Standing Panel on Executive Organization and Management
Meetings - Minutes

STANDING PANEL ON PUBLIC SERVICE AND EXECUTIVE ORGANIZATION AND MANAGEMENT

OCTOBER 20, 2006 DRAFT MINUTES

PANEL ATTENDEES:  Brad Huther (Chair), Enid Beaumont, Clint Brass, Morton Cohen, Diane Disney (via phone), Mortimer Downey, Henry Hogue, Dwight Ink (via phone), Herb Jasper, Fred Kaiser, John Kamensky, Bernard Martin, Howard Messner, Bruce McDowell, Ronald Moe, Steve Redburn, John Stone, Costis Toregas, Maryanne Troanovitch

STAFF ATTENDEES: Mark Givens, Alethea Long-Green, Hannah Sistare

GUEST ATTENDEES: Chris Myers Asch, Molly Torsen

WELCOME AND ADMINISTRATIVE MATTERS

Brad Huther welcomed everyone and the Panel approved the minutes from the previous meeting.  Interim Academy President Howard Messner spoke to the Panel about the Academy’s latest activities and the search process for a new president.

UNITED STATES PUBLIC SERVICE ACADEMY

Chris Myers Asch spoke to the panel about the proposed US Public Service Academy (PSA).  The PSA would be modeled on the nation’s military academies and would be primarily funded by Congress.  The concept of an academy for public servants can be traced back to such notable historical figures as George Washington and Theodore Roosevelt.  Admission to the PSA would occur by congressional nomination and students would be required to make a five-year post-graduation service commitment.  There would also be an attempt to ensure the country is represented equally by states and regions.

Asch said the fundamental mission behind the idea for the PSA is promotion of a public service ethos and civilian leadership development for the public sector.  The curriculum would be intense, akin to a military academy’s, and provide the students a broad-based and practical background.  Asch compared the idea of the PSA to the Peace Corps in the 1960s, in that it would have a ripple effect by “creating a culture of service” that would spread throughout the youth of the nation.  The intention is to house the PSA in Washington DC as it is the nation’s capitol and the center of l public administration at the federal level. The estimated initial cost to establish the PSA would be about $205 million.  Notable members of Congress that support the PSA include Hillary Clinton, Arlen Specter, Harold Ford, and Christopher Shays.

Huther asked if public service academies in other countries were benchmarked.  Asch discussed the French academy, but cautioned that the PSA would be different in that it wouldn’t be targeted to elite segments of society.  John Kamensky asked if the proposed PSA was a response to the weak current academic programs in private and public universities.  Asch responded that most renowned public administration programs are at the graduate level and the PSA would serve as a “feeder” for these programs.  Additionally, having the entire campus focused on public administration would distinguish the PSA from other schools by creating a more focused culture.

Asch addressed a question about fairness in the application process.  He said they were aware of unfair practices in prestigious private schools and would limit these types of effects by having Congress nominate candidates who would ultimately be selected by the PSA.  Costis Toregas asked how the student’s five-year commitment would be funded.  Asch said that the cost would be paid by whomever employees the graduate.  The transition from the PSA would be facilitated by a strong campus placement office.

PRESIDENTIAL MANAGEMENT CAPACITY TO RESPOND TO 21st CENTURY CHALLENGES:  UNDERLYING VALUES, PRINCIPLES, AND ASSUMPTIONS

Topic Introduction by John Kamensky

John Kamensky introduced the topic and said the purpose was to discuss a potential conceptual framework for which the entire debate over presidential management could occur.  Kamensky talked about three useful perspectives from a recent article written by Charles Goodsell, which could be helpful to build this framework.  These perspectives focus on:

• State (tightly controlled, unified, and powerful chief executive)
• Market (driven by private sector values)
• Civil Society (requires direct public involvement)

Kamensky also offered four additional perspectives from Paul Light’s “Tides of Reform.”  These include:

• Scientific Management (efficiency via hierarchy and specialization)
• War on Waste (efficiency via inspectors and reviewers)
• Watchful Eye (emphasis on fairness and openness)
• Liberation Management (accountability via performance management)

Light pointed out that over the years Congress has passed various laws from these different perspectives.  Over time this has led to laws that either directly or indirectly conflict with one another.

Presentation of Ronald C. Moe

The title and subject of Ronald Moe’s presentation was: The Constitutional Theory (or Paradigm) of Management.  Moe noted that he did not accept the validity or applicability of the Goodsell matrix of governmental management, as presented by Kamensky, because it accepts as its unexamined premise that all three “societal perspectives” are of equal theoretical value.  The operating assumption of the Constitutional Theory of Management is that the federal government is organized and managed according to certain constitutional and legal principles and that these are pre-eminent and inclusive.

The other two Goodsell societal perspectives; “market perspective” and “civil society perspective,” while providing insights, are necessarily behavioral, dependent, and derivative.  They are both dependent for their functioning upon the law.  When laws change, behaviors tend to change, but the reverse is not true.

Behavioral principles tend not to be theoretical in practice as they are not subject to proof and disproof.  Thus, to state: “Effective managers are not bound by ‘red tape,’” the first principle of the Reinventing Government exercise, is not a statement of theory (i.e., subject to proof or disproof), but rather a hortatory statement seeking to influence managerial behavior in a particular (in this case non-legal) direction.

Constitutional Basis of Federal Organization and Management

The United States is the only nation in the world established according to a comprehensive political theory.  The government was established by the Constitution of 1789.  Although initially small in size, it was complete and the rules of governance established at the time continue to provide the basis for the organization and management of the executive branch.

The Constitution reflects the clear intent of the Framers to organize a government based on theoretical principles, the three premier principles with respect to organization and management being;

        1. The institutions of government shall be divided among three co-equal branches; the legislative, executive, and judicial, and these branches shall be at once institutionally separate and interdependent.

        2.     All administrative functions are to be located within the executive branch and
                responsible to the President and through the latter accountable to Congress.

        3.     There shall be a governmental sector (agents of the sovereign) and a private sector, and they shall be separate and function under distinctive theories of jurisprudence.
                (“distinctive sectors doctrine”)

Lest these principles sound commonplace to the American ear, it needs to be recognized that, collectively, they are not found to be operative in any other nation.  Indeed, if there is an international trend evident in governance, it is a movement further away from these principles.

The popular trend today in the academy and in practice is to deny the legal distinctiveness of the sectors and to move government management from its constitutional and legal basis and toward the pre-eminence of generic management concepts most closely associated with the private sector.  Organizational autonomy and hybridization are the magical elixir of contemporary international public management.  One need only watch the current play of the French and German governments with the Airbus Corporation to see the convergence management paradigm in action.

The United States has undergone its own pressures to move in the direction of generic management and governmental disaggregation, as witnessed in the problems associated with Fannie Mae and contractors in Iraq.  Today, we face severe challenges in political accountability having to do with the management of federal agencies and programs.

Congress as Co-Manager of the Executive Branch

The key to understanding governance in the United States at the national level is to recognize the centrality of Congress to the political system.

The powers of Congress are defined and enumerated in Article I of the Constitution, a location selected intentionally.  It is Congress that establishes departments and agencies and, to whatever degree it chooses, the internal organization of agencies, personnel systems, confirmation of executive officials, funding systems, and ultimately determines whether the agency shall continue to exist.  It is Congress that establishes all programs and determines whether or not they are being implemented properly. 

Management of the executive branch, both in terms of process and behavior, is ultimately dependent upon Congress and the law.  In a 1995 article, Robert Gilmour and myself listed some 10 principles of public administration.  The first being: The primary purpose of executive management is to implement the laws passed by Congress as the elected representatives of the people.   Skipping to principle eight, it reads: Public accountability requires that inherently governmental functions and tasks be performed by officers of the United States and their government-employed subordinates.

This listing of principles of public administration has yet to be challenged by the promoters of the New Public Management or their many cousins.  The principles were intended to be, and remain so today, valid although their validity is often recognized in the breach from enforcement.

President as Chief Executive

The President has executive powers, many of which are enumerated in the Constitution.  Implementation of laws, for instance, is principally the responsibility of the President.  Recent Presidents have tended to shy away from their managerial responsibilities.  The White House has not bee assiduous in managing through constitutional and legal provisions.  For instance, President have been signing bills and then announcing that they will not enforce provisions they find unacceptable on constitutional grounds.  They reject the proper procedure, the issuance of a veto, and in turn simply announce that they will not fully enforce the law they just signed.  The results of this retreat from following the Constitutional and legal requirements of their office have been pernicious with respect to both the organization and management of the federal government.

General Management Laws

The General Management Laws (GML) are the basic tools by which Congress and the President agree to management the executive branch.   The term “general management law,” as used here, refers to those cross-cutting laws of general applicability regulating the activities, procedures, and administration of all agencies of the federal government.  GMLs are intended to provide appropriate uniformity and standardization of government organization and governance processes.  Uniformity and standardization by themselves, however, are not the objective of GMLs.  Such an objective would stultify government as “one size does not fit all.”  What these laws do reflect, therefore, are the conceptual and legal agreements between the branches respecting the management of the executive branch.  In functional terms, general management laws are statements of presumption guiding governmental behavior; that is, certain doctrinal provisions reflected in legal language stand until and unless an exemption is permitted. 

GMLs come in various guises and may be extensive in their coverage and impact, as is the case with the Administrative Procedure Act, Budget and Accounting, Ethics in Government, and Freedom of Information Acts, or they may be of relative low visibility (although visibility is not necessarily equatable with importance), such as the Federal Advisory Committee Act and the User Fee Act of 1951.

In recent years, two somewhat contradictory trends have been evident.  First, many new GMLs have been enacted (e.g., Inspector General Act; Chief Financial Officers Act), each supported and justified on its supporters’ definition of a problem, but often with what some observers believe to be little consideration of its probable impact upon other related GMLs.  Second, increasingly agencies and interest groups have been successful in gaining exemptions from the coverage of these acts, especially exemptions in the fields of personnel, compensation, and intra-governmental regulations.  We are presently watching the proliferation of agency-specific personnel systems and pay schedules.

There is no longer sufficient central management capacity or will in the executive branch to faithfully develop and implement the GMLs.  Increasingly, executive branch management is a politics of exemption and exception to the general management laws and principles.  Increasingly, management of federal programs is assigned to third parties whose interests and fiduciary responsibilities are not those of the United States.

Erosion of Central Management Capacity Near the President

The Constitution and the intent of the Framers was to have a unified executive branch accountable to the President through necessarily hierarchical delegations of authority.  Today, however, disaggregation of agencies and programs is becoming the norm.  Direct authorities are being given by Congress, at presidential initiative or with acquiescence, to subordinate units and officers.  The most serious problem arising from our retreat from constitutional practices is found in the rapid growth of quasi governmental units and the assignment to private organizations the implementation of laws.

An egregious recent example of the latter circumstance involves the recently created Public Company Accounting Oversight Board.  The PCAOB, although a major regulatory agency responsible for developing and enforcing hundreds of regulations, was sloppily created violating the distinctive sectors doctrine.  The relevant provision of law reads:

“The Board shall not be an agency or establishment of the United States Government, and, except as otherwise provided in this Act, shall be subject to, and have all the powers conferred upon a nonprofit corporation by, the DC Nonprofit Corporation Act.  No member or person employed by, or agent for, the Board shall be deemed to be an officer or employee of or agent for the Federal Government by reason of such service.”

Here you have the classic case of assigning to a private corporation, headed by non-officers of the United States, the making and enforcing of laws of the United States.

Mixing of the sectors may meet with approval from those in the New Public Management seeking the convergence of the sectors, but it is unconstitutional on its face and an invitation to mischief.  In this case the mischief was to permit the chairman and members of the PCAOB, know by defenders and critics alike as “Peek-a-Bo,” to receive excessively high salaries.  The Chairman’s salary is $556,000 and Members, $452,000, in both instances more than the President of the United States, its nominal commander in chief.  As you might expect, the PCAOB is under suit for constitutional reasons.

Emerging Quasi Government

To the approval of the New Public Management, there are today literally hundreds of quasi governmental entities operating without effective political accountability.

You are aware of Fannie and Freddie and the threat they pose to our fiscal stability.  But there are others entities out there waiting to blow up because sound constitutional practices were subordinated to the values of the New Public Management proponents.  Three products of the Reinvention exercise deserve special mention.  You have In-Q-Tel, the CIA and DIA venture capital firm.  The US. Investigations Service, a billion-dollar ESOP created without statutory authority by OPM, and the US. Administrative Corporation, a vague entity under Delaware law related to the FCC and blessed with administering an ear-marked tax.   All three were created to intentionally blend the sectors and were blessed by Gore’s “reinvention” staff.

Reasserting the Constitutional Theory of Management and the Distinctive Sectors Doctrine

Contrary to the wishes and hopes of the New Public Management, we still have two distinctive jurisprudential systems in the United States; public law and private law.

In the governmental sectors, the constitutional presumption is that the actions of an agency or officer must have their basis in public law.  Silence in law is prohibition.

In the private sector, on the other hand, the reverse presumption holds sway.  That is, private persons may act as they please unless there is a law prohibiting their actions.

Officers operating under public law are held to a higher standard of behavior (e.g., they must follow constitutional due process) in dealing with citizens.  Let us remember this principle when we read about future IRS problems and their use of private tax collectors.

Constitutionalists contend that there is a hierarchy of values.  For example, the highest value in governmental management is (1) political accountability, next (2) adherence to due process in dealings with the public, and (3) transparency in operations. These values do not inhere to the private sector, and indeed ought not.   Behaviorally based management axioms (“Good managers avoid red tape”) common to business schools and to promoters of entrepreneurially based performance paradigms, are not theoretical in content.  They typically call for “systems in which people are accountable for following the rules to systems in which they are accountable for results.”  In short, the New Public Management tends to place ends above means.  This may be acceptable in the private sector (although the number of CEOs in jail might suggest otherwise), but it is not acceptable in the governmental sector.

Conclusion

The debate over management paradigms is not as it is usually presented; one choice among several paradigms of equal value.  The truth is that the Constitutional paradigm is necessarily paramount.  It is not simply one paradigm among many.  It will always be paramount as long as we have a democratic republic.

Other paradigms; entrepreneurial, participatory, performance, marketing, or whatever you want to call them, are necessarily statements of normative value, not statements of theory, and are always derivative or dependent upon the constitutional paradigm.  That is; I can change management behavior by changing the law, but I can’t change the law by changing management behavior.

What has been most striking to me in my 25 years at NAPA has been the decline in the overall quality of government management notwithstanding one massive acronymic exercise after another.  I attribute much of this decline to the loss of understanding and appreciation of the Constitution and the distinctive jurisprudential system under which it must operate.

Presentation by John Kamensky

John Kamensky offered insights on two other perspectives that the Panel should consider as part of any conceptual framework for framing its future white papers providing its insights to presidential candidates and Congress.  Whatever concepts are selected would likely underpin its assessment criteria of the state of presidential management and likewise might serve as drivers for any potential recommendations or options the Panel might offer.

The “Market” Perspective

While Dr. Moe’s theory-based assessment provides a framework that can be used to develop principles for action, a challenge for academics is not only to develop theory but also to be able to relate it to what’s going on in the real world.  For example, Dr. Richard Neustadt attempted to do that in describing an alternative framework of how President’s can be effective leaders.  At that point, his alternative framework seemed to describe better what president’s did than did the traditional description from public administration theorists.

Considering the Market and the Civil Society perspectives are akin to what Neustadt did in the late 1950s.

The Market perspective assumes that individuals are motivated by personal preferences, not necessarily the public good.  While those who choose public administration as a profession dislike this assumption, it tends to reflect reality.  In such a framework, then, there are the following assumptions:

• government organizes around “services and results” not “agencies and programs.”
• it emphasizes a result-orientation vs. stewardship
• it is collaborative in nature vs. stove-piped
• it prefers fluid boundaries between levels of government, between government and private, non-profit organizations
• accountability is largely driven via transparency vs. hierarchy and inspection

Likewise, its principle characteristics are:

• Clear, central goals, policies, and oversight; decentralize implementation. 
• customize response vs. one-size-fits-all; to do this requires pushing as much authority as practicable to the front line delivery agent, or reducing the distance between the “center” and the “edge” as much as possible.
• Use incentives vs. disincentives where possible (trust but verify); principal-agent theory is one approach (contracting, performance measurement, etc.)
• Reliance on risk management vs. risk avoidance.
• An emphasis on being performance-based vs. process-compliance focused

A president who subscribes to a Market perspective might apply the following kinds of approaches to improve his or her institutional management capacity:

• Designate a commission or task force to design, develop proposals
• Look beyond just government management to government performance.  In this approach, he or she might use the Key National Indicators Initiative as an impetus for organizing around outcomes:
• This could lead to the creation of a new White House Council – such as a National Performance Council – to guide nation-wide outcome achievements in areas such as housing, healthcare, or environment.  Its operations might be based on a variation of Citistat or the Washington State GMAP.
• Another option might be the expanded use of “National Strategies” as a tool for doing this; National Strategies were described in an earlier session and are being used increasingly by this Administration as a tool for pursuing outcomes that reach across federal agencies, as well as states, localities, and non-governmental organizations.

The “Civil Society” Perspective

Leaders must have a reputation of legitimacy with the public.  They must be “out” amongst citizens.  The institutional presidency has traditionally not emphasized this perspective.  However, it has used it.  White House conferences are a medium the President uses to get/act upon dialogue with citizens on specific topics.  For example, he has used  Conference on Aging, Conference on Small Business, etc. to engage citizens in the past.  This “engagement with civic authority” was the genesis of Medicare.

There are other examples of executives engaging the public, but these are predominantly at the state level.  For example, Washington State governor Christine Gregoire conducts town halls and talks in-person around state-wide priorities.  In the past, other governors from Oregon and other states have used heavy citizen-dialogue efforts to gain legitimacy around state-wide goals.  With the advent of the Internet, wide-spread engagement has become more of a potential for the institution of the presidency and future presidents may choose to use this approach more than their predecessors.

PANEL DISCUSSION OF THE PRESENTATIONS

Kamensky asked Moe about his assertion that one of the underlying principles of the United States government revolves around the distinction between the private and public sectors.  Specifically, he questioned the implication that government should only act if it has been specifically authorized by law to do so.  Moe responded that although this was never explicitly stated in the Constitution, it has been interpreted in this manner over the years.  Moe also disputed Kamensky’s contention that if theory doesn’t match reality, you must change the theory.  He compared that line of thinking to the idea of revoking laws just because people are not complying with them.

Enid Beaumont said that if government followed Moe’s reasoning it would never change or adopt new practices.  Moe responded that his principles would not only lead to greater accountability but could also result creativity.  He cited the user fees charged for the Panama Canal as an example of the federal government using the market mechanism without ceding its authority to the private sector.

Fred Kaiser referred back to Tides of Reform and said there a whole chapter dedicated to how changes often occur because of idiosyncratic events.  This supports the view that reality will not always align with theory. 

Bernie Martin said that government is already operating how Moe believes it should.  GPRA and the “piggyback law” were enacted by Congress before their implementation.  Moe responded that Congress did not give them proper consideration.  In previous years there was more dialogue and debate before laws were passed.  He added that the executive branch should be more involved in the writing of laws because they are the ones that have to implement them.

Henry Hogue said the Moe’s approach is a deductive legalistic approach, while Kamensky’s perspective is more behavioral in nature.  Hogue added that these views are not mutually exclusive of one another.  The dilemma for decision-makers is when to use one approach versus the other.  

Dwight Ink doesn’t believe that the legislative or executive branch is more important than the other.  However, he has observed that when the executive branch attempts to circumvent Congress, the legislative response is to place more restrictions on the executive.  He strongly believes that cooperation between the two branches is essential and that this does not necessarily lead to the elimination of checks and balances.  Ink said that from his experience it was always beneficial to have a good working relationship with those who politically he disagreed with.  Kamensky agreed with the importance of the “people dimension” and the need to strive for commonality.

Costis Toregas referenced a report published by the Institute of Chartered Accountants of Scotland discussing a series of proposed fundamental changes for their profession.  They developed a set of principles they wanted to espouse, but they also recognized the human dimension and incorporated that into their planning with a performance based system. 

This is illustrated in a quote from the report,

“The report concludes that a principles-based approach to standard setting is not only desirable but essential, to serve the needs of business and the public interest and that the global convergence of accounting standards cannot be achieved by a detailed rules-driven approach.  The working group believes that principles-based standard setting will require: a change in the global profession, with preparers and auditors assuming more responsibility for their judgements; the documentation of key judgements in the financial statements; and regulators accepting a range of judgement-based outcomes.  The working group believes that rules-based accounting adds unnecessary complexity, encourages financial engineering and does not necessarily lead to a 'true and fair view' or 'fair presentation'”. ¹

John Stone talked about Federalist Paper 51 in which James Madison explained the core beliefs behind constitutional values.  Madison discussed the need to constrain human nature which historically has gravitated towards governance by tyrants.  Stone observed that it is the exception, rather than the rule, when people consistently work together in non-partisan ways.  As such, he doesn’t believe that moving from a hierarchical system to a performance-based system will improve governance. 

Huther introduced Debra Trent from George Washington University.  Trent informed the panel about a new human capital management report published by the Center for Innovation and Public Service and a related symposium to be held in December. 

Moe updated the panel on the agenda for the upcoming fall meeting.  The EOM panel will be meeting on November 15th from 1:30-3:30.  There will be four guest speakers on the institutional capacity of the president in the 21st century.  After the fall meeting, regular EOM meetings will recommence in December.