Applying the Balanced Scorecard methodology in the public sector: the case of the Department of Defense in the United States

Abstract

The public sector in the United States continues to wrestle with the challenges of complying with legislation such as the Information Technology Reform Act and the Government Performance and Results Act that requires federal agencies to align their programs with the overall mission of the agency and to report their success and failures on an annual basis to Congress.
The results unfortunately have not been very good. The Office of Management and Budget and the General Accounting Office have found in their reviews that the federal government as a whole has not been doing a very good job aligning their programs with the goals and establishing effective performance measures. The Balanced Scorecard (BSC) offers a methodology that can be applied to the federal sector to enable more effective alignment of programs to mission and a tangible means for measuring the results. Some agencies, particularly within the Department of Defense, have embraced the Balanced Scorecard as a means for achieving these objectives, and have successfully transformed their programs to achieve higher productivity, aligning with the mission of the agency and resulting in higher efficiencies. This paper discusses the overall effectiveness and applicability of the Balanced Scorecard to the federal sector of the US Government, including a specific real-world application by the Defense Finance and Accounting Services (DFAS).

JEL Classification: Lll, L86, M31.