A study examined local U.S. Employment Service (ES) office placement performance and the role of the U.S. Department of Labor (DOL) in guiding and monitoring state and local ES program performance. Regression and other statistical methods were used to analyze state and local program performance based on the following: placement data for approximately 1,700 local ES offices; information regarding services, applicants, and labor market conditions for 438 local ES offices; and ES program management practices and funding levels for 50 states and the District of Columbia. Four focus group discussions were held to elicit employer perceptions of factors affecting ES performance, and national/regional offices were studied to assess DOL influence on ES program performance in 25 states. The study established the following: focusing on program performance produces better placement results; client-oriented services boost local office performance; and limited federal involvement does little to strengthen program performance. (Appended are details regarding the study methodology and variables, statistics for state and local management practices/office operations for 1986, comments from DOL and the Interstate Conference of ES Agencies, and a list of major contributors to the report. Thirteen related General Accounting Office products are listed; 50 tables/figures are included.) (MN)