Background
The Department of Defense (DoD) is the largest Federal department consisting of 3 military departments (Army, Navy, and Air Force), 9 unified combatant commands, 15 Defense agencies, and 8 DoD field activities. It has over 1,395,000 military personnel and 725,000 civilians assigned as of May 31, 1998, and over 500 military installations and properties in the continental United States, U. S. territories, and foreign countries. The overall size, composition, and dispersion of the Department of Defense, coupled with an innovative regulatory program, presents a challenge to the management of the Defense regulatory efforts under Executive Order 12866 ``Regulatory Planning and Review'' of September 30, 1993.
Because of its diversified nature, DoD is impacted by the regulations issued by regulatory agencies such as the Departments of Energy, Health and Human Services, Housing and Urban Development, Labor, Transportation, and the Environmental Protection Agency. In order to develop the best possible regulations that embody the principles and objectives embedded in Executive Order 12866, there must be coordination of proposed regulations among the regulating agencies and the affected Defense components. Coordinating the proposed regulations in advance throughout an organization as large as DoD is straightforward, yet a formidable undertaking.
DoD is not a regulatory agency but occasionally issues regulations that have an impact on the public. These regulations, while small in number compared to the regulating agencies, can be significant as defined in Executive Order 12866. In addition, some of DoD's regulations may impact the regulatory agencies. DoD, as an integral part of its program, not only receives coordinating actions from the regulating agencies, but coordinates with the agencies that are impacted by its regulations, as well.
The Regulatory Program within DoD fully incorporates the provisions of the President's priorities and objectives under Executive Order 12866. Promulgating and implementing the regulatory program throughout DoD presents a unique challenge to the management of our regulatory efforts.
Coordination
Interagency
DoD annually receives regulatory plans from those agencies that impact the operation of the Department through the issuance of regulations. A system for coordinating the review process is in place, regulations are reviewed, and comments are forwarded to the Office of Management and Budget. The system is working in the Department, and the feedback from the Defense components is most encouraging since they are able to see and comment on regulations from the other agencies before they are required to comply with them. The coordination process in DoD continues to work as outlined in Executive Order 12866.
Internal
Through regulatory program points of contact in the Department, we have established a system that provides information from the Vice President and the Administrator of the Office of Information and Regulatory Affairs (OIRA) to the personnel responsible for the development and implementation of DoD regulations. Conversely, the system can provide feedback from DoD regulatory personnel to the Administrator, OIRA. DoD continues to refine its internal procedures, and this ongoing effort to improve coordination and communication practices is well received and supported within the Department.
Overall Priorities
The Department of Defense needs to function at a reasonable cost, while ensuring that it does not impose ineffective and unnecessarily burdensome regulations on the public. The rulemaking process should be responsive, efficient, cost-effective, and both fair and perceived as fair. This is being done at a time when there is a significant ongoing downsizing in the Department and it must react to the contradictory pressures of providing more services with fewer resources.
The Department of Defense, as a matter of overall priority for its regulatory program, adheres to the general principles set forth in Executive Order 12866 as amplified below.
Problem Identification
Congress typically passes legislation to authorize or require an agency to issue regulations and often is quite specific about the problem identified for correction. Therefore, DoD does not generally initiate regulations as a part of its mission.
Conflicting Regulations
Since DoD does not plan to issue any significant regulations this year, the probability of developing conflicting regulations is low. Conversely, DoD is impacted to a great degree by the regulating agencies. From that perspective, DoD is in a position to advise the regulatory agencies of conflicts that appear to exist using the coordination processes that exist in the DoD and other Federal agency regulatory programs. It is a priority in the Department to communicate with other agencies and the affected public to identify and proactively pursue regulatory problems that occur as a result of conflicting regulations both within and outside the Department.
Alternatives
DoD will identify feasible alternatives that will obtain the desired regulatory objectives. Where possible, the Department encourages the use of incentives to include financial, quality of life, and others to achieve the desired regulatory results.
Risk Assessment
Assessing and managing risk is a high priority in the DoD regulatory program. The Department is committed to risk prioritization and an ``anticipatory'' approach to regulatory planning which focuses attention on the identification of future risk. Predicting future regulatory risk is exceedingly difficult due to rapid introduction of new technologies, side effects of Government intervention, and changing societal concerns. These difficulties can be mitigated to a manageable degree through the incorporation of risk prioritization and anticipatory regulatory planning into DoD's decisionmaking process which results in an improved regulatory process and increases the customer's understanding of risk.
Cost-Effectiveness
One of the highest priority objectives of DoD is to obtain the desired regulatory objective by the most cost-effective method available. This may or may not be through the regulatory process. When a regulation is required, DoD considers incentives for innovation to achieve desired results, consistency in the application of the regulation, predictability of the activity outcome (achieving the expected results), and the costs for regulation development, enforcement, and compliance. These will include costs to the public, Government, and regulated entities, using the best available data or parametric analysis methods, in the cost-benefit analysis and the decisionmaking process.
Cost-Benefit
Conducting cost-benefit analyses on regulation alternatives is a priority in the Department of Defense so as to ensure that the potential benefits to society outweigh the costs. Evaluations of these alternatives are done quantitatively or qualitatively or both, depending on the nature of the problem being solved and the type of information and data available on the subject. DoD is committed to considering the most important alternative approaches to the problem being solved and providing the reasoning for selecting the proposed regulatory change over the other alternatives.
Information-Based Decisions
The Defense Department uses the latest technology to provide access to the most current technical, scientific, and demographic information in a timely manner through the world-wide communications capabilities which are available on the ``information highway.'' Realizing that increased public participation in the rulemaking process improves the quality and acceptability of regulations, DoD is committed to exploring the use of Information Technology (IT) in rule development and implementation. IT provides the public with easier and more meaningful access to the processing of regulations. Furthermore, the Department endeavors to increase the use of automation in the Notice and Comment Rulemaking process in an effort to reduce time pressures in the regulatory process.
Performance-Based Regulations
Where appropriate, DoD is incorporating performance-based standards that allow the regulated parties to achieve the regulatory objective in the most cost-effective manner.
Outreach Initiatives
DoD endeavors to obtain the views of appropriate State, local, and tribal officials and the public in implementing measures to enhance public awareness and participation both in developing and implementing regulatory efforts. Historically, this has included such activities as receiving comments from the public, holding hearings, and conducting focus groups. This reaching out to organizations and individuals who are affected by or involved in a particular regulatory action remains a significant regulatory priority of the Department and, we feel, results in much better regulations.
Coordination
DoD has enthusiastically embraced the coordination process between and among other Federal agencies in the development of new and revised regulations. Annually, DoD receives regulatory plans from key regulatory agencies and has established a systematic approach to providing the plans to the appropriate policy officials within the Department. Feedback from the DoD components indicates that this communication among the Federal agencies is a major step forward in improving regulations and the regulatory process, as well as in improving Government operations.
Minimize Burden
In the regulatory process, there are more complaints concerning burden than anything else. In DoD, much of the burden is in the acquisition area. Over the years, acquisition regulations have grown and become burdensome principally because of legislative action. But, in coordination with Congress, the Office of Federal Procurement Policy, and the public, DoD is initiating significant reforms in acquisition so as to effect major reductions in the regulatory burden on personnel in Government and the private sector.
DoD implemented a multi-year strategy for reducing the paperwork burden imposed on the public. This plan shows that DoD has met and will exceed the goals set forth in the Paperwork Reduction Act, which requires a 25 percent reduction in each agency's burden by the end of FY 1998. The Department achieved a 25 percent reduction by the end of FY 1996, and an additional 9 percent in FY 1997. During FY 1998, DoD achieved its second largest reduction ever, for a single collection, by reducing the paperwork burden by 17.2 million hours through program changes. Another significant reduction in the burden imposed on the public was achieved as a result of the review of the information collection requirement in support of the solicitation phase of the Department of Defense acquisition process. The information collection requirement pertains to information that an offeror must submit to DoD in response to DoD solicitations not covered by another OMB clearance. As a result of recent revisions to the duty-free entry information collection requirements, DoD reduced the burden hours imposed on the public under this information collection requirement by 530,884 hours per year. Further, DoD reduced 88,711 hours per year from the burden imposed on the public to support foreign acquisitions. This reduction is based on the most current data available in DoD data bases, as well as other information from other sources, such as the number of duty-free entry certificates processed and the number of reports received relating to contract performance outside the United States. It is the goal of the Department of Defense to impose upon the public the smallest burden viable, as infrequently as possible, and for no longer than absolutely necessary.
Plain Language
Ensuring that regulations are simple and easy to understand is a high regulatory priority in the Department of Defense. All too often, the regulations are complicated, difficult to understand, and subject to misinterpretation, all of which can result in the costly process of litigation. The objective in the development of regulations is to write them in clear, concise language that is simple and easy to understand.
DoD recognizes that it has a responsibility for drafting clearly written rules that are reader-oriented and easily understood. Rules will be written for the customer using natural expressions and simple words. Stilted jargon and complex construction will be avoided. Clearly written rules will tell our customers what to do and how to do it. DoD is committed to a more customer-oriented approach and uses Plain Language rules thereby improving compliance and reducing litigation. The Department will adhere to the timetable established in the President's memorandum of June 1, 1998, regarding Plain Language in Government Writing, for incorporation of plain writing techniques in official documents.
In summary, the rulemaking process in DoD should produce a rule that addresses an identifiable problem, implements the law, incorporates the President's policies defined in Executive Order 12866, is in the public interest, is consistent with other rules and policies, is based on the best information available, is rationally justified, is cost-effective, can actually be implemented, is acceptable and enforceable, is easily understood, and stays in effect only as long as is necessary. Moreover, the proposed rule or the elimination of a rule should simply make sense.
Specific Priorities
For this regulatory plan, there are three specific DoD priorities, all of which reflect the established regulatory principles. In those areas where rulemaking or participation in the regulatory process is required, DoD has studied and developed policy and regulation which incorporate not only the provisions of the President's priorities and objectives under the Executive order but also the National Performance Review, dated September 1993.
DoD has focused its regulatory resources on the most serious environmental, health, and safety risks. Perhaps most significant is that each of the three priorities described below promulgates regulations to offset the resource impacts of Federal decisions on the public or to improve the quality of public life such as those regulations concerning wetlands, acquisition, and health care delivery.
Preserve Quality and Quantity of Wetlands
During FY 1999, the U.S. Army Corps of Engineers is not proposing any significant regulations as defined by Executive Order 12866. The Office of the Assistant Secretary of the Army (Civil Works) and the Corps will propose and complete two regulations initiated as part of the President's August 24, 1993, Wetlands Protection Plan and the President's 1995 Regulatory Reinvention Initiative. The wetlands protection plan provides for a fair, flexible, and effective approach to protecting America's wetlands through both regulatory and nonregulatory mechanisms. The regulatory reinvention initiative reinforced those provisions and included additional regulatory reform and streamlining provisions.
During 1998 and 1999, the Corps will propose and finalize two regulations pursuant to its authorities under section 404 of the Clean Water Act and section 10 of the Rivers and Harbors Act of 1899. The first regulation will establish an administrative appeal process whereby permit applicants and landowners can appeal permit denial decisions. This regulation was proposed on July 19, 1995, with a similar regulation on appealing jurisdictional determinations. The permit denial appeal regulation will be finalized in 1999. The administrative appeal process will increase fairness to applicants and landowners in the permitting process by establishing a recourse to Corps permit denial decisions without pursuing litigation. The process will also provide for interested party involvement when the Corps reconsiders a previous denial. The jurisdictional determination appeal regulation has been deferred, pending adequate funding from Congress.
The second regulation will be to clarify the scope of analysis that the Corps has responsibility for under the Endangered Species Act (ESA). The Corps scope of analysis for the National Environmental Policy Act and the National Historic Preservation Act is established in 33 CFR part 325, appendices B and C, respectively. This regulation will adopt the Corps ESA scope of analysis consistent with the ESA, the ESA regulations, and the Corps authorities.
Reform Defense Acquisition
The Department continues its efforts to reengineer its acquisition system to achieve its vision of an acquisition system which is recognized as being the smartest, most efficient, most responsive buyer of best value goods and services which meet the warfighter's needs from a globally competitive base. To achieve this vision, the Department will focus in the acquisition regulations arena during this next year on implementing and institutionalizing initiatives which may include additional changes to existing and recently modified regulations to ensure that we are achieving the outcomes we desire (continuous process improvement). The Department will focus on reengineering the process by which it acquires services, focusing on the use of performance-based work statements. The Department also intends to improve its use of electronic commerce/electronic data interchange.
The Department is committed to acquisition reform and continues to make significant improvements in this area, consistent with the National Performance Review and Executive Order 12866. DoD is leading the following initiatives to reform the acquisition process, which include integrating commercial and military facilities and expanding the ability to buy commercial products and expanding the use of commercial procedures.
Integration of commercial and military facilities is critical to enable the Department to capitalize on and access commercial technology and generate funds for modernization, all within a balanced-budget environment. To accomplish civil-military integration, DoD is developing a plan to remove the current barriers to this integration and provide guidelines and incentives for industry to achieve the desired objective. The 1994 Coopers & Lybrand (C&L)/TASC, Inc., report ``The DoD Cost Premium: A Quantitative Assessment'' formed the basis for expectations of possible future cost reductions by defining the cost premium differential between the commercial and military sectors. The Department's plan is to capitalize on the foundation established by this effort.
The C&L/TASC, Inc., report identified the regulatory cost drivers that contributed to the average 18 percent premium that DoD pays for goods and services. In 1996, DoD developed comprehensive action plan assessments for the top 24 cost drivers and addressed the next 35 cost drivers. These assessments were last updated in June 1996. DoD is currently updating those regulatory cost driver plans. In those updates, the Department will address unresolved implementation challenges and other collateral reform efforts, as well as integrate Defense Reform Initiative, Management Reform Memorandum, and National Performance Review activities. In the fall of 1998, the Department will select a number of regulatory candidates designed to further integrate commercial and military facilities.
In addition to the need to integrate commercial and military facilities, the Department must expand on the ability to buy commercial products and expand the use of commercial procedures. DoD continuously reviews its supplement to the Federal Acquisition Regulation and continues to lead Governmentwide efforts to simplify the following acquisition processes:
¤ Rewrite of FAR part 45, Government Property. The goals of the FAR part 45 rewrite are to reduce contractor and Government costs to manage property in the possession of contractors by streamlining recordkeeping requirements; to eliminate requirements to track, report, and inventory property valued at $1,500 or less during contract performance; to replace five inventory schedules with a single inventory disposal schedule; and to shorten screening times prior to property disposal. The FAR part 45 rewrite also encourages the dual use of Government property introducing commercial rental practices and reducing property rental costs.
¤ Rewrite the FAR guidance pertaining to Progress Payments. The goal of this initiative is to simplify the progress payments process and to minimize the burdens imposed on contractors and contracting officers.
¤ Review of FAR representations. The goal of this initiative is to remove or reduce certain requirements for representations and other statements from offerors and contractors. Removing or reducing these requirements will eliminate unnecessary burdens that are placed on offerors and contractors.
¤ Review of various FAR cost principles. The goal of this initiative is to determine whether certain FAR cost principles are still relevant in today's business environment, whether they place an unnecessary administrative burden on contractors and the Government, and whether they can be streamlined or simplified. For example, we are considering: (1) Revising the Relocation Cost Principle to remove ceilings imposed on specific relocation costs and to recognize the growing commercial practice of reimbursing relocation costs on a lump-sum basis; (2) deleting the Civil Defense Cost Principle since, with the end of the Cold War, the special guidance provided is no longer deemed necessary; (3) revising the Recruitment/Public Relations and Advertising Cost Principle to remove excessive wording and details for streamlining purposes; and (4) revising the Insurance and Indemnification Cost Principle to streamline the guidance.
Improve Health Care Delivery in the Defense Department
The Department of Defense is able to meet its dual mission of wartime readiness and peacetime healthcare by operating an extensive network of medical treatment facilities. This network includes DoD's own military treatment facilities and the civilian healthcare providers, facilities, and services under contract to DoD through the TRICARE program. TRICARE is a major healthcare initiative designed to improve the management and integration of DoD's healthcare delivery system. The program's goal is to increase access to healthcare services, improve healthcare quality, and control healthcare costs. TRICARE offers enrollment in an HMO-like option (Prime) and two options that do not require enrollment: A preferred provider-like option (Extra) and a fee for service option (Standard), formally known as CHAMPUS. Like the old CHAMPUS program, under TRICARE, DoD continues to share the cost of civilian healthcare with its eligible beneficiaries when services are not available in the military medical treatment facility. DoD initiated the TRICARE Senior Prime Demonstration Project with the Health Care Financing Administration (HCFA). This program enables DoD to offer beneficiaries over the age of 65 years the ability to enroll in the TRICARE HMO option. Once DoD meets the prescribed level of effort in providing healthcare to this population, HCFA will share the cost of the benefit with DoD. This demonstration project is conducted under the authority of section 1896 of the Social Security Act, as added by section 4015 of the Balanced Budget Act of 1997 (Pub. L. 105-33).
The principal health-related regulatory publications of the Department are based on CHAMPUS, the Civilian Health and Medical Program of the Uniformed Services (32 CFR part 199). CHAMPUS regulations are comprehensive and address issues such as: Eligibility, benefits, authorized providers, claims payment, appeals procedures, and the healthcare delivery options available under TRICARE.
DoD coordinates changes to CHAMPUS regulations with the Departments of Transportation (U. S. Coast Guard), Health and Human Services (Public Health Service), and Commerce (National Oceanic and Atmospheric Administration) whose beneficiaries are also eligible for CHAMPUS.
Revisions in the TRICARE/CHAMPUS Program's statutory base or DoD initiatives to improve the program may result in amendments to the regulation. DoD's regulatory priorities for the upcoming year include: Promulgation of regulations governing enrollment in military health system managed care programs and the management of high cost health care cases.