Mr. Fortune 500 Runs a Federal Agency

Roger Johnson recounts how he saved $11 billion in taxpayer funds by applying basic business principles

Roger Johnson has some good news and some bad news about how your federal government works.

"The good news is that your federal government is not being mismanaged," says the former head of the General Services Administration (GSA), back at his beachfront home here after a three-year stint running the $64 billion federal agency. "The bad news is that it's not being managed at all."

If that sounds like puff-chested hyperbole warmed over from a Ross Perot rally, read on. The Orange County Republican-cum-Democrat is not running for office and has a revealing story to tell.

After 35 years as an executive in several Fortune 500 companies, Mr. Johnson took his outside-the-beltway track record and put it to work inside the beltway at the GSA. That's the agency responsible for everything from paper clips to personal computers, federal buildings to phones - and a few of the $200 ashtrays you may have heard about. Now, after trimming $11 billion from the GSA budget and cutting 4,000 (out of 20,000) positions - without loss of services, programs, or laying anyone off - Johnson has resigned his position to write a book and hit the lecture circuit.

From the couch of his art-adorned home, Johnson delivers a punchline that might make a few ears twitch in both political parties: "From what I've just seen, bringing basic professional management principles to Washington could balance the budget in seven years, without cutting a program."

While some say that sounds ridiculous, others look at Johnson's track record in just three years in one agency and say he might not be far off. Either way, his experience sheds light on rampant waste in Washington. "Save a billion here and a billion there," Johnson is fond of saying, "and pretty soon you're talking big money."

"Roger Johnson brought a perspective to us that no one in Washington has had as long as I've been here," says Dennis Fischer, chief financial officer of the GSA, a 26-year, nonpolitical career official who has also served in several other departments. "He showed a bunch of policy and political people how to organize and run themselves and saved literally billions in the process."

The ideas he used to do so are commonplace in managing businesses, schools, and hospitals, says Johnson, but practically nonexistent in the federal government. Among them:

*Using balance sheets to track inventory. (How many paper clips are on hand? What is the cost to store them?)

*Managing assets such as buildings and cars. (Are they cheaper to buy or rent? Are prices competitive with the private sector?)

*Capital planning and budgeting. (How much does a computer bought today save in workload costs over, say, the next five years?)

"People in Washington don't do any of these things, not because they are stupid or greedy or corrupt," says Johnson. "They don't do it because they are primarily policy-oriented folks. They care more about issues of what to do in education, health, and welfare - not how to do it."

Johnson left the Clinton administration in March, he says, because he felt he could tell his story better and be taken more seriously if he were outside of government. He has said that his decision to step down was not related to a Justice Department review of his office accounts and that he has since been exonerated of wrongdoing.

Johnson insists his ideas are not rocket science, or even fancy ideas that only management gurus like Peter Drucker can understand.

An easy-to-grasp example is real estate. Half of all federal buildings are rented instead of owned because yearly leases (say $100,000) can fit into an annual federal budget more easily than a full purchase price. "In 20 years you've paid twice what the entire building would have cost to own," he says.

But such logic is commonplace in Washington because of "scoring laws" used to legislate management behavior that elsewhere would be dictated by common sense.

Noting that the federal code regulating purchases now runs 130,000 pages, Johnson says: "You get piles and piles of rules and then have to employ whole new bodies of people to make sure they are followed - congressional oversight committees, inspectors general, ethics committees."

"There is no doubt that what [Johnson] has achieved is very real savings and a model of what the government could well do if both Congress and federal managers put their minds to the business of results as opposed to simply thinking what their policies ought to look like," says Don Kettle, professor of public affairs at the University of Wisconsin, Madison, and a senior fellow at the Brookings Institution.

Johnson is not the first or only person to recognize the vacuum of professional management in Washington. With the mandate of "reinventing government," the Clinton administration has been attacking the problem head on with the National Performance Review (NPR) - a nonpartisan, 60-member task force of mid- to upper-level managers. The task force is now in the process of untangling and reforming the massive sets of federal statutes that stymie the application of such common-sense principles.

Clinton tapped Johnson, a lifelong Republican, for the NPR and the GSA in 1991, after long talks revealed a mutual desire for solutions that didn't neatly fit liberal or conservative ideologies.

Before coming to Washington, Johnson was chairman and chief executive officer of Western Digital Corp., a Fortune 500 high-tech firm in Irvine, Calif. He has held executive positions with Memorex Corporation, Singer Company, and General Electric.

Johnson says the story of his Washington experience is important not just for the billions of dollars involved but because "it goes to the heart of public cynicism about their government. People see things that make no sense and conclude that the place must be run by a bunch of idiots or crooks."

Quite the contrary, Johnson says. He says that federal employees were as hard working, competent, and honest as those he was familiar with in the private sector.

But not everything Johnson did was welcomed. A freeze of federal building projects already approved by Congress brought the wrath of several senators, and some Democrats tried to undermine his integrity with newsletters highlighting his Republican past. (A lifelong Republican, Johnson late last year aligned himself with a moderate wing of the Democratic Party.)

Johnson is proposing some of his own ideas about how to remedy Washington's ignorance of management principles.

*He is calling for American corporations who train their own personnel in management to voluntarily open their internal courses for free to government workers.

*He recommends a one-year swap of 500 to 1,000 of the top operating officials (chief financial officers, information officers, purchasing agents) between federal agencies and private corporations.

*He has suggested to President Clinton that top officials in Washington should not be hired unless they have experience running an organization of more than 2,000 employees and are fully conversant with basic management tools.

"We need to convince political people that it is in their best interest to have professionals running their operations because they can go much further on the dollars they have," says Johnson. Citizens have a vital role in this process, he says, and must question their representatives not only about policy or taxes but also about managerial oversight.

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