USING A BUSINESS ANALOGY, AN APPROACH IS DESCRIBED FOR ORGANIZING EVALUATION OFFICES AND MEASURING THEIR SUCCESS IN TERMS OF INDIVIDUALS AND GROUPS SERVED. THE APPROACH IS BASED ON OVER 4 YEARS OF WORK WITH VARIOUS EVALUATION AND MANAGEMENT ORGANIZATIONS WITHIN THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE (DHEW): NATIONAL INSTITUTE ON ALCOHOL ABUSE AND ALCOHOLISM, NATIONAL INSTITUTE ON DRUG ABUSE, AND NATIONAL INSTITUTE ON MENTAL HEALTH. ABOVE THESE INSTITUTES ARE THREE LEVELS OF GUIDANCE AND REVIEW IN EVALUATION: (1) THE ALCOHOL, DRUG ABUSE, AND MENTAL HEALTH ADMINISTRATION'S OFFICE FOR PROGRAM PLANNING AND EVALUATION; (2) THE ASSISTANT SECRETARY FOR HEALTH; AND (3) THE ASSISTANT SECRETARY FOR PLANNING AND EVALUATION. PROBLEMS IN EVALUATION ARE TWO-DIMENSIONAL: EVALUATION OFFICES HAVE BEEN UNABLE TO DEMONSTRATE THAT THEY ARE SUCCESSFUL AND THERE IS NO AGREEMENT ON WHAT CONSTITUTES SUCCESS (NO OPERATIONAL FEDERAL EVALUATION POLICY). APPROACHES TO EVALUATION MANAGEMENT AND CONTROL THAT HAVE FAILED ARE NOTED. TO REMEDY FAILURES IN EVALUATION, THE BUSINESS ANALOGY APPROACH INCLUDES THE FOLLOWING ELEMENTS: SUCCESS CRITERIA FOR EVALUATION OFFICES, SUGGESTED MARKET DEMAND STUDIES, AND RECOMMENDATIONS TO DEVELOP A FEDERAL EVALUATION POLICY. IN THE APPROACH, NO ARBITRARY MODELS OF THE DECISIONMAKING PROCESS ARE DEFINED. THE THREE FEDERAL MARKETS FOR EVALUATION INFORMATION (CONSUMERS OR INDIVIDUAL GOVERNMENT OFFICIALS, PROGRAM MANAGERS, AND POLICYMAKERS) ARE DETAILED, AND THE USE OF THE BUSINESS OR MARKET APPROACH TO GUIDE EVALUATION OFFICE PLANNING AND TO ESTABLISH A FEDERAL EVALUATION POLICY IS DISCUSSED. APPENDIXES PROVIDE FURTHER INFORMATION ON EVALUABILITY, RAPID FEEDBACK EVALUATION, AND THE MEANING OF EVALUATION AS EMPLOYED BY A DHEW TASK FORCE ON HEALTH EVALUATION. (DEP)