August 13 memorandum on operating responsibilities had included a section on compliance activities, and although it was omitted from the final version, it featured a bold but honest statement of the impact on compliance and enforcement in Phase IV of the new delegation of authority: "IRS is responsible for assuring compliance with the Phase IV regulations through review of official filings and investigation of the activities and records of individual firms." But as CLC bore final statutory responsibility for conducting the Economic Stabilization Program, it was obviously interested in how IRS conducted compliance and enforcement programs. This interest was expressed and channeled through the three divisions of CLC Office of Operations: Price Compliance Division, Pay Compliance Division, and Operations and Procedures Division.

The two compliance divisions in conjunction with IRS developed general strategies for compliance and enforcement programs and requested certain surveys and directed investigations in fulfillment of those strategies. The procedural division managed the operational aspects of CLC's tie with IRS in Phase IV, and supported compliance activities through preparing and publishing manuals of instruction for forms review and other new IRS functions, conducting technical assistance trips of CLC personnel to IRS key districts, and ensuring that Phase IV policies, rules and procedures were uniformly applied by IRS field units.

During the first quarter of 1974, CLC's Price Compliance Division completed the initiation of its planned Phase IV industry surveys. At the same time, the coordination of actions to enforce petroleum regulations—in which Price Compliance had been involved-was transferred wholly from CLC to the Federal Energy Office. With the consequent reduction in workload, the Division was able to turn its attention to the task of refining the system of industry monitoring, previously managed by the IRS National Office. That system took on added importance in the first quarter of 1974 as more industries were decontrolled, and as CLC needed information on fulfillment of exemption commitments. Fostered also by dimunition of pay compliance activity, which in Phase IV served largely to continue the active enforcement effort of Phase III, CLC's compliance organization was reorganized for a last time in February 1974 and was embodied in a single Industry Monitoring and Compliance Division. Its functions were to monitor the performance of industries exempted from Phase IV, to complete action on open compliance cases remaining from Phase IV and previous phases, and to coordinate activities of IRS industry monitors still in the field. The Operations and Procedures Division

continued its work during the same period.

IRS organization in Phase IV was an extrapolation of its essential structure in previous phases, fitted to the new circumstances of its expanded authority and program responsibilities. The National Office was again divided into two divisions-Technical Programs, which had three branches: Interpretations, Price Analysis, and Publications and Guidance Materials; and Compliance and Enforcement, which had four branches: Compliance Investigations, Case Control and Reports, Industry Survey and Analysis, and Pay. The IRS "field" -regional offices and key districts-resembled in Phase IV much the same system that had been developed during Phase III and utilized in the second freeze. The key district concept was fully implemented, and more direct communication between policy levels in Washington and action units at the working level resulted.

If compliance and enforcement programs were inadequately planned and rationalized because of the number and variety of compliance strategies that were alternatively adopted, the same programs were also certainly not helped by the similar number of organizational systems that were featured from phase to phase. But while the failure to achieve greater consistency in the use of compliance strategies cannot entirely be explained by the need to respond to enforcement problems on an ad hoc basis, the frequency and scale of change in organizational schemes were compelled by the changing nature of succeeding phases. Seven or eight different compliance strategies were used at one time or another during the Stabilization Program. The revolving door of compliance organizations had six different segments. Phase I's spontaneous existence and need for instant credibility required the use of available federal resources, the best of which were quickly identified as the Office of Emergency Preparedness and IRS. Together with Justice's Civil Division, they comprised the enforcement loop in the first freeze. The second organizational scheme to handle compliance matters, in the first seven months of Phase II, involved a management-analysis office at CLC, several program offices in two other agencies (PC and PB), and a still newly requisitioned field force, IRS. The third organization appeared with the consolidation of compliance functions in one office at the Price Commission, somewhat simplifying the second scheme. The fourth system, perhaps the simplest of all, was the single-office CLC connection with IRS in Phase III. The fifth system included the second freeze's triangle of a compliance locus in the Freeze Group, the existing compliance office in the main part of CLC, and, as ever, IRS. Finally, Phase IV saw the sixth set-up-between CLC Office of Opera

tions on the one hand, and an enforcement-potent IRS on the other. With the exception of the two schemes in Phase II, each phase and each freeze presented its own array of compliance offices. Since price and wage regulations were different in each of those periods, and since each previous period offered lessons in effective compliance organization, it was logical to expect that each new period would involve a little re-shuffling. So the mere succession of different schemes for compliance organization, though hardly a positive contribution to program efficiency, was not really avoidable.

Evaluation

A look at the management problems that faced compliance programs suggests a few criteria with which to evaluate the alternative types of organization which were used for compliance and enforcement. First, an organization ought to be comprehensible—its structure and procedures should be as simple as operational programs allow, so that the participants can identify other participants and relate to them as easily as needed. Investigating agents in the field should be able to understand the route that a compliance case will take vertically through the system; policy decision-makers should be afforded an easily remembered model of how decisions are executed (inter-locking committees and secondary check-points are complications that obscure such a model); and, perhaps most important, the public and business community should be offered an easily assimilable idea of the program's enforcement arm and how it functions. Lacking comprehensibility, an organization may seem confused even if the details of its system are all ticking away according to plan.

Second, an organization should have some methodology for accountability. The lines of accountability should be as direct as possible, and easily identifiable to those at both ends. The very structure of the organization itself can foster either direct or diffuse accountability. If a field agency is receiving policy direction from three different centralized bodies, accountability tends to be diffuse-the "who's-in-charge-here?" syndrome-and effective completion of programs can be fudged.

Third, an organization should adopt a mode of decision-making tailored to specific program needs. If rapid enforcement results are desired, a consultative decision-making process involving multiple offices may tend to thwart the attainment of compliance objectives. If complex economic conditions require a synthesis of divergent opinions on desirable compliance methods, a singular or executive decision-maker may act too hastily or without adequate information. Fourth, an organization should reflect a precise and conscious

length of distance between policy and implementation levels. Those who design compliance programs ought to understand the minimum distance between the two levels that a given organizational scheme entails, and those who design the organizational scheme ought to lengthen or limit that distance in accordance with the requisite speed or permissible delay of enforcement results.

During the first several months of Phase II (the period for the second scheme indicated above), compliance organization was not easily comprehensible, with so many offices involved and functions not well defined; the mode of accountability was diffuse; decisionmaking was highly consultative and consequently slow; and the distance between policy direction and program completion was long. Conveniently enough, the period of the first several months of Phase II was marked by generally warm public acceptance of the Program, encouraging a solid base of voluntary compliance. Whatever defects of compliance organization existed would not necessarily have shown up in actual diminished compliance. As resistance in the business community began to build in Phase II, compliance organization in the last months of that Phase became characterized by a more comprehensive system (featuring a single price compliance node), a sharp executive decision-making response on price matters (also in the Price Commission), and the beginning of more concerted efforts to improve accountability and implementation-distance (typified by action to systematize and automate compliance information systems) Phase III witnessed perhaps the most comprehensible, accountable, and most sharply rationalized decision-making compliance organization that existed in the Program. Unfortunately, it coincided with a period of widespread public skepticism about the enforceability of controls. Compliance organization in Phase IV was a mixed bag in terms of the four criteria-comprehensibility was down again, thanks to the complexity of Phase IV rules and procedures, but the distance between policy and field levels was shortened, as a result of improved communications between Washington and the IRS key districts.

The planning of any future organization for compliance and enforcement of price and wage controls should be better equipped if these and other criteria are borne in mind, and if the heterogeneous systems of organization employed at various times in the Stabilization Program are understood.

MAJOR PROGRAM ACTIONS

Although the very organization of compliance and enforcement might be considered a methodology-because of its pervasive influ

ence on compliance management and enforcement results—it is a precondition for program management, and thus the father of all other methodologies. A ballpark has to be built before teams are selected and players hired. The preceding discussion of "Organization and Procedures" sets the stage for a more detailed and evaluative treatment of alternative methods of management used in compliance and enforcement, and the problems that arose in managing specific programs. But reviewing compliance management without first looking at the kind of specific programs that were undertaken would be like describing a ranch without ever having seen a horse. Illustrating the substance of compliance programs by sketching selected program actions that were undertaken between 1971 and 1974 will afford a tangible view of how compliance methodologies were practiced.

Not all activities of the various compliance organizations can be called "program actions." Quite as important to successful enforcement of price and wage controls are management actions or internal program actions intended to improve the bureaucracy. Activities such as management analysis, development of information systems, inter-agency liaison, and case processing are important aspects of compliance management, but they are not what is meant by program actions. The latter, broadly defined, are actions which have a substantive effect on price or wage compliance, and are usually undertaken with reference to an external target or condition. At least four kinds of such program actions were commonly ventured: 1) policy development, which included preparation of compliance strategies and enforcement options for specific industries or targets; 2) monitoring actions, which could entail either centralized or field acquisition of price and wage information of a compliance import (sometimes called "fact-finding"); 3) investigative actions, which included all manner of IRS field investigations; and 4) enforcement actions, involving the imposition of penalties on violators or initiating litigation. Since compliance and enforcement policy development has largely been covered under the rubric of compliance objectives and strategies, what follows is a description of the other three kinds of program actions.

Phase I

The President's early decision shunning a large bureaucracy to administer controls, predicted on the assumption that an overwhelming proportion of firms would voluntarily comply with price and wage limits, was the principal constraint on the Phase I enforcement program. No legion of enforcers-from IRS, OEP or any agency-was available to check for violations. Moreover, corrective or punitive sanctions that could be used against violators during the