National Partnership for Reinventing Government

President Signs Law Establishing First Performance-Based Organization

October 7, 1998--A new law signed by President Clinton is the first to formally establish a performance-based organization (PBO) in the federal government, a concept proposed by Vice President Gore in 1996. The PBO provision in the bipartisan-supported Higher Education Amendments of 1998 will complement and strengthen reinvention initiatives already underway within the Department of Education.

What Is A Performance-Based Organization?

A PBO is a results-driven organization created to deliver the best possible services. During the past 15 years, numerous state, local and foreign governments have implemented similar performance-based models to improve service and reduce costs.

The Vice President proposed to create Performance-Based Organizations in an address to the National Press Club in 1996. "These PBOs would be run by chief executives who sign contracts and will be personally accountable for delivering results," he said. "...Their pay and job security will be tied directly to performance." The National Partnership for Reinventing Government (then the National Performance Review), developed model legislation to establish PBOs in federal offices.

New PBO Is Also a High Impact Agency

The National Partnership for Reinventing Government also designated Education's Office of Student Financial Assistance as one of 32 High Impact Agencies, that is, agencies that serve the most Americans. When the Vice President met with High Impact Agency heads, he told them to focus on three areas--partnerships, information technology, and customer service. As a PBO, the Department of Education's delivery of federal student aid--loans, grants, work-study and other assistance--will be led by an executive with expertise in formation technology and experience with financial systems. The new PBO executive will report directly to the Secretary of Education and will have new administrative flexibility in exchange for increased accountability for results. The Secretary will continue to be responsible for setting student aid policy.

Education's financial assistance program includes the reinvention initiative, Project EASI (Easy Access for Students and Institutions). Students and families are now able to apply for federal student aid over the Internet at

For More Information

For more information on Performance-Based Organizations and High Impact Agencies, contact John Kamensky, National Partnership for Reinventing Government, at For more information on Project EASI, contact Program Coordinator Molly Hockman at (202) 708-6234 or

Web Resources

Also see the following web resources:

10/14/98: GovExec Reports: First Performance Based Organization Created

Project EASI

Free Application for Federal Student Aid (FAFSA)

High Impact Agencies

Performance-Based Organizations

GovExec Congress Creates Performance-Based Organizations

White House Fact Sheet on Creating the Government's First Performance-Based Organization to Modernize Student Aid Delivery

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