The missing piece of acquisition reform : economic incentives

• Main Author: Mason, Marshall L.
• Other Authors: David R. Henderson
• Language: en_US
• Published: Monterey, California: Naval Postgraduate School 2012
• Online Access: http://hdl.handle.net/10945/13456

This thesis explores the role of economic incentives in the Federal bureaucracy and the impact these incentives have on achieving and sustaining acquisition reform initiatives. The thesis uses economic theory to demonstrate that Government bureaucrats act in their own self-interest to maximize their agencies' budgets, and have little or no incentive to reduce costs. Previous DoD acquisition reform efforts minimized or ignored the overarching importance of these incentives while attempting to treat the symptomatic problems. The National Performance Review has attempted to incorporate incentive structures by decentralizing decision-malting authority and fostering initiative and innovation in the Federal workforce. The NPR's politically expedient focus on cost savings and personnel reductions, however, has undermined its ability to gain support among Government employees who perceive no tangible economic gain from embracing these reforms. New Zealand has implemented a comprehensive public sector reform program that emphasizes and incorporates economic incentives in the organizational structure, including decentralized resource allocation authority and accountability. Though the United States' political and bureaucratic systems create significant obstacles to adopting a comparable program, it is in the Country's best interest to incorporate economic incentive structures and accountability features within existing strategic management programs.