Can Anti-Corruption Rules Erode Trust?

business_ethics_highlights_2This piece takes the recent Centers for Medicare and Medicaid Services inspector general report on cost overruns in the implementation of U.S. Affordable Care Act insurance exchanges as a jumping off point to considering what sorts of contracting norms and relationships make for the delivery of high quality, cost effective services. Here, the author opines that U.S. Government contracting rules effectively prohibit the formation of trust-building relationships that are necessary to meet difficult deadlines with excellent work, all in effort to avoid conflicts of interest and corruption. >>>

LINK: How Went So, So Wrong (by Megan McArdle in Bloomberg View)

Trust is open ended: You do your best for me, I do my best for you. That means that people will go above and beyond when necessary, because they hope you’ll be grateful and reciprocate in the future. Rules, by contrast, are both a floor and a ceiling; people do the minimum, which is also the maximum, because what do they get out of doing more?

The federal contracting system is of course also incredibly slow and unwieldy. It’s designed to be, the better to frustrate anyone trying to slip a fast one by the American taxpayer. But if you have a three-year deadline to deliver a complicated technology project, then a system that slows everything down, while encouraging clock-punching, is really not the system you would expect to produce it.

The report is very useful in its way. But ultimately, it focuses on side issues. Neither inadequate paperwork nor disclosure problems are why the exchange contracts went wrong. They went wrong because they could not do anything else: The task was too large, and the law’s architects didn’t understand how big it was. The holes in the legislation created an impossible management structure. And the federal contracting system was optimized to prevent corruption rather than deliver working systems on time and on budget.

What do you think?

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