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23–206 PDF 2005

TURNING BUREAUCRATS INTO PLUTOCRATS: CAN

ENTREPRENEURIALISM WORK IN THE FEDERAL

GOVERNMENT?

HEARING

BEFORE THE

SUBCOMMITTEE ON THE FEDERAL WORKFORCE

AND AGENCY ORGANIZATION

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

JULY 13, 2005

Serial No. 109–62

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

GINNY BROWN-WAITE, Florida

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

MELISSA WOJCIAK, Staff Director

DAVID MARIN, Deputy Staff Director/Communications Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON THE FEDERAL WORKFORCE AND AGENCY ORGANIZATION

JON C. PORTER, Nevada, Chairman

JOHN L. MICA, Florida

TOM DAVIS, Virginia

DARRELL E. ISSA, California

KENNY MARCHANT, Texas

PATRICK T. MCHENRY, North Carolina

——— ———

DANNY K. DAVIS, Illinois

MAJOR R. OWENS, New York

ELEANOR HOLMES NORTON, District of

Columbia

ELIJAH E. CUMMINGS, Maryland

CHRIS VAN HOLLEN, Maryland

EX OFFICIO

HENRY A. WAXMAN, CALIFORNIA

RON MARTINSON, Staff Director

CHRIS BARKLEY, Professional Staff Member

REID VOSS, Clerk

MARK STEPHENSON, Minority Professional Staff Member

(III)

C O N T E N T S

Page

Hearing held on July 13, 2005 ............................................................................... 1

Statement of:

Gingrich, Newt L., former Speaker of the U.S. House of Representatives;

David M. Walker, Comptroller General of the United States; and Maurice P. McTigue, vice president, Mercatus Center at George Mason

University ...................................................................................................... 10

Gingrich, Newt L. ...................................................................................... 10

McTigue, Maurice P. ................................................................................. 69

Walker, David M. ...................................................................................... 38

Letters, statements, etc., submitted for the record by:

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 112

Davis, Hon. Danny K., a Representative in Congress from the State

of Illinois, prepared statement of ................................................................ 8

Gingrich, Newt L., former Speaker of the U.S. House of Representatives,

prepared statement of ................................................................................... 14

McTigue, Maurice P., vice president, Mercatus Center at George Mason

University, prepared statement of ............................................................... 72

Porter, Hon. Jon C., a Representative in Congress from the State of

Nevada, prepared statement of .................................................................... 5

Walker, David M., Comptroller General of the United States, prepared

statement of ................................................................................................... 41

(1)

TURNING BUREAUCRATS INTO PLUTOCRATS:

CAN ENTREPRENEURIALISM WORK IN THE

FEDERAL GOVERNMENT?

WEDNESDAY, JULY 13, 2005

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON FEDERAL WORKFORCE AND AGENCY

ORGANIZATION,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 2:08 p.m., in room

2154, Rayburn House Office Building, Hon. Jon C. Porter (chairman of the subcommittee) presiding.

Present: Porter, Davis of Virginia, Issa, Marchant, Davis of Illinois, and Norton.

Staff present: Ron Martinson, staff director; Chad Bungard, assistant staff director/chief counsel; Christopher Barkley, professional staff member; Patrick Jennings, OPM detailee serving as

senior counsel; Mark Stephenson and Tania Shand, minority professional staff members; and Teresa Coufal, minority assistant

clerk.

Mr. PORTER. I would like to bring the hearing to order.

We meet today for a hearing on ‘‘From Bureaucrats to Plutocrats:

Can Entrepreneurialism Work in the Federal Government?’’ I think

that is a very good question, and we have some experts here today

to help address that specific question. But before we get into our

visitors and special guests, I would like to say a few words from

my perspective.

Prior to having the honor of serving in Congress, I had the opportunity to have my own business for almost 20 years. Also, I

grew up in a family of small business, where my mom and dad

spent the better part of every evening at the dinner table talking

about the challenges of that entrepreneurial spirit of trying to have

their own business, and understanding the challenges of meeting

a payroll, understanding expectations of customer delivery, and,

more importantly, to make sure they could take care of their customers.

But today I think there are a lot of questions when it comes to

entrepreneurial spirit and what that really means. In the private

sector, when we talk about entrepreneurial spirit, it is someone

that hopefully has innovation; hopefully has the ability to make

tough decisions, but also lives with those ramifications, both positive and negative; has to do with the direct return on investment.

An entrepreneur in the private sector is an individual that underVerDate 11-MAY-2000 12:45 Sep 27, 2005 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 D:\DOCS\23206.TXT HGOVREF1 PsN: HGOVREF1
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stands that the harder the work, the better they perform, the more

efficiently they perform, the better return on their investment, and

by making their customers happy, they too can reap in the benefits

of that success.

There are very few places in the world like the United States

where we have this entrepreneurial spirit, and that is one of the

things that makes this country so great. It is that American dream

to be able to have ownership, whether that be your own home or

your own business, or whatever that is of your job. You may be an

employee of a corporation or the Federal Government. But the

American dream is based upon the entrepreneurial spirit, and that

is what built this country.

But many times when I talk to my friends and colleagues in the

public sector, when we talk about entrepreneurs, there are lots of

emotions, from a resentment in some cases, there are folks in the

public sector that may not particularly care for those in the private

sector and those that are entrepreneurs because they don’t really

understand it; they are threatened because many times those in

the public sector don’t really understand what it is like to be an

entrepreneur, and don’t necessarily understand what it is like to

have ownership. And I think probably the fact that they can feel

threatened or even some resentment or even a fear I think is really

based upon a true misunderstanding of the entrepreneurial spirit.

Now, books have been written and there are different experts—

and we are fortunate today to have some of those experts—but

there is also a book out there—and I meant to get the name, but

I am sorry—but it is called ‘‘E Myth,’’ where those that believe that

the entrepreneurial spirit is only a piece of a system and in the private sector provides for that spirit by putting systems in place that

show accountability so employees and management and ownership

understand when there is success and when there is failure.

One of the challenges that we have is that many times, especially

in the Federal Government—and it isn’t for a lack of quality employees; I think we have some of the best and the brightest in the

world working for the Federal Government—but I think our current system can really stifle some of their success. I think that our

system can encourage success only to get the job done and check

out for the rest of the day at times. And, again, this isn’t all employees, but I think that our system in the Federal Government

sometimes does not foster ownership for the employees, does not

foster the entrepreneurial spirit, does not foster success.

But I also know that the current system provides a lot of comfort. And we have spent a lot of time the past 6 months, and even

prior, looking at pay-for-performance from the Department of Defense; in the Homeland Security Department we are looking at the

balance of the Federal employees being placed in a pay-for-performance situation. And I hear frequently from employees that they are

just concerned because they don’t understand the direction of this

committee and the direction of the committee. But part of our job

is going to be to educate Federal employees to understand what our

goals are and our mission. And that is where we run into problems

throughout the Federal Government. At times our employees just

don’t know what their role is.

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Now, firsthand, I think my colleagues on both sides would probably agree that a better part of our job is trying to take care of our

customers, that is, our voters, our communities, our States. And a

lot of times, of those responsibilities, it has to do with a customer

or a constituent that is frustrated with the Government; they don’t

know where to turn. They may have been waiting months for a Social Security check or for a Medicare situation or a single mom that

has challenges. But I know we receive hundreds of letters, if not

thousands, from constituents that are frustrated with the Federal

Government and with different government.

Now, I am also a realist. Many folks don’t know the difference

between a Congressman and a State Senator or a city councilman.

They are just looking for help because they are frustrated. They

are frustrated because they can’t get a door open when they are in

need. So I do know that we spend a lot of time, as Members of Congress, trying to provide customer service because possibly a Federal

agency hasn’t really followed through as it should.

Now, I will reiterate. We have some of the absolute best and

brightest, and we want to make sure we can encourage that. But

I believe that in government, not unlike the private sector, we can

no longer do business as usual. We are in a global economy, and

that means the Federal Government is in a global economy.

For us to survive, we have to take care of our employees, who

then will take care of our customers. And I also know that those

races run by one horse don’t normally run as fast as when there

are multiple horses. So we want to make sure that there is some

competition that is attainable, where the best and the brightest

that we already have will survive and will become far more encouraged to provide that customer service.

But as we look at this global economy, we are also facing a lot

of changes. And my son and daughter—my son will be 27 tomorrow

and my daughter is 24—they are accustomed to an awful lot of

choices. Now, Speaker Gingrich is here, and I know when we were

growing up we had chocolate and vanilla ice cream; we didn’t have

500 flavors. We didn’t have 250 radio stations to choose from, we

had one, maybe two AM stations. At least I did in my small-town

in Iowa.

But our future generation is really accustomed to a lot of choices.

And they also expect customer service, as we do, but as we evolve

and we provide entrepreneurial spirit for our employees, they too

can serve this whole new generation that is, one, demanding higher

and better service; demanding success in a global economy, where

we are competing with China, we are competing with other countries as we look at the global economy; but also when we look at

technology. And I know that the Speaker is here today and will

touch upon some of the technology in health care delivery, but it

is the same in public service.

So I am excited to have the hearing today. There is a lot that

we can do. And I know that as a chairman of a committee that

looks at the employees and looks at the agencies and how they take

care of their customer service, I want to make sure that we can

provide not only the best training—which I think we do—but empower public employees, Federal employees, to share in that sucVerDate 11-MAY-2000 12:45 Sep 27, 2005 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 D:\DOCS\23206.TXT HGOVREF1 PsN: HGOVREF1
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cess of working hard and receiving the benefits of that delivery of

the best and most courteous customer service there is.

Now, the hearing today is going to, again, cover a lot of areas,

but I also want to address that tomorrow, along with Chairman

Davis, we are going to be introducing a bill to create what is called

a Results Commission, which will examine Federal agencies for

their effectiveness. And later this month the subcommittee will

hold a hearing to continue its look into how the Federal Government can free itself from burdensome bureaucratic processes and

maximize the use of information technology in the important arena

of health care.

And to bring the discussion to reality, I want to thank a couple

of folks that have excelled above and beyond. There is a young

woman from the Las Vegas Social Security Office that went out of

her way to help one of my constituents, Linda Ng; another individual, Kania Boltman, outstanding service in the Congressional Inquiry Division. We can go on and on and talk about those folks that

have that entrepreneurial spirit and are delivering services.

There is a Mr. Brad Gear at the Federal Emergency Management Agency. His task was to oversee the long-term recovery after

the destruction of the World Trade Center in New York. It was estimated that it was going to cost around $7 billion to clean up

around Ground Zero. He was able to successfully complete the task

in 6 months at $1.7 billion.

So there is a lot of creative thinking happening. The purpose of

the hearing today is to try to find a way to encourage that throughout the Federal Government.

So can entrepreneurial spirit work in the Federal Government?

I believe it can, and it is my privilege today to, again, have some

of those experts that deal with this on a daily basis. Each one

brings a unique perspective, and we look forward to lively debate

and discussion.

First, we are going to hear from the former Speaker of the

House, Mr. Newt Gingrich. Speaker Gingrich has written a

thought-provoking paper on how to reform the Federal Government

by fostering entrepreneurialism amongst the work force. And, of

course, he has had his leadership in many areas, but also will be

touching upon health care.

Next, we will be introducing the Comptroller General of the

United States—another entrepreneur in government, which I think

is a real compliment—Mr. David Walker. He brings, of course, a

wealth of experience in the private and the public sector at the

GAO.

And last, we are going to hear from Maurice McTigue, director

of Government Accountability Projects at the Mercatus Center who

first-hand has helped change the thought process and the culture

and experience in reforming the New Zealand government in his

time as a member of parliament there.

So I would like to thank all three of you for being here today.

[The prepared statement of Hon. Jon C. Porter follows:]

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Mr. PORTER. I would now like to recognize our ranking minority

member of the subcommittee, Mr. Danny Davis, another entrepreneur in government.

Mr. DAVIS OF ILLINOIS. Well, thank you very much, Mr. Chairman, and I want to thank you for calling this very important hearing today.

Over the last several years, this subcommittee has held several

hearings on Civil Service reform and government reorganization.

At one such hearing, held in April 2003, the Comptroller General,

David Walker, stressed that above all else ‘‘all segments of the public that must regularly deal with our Government—individuals, private sector organizations, States, and local governments—must be

confident that the changes that are put in place have been thoroughly considered and that the decisions made today will make

sense tomorrow.’’ I agree with the Comptroller and look forward to

listening and learning about practices and policies that will make

sense for the Federal Government, Federal employees, and taxpayers today and tomorrow.

I also want to again thank Mr. Walker and our other witnesses

for taking the time to testify at this hearing. Like you, I am certain

that it will be a spirited discussion. And, hopefully, at the end of

the day, we will have garnered some insight, information, and perhaps even expertise that would help move America forward.

So again I thank you for calling this hearing and I look forward

to the testmiony of our witnesses.

[The prepared statement of Hon. Danny K. Davis follows:]

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Mr. PORTER. Chairman Davis.

Mr. DAVIS OF VIRGINIA. Thank you very much. I am going to be

brief, but I am really looking forward to the testimony of our three

experts here in the first panel.

Mr. Speaker, you have been very creative in a number of ways

in trying to make government work over the years. Politicians and

the public alike take shots at bureaucrats, meaning Government

employees, who are perceived as paper shufflers, long on procedures, short on results; many of them performing the tasks they

were employed to perform, but filling out forms that probably

should have never been printed; working under regulations that

shouldn’t have been written.

We bear some responsibility in that. And I think today we will

talk about the laws, the procedures, the incentives that we give

them to work under and how we can make them more productive.

I personally believe Federal employees want to be productive. I

think they want to take pride in what they do. They want to show

results. And sometimes we spend so much time and effort making

sure nobody steals anything that they can’t get much else done at

the same time. We need to, I think, empower employees to make

decisions and incentivize them in the right way, and I am really

looking forward to your comments today.

Government isn’t the private sector. We know that. We have to

have a transparency and safeguards there that you will never get

in the private sector. We don’t have a profit motive that brings out

inefficiencies because we are not competitive. But having said that,

we realize that people are motivated by incentive, and we need to

find ways to build incentives for Federal employees to take risks,

to reward risks that achieve the results, not just to not make mistakes, which is so often what happens under the current system.

General Walker, you have been innovative in human capital reform at the GAO. You have told us reform is needed. You have

identified areas that we need to focus on at this committee, and we

hope to take further action in some of these as well. I can’t think

of too many other organizations in existence today that use methods that are 125 years old, but our Civil Service does. And it is

time to review those and probably reinvent government.

And, Mr. McTigue, your reputation as an entrepreneur in government management and organization as a member of the parliament

in New Zealand is legendary. I am pleased that you are currently

affiliated with George Mason University out in my district, as well.

The dramatic reforms you and your colleagues accomplished can be

a model for us, a checklist, if you will, that we should look at in

terms of moving our Government away from the bureaucratic to a

more entrepreneurial model.

I want to thank everybody for your comments today and for

being with us and being willing to take some questions.

Mr. PORTER. Thank you, Mr. Chairman.

Congresswoman Holmes Norton.

Ms. NORTON. Thank you, Mr. Chairman. This is an interesting

hearing, and I am very pleased that you have chosen to have a

hearing on this subject. I do want to especially welcome my good

friend, Speaker Newt Gingrich. I will always remember Speaker

Gingrich for his fairness to the District of Columbia, the energy he

10

put into the Capital of the United States, when he was speaker at

a particularly trying time.

Some may be surprised to see Newt here talking about management of Government, but that is because you all don’t know Newt

Gingrich. I sometimes think that the word visionary was not coined

until Newt Gingrich burst onto the public scene, because his visionary sense sometimes knows no limits. And I say that as someone,

as Newt knows, who is not always in agreement with him. But

Newt Gingrich is one of these people who it pays for everybody to

listen to, whether you are one of his devotees or not. When Newt

talks, just listen; it will perhaps help you to improve on your own

adversarial approach to what he is saying or you may even adopt

one of his ideas. So I especially welcome my good friend Newt

Gingrich here.

Thank you, Mr. Speaker.

Mr. PORTER. Thank you very much.

I would like to ask unanimous consent that all Members have 5

legislative days to submit written statements and questions for the

record, and any answers to written questions provided by the witnesses also be included in the record. Without objection, so ordered.

I ask unanimous consent that all exhibits, documents, and other

materials referred to by Members and the witnesses may be included in the hearing record, and that all Members be permitted

to revise and extend their remarks. Without objection, so ordered.

As you know, it is the practice of the subcommittee to administer

the oath to all witnesses. If you could please stand, I would like

to administer the oath. Please raise your right hands.

[Witnesses sworn.]

Mr. PORTER. Thank you. Let the record reflect that the witnesses

have answered in the affirmative. Again, welcome.

Witnesses will each have 5 minutes for opening remarks, after

which the members of the committee will have a chance to ask

questions.

Mr. Gingrich, again, thank you very much. It is an honor to have

you here. We appreciate your insights and thoughtfulness. You will

have approximately 5 minutes.

STATEMENTS OF NEWT L. GINGRICH, FORMER SPEAKER OF

THE U.S. HOUSE OF REPRESENTATIVES; DAVID M. WALKER,

COMPTROLLER GENERAL OF THE UNITED STATES; AND

MAURICE P. MCTIGUE, VICE PRESIDENT, MERCATUS CENTER AT GEORGE MASON UNIVERSITY

STATEMENT OF NEWT L. GINGRICH

Mr. GINGRICH. Thank you, Mr. Chairman. I want to thank you

and the other members for your kind words, in particular the rather glowing comments of Ms. Norton. That alone was worth coming

up here for. So thank you.

I have a very direct message, I guess, for the Congress, and that

is that real change is going to require real change. That we keep

trying to monkey around at the margins and somehow get dramatically better results. But, in fact, what we need is a very profound

change, far more than just privatization. We also need to learn the

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lessons of modern productivity and the lessons of modern quality,

and then rethink from the ground up how Government functions.

Many of the things we as a people try to do together in our Government are extraordinarily important, life and death: the very

education of our young, the protection of our country, key elements

of transportation. And it is important to recognize that this is a

city which spends almost all of its energy trying to make the right

decisions and almost none of its energy focusing on how to improve

implementing the right decisions. And, yet, without implementation, the best ideas in the world simply don’t occur.

I am submitting for the record a paper on entrepreneurial public

management. It is a term I use very deliberately. As Chairman

Davis pointed out, we currently have a bureaucratic public administration model that has some 125 years of development. It was

originally created when male clerks with quill pens were sitting on

high stools, writing on paper from an ink bottle.

You now live in a modern world, and I think the standard you

should set for the Government is the speed, agility, and accuracy

of UPS and FedEx. Take a look at those two systems, and then

come back and say, all right, if we want education to work, how

do we get it to be that accurate? If we want health to work, how

do we get it to be that effective? If we want intelligence to protect

us from terrorists, how do we ensure that level of daily competence?

I outline 20 points in this paper on entrepreneurial public management—which I won’t go over, but I will be glad to answer questions on—because I think it is a system’s replacement problem.

This is not marginally improving the system we have inherited; it

is, in fact, replacing it with a profoundly different system. I think

Congress has, in many ways, the major role to play, because most

of the current system is inherently structured by law, modified by

the way we do oversight, and reflected in our budgeting and appropriations process.

I would encourage you to have a series of hearings on demming

the Toyota protection system and the nature of quality in the private sector, and to ask people who are actually practitioners to

come in, explain why we are so dramatically more productive in the

private sector, and then ask them what the basic principles would

be for rewriting and redesigning our entire system of employment,

of procurement, and of management.

I would also encouraged you to look at legislation to dramatically

modernize the entire system. I would urge you to look at how the

budget process today is anti-investment and traps us in failed systems of the past. And I would ask you to look at how the appropriations process tends to bias us against the kind of modernity that

we need.

Let me just give you three quick examples of the scale of change

I am describing.

The budget committees, and possibly this committee, should be

holding hearings on the process by which the Congressional Budget

Office and the Office of Management and Budget engage in scoring,

because that very scoring shapes much of what we do. We had the

experience in the last week of a 24 percent error rate in estimating

the surplus or deficit for this year, that is, within the cycle of this

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year. The CBO and OMB model was off by 24 percent. Now, if that

is what we are relying on to tell us what we can invest in health

care, or what we can invest in education, or what we can invest

in a better environment, it is so central to our operating that it deserves to be open, transparent, and accountable.

Second, look at small symbolic changes that would be dramatic.

As Ms. Norton pointed out, I am passionate about our national capitol truly being our national capitol. We should be looking at the

National Zoo as an example of where a public-private partnership

would radically improve the zoo, which will never be improved in

the current bureaucracy under the current Smithsonian system.

Yet, over half the cities in the United States today, there is a

public-private partnership: San Diego, arguably the best zoo in the

world; New York City, arguably the best research zoo in the world;

the Atlanta Zoo; the Memphis Zoo; the zoo in Birmingham, just to

give you some examples.

You could combine the area out around Front Royal, that magnificent area, which could be the equivalent of the San Diego Wild

Animal Park, and you could combine it with the zoo downtown.

You could create a public-private partnership and within a very

short time you would have vastly more money, vastly more energy,

and you would have a better system, with better care of the animals, with better attendance, and everybody is a winner. But it is

a different model than trying to funnel enough resources through

the Smithsonian bureaucracy.

On a larger scale—I can’t say this too strongly—our intelligence

system is broken, and fixing the top of it with new names and new

charts is irrelevant. Porter Goss ought to have the ability to blockmodernize the entire staff of the Central Intelligence Agency. I will

give you one example. This is something I have been working on

for the last 2 weeks.

North Korea is a country we have been studying since 1950. That

is 55 years. We have had 38,000 troops in South Korea for two generations. Sixty-five percent of our analysts don’t read or speak Korean at all; 25 percent read or speak it partially; fewer than 10 percent of the analysts currently dealing with North Korea are fluent

in Korean.

Now, this is a system of such stunning incompetence at a practical level that trying to marginally improve it over a 20 year period the week after the bombings in London ought to be a warning

to all of us that we have to go to dramatic block modernization at

the personnel level or we are going to risk getting killed.

One last example. It is fascinating that Amtrak, which is very,

very important to the northeast corridor, cannot learn from the

British experience, where the British have systematically modernized their railroads; privatized the operation away, which ended up

being very acceptable to the British rail unions; and, as a result,

the increase in traffic on the British railroads is larger than the

total traffic on Amtrak.

And there is a model there worth looking at, because I don’t care

how much money this Congress spends on Amtrak. In the current

model, with the current rules, under the current structures, it is

going to fail, once again, for the 30th year.

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So I just want to suggest to you this is about more than just

privatizing out of the Government. It is also about bringing the

best of the models of modern productivity into the Government.

And I think the invention of entrepreneurial public management is

one of the most important challenges that this Congress faces. And

I thank you for allowing me to come here.

[The prepared statement of Mr. Gingrich follows:]

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Mr. PORTER. Thank you very much, Mr. Speaker.

Next we will have Honorable David M. Walker, Comptroller General of the United States.

Welcome, Mr. Walker.

STATEMENT OF DAVID M. WALKER

Mr. WALKER. Thank you, Mr. Chairman. Members, it is a pleasure to be back before this subcommittee, this time to talk about

how to transform Government to meet the challenges of the 21st

century.

As you know, I have spent 20 years in the private sector, now

13 in the public sector. And, as you know, GAO is trying to lead

by example with regard to transforming what we do and how we

do it for the benefit of the Congress and the American people.

What I would like to do is to show a few slides that I think demonstrate a compelling business case for why it is not only desirable,

it is absolutely essential that we transform what the Government

does, how the Government does business, who does the Government’s business, and how we are going to pay for the Government’s

business in the 21st century, which means dramatic and fundamental reform not just in the executive branch, but also in the

legislative branch, which is not well aligned for success in the 21st

century.

This first builds on Speaker Gingrich’s comment. This is based

upon looking at CBO’s assumptions for the next 10 years, using

GAO’s long-range budget simulations. It shows what our fiscal future looks like based upon two key assumptions: No. 1, discretionary spending in the first 10 years grows by the rate of inflation;

No. 2, that all tax cuts expire; No. 3—in fact, there are four key

assumptions that no new laws will be passed; and, No. 4, that the

alternative minimum tax will not be fixed.

I would respectfully suggest none of those assumptions are realistic. As a result, this shows that we have a large and growing

structural deficit due primarily to known demographic trends, rising health care costs, and lower Federal revenues on a relative

basis than a percentage of the economy.

Next is an alternative scenario. There are only two changes, but

differences between this one and the first one. No. 1, discretionary

spending grows by the rate of the economy, which includes national

defense, homeland security, judicial system, transportation, education, etc.; and, second, that all tax cuts are made permanent.

This is an Argentina scenario. With all due respect, New Zealand

did a great job in transforming itself, but only when it was on the

verge of default.

It is absolutely essential that we take action now; that we begin

to recognize reality that we are in an imprudent and unsustainable

fiscal path; that working at the margins is not acceptable; and that

as this document shows—which was published on February 16th,

of which each Member has been given a copy—a vast majority of

the Federal Government is based upon conditions that existed in

the United States in the 1950’s and the 1960’s. Whether it is entitlement programs, whether it is spending policies or tax policies,

they are based upon conditions that existed in the United States

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damentally review, re-engineer, re-prioritize the base of the Federal Government.

In doing that, we are going to have to ask some fundamental

questions. Why do we have this program? Why do we have this policy? Why do we have this function or activity? Stated differently:

Why did we create it? What were the conditions that existed? What

were we trying to accomplish? How do we measure success on an

outcome-based basis? Are we successful on that basis? What is the

relative priority for today and tomorrow?

Believe it or not, a vast majority of Government has never been

asked those fundamental questions. It is time that we ask.

Furthermore, we are also going to have to recognize that this is

nothing less than a cultural transformation. The left-hand side

shows the current state of many Government agencies. And, by the

way, it is not just Government agencies, it is monopolies and entities in the private sector that do not face significant competition.

That is the real key element.

My father worked for AT&T when it didn’t have much competition. They had the same type of factors as many Government agencies do: hierarchical, stovepiped, process and output-oriented, reactive behavior, inwardly focused, avoiding technology, hoarding

knowledge, avoiding risk, protecting turf, and directing employees

as to what to do.

We have to transform how Government does business to make it

a flatter organization, more matrixed and results-oriented, to be

much more proactive, much more focused on the needs of customers and clients, to leverage technology, to empower employees,

to share knowledge, manage risk, and, very, very importantly, form

partnerships not only in Government, between governments, with

the public-private, not-for-profit sector both domestically and internationally in order to make progress.

At GAO, we have focused on four key dimensions with great success, because we actually have fewer people today than we did 6

years ago and our results have over-doubled.

No. 1: Results. What are outcome-based results? Return on investment last year, 95 to 1, No. 1 in the world. No. 2: What do our

clients and customers say about our work? Ninety-seven to 98 percent positive client feedback. No. 3: What do our employees say

about our agency as a model employer? No. 1 in the Federal Government and higher than the private sector by about 6 percentage

points. And, last, but not least: What do our partners that we work

with say about how good a partner we are?

In summary, there is absolutely no question that we need to review, re-examine, re-engineer the base of the Federal Government.

Working at the margins is not acceptable. Budget reform is part of

that, but it is much more than that. And, candidly, this has to happen not just in the executive branch, but in the legislative branch,

because if you look at the authorization, the appropriation, and the

oversight process, many times when things are authorized, Congress does not provide clear direction of what it is attempting to

achieve and what are the outcome-based results which that program should be measured against.

Second, in the absence of those outcome-based results, the assumption is if you throw more money at it, or if you provide addiVerDate 11-MAY-2000 12:45 Sep 27, 2005 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 D:\DOCS\23206.TXT HGOVREF1 PsN: HGOVREF1
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tional tax preferences, it will be good and it will make a difference.

That is simplistic and wrong. More money and more tax preferences do not necessarily achieve better results. We need to understand what results we are trying to achieve and to try to make

sure that people are geared toward doing that. In appropriations,

the money has to be allocated in a more targeted basis and based

upon results that are actually achieved, rather than results that

are promised.

And, last, I want to commend this committee and a few others

for engaging in periodic oversight. We need more oversight. But

that oversight is not just to find out what is not working; it is also

to acknowledge what is working, because there are many things

that are going well, and we should share those successes, celebrate

those successes, replicate them across Government, while figuring

out where we need to make changes and holding people accountable for progress.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Walker follows:]

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Mr. PORTER. Thank you very much, Mr. Walker.

Mr. McTigue, welcome. I think you are going to address some solutions also. We appreciate your being here.

STATEMENT OF MAURICE P. MCTIGUE

Mr. MCTIGUE. Thank you, Mr. Chairman. Yes, indeed. First, I

applaud the concept of government organizations being innovative,

creative in solving societal problems.

I also support the theory and reasoning captured in the paper by

Speaker Newt Gingrich. The constraint and standardization of the

industrial revolution is not the culture for successful 21st century

organizations. However, the culture of organizations do not change

just because we ask them to change. The incentives in these organizations must change to produce the desired culture change. This

means that talking must be converted into action on the structural

change necessary to get the desired result.

My written testimony takes the entrepreneurial ideas espoused

by Speaker Gingrich and suggests the changes necessary to

produce private sector organizations with a clear view of what success looks like, strong accountability for results achieved, and the

flexibility to resolve the societal challenges that are requested to be

addressed.

My recommendations, however, are not based on theoretical

managerial concepts, but are based on the practical experience of

having been personally involved in implementing such change to

the machinery of government in New Zealand, both as an elected

member of parliament and as a member of cabinet.

The work we do at the Mercatus Center at George Mason University is convincing us more and more that the cost of creating

successful organizations is closely linked to a strong and well designed system of accountability. If the accountability regime focuses on accountability for the completion of tasks and accounting

for expenditures, then the organization becomes process-oriented

and tends to be bureaucratic. If the accountability regime focuses

on successfully making progress on outcomes, then the organization

is much more likely to identify and use best practice to seek new

and better ways of maximizing progress toward the outcome, and

generally develops an entrepreneurial or success-oriented culture.

However, if management is charged with accountability for outcomes, but constraints outside management’s control are placed on

the operation of the organization, then both morale and performance will be adversely affected. Therefore, accountability for outcomes will only produce optimal results if management is given the

freedom to manage and the opportunity to succeed.

Mr. Chairman, in the points that I make in my written presentation to you, I am making a suggestion that inside the organizations of government there should be a division between the directorship of the organization and the day-to-day management. The

day-to-day management of the organization should be done by the

career professionals who have long experience in delivering those

outputs, but that the role the appointee should be the guidance or

the directorship of the organization and should stay in the policy

field.

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That, I know, would be a major change for the way in which the

Government of the United States works, but I believe it is the right

course of action. That the people who run the day-to-day operations

should be there because of their competency to do the job. They

should have a CEO kind of stature and they should have term contracts that gives them permanence of authority, that means that

the decisions that they make will be carried out by the organization.

But if this is going to work, then the funding process itself also

needs to be changed. An appropriation really, in psychological

terms, is a grant of money addressed at a particular outcome, with

the expectation that it is going to produce a result. A much more

viable way of doing that is to purchase from delivery organizations

a specific set of outputs that are designed to produce the outcome

that you want.

Under that purchase agreement, there is a clear indication of exactly what it is that has to be approved and there is a strong ability for accountability. In that image, you are looking at something

that focuses very much on the outcome rather than focusing on the

output. If I were to challenge something that you said before, Mr.

Chairman, I would say this.

You made the comment that employees often don’t know what

their job is or what is expected of them. And I would say that

maybe the instructions from their bosses don’t clearly describe

what they expect from them. For example, currently there are hundreds of billions of dollars in activities funded each year that have

not as yet been reauthorized. That process of reauthorization could

make it very clear exactly what it is that Congress expects from

that outcome.

Let me just take one of the simplest examples. Each year Congress funds a very significant quantity of money for food stamps.

The purpose of that is to feed hungry people. Yet, food stamps are

never going to eliminate hunger, because all they do is address the

consequence of hunger: the fact that there are hungry people there.

The reauthorization of that process should very clearly say that

over a period of time the United States intends to eliminate hunger. That would bring about a very different set of programs that

are based upon what caused the hunger in the first place. Maybe

the person can’t read or write; maybe the person is new to the

United States; maybe the person has a disability. But what could

we do to alleviate those problems so the person could no longer be

hungry?

Is this new? The answer, in my view, is no. Back about 1960,

John F. Kennedy said, after the launch of Sputnik, ‘‘We are going

to be the first on the moon.’’ Didn’t have any idea how you were

going to get there, nor did anybody else in the Government have

any idea how you were going to get there. But there was a very

clear vision of what the challenge was, getting to the moon. But not

only what the challenge was, but the priority: it wasn’t going to be

good enough to be there second, it was only good enough if you got

there first. And, of course, the Government was entrepreneurial

enough to be able to succeed in that challenge.

What we are lacking at the moment is a clear vision given to

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land Security that you will improve the safety of Americans at

home by 10, 15, or 20 percent per annum. We are not offering that

challenge. And it is possible to measure whether or not that is happening. We should be saying that the challenges to each year commission, this number of new enterprises among our economically

disadvantaged and minority groups in society, but all we do is devote money to it and hope that we are going to get that result.

One of my colleagues has a great description for that, Mr. Chairman. He says that if you allocate money to something that you

want to see achieved, and don’t have a clear view of how that is

going to be done, that is what you call a faith-based initiative. And,

unfortunately, a great deal of the budget is faith-based initiatives.

Thank you, Mr. Chairman.

[The prepared statement of Mr. McTigue follows:]

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Mr. PORTER. Thank you very much, Mr. McTigue. We appreciate

it.

Very compelling testimony by all three. I appreciate your insights and your thoughts. But I must tell you I am disappointed,

because I think there is one key element that was not addressed,

and that is, of course, the political side of the reality of putting in

place some of these required, if not imminent and necessary,

changes.

And I know that our system of government has its share of challenges, but still the best in the world, but it creates an adversarial

environment here in Washington, and it appears—and I know, Mr.

Speaker, you were in office for a long time, far longer than I; Mr.

Walker and Mr. McTigue—but I think that a serious challenge to

us in competing in this global world with no boundaries is our own

political process of the spirit of attack and spirit of taking down the

other party.

There are many ideas that are floated here in Washington that

become political fodder. May I suggest even a personal account as

a discussion item has been used—and I use this as an example because it is alive and well today, and, again, waiting to see specifics

on personal investment accounts. It has turned into a campaign on

who is going to be the next President, not about what is best for

seniors.

So I guess as I have three of the best and the brightest here

today, I want to take a moment, as we look at your ideas and suggestions, I think many of which could take us into this next century. But as we weave through the political process, what steps do

you see that we can bring both political parties together and do

what is actually best for the country, not what is best for a political

party?

Mr. Speaker.

Mr. GINGRICH. I think that is a very realistic starting point for

this discussion, if we can assume that we have crossed the threshold of agreeing that we need very real change. I will give you just

a couple of specific insights from my own career.

The first thing I would recommend to the House Republican majority is to find 5 or 10 bills the Democrats have introduced that

move us in the direction you are describing and pass them. You

will change the whole tone of the building. And I remember when

Dick Armey, who was not on the Armed Services Committee, had

the idea for a base closing commission, went out and advocated it

as a minority member. Republicans were in the minority, and had

been, at that point, for about 34 years.

And Armey talked to enough people long enough that Les Aspen

decided that he had better move it as a Democratic idea because

it was too popular to stop. And so Dick Armey, never having served

on the Armed Services Committee, passed one of the most important pieces of reform legislation for the national defense system.

I remember when Jack Kemp and Bill Roth went around talking

about tax cuts, made it popular enough in the country that a

Democratic Congress passed it in 1981.

So I start with the idea there are a lot of people in the Democratic caucus who have a very passionate interest in government

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ment; they represent, often, constituencies that desperately need

government. And I would look around and find the 5 or 10 best

small ideas and pass them as freestanding bills so that, all of a

sudden, people say, gee, we are really working together.

Second, what you hold hearings on really matters. And if you

bring in people who think positively—I will give you a specific example. Mayor Giuliani had a remarkable system for fighting crime

and made New York City dramatically safer and dramatically more

prosperous. That system relied very heavily on a matrix-based organization; it has been studied widely.

I would invite Mayor Giuliani and the people who have implemented that system and the people who have studied that system

to come down and hold three or four hearings in a row on what

would the Federal Government be like if we brought that model

and we applied it around the Federal Government, and what would

we have to change to do it? I think it is something which many

New Yorkers of both parties would agree made the city a dramatically better city. So I would try to be positive about the big ideas.

Third, there are things that don’t have much political resistance.

We define the inspector generals’ job so that half of their time

should be highlighting successes and half of their time should be

finding fault, and you would, overnight, change the psychology of

the inspector generals. Because the goals shouldn’t be ‘‘gotcha.’’

The goal shouldn’t be to look for petty excuses to blame somebody.

The goal should be, I am inspecting this department to get it to be

the most productive, most effective deliverer of services possible.

That change I suspect you could do on a bipartisan basis.

Last, let me just say, in answer to this question, define what success is for each department and then hold hearings on those aspects that are successful. What are the five best achievements at

HUD this year? What are the three best achievements at the Department of Labor? There is no reward in the American Government today for serving the country, taking a risk, being entrepreneurial.

And, frankly, you might consider allowing inside the Civil Service some limited number of promotions for achievement outside everything else. Yes, you are going to run a risk of favoritism and all

that stuff, but if it could be defined as actually relating to an

achievement so we began to reward risk-taking among Civil Servants, it might pay us a huge dividend in the long run.

Those are just specifics that I think are all doable, would all be

positive, and would all have bipartisan support if they were designed right.

Mr. PORTER. Mr. Walker, just address that, please.

Mr. WALKER. Well, first, I share a number of those thoughts.

One, for example, is the fact that when you are talking about trying to look at government, it is not just what is wrong with government, it is what is right with government. There are a lot of things

that government does that it does well, and they do not get highlighted enough.

So I think it is important to be able to look not only at the roles

of the inspectors general, but also to be able to look at oversight

and to recognize that you can conduct oversight hearings where

you cannot just talk about the negative; you can talk about the

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positive. Who is doing it well? Who is doing it right? How can you

share that? In addition to who has a problem? What is the problem? How are we going to solve the problem? And how can we

make progress?

Let me turn just for a second to the executive branch, because

the Speaker spoke primarily about the legislative branch, although

I totally agree that changes are necessary in the legislative branch.

The United States does not have a strategic plan. The largest,

the most important, the most complex entity on the face of the

Earth does not have a strategic plan. It does not have well defined

goals and outcomes. We spend $21⁄2 trillion a year, hundreds of billions of dollars in tax preferences, issue thousands of pages of regulations, and we have no plan. You are going nowhere fast without

a plan.

Second, the United States does not have key safety, security, social, environmental, etc. indicators to assess the Nation’s position

and progress over time and in relation to other nations. These are

outcome-based indicators. The United States does not have clearly

defined goals and objectives about what we are trying to achieve

on an outcome basis and an integrated basis based upon current

and expected resource levels.

As a result, in the absence of having those basic things, it is no

wonder that people think, well, if we want to solve a problem, let

us throw more money at it; let us put more people on it; let us give

another tax preference. Those are simplistic and flawed analyses.

We need to be able to have a plan; figure out what we are trying

to accomplish; come up with key outcome-based indicators; take a

more strategic and innovated approach; align the executive branch

and the legislative branch based upon today and tomorrow; be able

to focus on allocating resources to achieve the most positive results

within available resource levels. And we need to make sure that

there are adequate incentives for people to do the right thing,

transparency to provide reasonable assurance they will do the right

thing because somebody is looking, and appropriate accountability

if they do the wrong thing, as well as praise if they do the right

thing. These are basic. These are basic to any organization, whether you are in the public sector, private sector, not-for-profit sector.

And we don’t have it.

The last thing I would say is I come back to the legislative

branch. The authorization process, the appropriations process, the

oversight process. When are authorizing or reauthorizing, what are

you trying to accomplish? How do you measure success? It has to

be integrally in that. In the appropriations process, we can no

longer assume that the base of government is OK. We can no

longer spend tremendous amount of time and energies that we are

going to plus this up a little bit or cut this back a little bit. We

have to look at the base—what is working; what is not working;

what makes sense for the 21st century—because the base is

unsustainable and is not results-oriented.

And, in the oversight process, as I said, we have to recognize that

there has to be much more oversight. But it doesn’t all have to be

negative. In fact, it is important that it be balanced. Because, after

all, there are some things that government does that the private

sector either cannot, will not, or should not do. So it is critically

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important we make sure we do it right and we celebrate successes

when we do.

Mr. PORTER. Thank you, Mr. Walker.

Mr. McTigue, we will come back to you in a second.

Mr. Davis, do you have any questions?

Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Chairman.

And again I thank the witnesses.

Mr. Speaker, several of your principles for entrepreneurial public

management are centered around information technology, the use

of sophisticated equipment and wireless communication devices

and all. If I remember, in 1995, you led the effort to eliminate the

Office of Technology Assessment. What has occurred between then

and now in terms of that would shift, perhaps, your thinking from

where it may have been at that point to where it is today?

Mr. GINGRICH. Well, in 1995 I also testified at the Ways and

Means Committee that we should consider giving every second

grader a laptop, because I wanted to end disparities in access to

information technology. So I don’t know that my views have

changed much. I wrote a book on the importance of scientific and

technology change in 1984 called Window of Opportunity, and I

have long been a believer that technology is a significant part of

our future and that science—in fact, I helped double the NIH budget and, in retrospect, wish I had tripled the National Science Foundation budget because I think science is such a key part of our future.

Those of us who were very pro-science who opposed the Office of

Technology Assessment frankly thought it was an obsolete office

that did an inadequate job. It is a little bit like the rise of Google.

It is amazing how much information you have at your fingertips

now if you simply go online and pull up Google and type in a query.

By the way, I also helped, when I became speaker, the day after

I was sworn in, we launched the Thomas System online so that the

entire world can access the U.S. Congress for free. And a few weeks

after that I did the first effort to raise money for the National Library of the American People, which is the first digital library on

a large scale that exists, and it now has over 5 million documents

online, including Scott Joplin’s writings and much of Martin Luther

King, Jr.’s work, so that people all over the world and school children all over the world can access it.

So I do believe in technology, and always have. That was a very

specific question about a very specific office that I frankly thought

did not do a very good job.

Mr. DAVIS OF ILLINOIS. Do you think that there is any possibility

that we might move what I will call overuse of technology? When

I think of technology and I think of the implications, and when I

think of globalization, I also think of unemployment and I think of

the lack of opportunities in some instances for people to keep up

and be able to be employed. Is it possible that we might reach a

point where we can do so much, where many of the people really

won’t be needed to accomplish what has to get done?

Mr. GINGRICH. If that came to me, my initial answer would be

no, but I would describe it slightly differently. You know, people

have thought, starting with the Greek mythology of Prometheus

being punished for having discovered fire, there is a long tradition

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of let us not do the next technological cycle. The wheel was good

enough for me and the ox cart is good enough for me. Why are you

bringing in this newfangled thing?

But I would put it a little differently, and here is an example

where I think government could rethink itself. I would tie unemployment compensation to re-education. Because what technological

change does mean is that we are not in an industrial age cycle

where you get laid off for 4 months, go back to the very same job.

The average person is going to be in a different job, in a different

industry, doing a different thing.

So I would make unemployment compensation directly a component of also being able to go out and to get better educated so that

if you are unemployed and you do have some free time. And I

would look at places like the University of Phoenix, which is the

largest online education system in the world. And I would try to

integrate so that every citizen in the United States has a continuing opportunity to improve their marketability, their capability,

and their productivity, which, I think, is frankly going to be a key

to our being able to compete effectively with China and India.

So I am very much for reinvesting in the human capital of the

American people in order that they can keep up with and be employed in the technological changes that we are going to live

through.

Mr. DAVIS OF ILLINOIS. You mentioned Phoenix. I happened to do

the commencement address for Kaplan on this past Saturday,

which was a great commencement and a great graduation.

Mr. Walker, could I ask you, you mentioned in your comment

that in addition to looking at what might be wrong with government, let us also take a look at what is right with government.

What are some of those ‘‘right with government’’ things that we

could look at?

Mr. WALKER. Well, I think the fact of the matter is there are certain functions that are performed by government that you don’t

want to privatize, you know, that need to be done by government.

Therefore, we have to do it well. I think the other thing we have

to recognize is that there are certain agencies that are very much

trying to do what all of us are talking about: try to be more resultsoriented, try to be more citizen-centered, try to empower their employees more, and try to form better partnerships.

I think more needs to be done to highlight those that are making

progress in areas where we want them to make progress. There are

many agencies that have done positive things. FEMA has done

positive things there. The IRS even, believe it or not, has done a

number of positive things with regard to trying to transform themselves. We might be another example.

So part of it is just the fact that let us not just look for what is

wrong; let us look for some of the things that are going well and

figure out how we can highlight that and spread it across the Government.

Mr. DAVIS OF ILLINOIS. I will yield back. My time is up.

Mr. PORTER. Chairman Davis.

Mr. DAVIS OF VIRGINIA. You know, we have a hard time here.

Ideas are a very, very important part, but we have a hard time getting the Government to change anything. For example, Telework.

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A lot of the companies out in my district, their employees aren’t

hanging around the office all day; they are out visiting customers,

some of them are working at home, as long as they have their

laptops and whatever else they need to be in communication. These

are not just quality of life issues, they are efficiency issues in some

cases. But we have a hard time getting agencies to respond to that.

Competitive sourcing. It seems to me you can’t have government

re-innovation without competitive sourcing. Yet, the House struck

down our ability to do that in an amendment a couple weeks ago.

The Buy America Act is a huge impediment in terms of efficiencies

and being able to get the best goods and services for our dollar.

Yet, members go crazy over those kind of things.

But I think the testimony here is excellent. You need to reward

risk. You need to reward innovation. Right now we reward people

for not taking chances. It is the opposite of what it ought to be.

Let me ask each of you. I will start with Speaker Gingrich. If you

could give two or three of the most single practical things that Congress could undertake to pass legislatively, could you give a priority? Putting a comprehensive package together in this environment

just becomes so difficult.

Mr. GINGRICH. Well, let me say, first of all, I don’t want to disappoint my good friend, but this process has always been a mess.

Always. I mean, it was a mess for George Washington. And it was

designed to be a mess. The founding fathers wanted to guarantee

we wouldn’t become a dictatorship, so they designed a machine so

inefficient that no dictator could force it to work. And they succeeded so well that we can barely get it to work voluntarily. It was

by design. So I start with that.

There are three things you can do over and over again that make

a difference. And I say this having served 16 years in the minority

and tried to get things done when I belonged to the minority party,

and for a brief period had served twice with a Democratic President and a Democratic Congress. The first thing you do is you talk

about it, you hold hearings on it, you do special orders on it. You

get the language so people get used to it.

Mr. DAVIS OF VIRGINIA. You stay on message, in other words.

Mr. GINGRICH. It is really important, because eventually people

change how they measure themselves. We change what we tolerate.

We have seen it happen over and over for several hundred years

now.

So I think to say that—and notice I didn’t come here today to be

anti-government. I came here today to say we have a vested interest as a people in government that works, in a government that is

effective. We can argue over which things it should do. But once

we make the decision to do it, it should do it to the best possible

ability and it should match institutions like FedEx and UPS in

their capability.

By the way, there is a page 1 story in the paper today that our

inability to use information technology in health care in the area

of hospital-induced illnesses alone is killing an estimated 100

Americans a day. Now, that should be an area where we should be

able to come together to say that, on a bipartisan basis, liberal and

conservative, saving 100 lives a day would be a good thing.

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And certainly if you look at something like airline crashes—when

I used to serve as ranking member, and before that as minority

member on the Aviation Subcommittee—there wasn’t a Democratic

airline safety proposal and a Republican airline safety proposal; it

was an idea that we both flew in airplanes and we would like to

get there safely. So we somehow came together. I think you start

with language.

The second thing you do—I want to go back to what I said earlier

because I think it is so important. And this, again, may surprise

some of my friends because I have been a fairly aggressive partisan

much of my life. It is really important to scan every bill introduced

by Democrats and find 5 or 6 or 10 bills that move us a step in

the right direction, and bring them up in a bipartisan way and

begin to create a notion that even if they are baby steps, if they

are steps in the right direction, they can make an impact.

And then last, to go back to your key point, I don’t think you can

pass an omnibus bill. I think it is too complicated. But you can target specific things. And I will give you two relatively narrow examples I mentioned here today.

The first is to really work on a bill to redefine the job of the inspector general so that the inspector general is not just a negative,

fault-finding, law enforcement function; it is a productivity, quality,

effectiveness, improving function. It would dramatically change the

culture of many of the departments.

And the second one is to look at something very small that is of

importance to several members of this panel, and that is the National Zoo. Here is a great symbolic institution. And with the right

public-private partnership, which ought to be doable on a bipartisan basis, I believe you could have a truly national quality institution with two great parks, one modeled on San Diego. And it would

be a symbol of the willingness to start doing new things in a new

way, designed to achieve positive results.

Those are small steps, but I think they are important.

Mr. DAVIS OF VIRGINIA. Mr. Walker.

Mr. WALKER. Three things. I think the Federal Government has

to have a strategic plan and I think OMB should be tasked to do

it.

No. 2, I think we need to develop a public-private partnership to

develop a set of key national outcome-based indicators—safety, security, social, economic, environmental, etc.—in order to guide our

way on strategic planning, enhance performance accountability reporting, facilitate the review of the base of the Federal Government, and to help make authorization, appropriation, and oversight

decisions and engage in related activities. Other countries have it.

There is no reason we can’t and we shouldn’t have it.

No. 3, I do agree that you need to look at the accountability community and make it a performance and accountability community.

What you are trying to do is to maximize performance and assure

accountability at the same point in time. But we can’t forget about

the first; we want to maximize performance.

And the last thing I would say for the legislative branch is think

about how these concepts apply to the authorization, the appropriation, and the oversight process, especially oversight—I think you

can start there first—and then also reauthorizations and new auVerDate 11-MAY-2000 12:45 Sep 27, 2005 Jkt 000000 PO 00000 Frm 00099 Fmt 6633 Sfmt 6633 D:\DOCS\23206.TXT HGOVREF1 PsN: HGOVREF1
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thorizations, and lead by example. Make sure that you are trying

to take a balanced approach. Make sure that you are trying to

focus on what outcomes are we trying to achieve and how can we

provide guidance to these agencies to help them understand this is

what we expect to achieve on an outcome basis, this is how we are

going to measure success, this is what we expect you to gear your

energies and efforts to, and we are going to hold you accountable.

But, by the way, we are going to provide you reasonable flexibility

to get your job done, and as long as you can deliver results and not

abuse authority, you are fine.

Mr. DAVIS OF VIRGINIA. Mr. McTigue.

Mr. MCTIGUE. Congressman Davis, I would do it with one measure. That one measure would require that every appropriation have

linked to it a specific progress toward an outcome. So with the SEC

you would seek an improvement in the behavior in the market by

10 percent per annum; on hunger you would expect a decrease in

hunger by 10 percent per annum; on homelessness by 10 percent

per annum; and so on.

If you linked every appropriation to the progress you expected to

make on an outcome, all of the other things would fall in place because they would have to. It is in the best interest of the elected

Members of Congress and it is in the best interest of the organizations that deliver those goods and services. It would force you to

buy goods and services from the best provider, whether that provider was a private sector provider, whether it was a voluntary sector provider, or whether it was a public sector provider. But if that

was there, then there is a clear target to shot for every year.

The third thing is, if you did that, I think that the reputation of

Congress itself among the general public would improve immediately.

Thank you.

Mr. DAVIS OF VIRGINIA. Thank you.

Mr. PORTER. Congresswoman, do you have any questions?

Mr. GINGRICH. Can I just add one quick thing to what Chairman

Davis asked? I think if you were to encourage every Member of

Congress to create an entrepreneurial public management working

group back home and bring together four groups of people: people

in the private sector who are actually doing it, that is, who have

productivity, who have quality, who are using technology; people in

local government who you have pride in and who are respected.

I think, for example, of the mayor of Chicago and Mayor

Giuliani. Mayor Daley and Mayor Giuliani were stunningly effective local officials, and to have them come in and say here are the

nine things you could do to make the Federal Government better

would, I think, be powerful.

The third is the same thing with State officials, and the fourth

is with Federal officials. We don’t honor the person who spends 30

years of their life serving the American people by asking their opinion. And yet, I will bet you—this is basic demming, this is a basic

approach to quality.

If you went out, as you know, in your district and you wandered

across the district and just sat around and said to local government

employees, so what are three things we could do that would allow

you to serve the country more effectively, at the end of a couple

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months of that kind of looking at home—and if you just encouraged

this to be a standing long-term relationship, that every member

build an entrepreneurial public management working group at

home—you would begin to get ideas flooding back into the Congress. You would have a whole new tone of telling people things.

And that then makes it easier to pass things here, because now you

have noise back home saying it is a good thing to do.

Mr. PORTER. Thank you.

Congresswoman.

Ms. NORTON. I am going to, I guess, start with Speaker Gingrich,

since he conceptualizes much of what the three of you say, and

then go across the board.

I want to say, Mr. Walker, you know, I understand limitations

of a graph, but the expiration of the tax cuts, the tax cuts which

are footnoted here and the spending here, this is the kind of thing

that gets people’s hackles up, because obviously it is noted here. It

is noted here, but since the tax cuts are in a footnote, what one

really sees across here is a spending that is the hardest to deal

with, that does not have speak to the stuff Congress has kind of

piled on new, the stuff that was already there cumulatively.

And it is much harder to deal with it when that is what you put

in people’s face, because then you just get the House divided with

people saying, well, you know, if you hadn’t done the tax cuts in

the first place, and others saying if you spend less. And, frankly,

that is where we are now, stuck on stupid.

I want to start where Mr. Gingrich starts. His model starts very

rationally, then when we get to his ideas they are eclectic. Some

of them are short-term; some of them are revolutionary and longterm. But he starts, it seems to me, with a corporate model, with,

for that matter, the model of any large enterprise, what he calls

the vision of success, the so-called what in the hell are you trying

to do question.

And everybody starts that way, he says, and I think you all

would agree, except government, which just says here are some

things to do, let us get to doing them. I profoundly accept that because my own experience reinforces it so much.

My experience in government was as chair of the Equal Employment Opportunity Commission, which gave me an opportunity that

few people have in government. The agency was on its knees, it

was about a dozen years after it was set up in the first place, overcome with backlog, and the President said get in there and deal

with it.

So it was possible for me to step back and say what do I want

to do and I am going to do it. It was so bad that people had to let

me do it so that we got the backlog down from something that

would take a case 4 years to where it took 4 months, and did something that was tough, where people initially said uh-oh, that is to

say, went to a model of settling cases, rather than the litigation

model that came out of the civil rights movement that had been so

successful, you know, sue it. It has bothered you, it is bad, so go

at it with a lawsuit.

And we were able to show that you got far more for people who

brought cases by settling them early while the evidence was young

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and fresh, than by going for years when the evidence and, for that

matter, the witnesses had vanished.

We organized not only the structure—that is about what we are

about doing now in the Homeland Security Committee with homeland security—but reorganized work so that investigators, instead

of going after pieces of paper, focused on bringing the parties together to seeing if there was kind of agreement between the parties

that could be reached.

The civil rights groups were the most doubtful. But because I

came out of the movement, they gave me some slack. And, in the

long run, when they saw that people got more than previously, the

system was accepted.

Most government managers don’t find themselves in a situation

where the thing is falling apart, so somebody has to say get in

there and do it. But I endorse this notion, and I think we could do

that even for agencies that are at this moment. What is the vision

of success, for example, as the Speaker says. I want to hold you—

as Mr. McTigue says—hold you accountable because you have to

lay out at the beginning what it is you are trying to achieve, or the

President indicates what he is trying to achieve.

By the way, the EEOC, the people who were taking it, who were

being slammed, were the front line people who processed the cases.

Obviously, the management of the agency was responsible. The

very same people who were slammed because the cases took 4

years were the people who got them done in 4 months because they

had a new system. So it seems to me that on down the line, including the unions, including the workers, are going to be much more

receptive if they see that management is being held accountable in

the same way the CEOs are held accountable, and they, in fact,

make people want to do the work by the systems they put in place.

I looked closely at some of the things you want people to be able

to do in the Government, Speaker Gingrich, because I agree with

you. People who believe in government as I do really ought to be

up front reforming government. Many of my Republican colleagues

come straight out and say government just shouldn’t be doing most

of what they do. I don’t think we have any right, therefore, to criticize them when they go at government. It seems to me we ought

to be going much more strongly at problems in government if we

believe that people benefit from government.

Once you get down into the Civil Service system is where you get

people dividing out. We have a Civil Service system for a reason.

We are not dumb. It is because it is the Government. So that if you

were to be fired from one of the three Fortune 500 companies, on

whose board I served before I came to Congress, you did not have

due process, fifth amendment, fourteenth amendment. That happens to be part of government employment. It is very different from

employment in the private sector. And you have to be smart

enough to think through that as well as think through how to

make it more efficient.

Some of the things you have in your paper, Speaker Gingrich, it

seems to me may sound strange, but I think could be done, and

some of them may be done now. For example, you say allowing people to move in and out of government service. Well, we are crying

and screaming about scientists who obviously can make far more

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money. Increasingly, we are not going to be able to attract the best

and the brightest to the government service as we could before, because there are so many options out there.

I wonder about moving in and out of government as a way to

deal with some of that. Doctors, many, many people now who, it

seems to me, will be able to do better in the private sector. Moving

from department to department. Some of that obviously still goes

on here.

The reason I break this up this way, Speaker Gingrich, is in

spite of your revolutionary approach to government, you and I

know that these folks are more likely to take bits and pieces of it

and move it, than they are to throw the whole thing up and begin

again. You say here, for example, to buildup seniority as you move

in and out without continuous service, as long as experience and

knowledge has risen. That is interesting.

I am sure that people would first stop and think about people

who spent all their time in government. But I just think these are

examples of ideas, and I want to ask you, building upon this, if I

could just pose my question around an existing system.

Mr. PORTER. And we are going to have another round, also.

Ms. NORTON. But this was the question I was leading up to, if

I could just get this. And then I will forgo the round.

Mr. PORTER. OK.

Ms. NORTON. It is the so-called A–76 process, as an example of

government trying to move forward in a different way. Very controversial, but it is a process by which civil servants compete with

the private sector before the work is outsourced. Now, I am told

that——

Mr. PORTER. Maybe what we could do is have them answer that

question in the second round. Would that be OK, Congresswoman?

Ms. NORTON. But I haven’t asked it yet.

Mr. PORTER. Oh.

Ms. NORTON. I am told that 80 to 90 percent of the time Federal

workers win, that sometimes what happens is they have to

downsize in order to compete with the private sector because the

private sector often doesn’t have health care. So they do this by attrition. It is very controversial.

But they have been willing to do this to keep the work in-house,

with all of the limitations involved, which is they compete with

people who don’t have the same benefits and therefore are forced

to make themselves look like the private sector, or else they would

end up, too, without health care for some workers and the like.

Some of you may know something. I think Mr. Walker and Mr.

Gingrich may know something about the A–76 process.

Mr. DAVIS OF VIRGINIA. Would the gentlelady yield on that? I

don’t think any government organizations had to reduce health

care benefits. They are all under FEHBP. And my understanding

is that there are companies with retired military officers and the

like that elect not to reward their people with health care benefits

because most of their employees have it and they put them in other

areas. That is why these regulations are ridiculous. But I am not

aware of any government organization that has had to pare down

their health care benefits to compete on competitive sourcing.

100

Ms. NORTON. Mr. Chairman, if I could indicate I didn’t say that

is what in fact happens as a result of the competition. You are perfectly right on that. But that in order to make sure that the benefits are in place, what happens is, although they win the competition most of the time, they downsize in order to make sure that

they are competitive with the private sector.

Now, I am not against the A–76 process. It is often seen by some

people as unfair because that is what you have to do, you have to

match yourself up with a system that has fewer benefits. It is one

of the compromises, frankly, that I would like to ask you about, because it comes out of trying to take something from the private sector, make employees compete. They do well. It has some real controversy attached to it. I wonder if it is the kind of model that you

think could be built upon.

Mr. PORTER. Thank you. And what we will do is we will come

back to answer that question, if you don’t mind. We will have another opportunity and we will come back to that in just a moment.

Congressman Issa.

Mr. ISSA. Thank you, Mr. Chairman.

Thank you all for being here today. Actually, what I will do is

I will piggyback the gentlelady’s question so that, realistically, you

can answer both in one capsule, I believe.

Briefly, I had the honor, before I came to Congress, of chairing

the IT outsourcing for the county of San Diego. And as I think the

Speaker knows, the county of San Diego went through a whole

process of top-to-bottom evaluating and, in most cases, bidding out

any number of services.

I will say that our history was not 80 percent, but we did have

times in which, in the case of information technology, was

outsourced. It was actually outsourced because, after evaluating it,

the in-house people said we cannot equal what we need to equal

at any price, even in a county as large as San Diego. And those

personnel were transferred to the private sector as part of the

guaranty, and all of their benefits were equaled in the private sector as part of the contract. The only thing we didn’t guaranty them

is a job for life. They obviously had to continue performing after a

lock-in period.

However, as someone who observed in San Diego, we dramatically reduced, for example, the cost of operating the county’s motor

pool, a very large fleet of vehicles, and with no reduction in service

or in pay. So I am a fan of trying to bring entrepreneurial process.

But, very briefly, the two questions that I have is, one, is or how

does Congress empower its agencies to have the power to be entrepreneurial, which by definition means freedom to fail? Because in

the private sector we fail, and we fail miserably. And sometimes

heads roll and sometimes they don’t, but we get up the next day

and the company gets up to the base. We don’t have the bureaucratic mentality that we generally have in government that all programs are 100 percent success and no programs get canceled, and

so on.

But the second one, which is the predictability of money. We

have a followup hearing, Hollis Eden, a company from my district,

who is grappling with the problem. We went out on the biosheild

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ation and for other biological warfare. Develop these and we will

buy them. Well, they have been developed. This particular one for

radiation poisoning is nearly approved by the FDA. And we are

simply refusing to fund purchasing.

So if you are going to ask the private sector to take risk at their

own expense, develop a solution, how do you, how do we, since the

you is we, provide some level of predictability that, when the entrepreneur takes the risk, they are not taking two risks, one that they

may not win a contract, but how about the one where we say there

is going to be a contract and then ultimately there isn’t or it is delayed by so many years as to make it fruitless?

Those are sort of with the gentlelady’s first, but then those two

series of questions.

Mr. GINGRICH. Let me yield first to David Walker, because he actually chaired a project on A–76. I think that would be a useful

place to start.

Mr. WALKER. Ms. Norton, I chaired something called the Commercial Activities Panel—I think it was about 3 years ago now—

at the request of Congress. It was a statutory mandate. I would

comment to you and be happy to provide to your staff, if you would

like, a copy of that report. That report includes the heads of the

two major unions in the Federal Government, as well as officials

in the Government and the private sector. We agreed unanimously

on 10 principles that should govern any type of competition process. We had super-majority agreement on a set of recommendations, but not total agreement on those set of recommendations.

I think one of the key elements that came out of that effort was

A–76 is only focused on certain functions and activities. One of the

things that we are talking about here is how can you create highperforming organizations throughout the Federal Government,

whether or not they will ever be subject to an A–76 competition.

In many cases what ends up happening is there are certain core

functions and activities that should stay in Government. A–76

theoretically only deals with those functions and activities where

they are not core to the Federal Government; they could be done

by the Government or the private sector, they are not inherent governmental needs, if you will.

My point is what are we doing to try to make sure that for all

of government—not just ones that might be subject to A–76—that

we are leveraging technology, we are streamlining our processes,

we are minimizing our management layers, we are empowering our

employees and getting the ideas of employees in order to do things

more economically, efficiently, and effectively. I think a lot more

has to be done there. And I think that is what this hearing is all

about, I would suggest.

Mr. GINGRICH. Let me give you a couple of examples. Let me say,

first of all, that if you decide to hold more hearings in this direction, one of the people I would invite in, if I were you, is Steve

Goldsmith, the former mayor of Indianapolis, who is a very innovative person. I think if you said to him, give me 15 specific examples, he would come in armed and really able to give you very good

specific examples of doable things and real success stories.

Two, part of what has to happen, Mr. Issa, is to develop lock-in

provisions in these bills. If you notice, when we start to build an

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aircraft carrier, which is a multi-year project, we manage to somehow write the legislation so that the shipyard in Norfolk knows it

will actually finish it; and there is a very substantial penalty

clause if we don’t. So part of that is a contracting problem. The

Congress has to be honest and up-front about how it would approach these things. And I think that is a challenge. Again, I think

at least half the problems we are describing are in the legislative

branch and can’t be fixed in the executive branch alone.

Third, I would like to build on something that Mr. McTigue said.

I think if the Appropriations Committee, in its annual process, required each department and agency, as a starting point, to list the

10 percent least effective or least useful projects in the agency—

just for review purposes—that would change the dialog of management dramatically. And if they would also list the 10 percent most

effective, you begin to get a whole different sense of hearings and

people would have a different sense coming in.

One last thing. And I don’t quite know how to say this as quickly

as we should, but I will dive in. Imagine your own personal life

with no automatic teller machine, no cell phone, no e-ticketing.

Just go down the list of whatever is now normal. That is government. So a specific example that you could begin to look at for the

Federal Government tomorrow morning: Travelocity and Expedia

and other systems allow you to buy airline tickets in a highly competitive environment. I used to represent the Atlanta Airport. Per

passenger mile in constant dollars, tickets have dropped from 23

cents a passenger mile in 1978 to 12 cents today on average.

Your city, Mr. Porter, has been one of the great recipients of inexpensive airfare, since it now has, I think, 40 million visitors a

year, or something like that. So in that setting, in the Federal Government, I know of one department, as a matter of fact, in which

you are not allowed to buy business class. Now, it turns out that

there are a number of places where you could actually buy business

class cheaper than you can buy a regular first class ticket if you

are looking for a special deal.

There are also a number of places where I could buy the government priced ticket, which in the model of 20 years ago was often

the least expensive ticket because of bulk purchasing, or I could

buy this afternoon’s immediately available least expensive ticket

and save 60 percent of the cost.

There are no places I know of in the Federal Government where

we incentivize people to save the taxpayer money. But if we were

to say, as an example, you can benchmark online the standard

price the Government is going to pay this morning. If you can get

a better ticket for the same or lower amount, you are allowed to

do so. And if you can get it for a substantially lower amount, you

can even consider sharing. If somebody says I will fly the night before, I will take the redeye, and, by the way, the taxpayer and I

will share the money, it is a totally different way of thinking about

the whole process.

And I do want to say, just in closing, I agree totally with one of

the points that was made by Mrs. Norton, which is you have a

much higher fiduciary obligation to avoid corruption and to avoid

theft and to avoid all the kinds of things that we know, prior to

the Civil Service laws, were real.

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So you are not a private company. This is in fact the public’s

money and the public trust, and I do think you have to have some

extra special provisions of transparency and accountability from

that standpoint. But I do think you could respond to the emerging

modern world and save a substantial amount of money and actually be more effective.

Mr. ISSA. Mr. Chairman, if I could just make one quick followup.

Speaker Gingrich, I must disagree with you, respectfully. There

is an exception in Government, and that is that when you became

speaker and you switched us over to having a fixed budget that

was fungible, that could be spent anywhere, it does incentivize my

office and all the members’ offices to look for government, non-government cheaper tickets so that we can do our jobs, and those

funds now are movable to other uses. So with rare exception you

would be right, but there was notable exception that you might remember fondly.

Mr. DAVIS OF VIRGINIA [presiding]. Mr. Walker.

Mr. WALKER. Two things, if I can, real quick. No. 1, Steve Goldsmith was a member of the Commercial Activities Panel. He is a

former mayor of Indianapolis, now at Harvard. Second, as you

probably recall, at our request, as well as the Department of Defense, meaning GAO as well as the Department of Defense, the

Congress passed, several years ago, a bill that gives Civil Service

employees or Federal employees the right to keep frequent flier

miles. There are some agencies that have now set up gain-sharing

programs for the purpose to try to have a win-win situation, where

if people use their frequent flier miles, if it saves the taxpayers

money, then that is shared between the taxpayers and the individuals.

So there are ways to do it. We need to look for more.

Mr. MCTIGUE. Mr. Chairman, can I just make a couple of comments as well?

Mr. DAVIS OF VIRGINIA. Sure.

Mr. MCTIGUE. The comment was made by you, Mr. Chairman,

right at the very beginning, about it is easy to measure progress

in the private sector because there is a well known bottom line; it

is what is the return on capital or it is what is the profit or it is

what is the dividend. But there is a bottom line in the government

sector as well, and we often ignore that, and the bottom line is the

public benefit. So what is the public benefit that accrued from

spending resources on this particular activity? And until recently

we have been bad at measuring that.

So, for example, in the case of Delegate Norton at the EEOC, the

public benefit at the end of the year is by how much has discrimination been diminished, and looking for ways in which you can continually diminish discrimination.

Delegate Norton, there was something else that you mentioned

that I want to pick up, but it is from my experience in New Zealand, not from my experience in the United States. As we made it

possible for people in Civil Service to move readily from Civil Service to the private sector and back again, I had people working for

me from time to time who were into their third iteration of doing

that. It was hugely beneficial to both because people were going

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into the private sector, getting best practice, and coming back into

the public sector and bringing that best practice with them.

But at the same time we also found, after a short period of time,

that the private sector realized how good some of the people were

that we had and we had aggressive headhunting of people in the

public sector. And that was good as well, because it started to give

them a sense of their own self worth.

The third thing that I wanted to say was this, and that is that

unless you have a clear focus on what the public benefit is that you

are trying to achieve, then you are not going to get the efficiencies

that you want. One of the decisions that the Government of New

Zealand made was that it was the responsibility of every executive

working in government departments to buy goods and services

from the best provider; that they needed to define best.

Best does not necessarily mean cheapest. And what we saw frequently was that would change from public sector to voluntary sector to public sector to private sector. But as long as the competition

was open and fair, then the beneficiary was the public benefit; we

were getting more goods and services.

And the last comment, Mr. Chairman, was this, that where government agencies were able to get efficiencies from what they were

doing, we allowed the money to stay inside that agency to allow

them to do more of their public good; it didn’t have to be returned

to the treasury. What we found then was that many agencies, at

the end of the year, finished up with surpluses instead of deficits,

and there was no spending splurge at the end of the year on things

of little value.

Mr. DAVIS OF VIRGINIA. Thank you very much.

We have about 15 minutes left. What I want to try to do is just

do 5 minutes apiece, if we can try to hold that strictly. I will start,

and then Mr. Davis and then Ms. Norton. Then at 4 p.m., I am

going to gavel it shut so that our speakers can leave.

A couple of comments. One is my experience in running the government out in Fairfax was I went to my managers, and some of

the best ideas came from people that have been there for years but

nobody ever listened to them. They know how to save money if you

will just empower them sometime. The guy that is at the window

everyday talking to people, they know what is right and what is

wrong. And we got some wonderful suggestions.

When I went to my senior managers and asked them to save

money, they came up with a little bit of savings. But when I went

to them and said, you know, I am going to give you a percent back

and you are going to have wide discretion as to how to spend your

savings, they came up with huge savings. You empower them, you

give them the right incentives, and it is funny what they can come

up with.

In talking about outsourcing, I represent 54,000 Federal employees. I think they are the greatest asset the Government has. And

I think it is not their fault in many cases; we misuse them. We

don’t incentivize them the right way. We don’t empower them the

right way. We don’t always pay them the right way. These are investments. On the other hand, if they find out that they can’t compete with the private sector and the private sector can do it for

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less, we exist for the taxpayers, at the end of the day, to get the

best deal for them.

But one of the problems we have is we have a Civil Service that

basically is a one-size fits all standard. We are getting a lot of stuff

being outsourced today because we don’t have a cadre of high technology software people in Government because we won’t pay them

appropriately because the current schedules don’t even speak to

these qualifications. And you try to change it and some of the existing Government employee groups are the first ones to resist it. And

then they complain when you have to outsource to get this stuff

done.

So I just wonder. I personally favor more bonuses and those kind

of incentives, because I think they work. If a procurement officer

can bring a large contract in below cost and on time, we lose tens

of billions of dollars with contract overruns every year with improper oversight. Training has to be something that we need to

spend more money on. Yet, that is the first thing that is cut with

the budgets. Just some minor changes in those ways I think could

help.

Before I ask for a comment, I would just say Government’s tendency when they have to lose weight is they chop off fingers and

toes. You remember we would go agonizing votes to save a little bit

of money on something symbolic, where, in truth, fat is layered

throughout Government in the way we do business. And if we just

take a look at the way we are doing business and change some of

those models, I think there is a lot more savings.

And I will just open up and see if there is any comment on that.

Mr. GINGRICH. Well, you said a lot of different things, and I

agree with almost all of them. You are exactly right, and that is

part of what I meant about having an entrepreneurial public management working group back home. I think if the average member

went home and went around and talked to the actual deliverer of

goods and services in the Federal Government in their district,

they would be startled how many people know better.

I think, second, you kind of have also a challenge to define what

are we trying to accomplish. And here I think Mr. McTigue put his

finger on something very, very important. One of the projects we

are working on is to review education bureaucracy from the standpoint that if I could find, out of our current $60 billion Federal education budget, a way to get 40 percent more salary for teachers, but

also have as part of that contract a merit relationship so that

teachers really were delivering for that 40 percent pay raise, I

think you would have a lot better education system than all the

layers.

So I think it is partly a question of what system are we asking

to do this and partly a question of who actually knows it and how

do you incentivize them to come in.

Last, I would be very curious if you tried to offer that opportunity in a variety of places. Obviously, again, this is why I would

recommend, on change, it is fundamental that you start with a bipartisan effort.

Two last things. Take any of these handful of agencies and try

to figure out how can we take your Fairfax model and say to a cabinet secretary or the head of some agency, if you can really find X

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amount of savings, you get to keep 10 percent of it as a discretionary fund, a portable, accountable, publicly spent fund, you

would begin to get real control. I think you would find staggering

levels of savings.

And the last thing, which goes back to something Mrs. Norton

said, I am very worried about how we are approaching the National

Institutes of Health. I am very worried that a grotesque overreaction to a handful of people is going to make mediocre an institution like that. And I think designing a brand new science technology pay scale and setting up appropriate ethics relationships

that ought to largely be a function of transparency, not of limitation.

But if you look at the cycle we went through recently, where people in Congress were proposing that secretaries at NIH wouldn’t be

able to hold—I think the NIH bureaucracy proposed rules which

would have meant that a secretary couldn’t have invested their

pension fund in a health company. This is a secretary who is not

doing anything except clerical work; has no plausible public impact.

It verges on being crazy.

So I think there is a zone here where, if we want the best and

the brightest, you might bring in both from the private sector, from

the academic world a number of people who fit that category and

say to them, what are the right rules? How do we get to the right

rules? What is the right compensation?

And in some cases I do believe you are going to find that it is

some kind of contracting relationship, because there are some areas

where, in order to get the very best, they have to work all the time

at the cutting edge, and no Government job by itself will keep them

there. So you have to have some ability to come in and out of the

system, bringing with you that level of experience.

Mr. WALKER. Quickly, Mr. Chairman. First, I think it is important to keep in mind that the principles and concepts that we are

talking about here are not corporate concepts; they are modern

management principles and concepts that apply to the public sector, the private sector, and the not-for-profit sector.

For any system to work, whether it is a human capital or Civil

Service system or a health care system—you name it—corporate

government system, you have to have incentives for people to do

the right thing, transparency to provide reasonable assurance they

will do the right thing because somebody is working, and accountability if they don’t do the right thing. That is particularly important in government.

As you properly pointed out, employees have a lot of great ideas.

We need to make sure that one of the key things that every agency

does is to regularly tap the ideas of their employees as to how we

can continuously improve. That is not the norm in government. It

should be the norm. It is one of the four elements I talked about

before.

Last thing, very importantly. There are many, many needs and

opportunities in the Federal Government to try to modernize itself

to improve its economy, efficiency, effectiveness, that have nothing

to do with politics and that have nothing to do with political parties.

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And one of the things that we may need to do—and I believe we

desperately need to do it right now in the Department of Defense,

and maybe in the Department of Homeland Security, but definitely

the Department of Defense—we need a chief operating officer, a

chief management official who is a level two official focused on

these basic business issues, who is a pro with a term appointment

and a performance contract, could come from the Civil Service,

could come from the private sector, because it doesn’t get focused

on.

If we look at other countries, whether it is New Zealand, whether

it is the U.K., whether it is the Netherlands, they have these positions. They are ahead of us with regard to transforming government. And this is one of the key elements that has helped them

to get to where they need to be.

Thank you.

Mr. DAVIS OF VIRGINIA. Thank you.

Mr. MCTIGUE. Mr. Chairman, let me endorse everything that

David Walker has just said, and also what Speaker Gingrich’s aid

as well. But let me take one part of it a little bit further. In my

written testimony to you I have a section in there where I talk

about the Office of Personnel Management.

In my view, that is a redundant organization unless it has its

function changed dramatically. And its new function should be to

identify whether or not each organization in the Government has

the capability to do its job. And that means looking at its human

capital and seeing whether or not it has those resources in place.

For example, if you read the 9/11 Commission Report, you can

see that one of the causes of the failure in intelligence was the fact

that something as simple as translation didn’t happen in a reasonable period of time. If somebody had been auditing those organizations for their human capital capabilities, immediately that would

have been red-flagged. Not only would it have been red-flagged, it

would have told you that there was the likelihood of a critical failure of this organization unless something as simple as translation

was addressed.

Many organizations suffer from just exactly these things, as you

identified, Mr. Chairman, because they don’t have the right skills

in place, and nobody is focused on identifying that.

Mr. DAVIS OF VIRGINIA. Thank you.

Mr. Davis.

Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Chairman.

In addition to the creation, perhaps, of the CEO type individual,

if we are to develop these results-based high-performance organizations, what else must change if that is to happen within the Federal Government?

Mr. WALKER. Well, first, to clarify, I think we need a chief operating officer or a chief management official. For example, let us

take the Department of Defense. You would have the secretary of

defense, who is the CEO; you would have a deputy secretary of defense for policy, who is a political appointee and obviously the

party of the current president; and you would have a deputy secretary or principal under secretary for management. That is the position I am talking about.

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I think one of the things that has to change is we need to get

back to basics and we need to focus on what are we trying to accomplish in these different agencies. What type of results and outcomes are we trying to achieve, and how can we align our agencies

and our performance measurement reward systems to get that

done. I do think we are going to need Civil Service reform. I do

think we are going to need Civil Service reform to be more marketoriented and performance-based.

But I do, however, believe it is going to be critically important,

in achieving those reforms, that there be adequate safeguards in

place to make sure that people do it right and in a nondiscriminatory fashion. And I believe that those systems and safeguards

should be in place before agencies are allowed to use those additional flexibilities. I think because if they don’t demonstrate to an

independent party that they have those systems and safeguards in

place, it could be a disaster. But I do think we are going to need

to modern our Civil Service system as part of an essential element

of trying to accomplish the objectives we have talked about today.

Mr. GINGRICH. Let me pick up on what Mr. Walker just said but

approach it from a slightly different angle. I want to say two quick

recent stories. One is a Washington Times story, Arabic Words Go

Free In Jails, which I will submit, where it turns out the U.S. Department of Prisons has no Arab-speaking translators, despite having currently 119 persons with specific ties to international

Islamist terrorist groups.

And, in fact, the person who reported this cannot get transferred

from the prison in which he is likely to be killed because he has

now been identified and the Arab-speaking people in that prison regard him as a traitor to the cause, and the Bureau of Prisons refuses to transfer him.

The second was an article or a story which came out just a few

days ago on CBC, which points out that U.S. border guards allowed

a man to enter the United States when he arrived at the Canadian

border carrying a homemade sword, a hatchet, a knife, brass

knuckles, and a chainsaw stained with what appeared to be blood.

He was allowed into the United States. Two decapitated bodies

were found the next day in his New Brunswick town.

He was finally arrested during a routine check that discovered

outstanding warrants for his arrest. And Bill Anthony, a spokesman for the U.S. Customs and Border Protection, said that Sprays

could not be detained because he is a naturalized U.S. citizen and

that ‘‘being bizarre is not a reason to keep somebody out of this

country or lock them up.’’

Now, I just want to suggest, after the London bombings, that we

are not a serious country yet. If the U.S. Bureau of Prisons hasn’t

figured out we need an Arab translator, and we haven’t fired the

head of the U.S. Bureau of Prisons for not figuring it out, and we

are not protecting the man who blew the whistle, we are not a serious country.

And I want to come back. These are the steps that need to happen in response to your question, Mr. Davis. First of all, there are

three assessments: what are your goals, what are your metrics for

achieving the goals, and is it working or not. There are six solutions: is the strategy right; are the people right; are they right but

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they need to be trained; do they have enough resources; are the

regulations wrong, in which case the President should issue new

ones; is the legislation wrong, in which case the President should

send up proposed changes in legislation.

There are four specific requirements to change the speed and

tempo of government: more rapid firing for incompetence; more

rapid promotion for achievement; more rapid hiring for new people;

and more rapid reassignment for people who are currently in the

wrong position.

And unless Porter Goss gets that kind of authority, we are going

to remain vulnerable to losing an American city to terrorists. It is

that simple and that real.

Mr. DAVIS OF VIRGINIA. Thank you.

Ms. Norton.

Ms. NORTON. Very quickly, Mr. Chairman. I focus on

hypotheticals, looking for win-wins, because I don’t see how we can

proceed in this kind of Congress, or ever in Congress without something approaching it. That is why I look to the A–76. Actually, it

was carrot and stick. The stick was exactly what workers didn’t

want, outsourcing; and the carrot was, look, you restructure it by

the way they do the restructuring, as I understand it. Yes, there

will be some downsizing—I understand most of that was by attrition—and yet it continues to be controversial.

Mr. McTigue mentioned people being able to keep money in the

budget that they saved. Let me just ask a question pertaining to

that. When I ran an agency, we did feverishly try to spend at the

end of the year, rather than give it back to the Treasury. I hope

we weren’t being wasteful. But I can tell you every agency does try

to make sure it spends its money. I believe we do that in the Congress. Of course, you have to be careful here, because it comes out

of your own pocket, out of the members’ pocket if you overspend.

I remember in this committee we passed a bill which allowed an

agency to set up child care out of its own budget if there was

money left over, and there were agencies that did that. I think

some agencies would be afraid that if they could keep the money

themselves, rather than go back to the Treasury, when the time

came for them to go before the authorizing committees and the appropriation committees, they would simply lose it in the budget

process. How do you get around that?

Mr. MCTIGUE. Can I answer that? I used to be Minister of Employment at one time, and was responsible for most of the programs that helped get people back into work. Now, if I used up all

of the money that I had for long-term unemployed, I had to stop

spending on long-term unemployed. But if I managed to get all of

the people that I was required to into work with disabilities and

had some money left over, that gave me the opportunity of being

able to transfer through to putting more of it into the field of longterm unemployed.

Because the Government was actually focusing more on how

much public benefit are we buying, they might have decided that

they wanted to take another 100,000 people out of being unemployed and, therefore, you didn’t necessarily lose money because

you proved that you were more efficient or able to get more people

the benefit that you sought.

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So that worked OK. And what we found was that more and more

people were focusing on the result and getting the cost down so

that they could multiply the benefit, because their performance

payments were attached to how successful were they at moving

people back into employment, not whether or not they did it at exactly that quantity of money.

Mr. WALKER. It may be, Ms. Norton, that you make sure that

they get the money for 1 year. The gain-sharing could be a 1-year

gain-sharing. There is no guarantees that you are going to continue

to benefit from that year after year after year; you have to have

new savings in order to get new gain-sharing.

I will tell you what some agencies do on your example of child

care, including GAO. We have an award-winning child care facility

at GAO. We donate space. That is our contribution. And we try to

make sure that it has adequate capacity and things of that nature.

But that is a soft dollar cost. You know, there is a cost, but it is

not a hard dollar cost; we don’t have to come out of pocket in order

to meet that need.

Mr. GINGRICH. I am going to sound naively idealistic for a second. I really think the legislative branch, under our Constitution,

has to be at least as mature as the executive branch. And I think

that really means you have to think about, when we talk about retraining the executive branch and we talk about education for executive branch managers, we really have a job to do on our own

members and on the staffs, because these are learned patterns.

You can train an appropriations committee to say I am always

going to be supportive of X amount of flexibility, and that becomes

a trained behavior.

I will just give you one example we worked on for a long time

that I think had some positive effect. The news media loves to beat

up congressional junkets and then loves to beat up Congressmen

for not knowing anything about foreign policy. We worked very

hard to get—and President Clinton and I worked hard to get every

leader since then—at the Executive Level to encourage Congressmen to travel, to talk positively about Congressmen traveling, because I knew if you could get people in the habit of going back

home and reporting on their travel, it in fact is rewarded.

People back home want you to be a leader who understands that

we are in the world. I don’t think any member gets attacked back

home for having gone to Afghanistan or gone to Iraq or gone to

China and tried to understand what is going on if you are serious

about it, and if you go back home and say this is what I did.

I say the same thing here. The Congress is going to have to be

an integral part, under our Constitution, of getting to an entrepreneurial public management; it can’t be done by the executive

branch without the Congress being supportive.

Mr. DAVIS OF VIRGINIA. Thank you very much. We appreciate everyone’s testimony today. I think this is just the beginning, not the

end. As we move forward, I appreciate very, very much your insights and looking forward to continuing working together.

Mr. McTigue, if we could chat for a moment after the meeting,

I have a couple of questions I would like to ask.

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But due to the time, I would like to ask that if any Members

have additional questions for our witnesses today, they can submit

them for the record.

I would again like to thank you all for being here.

The meeting is now adjourned. Thank you all.

[Whereupon, at 4:04 p.m., the subcommittee was adjourned.]

[The prepared statement of Hon. Elijah E. Cummings follows:]

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