Toward a More Perfect Union: Regulatory Analysis and Performance Management

Abstract

Two separate but similar initiatives attempt to apply a scientific approach to improve government decision-making and results: performance management and regulatory analysis. Both initiatives seek to identify the nature of the problems government is trying to solve, develop alternative solutions, and evaluate the effectiveness and costs of the alternatives. Both require measurement of costs and outcomes. Both involve rigorous analysis to identify whether, and to what extent, government actions cause particular results to occur. Their analytical methods can be used ex ante, to evaluate alternative prospective courses of action, or ex post, to assess what consequences actually flowed from the alternative that was chosen and identify opportunities for improvement.

Yet performance management and regulatory analysis rarely cross paths. Scholars who specialize in performance management tend to be in public administration or policy analysis departments; scholars who focus on regulatory analysis tend to be economists or lawyers. Ideologically, performance management is usually viewed as a means of making government more effective and customer-focused; regulatory analysis is often characterized as an attempt to throw sand in the gears of the regulatory state. For the U.S. government, the most prominent performance management directive is the Government Performance and Results Act (GPRA). The principal source of regulatory analysis mandates is Executive Order 12,866. In federal agencies, the plans and reports mandated by GPRA are usually the responsibility of the chief financial officer or a senior official in charge of management. Regulatory analysis is usually the responsibility of a policy office that writes regulations or an economic analysis division. Even in the President's Office of Management and Budget (OMB), which oversees both performance management and regulatory analysis, responsibility is divided. GPRA guidance and other performance-related initiatives are under OMB's deputy director for management. Regulatory analysis is overseen by the Office of Information and Regulatory Affairs (OIRA).

Due to these divisions, there are significant unexploited synergies between regulatory analysis and performance management. GPRA, and the performance-oriented practices it spawned, provide a vehicle to improve the quality of regulatory analysis in both executive branch and independent agencies. Similarly, the theory and practice of regulatory analysis suggests some opportunities to strengthen federal performance management in ways that more fully implement the spirit of GPRA. This Article explores the actual and potential linkages between regulatory analysis and performance management in theory and in practice.

Keywords: performance management, regulatory review, oira, regulation, benefit-cost, gpra, omb

JEL Classification: L50, L51, L52, K2,