Performance-Based Organizations:

Lessons From the British Next Steps Initiative

T-GGD-97-151: Published: Jul 8, 1997. Publicly Released: Jul 8, 1997.

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GAO discussed the British Next Steps initiative, a model the administration used in crafting its performance-based organization (PBO) proposal, and the lessons that the Next Steps experience suggest for PBOs in the United States.

GAO noted that: (1) the administration has proposed the creation of PBOs modeled after the British Next Steps agencies; (2) PBOs, like Next Steps agencies, seek to separate service delivery functions from policy functions; (3) in exchange for flexibilities from some governmentwide requirements, the head of the agency is to be held directly accountable for the agency's performance; (4) Next Steps agencies are the British government's predominant form of service delivery; (5) these agencies have reported that, over the years, performance has improved, in some cases substantially; (6) some agencies have reported significant cost savings; (7) the British government has confronted some difficult and continuing issues Congress may want to consider as it considers the PBO concept; (8) these issues include a lack of clarity in the relationship between agencies and their parent departments, an uncertainty concerning who is accountable for performance, and difficulties in developing and setting performance goals; (9) the British have found that the roles of the Next Steps agencies and their parent departments often remain unclear because of the problems inherent in trying to delineate responsibilities; (10) management decisions made by Next Steps agencies can have impact on policy choices made by their departments; (11) lack of clarity in roles between agencies and departments affects accountability; (12) it is sometimes difficult to tell if a poor result was due to policy or inadequate implementation of that policy; (13) British evaluations identified three areas of concern regarding performance measurement: (a) goal setting does not always reflect what is realistic as much as adding incremental improvements to prior results; (b) it can be difficult to determine exactly what to measure; and (c) it is important to ensure that performance information is put in a proper context and used to improve performance; (14) GAO reported to Congress in May 1997 on the administration's proposal to convert the Saint Lawrence Seaway Development Corporation to a PBO. GAO found that such a conversion would result in significant changes in the Seaway's management structure, funding mechanism, and relations with Congress; and (15) however, since PBOs must be created through enactment of enabling legislation, Congress has an opportunity to define its role with regard to the Seaway or any other PBO.

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