Toward a More Perfect Union: Regulatory Analysis and Performance Management

This paper was published in the Florida State Business Law Review, Vol. 8, 2008.

The Study

Two separate but similar initiatives attempt to apply a scientific approach to improve government decision-making and results: performance management and regulatory analysis. This study explores the actual and potential linkages between regulatory analysis and performance management in theory and in practice.

Our Findings

• Federal requirements for regulatory analysis and performance management are outlined in different legal documents, administered by different personnel in agencies, and studied by scholars in different fields.

• There are significant unexploited synergies between regulatory analysis and performance management.

• The Government Performance and Results Act (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.

• Regulatory analysis, as outlined in Executive Order 12,866, suggests some opportunities to strengthen federal performance management in ways that more fully implement the spirit of GPRA.

Conclusions

• Several changes would more fully incorporate GPRA performance management principles into federal regulatory analysis, and vice versa:

• E.O. 12,866 should be amended to require agencies to articulate the specific outcomes proposed regulations are supposed to produce for the public, explain how these outcomes are related to the agency's strategic goals, identify how the agency will measure the regulation's progress toward these outcomes, and explain what program evaluations will be necessary to assess what outcomes the regulation has produced.

• Section 5 of the executive order should be amended to require agencies to arrange for and publicly release independent annual assessments of the ex post costs and benefits of existing regulations.

• OMB Circular A-11, which provides guidance for agency preparation of GPRA planning and reporting documents, should be amended to require agencies to (1) consider the costs and benefits of alternatives when they develop their strategic plans and (2) discuss alternatives to remedy performance shortfalls identified in the annual performance report.

• Circular A-11 should require agencies to enumerate in their performance reports the primary regulations or groups of regulations that contribute to the accomplishment of each strategic goal, along with an assessment of outcomes and costs.

• Circular A-11 should explicitly direct agencies to report on the opportunity cost to society of regulations related to their strategic goals, not just their expenditures to promulgate and enforce regulations.