The Silent Revolution

Governing through a diverse array of third parties can provide important advantages to public managers at all levels. It also poses daunting management and accountability challenges.
by | November 6, 2006

Most of us would acknowledge that the scope and role that government plays in our lives has grown exponentially over the past 60 years.

Coinciding with the end of World War II, governments at all levels have been called upon to deal with a growing range of daunting problems and aspirations in areas ranging from health care and transportation to energy production and conservation and environmental protection.

It goes without saying that the federal government of President Truman, for instance, cast a far smaller shadow on the nation than the government of President George W. Bush, as reflected in the growth of federal spending from 11.6 percent of the economy in 1948 to 20.1 percent in 2005. Surprisingly, however, the number of federal civilian employees has remained roughly the same over this period. President Truman's government employed from 1.6 to 2 million civilian employees, about the same level as President Bush's government of 1.8 million employees.

This puzzling factoid reflects an important paradigmatic shift in the nature of governance that has been going on for five decades, literally under the radar screen of many public dialogue about government.

The growth of government programs and spending in the past half century was not accomplished by using federal employees, but rather by leveraging the resources of other sectors of the economy, whether it be contractors, state and local governments, or nonprofits. Paul Light's analysis shows that federal employees now constitute only a small share of the nearly 15 million-member government workforce of contractors, state and local grantees' staffs working under the yoke of federal grants and mandates, and others who have been cajoled, mandated, enticed, jawboned or mobilized to work on federal goals and programs.

Indeed, it is difficult to find many major federal mission areas that do not rely heavily on third parties for program delivery and even goal definition. Even the function of defending the nation's borders has become a matter dependent on other actors beyond the Pentagon, whether it be defense contractors or local fire departments and other first responders who have become the line of first defense in the event of a terrorist attack. Contractors used by such agencies as NASA and Energy outnumber federal employees by ratios exceeding 10 to 1.

Similar trends are present at the state and local levels. Contracting accounts for nearly 20 percent of state budgets. At the local level, leaders are realizing how reliant they are on other sectors to meet public goals and expectations. For instance, protecting the critical infrastructure in cities from a variety of manmade or natural threats often calls for collaborations with private owners of such assets as rail yards, port facilities or chemical plants.

This silent revolution in public administration created a dramatic shift in the nature of public management and policy development -- in ways we are just beginning to appreciate and study. Thanks to the path-breaking work of scholars such as Lester Salamon, Don Kettl, Paul Light and Stephen Goldsmith, we are now realizing that the old public administration focus on the management of bureaucracies to deliver faithful implementation of public goals has to be reframed as the study of governance, not government alone, becomes the new watchword for policy formulation and management in the public sector.

Governing through a diverse array of third parties can provide important advantages to public managers at all levels -- third parties enhance the legitimacy of government, share the costs, provide critical skills and authorities not available to governments, and help adapt programs to unique local conditions and needs.

However, this emerging approach to governance also poses daunting management and accountability challenges that complicate the projection of public goals. A greater range of actors is invited and empowered to share in the process of determining program goals and delivery with far less certain results than might be obtained through traditional hierarchies. The disconnects between smart policy proposals hatched inside government and the results achieved years later are greater, particularly if we fail to understand this more demanding and complex public management environment. One scholar aptly summarized the challenges facing public officials by noting that third party networks offer more opportunities for "free riding and free wheeling...."

Achieving accountability in these relationships is particularly challenging -- transferring who does the work does not relieve governments of responsibility for performance. It may be no coincidence that the period of growing public-sector reliance on third parties coincided with a broad, sweeping indictment of the capacity of government to deliver on those expectations.

Yet, there remains much confusion in the public debate about these trends. For instance, management reformers in recent administrations and Congresses continue to conceptualize managing large agencies as the heart and soul of effective public service delivery.

In the 1990s, federal legislation to improve financial and performance management was largely aimed at improving federal agency internal operations and management. While the Clinton administration's National Performance Review embraced reinventing government by pushing government to "steer rather than row," this initiative failed to recognize that steering had become the central federal practice for years, with the emerging challenge being how to steer independent actors to achieve common goals.

The Bush administration has developed a management scorecard that focuses on how well agencies are managing core functions of financial, performance, information and human capital management. These areas are no doubt important and warrant continued attention but largely do not register how well agencies are doing in managing through others using the new tools of governance. We have yet to develop the scorecard to rate and rank the quality of our governance.

Indeed, even those who recognize these trends use differing metaphors and descriptors to define what this revolution is all about. Some depict the new governance as government by contract, with "make or buy" as the key decision. While accurate in many cases, this model fails to take into account the numerous areas in which government has no choice but to engage third parties -- whether it be special education or first responders, the federal government has no real "make or buy" choice except to design tools to influence existing third-party providers.

Some suggest that this revolution is a "devolution revolution" in which governments are relinquishing powers to other entities. Again, while capturing the essence of such areas as welfare reform, this model does not account for the many areas in which governments' engagement of third parties has served to mandate or preempt their authority and flexibility, whether through the carrot or the stick.

In future columns, I will continue to explore the implications of this silent revolution for accountability, performance, public involvement and public affairs education.

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