisan Government Performance and Results Act (GPRA) took effect in 1993. Only in March 2000 did departments and agencies present their first GPRA performance reports. There still is much debate about exactly what results most agencies should be achieving. In addition, many of the conditions for achieving agreed-upon results are not under agencies' direct control. Beyond that, many agencies we have studied have been charged with achieving results while not receiving adequate program funding. For example, so far we haven't found an agency that receives all the funds it needs to appropriately maintain the physical assets it relies on to achieve results. What's more, most agencies we've assessed have at one time or another been blocked by politicians from taking management actions that would have enabled them to better achieve their missions. Further, while it's clear that agencies have gotten the GPRA message that they must measure the outputs and outcomes of their programs, it appears they aren't yet using performance information to run those programs. The General Accounting Office reported in October that a survey of managers at 28 departments showed a falloff in the use of performance information since 1997. A significantly lower percentage of managers were using the information to set program priorities, adopt new program approaches or change work processes. This has occurred despite a marked increase in the percentage of managers reporting they now have performance measures for their programs. Having measures is good, but they provide no benefit until managers actually use information from them to improve programs. We asked managers to grade their agencies on managing for results as part of this year's project. Their grades tracked our assessments fairly closely. At the two agencies we found to be doing grade-A management for results, the National Weather Service and U.S. Postal Service, managers assigned their agencies Bs, demonstrating the higher expectations and more sophisticated understanding of performance management that contributed to those agencies' top grades. While we assigned the State Department's Bureau of Consular Affairs a C in managing for results, its managers gave their agency a B, likely because they rated the agency in comparison with its troubled past and with its parent agency, the State Department, which has been criticized widely for deplorable management. Conversely, we compared Consular Affairs to the higher standards set by our criteria and to better performers this year and in years past. Given the sad condition of management at the Bureau of Indian Affairs, it's likely that the C awarded by managers there reflects their strenuous efforts in the face of insurmountable odds. Our D emphasizes the distance the agency must travel even to measure performance and collect data in order to accomplish a huge, complex mission that is poorly understood by most members of Congress and the public. Messy Missions Agencies' problems with managing for results often begin with their missions. In many cases, agencies are assigned multiple missions. In every case, mission priorities change as each new President takes charge. Sometimes, agencies bite off more than they can measure. NASA, for example, has problems wrestling a mission as big as all space-uncovering the origins of the universe-into discrete, measurable, outcome-oriented programs and projects. Often, legislation gives agencies confusing or even conflicting missions. That was clear in our first report in 1999, when we graded agencies such as the Immigration and Naturalization Service-legally bound to keep illegal immigrants out of the United States, while at the same time quickly processing the applications of legal immigrants for citizenship and federal benefits. It is clear again in the case of the U.S. Forest Service, graded in this report. The Forest Service always has had to balance production and preservation of resources on public lands, but the emphases have varied widely. During and after World War II, timber harvesting became critical to war efforts and the post-war housing boom. Starting in the 1960s, as environmental concerns mounted, the agency reoriented. Today, it has come to emphasize ecosystem management over timber harvesting. But the shift hardly has unanimous support. "The American people haven't figured out what they want out of their land, and the agency reflects that," says a forest supervisor. "There clearly has been a shift toward ecosystem management and away from commodity production, but trying to figure out exactly what that means is difficult." Evidence of Americans' conflicting views can be found in the 10,000 public comments about new forest planning rules formally reflecting the ecosystems management ethos. In other cases, an agency can act in good faith to achieve a results-oriented goal and discover that doing so produces unforeseen negative consequences in another area. The Administration for Children and Families, for example, found that by giving monetary bonuses to states for getting welfare recipients into jobs, it unexpectedly motivated a big drop-off in the number of people on food stamp and Medicaid rolls. Since those programs often are vital to people in low-wage jobs, ACF quickly switched gears and now rewards states that best inform low-income workers of their eligibility for the programs intended to help them remain employed. In the few agencies with clear missions and well-crafted measures, managing for results comes almost naturally. The National Weather Service, this year's top graded agency, has set out to be a "no surprise service," providing the most timely and accurate forecasts possible. It measures its success in terms of such factors as tornado warning times, up from 6 minutes to 11 since 1993; flood warning times, up from 21 minutes to 50; and hurricane landfall predictions, accurate to within 88 miles today as compared with 100 miles in 1993. A 10-year, $4.5 billion overhaul brought the agency new technology dedicated to improving forecasts and productivity. An agencywide cost accounting system now under construction will help calculate the exact cost of delivering services to specific regions of the country, allowing more mission-oriented investments.

We've found that even agencies with less results-oriented management systems are finding innovative ways around their problems. The Administration for Children and Families at the Health and Human Services Department, for example, has overcome inadequate funding for research about the results of its programs by seeking funding from private foundations focused on family issues. The Henry J. Kaiser Family Foundation is helping ACF fund work with states to make sure former welfare recipients understand they still may be eligible for other federal help. A number of large corporations under the aegis of the Welfare to Work Foundation are teaming with ACF and state agencies to move people into jobs. ACF also is partnering with the state programs it oversees, providing technical assistance and sharing best practices to help states meet federal guidelines. Similarly, the Bureau of Consular Affairs has taken a best practices approach, bringing staffers from posts worldwide together to share successful ideas to improve efficiency and services. The U.S. Postal Service has crafted an alliance with package delivery competitor FedEx that will relieve USPS of the need to lease its own planes, saving more than $1 billion. Unconventional Wisdom Taking the position that we'd rather explore how agencies' missions are set and why they frequently aren't met often puts us at odds with the conventional wisdom. For example, our A in managing for results for the Postal Service seems to fly in the face of recent news that the agency may come up more than $2 billion short of its revenue targets this year and the fact that in February, just a month after the cost of stamps rose from 33 cents to 34 cents, the agency began seeking an additional increase. Shouldn't those revelations be grounds for a bad grade? Not necessarily. We've chosen to acknowledge the agency's problems and then to dive beneath the gloomy headlines to discover what it takes to steer this $65 billion quasi-commercial operation second only to Wal-Mart in workforce size. Even a quick look reveals that although the Postal Service was created as a self-supporting government corporation in 1970, it lacks control of the basic levers by which most companies balance costs and revenue. For example, the agency cannot refuse to deliver to remote or inaccessible addresses. The Postal Service cannot set the prices of its services. It must rely instead on a 16-month rate increase process under which the Postal Rate Commission makes the ultimate decision. And the commission can set lower rates than the agency seeks as it did recently when it approved a 4.6 percent hike though the agency had sought 6 percent. Nevertheless, the Postal Service is expected to break even over each rate cycle. In addition, the Postal Service has little control over the 75 percent of its costs that are labor-related. Under the 1970 Postal Reorganization Act, wages are set through binding arbitration, and once an arbitrator awards one union a raise, the others are all but guaranteed increases. Granted, the Postal Service has had since 1970 to learn to manage these problems. And, while we downgraded it for woeful union relations, we still found admirable the agency's ability to project changes in costs and revenues, to increase productivity and to keep in line those costs it does control. Further, we found persuasive the Postal Service's cry for legislative relief from its limitations. Playing Politics A recurring theme in the Federal Performance Report's findings is that politicians who eagerly denounce agencies for poor performance often create or fail to remove management obstacles and refuse to fully fund programs. This practice is most blatant and often creates perilous problems in physical assets management. At the Bureau of Indian Affairs (BIA), funding shortages have forced the agency to perform maintenance triage-keeping only half its 24,000 miles of roads in proper repair and clear of ice and snow, for example. It has replaced only 15 of the 25 Indian school fire trucks found unsafe or unserviceable in a 1997 review. Maintenance problems often are compounded by widespread difficulties in managing assets. Congress has held back funds from the Forest Service and BIA because of their inability to track and plan for equipment and facilities. But refusing funds for improved equipment can worsen reporting problems. "They complain on the one hand that the bureau doesn't provide them any information, but they don't give us any money to [develop the systems necessary] to provide it," says Dom Nessi, Bureau of Indian Affairs chief information officer. Often, it takes a tragedy to get legislators to provide sufficient funding. Only after the mastermind of the 1993 World Trade Center bombing slipped through the U.S. visa system in Sudan did Congress permit the Bureau of Consular Affairs to charge and keep fees for machine readable visas (MRVs). The fees enabled the bureau to provide the hard-to-counterfeit visas at all its posts and to automate the process of checking the names of visa applicants against a list of those ineligible for entry. What's more, the bureau is using the fees to vastly improve computer maintenance. But it is at BIA where the failures of politicians, the government and the nation come into stark relief. Relations between tribes and the government make up a centuries-long saga of horror in which the bureau has played a key role for 175 years. "This agency forbade the speaking of Indian languages, prohibited the conduct of traditional religious activities, outlawed traditional government and made Indian people ashamed of who they were," said the bureau's top official during an emotional apology for past abuses at a ceremony marking the agency's 175th anniversary in September. While the most egregious offenses have ended, the legacy of poor treatment continues in the form of mismanagement by an agency starved for funds. Directly responsible for roads, schools, law enforcement, resources, housing, courts and land management for 1.2 million people, BIA is foundering. The agency so badly administered Indian trust accounts that the responsibility was given to a special trustee at the Interior Department in 1994. Despite having more employees, a vastly larger mission and a more extensive field operation, BIA has an information technology budget that is just 3.7 percent of that of the Housing and Urban Development Department. Indian schools lost their Internet connections for a time last year because the agency couldn't afford associated phone bills. Within Interior, its parent department, BIA must fight for funding. It only recently regained partial human resources management capacity after budget cuts forced it to rely on other Interior agencies for HR support. Observers argue that self-governance is the only hope for tribes, but that requires significant technical assistance and grants from BIA, aid that current employees are not well-suited to supply. And once tribes take over services, BIA has no way to measure their effectiveness. By law, the agency cannot require tribes to provide performance information. BIA's failures and their cost in human suffering demonstrate why this project places such a high value on building and maintaining agencies' capacity to manage for results.

Government Executive: Timothy Clark, editor; Anne Laurent, project editor; Tanya N. Ballard, George Cahlink, Joshua Dean, Beth Dickey, Susannah Zak Figura, Brian Friel, Kellie Lunney, Katherine McIntire Peters, Matthew Weinstock, Shawn Zeller, writers; Susan Fourney, Martin King, Tom Shoop, editors; Eileen Wentland, designer; Jason Peckenpaugh, researcher. The George Washington University, Department of Public Administration: Philip Joyce, associate professor and principal investigator; Kathryn Newcomer, professor and department chair; Howard Smith, project manager; Alan Alvarez, Julie Middleton, Amy Rofman, Antonia Edwardson, research assistants.