Defense Business Operations Fund (DBOF): Problems and Promise

In 1991, the United States Department of Defense established the Defense Business Operations Fund (DBOF). The DBOF includes support activities with a business volume well in excess of $80 billion annually, and it provides activities and services that are essential to the operation of the military forces. The necessity to reduce the defense budget and to find innovative ways of producing more defense than would be possible under prior operating and management arrangements caused the Department of Defense (DoD) to look to alternative economic and business models. The changes made are dramatic. The implementation has not gone as smoothly as some observers expected, and Congress and former Secretary of Defense Aspin each considered reversing the innovation. This article addresses the problems and the promised improvements in the context of the economic and management concepts undergirding the DBOF, concepts that are dramatically different than those previously applied in the DoD     

Motivation Crowding and the Federal Civil Servant: Evidence from the U.S. Internal Revenue Service

ABSTRACT

Pay-for-performance reforms create “high-powered” incentives for civil servants to meet or exceed specified performance objectives as measured by such things as customer satisfaction. Economists and social psychologists have advanced the claim that high-powered incentives for performance may empirically lessen the effect of civil servants' intrinsic motivation toward achieving agency goals (motivation can be “crowded out”). Nonetheless, well-designed pay-for-performance incentives may “crowd in” intrinsic motivation. A number of federal agencies and subagencies have undergone personnel management reforms that raise the specter of this pattern of “motivation crowding.” Does it happen? Is intrinsic motivation crowded in or crowded out? This paper employs item response theory to create measurement models for the estimation a latent trait of intrinsic motivation for employees of the Internal Revenue Service (IRS) and Office of the Comptroller of the Currency (OCC) using data from the 2002 Federal Human Capital Survey. The IRS, but not the OCC, implemented a paybanding system that imposed high-powered performance incentives on supervisors, but not on non-supervisory personnel. Results suggest that the IRS reward structure crowded in intrinsic motivation at the lowest levels, but that at the highest levels of motivation intrinsic motivation is crowded out, a pattern not seen in the OCC data.     

Preventing construction deaths: The role of public policies

Are stronger direct financial incentives or regulatory enforcement effective in reducing fatalities in the construction industry? We examine two important policies—state workers' compensation (WC) programs and federal and state Occupational Safety and Health Administration (OSHA) activities—which embody those strategies. We examine their impact by looking at state-level fatality rates in the construction industry from 1992 to 2016. Setting aside highway crashes and violence, the majority of employee deaths occur in construction. We find that states which exempt small firms from the requirement to buy WC insurance have higher fatality rates. When eligibility for compensation is restricted by longer waiting periods, fatality rates are substantially higher. More frequent federal or state OSHA inspections and, especially, consultation visits are associated with lower fatality rates, but higher average penalties are not. Limited variation in these policies over our sample period, especially for WC, makes these results suggestive rather than definitively causal.     

CIVIL SERVICE REFORM IN THE USA: PROMISE VERSUS REALITY*

Abstract: The 1978 Civil Service Reform Act (CSRA) mobilized changes to the basis and structure of the federal service which are the most far-reaching since those installed by the Pendleton Act in 1883. Several of the 1978 provisions were directed toward encouraging a more incentive-oriented approach to personnel matters. Other measures involved the dismantling of the Civil Service Commission, the installation of new mechanisms to handle labour-management relations, the codification of merit principles, and the delegation to individual agency managements of wider personnel responsibilities. This paper raises the question of whether, four years after the passage of CSRA, there are indications that the legislation is living up to its earlier promise. Attention focuses upon the character of the 1978 measures and how well the federal service is coping, or is being allowed to cope, with the private sector-style, rewards-sanctions approach to personnel matters which was embraced by the Carter proposals. To a very significant degree the 1978 Act's provisions in that respect concentrated upon the more senior managerial and supervisory levels. It is less surprising, therefore, that many of the difficulties now associated with CSRA's implementation also are concentrated among those same groups (Senior Executive Service and merit pay). The salary and other incentives available to career executives for outstanding job performance have been eroded by Congress; the sanctions for poor performance remain, however, while worries persist about the possibilities of manipulating the new performance appraisal procedures in order to harass or remove career government officials. Meanwhile, the bulk of the federal service is, in practice, largely unaffected by the new performance appraisal arrangements. Many of the concerns about CSRA have been reinforced by the actions of the Reagan Administration and the 97th Congress. The bonus system for career executives remains under siege, the pay cap remains intact, while there are more general doubts about the Reagan Administration's commitment to civil service reform. The locus of responsibility for overseeing CSRA's implementation remains unclear, while there is evidence in some agencies that Reagan political appointees have attempted deliberately to exclude career executives from the policy process. Thus, despite the probably well-intentioned initiatives enshrined by CSRA, the US federal service still finds itself beset by problems of identity and support. It still feels vulnerable, too, to the types of political abuse from which the 1978 measures were supposed to afford protection.     

Buying in a Businesslike Fashion— And Paying More?

The government, particularly the Department of Defense (DoD), is undergoing yet another wave of acquisition reforms, which are intended to bring commercial buying practices to DoD's purchasing operations. This research shows that, prior to these reforms, the DoD's buying practices were superior to commercial practices in terms of prices paid for a large number of electronic and engine parts. The research compares DoD and purchasing of more than 676,000 identical items costing more than $60 million with commercial purchasing of the identical items. It finds that the DoD's purchasing superiority holds even when purchasing costs are considered. The DoD achieved these results because it was already using commercial practices commonly followed by large firms: aggregating purchases, using cost data, and negotiating aggressively in markets with few suppliers. Some of the recent reforms will undermine the DoD's ability to exploit these common commercial practices and will raise the government's costs.     

ASSESSING INTERGOVERNMENTAL COORDINATION IN COASTAL ZONE MANAGEMENT

One of the primary incentives to state governments to participate in the national coastal zone management program is the legal requirement that federal resources use activities as well as federal projects and federally permitted activities that affect state ocean and coastal areas must be consistent with federally-approved state coastal programs. The "consistency provisions" are among the most innovative attempts to insure intergovernmental coordination in resource management. In assessing the implementation of the consistency provisions, we find that this legal requirement has led to the development of a variety of formal and informal collaborative mechanisms for intergovernmental coordination in ocean and coastal management. While these mechanisms have led to the resolution of the vast majority of federal-state conflicts in coastal areas some important federal-state conflicts have not been resolved. This has more to do with the character of these particular conflicts than the general effectiveness of the mechanisms for collaboration that have been established.     

Retention and retirement: The case of the U.S. military

The military retirement system provides an immediate, lifetime, inflation-protected annuity to personnel who complete 20 or more years of service. The cost of this system has risen substantially in the past 15 years, and the system's actuarial costs now comprise almost one-third of total military manpower costs. Because of its importance in the total military compensation system, the military retirement system exerts a significant influence on the age structure of the force and on personnel turnover patterns. This article evaluates the relative efficiency of the current retirement system by comparing it with two recently proposed alternatives, one by a presidential commission and one by the Department of Defense. It estimates the impact of these proposed alternatives on the military personnel force structure and on manpower costs. It is concluded that these alternatives would provide a force as capable as today's force at significantly lower cost.Order of authorship determined alphabetically. This paper presents results of analysis conducted while Enns and Nelson were associated with the Department of Defense and Warner was on the staff at the Center for Naval Analyses. The views presented herein are those of the authors.     

Nigerian Federalism Under Civilian and Military Regimes

Nigerian experiences with military and civilian rule suggestthat military rule is not entirely incompatible with federalism.The heterogeneous and centrifugal forces that operate in a multinationalpolity like Nigeria make the use of federal principles a reasonableoption for military rulers. To some extent, federal principleshave become entrenched in Nigeria. Too great a violation ofthose principles by a military regime can spark communal conflictand destabilize the regime. The major differences in the operationof civilian and military federalism are to be found in the styleand structures of administration.     

Price Effects around a Sales Tax Holiday: An Exploratory Study

Tax relief from a sales tax holiday depends on lower final prices for the eligible goods. In this article, prices are compared for ten goods across several retail locations before, during, and after the 2001 Florida sales tax holiday period. The comparison is also extended to the same items in a metropolitan statistical area just outside of Florida. The exploratory data indicate that before-tax prices are slightly higher in Florida retail establishments during the sales tax holiday, but it is not clear whether these prices reflect less generous markdowns by Florida managers or pricing decisions for much larger regions. Whichever the case, the tax policy forces consumers to speculate on non-holiday prices and choose items where the final price is, in fact, lower during the holiday.     

Federal Government Leasing: Costs, Incentives, and Effects

This article examines the lease or borrow decision from the perspective of the United States federal government as the lessee. It argues that there are several sources of friction in the leasing market that will make leasing more costly than buying for the federal government. Nevertheless, the budget process contains powerful incentives for federal government agencies to lease even though leasing is the most costly alternative.     

Politics and the implementation of public policy: The case of the US military housing allowance program

Are bureaucracies in fact controlled by the president, Congress, or legislation? We analyze a 1998 policy change in the Department of Defense’s (DoD) $6.5 billion annual military housing allowance program. Results show that both the president and Congress were able to influence the bureaucracy, even in the presence of an exceedingly specific law that outlined the manner in which the DoD was to allocate the funds. After policy implementation, allowances were disproportionately higher in locations that (a) supported the president in the 1996 election and (b) were represented by members of the House or Senate Armed Services Committees.     

The Impact of the Philadelphia Beverage Tax on Prices and Product Availability

In recent years, numerous cities in the U.S. have enacted taxes on beverages to promote health and raise revenue. This paper examines the impact of Philadelphia's beverage tax, enacted in 2017, on the prices and availability of both taxed and untaxed beverages. Using original data we collected in late 2016 and again one year later, we estimate difference-in-differences regressions of the change over time in beverage prices and availability in stores in Philadelphia relative to stores in nearby counties. We find that, on average, distributors and retailers fully passed through the tax to consumers. Pass-through is higher for individual servings than for larger sizes. There is also heterogeneity in the pass-through rate among stores; it is greater among stores that are in higher-poverty neighborhoods, located farther from untaxed stores outside Philadelphia, and that are independent as opposed to part of national chains. We also find that the tax reduced the availability of taxed beverages and increased the availability of untaxed beverages, particularly bottled water, in Philadelphia stores.     

A Framework for Analyzing Emergency Management with an Application to Federal Budgeting

Emergency management is a complex policy subsystem that involves an intergovernmental, multiphased effort to mitigate, prepare for, respond to, and recover from disasters. This article develops a framework for analyzing the fiscal and functional aspects of disaster policy. It uses established theories of intergovernmental relations to offer a rationale for examining the capabilities required to implement disaster policy and the behavioral incentives that drive policy formulation. In particular, the article identifies the extent to which the capabilities and political objectives characteristic of each level of government are aligned, and illustrates the interplay between incentives and competencies by reviewing the federal disaster funding process. The current rules for federal budgeting may inappropriately promote spending on disaster response and recovery, while de-emphasizing mitigation and preparedness. Various proposals for reform could establish more coherent incentives, making disaster spending more consistent with the relative functional capabilities of the various levels of government.     

The intelligence of fear

Intelligence agencies long have brought unwelcome news to civilian political and military masters – and sometimes suffered severely for it. Even in Western democracies, insecurities and outright fear produce behavioral responses by individuals and defensive institutional reactions that distort normal intelligence activities and affect the overall performance of intelligence agencies. Causes of fear include: political leaders, overseers, agency managers, and the security elements of their organizations. This article highlights the importance of institutional factors, especially organizational cultures and incentives, on the activities and overall performance of intelligence agencies and suggests that motivated biases, caused by personal and organizational self-interest and fears, are more significant causes of intelligence failures than are commonly believed.     

Market forces and private sector processes in government policy: The job training partnership act

This article examines those provisions of the Job Training Partnership Act designed to introduce the presumed efficiency of marketlike forces and incentives into federal employment and training programs. First, the JTPA replaced the administrative system used in earlier training programs (which emphasized detailed federal control and monitoring of the programs at the local level) with a system that, in effect, set a price for a prescribed level of performance and reduced oversight of the training process. Second, the Act gave people in private business some control over programs at the local level. According to available data, JTPA program performance is no different in local areas with a strong private-sector involvement than in areas where that involvement is weak and passive. The performance standards have had an effect, although the relationship between the standards and the goals of the JTPA is ambiguous at best. The article outlines the limitations of a market-oriented system for the administration of public policy.     

"Federal Character" and Management of the Federal Civil Service and the Military

The "federal character" principle, which has been enshrinedin Nigeria's Constitution since 1979, seeks to ensure that appointmentsto public service institutions fairly reflect the linguistic,ethnic, religious, and geographic diversity of the country.Application of the principle in the federal civil service andthe military has amounted to a confused balancing of the meritprinciple and the quota system, based essentially on statesof origin. This has had adverse consequences for both institutionsin terms of discipline, morale, and overall effectiveness andefficiency. Faithful implementation of universal primary educationand imaginative rehabilitation of secondary and tertiary educationare required to ensure equal opportunities for all citizensto compete for civil service positions on the basis of merit.With regard to the military, only rapid implementation of theconstitutional provision on compulsory military training anda definitive end to military rule can help to reduce the salienceof the "federal character" principle.     

Public Incentives,Market Motivations,and Contaminated Properties: New Public Management and Brownfield Liability Reform

Brownfields pose challenges to both communities and policy makers. Public funds are insufficient to remediate these contaminated sites, but, given the uncertainty of contamination and the complexity of liability, private interests are reluctant to become involved for fear of future litigation. From a New Public Management perspective, market incentives can be used to encourage private sector remediation of sites. However, this change implies a shift in administrative function from regulation to “getting the incentives right.” In this research, the authors investigate whether state and federal reforms aimed at increasing private sector involvement have actually done so, and they consider the implications for other goals of brownfield remediation, such as providing economic development assistance in communities where such change is needed. Findings show that developers respond to insurance and tax incentives, but the authors question whether public incentives are making unattractive redevelopment opportunities worth investing in or simply making profitable redevelopment opportunities more profitable.     

Availability of affordable healthy food in Hillsborough County,Florida

Prior research has indicated that low‐income neighborhoods in urban regions throughout the United States have limited access to healthy food, which partly explains the prevalence of diet‐related diseases. Our study provides new evidence on the relationship between access, prices of healthy food, and key demographic factors in Hillsborough County, Florida. The research team completed 65 surveys of grocery and convenience stores regarding availability and prices of 11 food items included in the Nutrition Environment Measures Survey in Stores (NEMS‐S). Results from the regression analysis indicate that affordable healthy food is more likely to be found in grocery stores than in convenience stores. There is no significant evidence, however, that low‐income neighborhoods have less access to healthy food than the not‐low‐income ones. We also observe significant price differences among types of stores but not in grocery‐to‐convenience store ratios among income groups, suggesting that low‐income families are not exposed to higher food prices.     

Intergovernmental Relationships and the Federal Performance Movement

Although implementation of the federal Government Performanceand Results Act (GPRA) has provided the framework for the federalperformance effort, other efforts have been undertaken withinfederal agencies to balance the two often conflicting imperatives:to provide states with flexibility and yet maintain a commitmentto performance outcomes that acknowledges the expectations ofthose who fund and authorize programs. This analysis seeks todevelop a typology to examine the ways that the federal governmenthas attempted to bridge the goals of funders with the demandsof those who implement programs. This article highlights sixdifferent approaches that have been taken recently within federalagencies: performance partnerships, incentives, negotiated measures,building performance goals into legislation, establishment ofstandards, and waivers.