How agencies can get the inside scoop on wasteful programs

Steve Kelman is professor of public management at Harvard University’s Kennedy School of Government and former administrator of the Office of Federal Procurement Policy.

Many companies that have a new product or project in the works have adopted a novel way to predict whether the effort is likely to be on-time or on-budget. Rather than relying solely on the project’s manager — because the manager might not be forthcoming with unbiased information — some companies now seek information from all those working on the project.

To ensure that employees have an incentive to (anonymously) give accurate information, each person receives a sum of money to buy “shares” in a “stock” representing a project completion date and/or final cost. The stock pays out to those holding the shares that represent the actual completion date or final cost. The relative prices of the shares reflect the aggregated best judgment of the people working on the project regarding how long it will take and how much it will cost.

That prediction market is an example of crowdsourcing — using the wisdom of crowds to aggregate the judgments of lots of people into one outlook that is often more accurate than the view of an individual expert.

In our current deficit environment, we should, in an analogous way, be soliciting the judgments of the millions of federal employees to locate wasteful government activities ripe for termination.

We could give every civil servant one vote to nominate a wasteful government activity that should be eliminated. Officials could compile a list of the top 100 choices, and then the Office of Management and Budget could more closely evaluate the 50 that would potentially save the most money.

At the end of the process, every civil servant who voted for an activity that was stopped would share from a pool of the first-year savings from eliminating the activity, minus the costs of running the program. Savings in subsequent years would go to deficit reduction.

Depending on the number of people who voted for the winning suggestions and the amount of savings, employees could receive a moderately large amount of money. For example, if 10,000 civil servants voted for a suggestion that saved the government $30 million in the first year and the program cost $10 million to run, each employee’s personal share would be $2,000.

Some activities should be excluded from the program. First of all, substantive policies whose value is under political dispute, such as funds for high-speed rail or agricultural subsidies, should be decided by the president and Congress. Second, government management challenges, such as reducing Medicare fraud or improper payments under benefit programs, cannot simply be turned on and off but instead require significant and ongoing management intervention to accomplish.

Instead, I’m thinking of activities that achieve little toward meeting a program mission but on which significant funds are being spent. Examples include production of nonstatutorily required reports that nobody reads, service contracts that employ lots of people but produce little of value, offices in which a large part of the workforce is significantly underemployed, product purchases that gather dust, nonstatutorily required procedures that cost money for no good reason, and development efforts that are going nowhere.

Allowing employees to take a proportion of savings would require legislation, and some people might balk at the idea of paying feds for their ideas. But keeping 100 percent of the savings on ideas that never get generated yields zero in deficit reduction. Getting a percentage of real savings is a better deal for taxpayers.

About the Author

Kelman is professor of public management at Harvard University’s Kennedy School of Government and former administrator of the Office of Federal Procurement Policy. Connect with him on Twitter: @kelmansteve

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Reader comments

Mon, Jun 13, 2011 Steve Kelman

I have not only read James Q. Wilson's Bureaucracy, but he was my dissertation advisor many years ago. I am not sure what in his book would say that this idea couldn't happen.

Wed, Jun 8, 2011

Mr. Kelman, have you read James Wilson's _Bureaucracy_? If you have read it, then what in the world makes you think that this idea would ever be implemented?

Wed, Jun 1, 2011 Michael Smith Washington DC

Steve: Employed in DOD lived through the first version of NSPS. Three ago I wrote to a variety of people indicating that they didn't need to waste 100's of millions of dollars in the creation of a new pay scale that was based on performance what they needed to do was dust of the regulation at OPM on the GS Scale and hold HR offices and Supervisor accountable to do their jobs. Specifically, everyone thinks that step increases within a certain grade are automatic THERE NOT suppose to be. They are suppose to be based on an individuals successful performance of their job. If the manager concurs then and only then is the step suppose to be authorized but this has become rubber stamped by HR offices and the supervisor never even sees the SF50 announcing that a step is due and should it be authorized. So how can the current GS schedule be corrected and improved. For one send managers to a refresher course on what are the rules, two, direct HR offices across the country to do their job and forward the paperwork to the proper supervisor for action. Three take the current ten steps within each grade and where it's two and three years between steps flatten it make it one year and extend out for 19 steps. In essence each step is worth about $750 when you do this. These small actions will save DOD hundreds of millions which were tossed down the drain because no one is willing to listen to a, at the time GS-13. Had this been incorporated across the Government instead of all these various pilot programs over a billion dollars might have been saved. Instead, DOD contracted for outsources to come up with a plan, develop it, train over 300,000 employees three different times at a week each time, plus supervisor got and additional week for all the work they had to do, the labor intensive task for each employee to write his or her "I love me document" that explain what great things I did in the previous year to be rewritten by supervisor, debated by others etc. I actually asked my SES who is more valuable an individual that does one contract a year worth in excess of a billion dollars, the contracts person that does 40 deals worth $60 million or an individual that does 300 deals at $15 million. The answer provided was the correct answer that they're all valuable and important. However, in reality the one who did one deal is the most valuable because they had to brief the SES, the Flag, ASN, etc. So they're also the ones that pick up the rewards. Who performed outstanding they all did so all should have been rewarded equally. It's an easy picture of the GS scale to draw up which as we all know if it's easy it can't be correct! WHY?!!

Wed, Jun 1, 2011 Robert Damashek, Binary Group Arlington, VA

Steve, I think this kind of thinking is a step in the right direction but could go even further with greater impact if this incentivizing was not limited to completely eliminating Government activities, but also to identifying significant cost savings/avoidance opportunities through process changes. Why not also extend this crowd sourcing to citizens, particularly those involved in analogous activites outside of Government? Government program managers themselves might be incentived for identifying streamlining opportunities if important value-added aspects of their own programs could share in the identified cost savings or avoidance.

Tue, May 31, 2011 Matthew Carson City

Steve, I'll race you to Vegas.

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