With centralization, one set of views plays a greater role in decision-making, and dissenting views play lesser roles. In other words, there are fewer checks and balances on the view of the central group. And if central managers try to control in much detail, they find it imperative to simplify decision-making and to make changing the program rather difficult. Finally, lower level incentives to dissent and criticize and urge changes may diminish if such activities begin to be unrewarding. All these forces can, in the long run, produce disadvantages: (1) the suppression of alternatives; (2) a neglect of part of the costs and gains from alternative policies; and (3) a neglect of uncertainties.
One group’s view of the future will be less diversified than the separate judgments of a multiplicity of groups. Dominance of one group will tend to discard tradeoffs and options that others may take seriously, to treat certain costs and gains more lightly than others would, and to regard a particular subset of contingencies and uncertainties as being the major ones.
Roland McKean, Economics of Defense in the Nuclear Age (1960). Ironically, this passage comes from the same book that led to Robert McNamara’s overcentralization through the PPB System. Here’s another good part:
And if central managers try to control in much detail, they find it imperative to simplify decision-making and to make changing the program rather difficult.
While everyone now agrees that decisions about what to do and how to do it need to be more agile, I think people miss the fundamental tradeoff with oversight. If you want to devolve decision authorities to lower levels (perhaps even down to the PM), you need to *increase* transparency of what’s happening. My primary fear about the recent rash of acquisition reforms is that they are trying to devolve authorities to lower levels and reduce transparency at the same time.
I agree David. Two points on that. First, I think that flexibility and reduced transparency are to some degree appropriate in the areas of before-the-fact control, such as exerted through the budget and requirements processes. Yet that must be balanced by increased transparency and after-the-fact controls. These are served not by requiring dozens of approvals that will lock-in future action. Instead, cost accounting and operational testing are what provides real transparency. Congress seems more interested in deciding who can do what in the future rather than holding people accountable for what has actually transpired.
And that relates to a second point. Devolving authority and providing flexibility cannot proceed at a faster rate than we have confidence in the people actually doing the work. Having two year tours for PM, and frequent turnover of non-experts in the area of technology development, makes sense when all major actions are approved by various layers of bureaucracy. But it might be counterproductive to keep the same personnel system and give them much broader authorities. Leadership in the PM offices have to feel responsible for fundamental go-ahead decisions, and have to expect that they will be judged based on the outcomes. I think the French acquisition system has a good emphasis on technical experience, long tenures, institutional memory, and delegated authority, but that takes time to build.