[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]





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


                                 ______

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
GINNY BROWN-WAITE, Florida           C.A. DUTCH RUPPERSBERGER, Maryland
JON C. PORTER, Nevada                BRIAN HIGGINS, New York
KENNY MARCHANT, Texas                ELEANOR HOLMES NORTON, District of 
LYNN A. WESTMORELAND, Georgia            Columbia
PATRICK T. McHENRY, North Carolina               ------
CHARLES W. DENT, Pennsylvania        BERNARD SANDERS, Vermont 
VIRGINIA FOXX, North Carolina            (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                DANNY K. DAVIS, Illinois
TOM DAVIS, Virginia                  MAJOR R. OWENS, New York
DARRELL E. ISSA, California          ELEANOR HOLMES NORTON, District of 
KENNY MARCHANT, Texas                    Columbia
PATRICK T. McHENRY, North Carolina   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


                            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

 
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 understands 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.
    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 success 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:]

    [GRAPHIC] [TIFF OMITTED] T3206.001
    
    [GRAPHIC] [TIFF OMITTED] T3206.002
    
    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:]

    [GRAPHIC] [TIFF OMITTED] T3206.003
    
    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 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 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 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 block-modernize 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.
    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 and in the world 
in the 1950's and 1960's, and we need to fundamentally 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 
additional 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.
    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 your organizations that says this is the role. We expect 
from Homeland 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 working. They come out of a philosophy that believes 
in government; 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 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 $2\1/2\ 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 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 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 results-oriented, 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. 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.
    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 authorizations, 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 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 long-term. 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 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 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.
    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 and we essentially said be entrepreneurs, develop 
fixes for radiation 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 high-performing 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 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.
    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 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 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 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.
    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.
    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 market-oriented 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 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 long-term 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.
    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.
    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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