Good Policy Makes For Better Politics — Improving Government Efficiency and Transparency: A Timely Issue for Both Parties

TransPro CEO Mark Aesch provides an interesting view of government efficiency. In this posting for the Early Warning blog Aesch explains how good policy makes for better politics.

With the Republican Convention underway and the Democratic convention just days away, there is a major, largely unspoken, issue on which both parties should be able to agree: better evaluation and performance of government agencies. Efficiency and excellence in government are not partisan issues.

Indeed, with public budget hemorrhaging, the fiscal cliff on the horizon, and misleading lectures to voters that their only choices are higher taxes or slashing government programs, managerial efficiency in our government agencies can and should become the highest priority.

Just like stockholders are more likely to invest in a business that has a proven record of performance, taxpayers are demanding and deserve high quality, transparent results and public sector leaders must be able to provide it.

The best place to start is with state and regional agencies that receive hundreds of millions in annual federal funding. No legislation would be required for these agencies to evaluate their own performance and to take it a step further and compare it to their peers. Wall Street does it every day. It is time for the government sector to do the same.

The absence of meaningful performance data requirements is clearly evident in the recently passed federal transportation bill, signed by President Obama in July, which provides $120 billion in spending over the next 28 months for roads, bridges, and mass transit. The law includes numerous requirements for reports and evaluation on performance, though unfortunately most are in vague terms.

A better approach (which I had advocated to the House Transportation Committee) would have been to establish a national benchmarking system for transportation agencies. Agencies would be placed in groups with similar organizations in terms of size of the service population and geographic location. Independent analysis would determine how efficient each agency is, rank it against peers, and ultimately connect the distribution of limited tax dollars to those organizations committed to excellence.

This same approach could be applied in the Department of Defense. We could start simply by requiring independent, verifiable cost data for the public defense maintenance, repair and overhaul facilities. Then we could benchmark those costs and their performance against one another as well as against their private sector counterparts. Legislation could be formulated to require greater competition between the public and private defense industrial bases.

Whether one favors cuts in government spending or increasing it, the best decisions will be driven by independent, verifiable, performance-oriented data, not by ideology, personality, or simply instinct.

The unfortunate reality, though, is that government agencies seldom embrace the same full disclosure, information based decision making that they hypocritically mandate private companies follow. In fact, the scrutiny that government contractors are under from the Defense Contract Audit Agency is extensive, with in-depth audits based on complex accounting rules and regulations. And these requirements become more cumbersome every year.

This same level of scrutiny, however, seldom applies to the overall operation of government agencies. Private investors would never buy such a stock. Taxpayers are sadly not given a choice.

In fact, government agencies should develop a strategically aligned performance measurement system, resulting in a report card and a “stock price” for a public agency. One number marries up all the individual performance metrics, compared to goals, and in a transparent fashion. Just like publicly traded companies report their earnings, public agencies can and should report to taxpayers whether they are meeting the Quantifiable Definition of Success as publicly announced at the beginning of the year.

Treating the taxpayer like a shareholder will dramatically improve government performance and eliminate the silly suggestion that we face a choice only between higher taxes or slashing service. It is time we introduce performance and productivity to the government sector discussion.

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About the Author: Mark Aesch is the founder and CEO of TransPro, an advisory firm that serves government agencies. As the CEO of the Rochester Genesee Regional Transportation Authority, he led a turnaround of the agency from a $27.7 million deficit to a $35.5 million surplus while reducing fares, increasing customer satisfaction, reducing costs, and winning a lawsuit against the Federal Transit Administration.