The Emerging Federal Quasi Government: Issues of Management and Accountability

In recent years, both Congress and the president have turned to hybrid organizations (Fannie Mae, National Park Foundation, Polish-American Enterprise Fund, for example) to implement public policy and functions that traditionally have been assigned to executive departments and agencies. Hybrid organizations, which possess legal characteristics of both the government and private sectors, tend to generate considerable support and criticism. Today, associated with the federal government alone, there are literally hundreds of hybrid entities that have collectively come to be called the "quasi government" (Seidman 1988). The relationship of this burgeoning quasi government to elected and appointed officials is of growing interest, and some concern, as it touches the heart of democratic governance: To whom are these hybrids accountable? How is the public interest being protected against the interest of private parties? The scope and consequences of these hybrid organizations have not been studied extensively. Basic definitional issues resist resolution. Even the language used in discussing the quasi government is in dispute. Should quasi government management be discussed in the language of public law, economic theory, or the business school? The traditional tools for holding executive agencies accountable (such as the budget and general management laws) are often inapplicable, leaving these hybrids free to pursue their own institutional interests, which may or may not conform to the public interest as defined by the nation's elected leadership. The current popularity of the quasi-government option can be traced to at least four major factors at work in the political realm: 1. Current controls on the federal budget process that encourage agencies to develop new sources of revenues; 2. Desire by advocates of agencies and programs to be exempt from central management laws, especially statutory ceilings on personnel and compensation; 3. Contemporary appeal of generic, business-focused values as the basis for a New Public Management; and 4. Belief that management flexibility requires entity-specific laws and regulations, even at the cost of less accountability to representative institutions. Congress is increasingly engaged in quasi-government issues ranging from the creation of nonprofit organizations to promote individual national parks, to proposals to strengthen regulation of government-sponsored enterprises such as Fannie Mae, to oversight hearings on national security issues at Los Alamos Laboratory, a government-owned, contractor-operated national laboratory. There is nothing modest about the size, scope, and impact of the quasi government. Definitions and Variations in Kind Writing about the quasi government is like entering a thicket with little hope of escaping unscathed. The truth is that the quasi government, virtually by its name alone and the intentional blurting of its boundaries, is not definable in any precise way. In general, the term describes entities that have some legal relation or association, however tenuous, to the federal government. One common aspect of this melange of entities is that they are generally not agencies of the United States, as that term is used in Title 5 of the U.S. Code. (1) The first task is to break the many hybrid entities in the quasi government into manageable categories so that legal and behavioral generalizations may be made. For the author's purposes, the following categories of quasi-government entities are defined and discussed: (1) quasi-official agencies; (2) government-sponsored enterprises; (3) federally funded research and development corporations; (4) agency-related nonprofit organizations; (5) venture capital funds; (6) congressionally chartered nonprofit organizations; and (7) instrumentalities of indeterminate character. There is nothing definitive about these categories; they are simply intended to provide a useful framework for analysis. …