Performance-Based Organizations

Congress and the administration have suggested various approaches in recent years to make federal agencies more results-oriented and federal managers more accountable for results. One approach proposed by the administration is the performance-based organization concept, inspired by the Next Steps program that the British government introduced in the late 1980s. This report (1) compares the characteristics of the Next Steps program with the performance-based organization concept and (2) describes the changes and effects that the performance-based organization concept could have on the Saint Lawrence Seaway Development Corporation. Specifically, GAO examines how performance-based organization status would potentially affect the Corporation's financing mechanism; management structure; accountability for performance, including safety and regional economic impact; and congressional oversight.

GAO noted that: (1) the Next Steps Program and the PBO concept share certain characteristics, including the relationship of the Next Steps agency or PBO agency to its parent department; (2) however, important differences exist between the Next Steps Program and PBO concept; (3) while the U.S. government has been developing the PBO concept, the British government has continued to grapple with certain issues related to the Next Steps Program that may be of particular interest to Congress and the Administration as they consider the PBO concept; (4) these issues include the lack of clarity in relationships between agencies and their parent departments, difficulty in developing and setting performance goals, and uncertainty concerning who is accountable for performance; (5) SLSDC's primary funding mechanism would change under the Administration's proposed legislation from annual congressional appropriations to mandatory, formula-based payments based in large measure on the tonnage moved through the Seaway; (6) SLSDC officials said they needed stable funding to develop an more aggressive maintenance program and to increase the capital reserve fund; (7) however, the formula-based payment is not without some risk to SLSDC; (8) if tonnage does not increase as estimated, annual payments would fall short of SLSDC's projections and could decline; (9) under the SLSDC PBO proposal, Congress would no longer have a direct role in setting SLSDC's funding levels or determining how those funds should be used once the formula has been enacted and SLSDC would be provided a funding level derived from the formula irrespective of overall policy goals; (10) the harbor maintenance tax, which is the source of current appropriations for SLSDC and the source for the proposed mandatory payments, has been ruled unconstitutional by the U.S. Court of International Trade; (11) SLSDC's PBO proposal presents several changes in the area of accountability; (12) as a PBO, the leadership of SLSDC would change from a presidentially appointed and congressionally confirmed administrator to a chief operating officer, competitively selected by and accountable to the Secretary of Transportation; (13) SLSDC officials also want changes to SLSDC's management structure which are to provide greater autonomy from Department of Transportation activities and requirements to free up staff for SLSDC's primary mission of ensuring safe and reliable navigation through the Saint Lawrence Seaway System and the Great Lakes; and (14) PBOs in general are to result in improved organizational performance, but there are no clear indications of how PBO status would improve SLSDC's performance.