that IRS Districts had received, and they resulted in a respectable 2 volume of enforcement actions, but the visibility and consistency of the enforcement program that could have emerged only with a succession of reporting periods did not have time to materialize. If the number of compliance actions (e.g. investigations, spotchecks, surveys, or other forms of firm-contact) and the number of enforcement actions (e.g. NOPVs, remedial orders, voluntary compliance agreements, lawsuits) were traced graphically from August 15, 1971 through June 30, 1974, the horizontal lines might well resemble a seismograph: the numbers of compliance and enforcement actions initiated or completed were always changing, usually increasing, but the pattern was never even. A result of changing phases, changing compliance strategies, changing compliance organizations and management limitations, the compliance calendar was always full but rarely consistent. Quixotic perhaps if viewed from a distance, the engine of compliance and enforcement in the Program sustained different rates of acceleration, occasional deceleration, and needed a few management repairs along the road-but it got to its destination: the establishment of enforcement credibility, and the apprehension of major price and wage violators. COMPLIANCE MANAGEMENT The effectiveness of compliance and enforcement depended to a great extent on conditions external to the Program. If voluntary compliance was an indispensable condition, then the public's reception of the Program, and the incentives (or disincentives) in general economic conditions for voluntary compliance, could and did have a great impact on the success of compliance programs. Internal management could have functioned with crystalline precision, and perfect compliance would still not necessarily have been achieved. But internal management naturally has an influence on program results, and any future attempt to construct a system of compliance and enforcement for price and wage controls will benefit from evaluating the management of compliance from 1971 to 1974. A description of policies, organization, procedures, and program actions ought to frame a relatively complete picture of compliance and enforcement. The "management" of a regulatory effort cannot be discussed apart from those elements; management is really nothing more than the development of policy, the emplacement of an organization, the use of procedures, and the substantive action which is taken. But the dynamic between those elements-how they are pieced together into a working entity-is something slightly different. The whole is more than the sum of its parts, and its evaluation cannot but have a subjective dimension. By definition, evaluation involves passing out value judgments. Some will highlight good things; some bad. But a management analysis which is both useful and concise will concentrate on negative aspects of a system or program-managers need less to be told what they are doing right (they probably think and certainly hope they are doing everything right), than they need to know where the errors are (the dysfunctions, in management lingo). So what follows is a sketch of the hitches in compliance management, the things that went wrong or were not sufficiently right. Substantial enforcement actions were completed in all phases of the Program, and that indicates that compliance programs were managed with a modicum of efficiency. No evaluation of compliance management could be an indictment, and the record cannot sustain any guilty verdicts on a count of significant mismanagement. But compliance management was not a tea partyto evaluate it, you have to talk about its problems. Virtually every management problem faced by CLC, IRS and the other agencies arose in one of three contexts: casework (the grist of compliance), communications, and inter-agency or inter-office relationships. Throughout the Program, compliance managers struggled with the caseload—the numbers of cases, the ease (or difficulty) with which they were processed, and their outcomes. Related to the management of cases was the communication between constituent offices of the Program-the passage of information about cases vertically through the organization, and the filing and retrieval systems for that information. Underlying both case management and intra-organizational communications was the character of relationships between various agencies and offices-the degree of cordiality and coordination with which different offices did business with one another. And so there are three areas of management where practical problems occurred in compliance and enforcement: cases, communications, and agency-relationships. Cases Frequently during Phases II, III and IV, compliance managers would meet or confer to discuss the progress of specific cases through the investigative and enforcement process. It was not uncommon in such a discussion for someone to ask what had happened to a particular case, about which he might have heard little recently. Sometimes the response would be: "Oh, that one fell through the cracks." Somehow, that oft-invoked image went just as often unchallenged. Whole cases were occasionally rumored to have disappeared in that manner. The "cracks" usually referred to the interstices of bureaucracy, the channels of information and transferral between organizations, the "in" boxes that went untouched and the "out" boxes that seemed to stay as empty as a nightclub on Monday night. "Falling through the cracks" is a condition endemic to bureaucracy, but-not really referring to a specific breakdown or blockage in the system-it signified all the many ways that casework was delayed, frustrated, or stalled. On July 27, 1972, CLC's Director of Operations observed in a memorandum to IRS and the Pay Board that "the rate at which compliance cases are being developed within the system is not satisfactory." 35 That was in Phase II, but it could have been a compliance manager's refrain at any time in the Program. Delay in transmitting requests for investigation to the level of the working agent, delay in finishing investigations, delay in transmitting a completed investigation back to the requesting office, delay in analyzing the investigation's results, delay in preparing a recommendation for action, and delay in taking that action if litigation or remedial measures were desired -every organization level or component (in the phases marked by heavy compliance caseloads) contributed to one or more of these forms of delay. Although case procrastination continued to be a problem throughout the Program-"Compliance Circuit Panels" were established in March 1974 of Phase IV to deal with aged cases in the field that required closure or action-the dimension of the problem shrank as the compliance system became more experienced in its work, and as the nature of the problem came to be understood and modified. From time to time management tricks would be devised to locate delayed cases more readily and to scare them through the system more efficiently. On June 29, 1972 CLC sent to IRS a scheme for "Priorities and Maximum Completion Times" for directed investigations which arranged five priorities-the highest required a turn-around time of 2 weeks on a requested investigation, the lowest a response time of 6 weeks. IRS protested that the reporting times were unrealistic in light of the requirements of adequate documentation of violations. The Price Commission agreed (for once) with IRS, as a memorandum from its Office of Compliance and Enforcement made clear: It seems that in attempting to tie a headquarters-conceived notion of priorities to a time schedule of this sort, we are arrogating to ourselves the responsibility for determining how much IRS field activity is required to answer the questions posed in the requests for investigation. I don't think any of us in Washington are smart enough to make such an arbitrary decision without first considering the judgment and time estimates of the people who actually The memorandum went on to contend that centralized priorities "may very well preclude litigation because the ground of the investigation is likely to be plowed too rapidly . . ." The Price Commission's device for guaranteeing a returned and completed investigation was to permit the IRS District which had to work the investigation to assign itself an initial and final due date, of which PC would presumably be notified. The procedure was introduced on July 7, 1972, but by September 28, it had "apparently ceased to function," according to a Price Commission memo, resulting in a "severe restriction" on the Commission's "capability to monitor and control case workload levels." The functional breakdown in this instance was that no provision existed for IRS to notify the Commission of assigned due dates. The Cost of Living Council, in one memorandum entitled, "Compliance Cases Requiring Special Attention" (July 27, 1972) had more or less given up in the fight against excessive consumption of time in developing field cases.3 "Alternative organizational, systematic and procedural changes have been widely discussed," it noted, "without material changes occurring." Absent fundamental system changes, CLC advised concentrating on cases which showed true potential for litigation. This method was a loss-minimizing approach to the problem and did not really address the causes of case senescence, but it was perhaps the most popular technique used by CLC compliance managers in the Program. One way in which high potential cases were surfaced and given concentration was through inter-agency committee meetings devoted to case deficiencies. In November 1972 IRS National Office summoned its Assistant Regional Commissioners for Stabilization to Washington to discuss directed investigations which were inadequate because of improper documentation, inadequate investigation, incorrect technical interpretations, or for other reasons. On December 11, CLC asked IRS to attend biweekly joint staff meetings for the purpose of "putting the maximum pressure" on the field, the Justice Department, the Price Commission or other agencies "to follow through on whatever action they must take" to mature individual cases. 39 CLC's assessment of the caseload near the end of Phase II was that the program still did not have "the necessary precision and aggressiveness in dealing with these cases." +0 From all appearances, and by all comments, it still lacked such precision and aggressiveness in Phase IV. A March 8, 1974 memorandum to CLC's Deputy Director was subject-titled "Your Favorite Subject -Case Review Panels," which were employed in the final months of Phase IV to wrap up outstanding compliance cases. The underlying reasons for case slippage were recognized during the Program but never completely resolved. Most were inherent in either the nature of price and wage regulations, compliance strategies that were adopted, or the capabilities of those involved in enforcement. At least three root causes for delay or imperfection in com: pliance cases seem evident; 1) Volume-there were probably too : many cases to investigate and complete in a timely fashion; 2) Enforceability or regulations, or the lack thereof; and 3) Types of Investigative resources. IRS was, of course, occupied from Phases II through IV with much more than conducting investigations, whether directed from Washington or initiated locally. Public inquiries had to be answered, complaints about price and wage increases had to be checked out, spot checks on posting requirements and other simple rules were performed, and in Phase IV, firms' price submissions were reviewed. Take just one of those activities-answering public inquiries. In Phase II, over 3.8 million such inquiries were received by IRS All were answered. There were approximately 3000 IRS personnel working in stabilization during Phase II. If each IRS employee had spent every day of Phase II (including weekends and holidays) answering those inquiries, he would have had to answer four a day. Not impossible, but not every IRS employee was responding to public inquiries. Field agents were working the thousands of investigations and compliance checks that CLC, the Price Commission, the Pay Board, and IRS National Office-not to mention IRS District Offices -had deemed necessary. The strategic emphasis was on investigative "presence" and what IRS called the "policy bodies" (CLC, PC and PB) acted accordingly. The production of requests for investigation became a measure in Phase II of the effort behind manifesting that presence. Quality control on directed investigations- asking before investigations were requested whether or not the information that would be netted would be meaningful or, more important, actionable -took a back seat to the need for manifesting presence in target industries. And "presence" is achieved as long as a great number of IRS investigators visit a great number of firms, regardless of the enforcement record left behind. To be sure, the credibility of that presence as an effective incentive to compliance tends to be undermined in time if enforcement results do not materalize, but the strategic concept of presence is aimed at achieving a compliance effect in a hurry-the idea is one of a blitz, not attrition. Delays in completing cases and errors in documentation tend to occur if those working the cases and preparing the documentation work in the con |