The current BP oil spill disaster is the most prominent case of institutional damage and need for repair. The former Mineral Management Service had devolved into an embarrassing and ineffective service that referred to the entities that it was supposed to be regulating as "clients" and "customers". This indicates direction and leadership that virtually destroyed the regulatory, objective and incorruptible protections under which government regulatory agencies are supposed to operate.
The bottom line is that the industry that was being regulated was allowed to run the regulatory agency, to take away all professional distance between regulators and industry and to even engage in acts of corruption, collusion and actionable misconduct.
The repair has been a weak one. The MMS was disbanded and renamed as the Bureau of Ocean Energy Management. Michael Bromwich, a Justice Department specialist in correcting troubles at institutional levels was hired and has been at work toward a major overhaul, in additon to Congressional attempts to separate two major components: regulation and royalty collection from each other. This is in addition to managing the consequences of the BP Macondo Well oil spill.
The first damage came when the American public and Congress ever tolerated secretive meetings between Bush Administration officials and the oil industry, with no public accountability whatsoever.
The second damage came when the line between negotiating and collecting royalties and regulating offshore oil drilling. Work is now being done to separate the two functions from each other and to prevent future administrations from ever violating a basic rule again.
The third damage came when the culture of the MMS was forced into a role of servant or vendor to "clients" and "customers". Never has a customer service culture been appropriate for the whole culture of a regulatory, oversight or auditing agency. There are specific functions and departments where customer and client approaches are called for, such as public information,education, training and problem solving, but not when it comes to enforcing essential regulations.
Now, it is not known whether even BP's other problematic and risky operations are receiving any more scrutiny or improved inspection, regulatory and other action, but there will be action soon.
The fourth damage came when a philosophy of completely catering to the interests of the regulated industries, lack of aggressive enforcement, incredible misconduct and unbelievably bad actions by those in leadership positions caused a complete breakdown in the agency, it's work in the public trust and its order, morale and discipline. The reputation and reason for the MMS to even exist was permanently destroyed, hence the formation of a completely new institution.
The final damage came when the entire culture of the institution, to the lowest paid worker, became so corrupted and ineffective that it must be completely reconstructed. Hopefully, Mr. Bromwich will be able to use every tool and resource available to him to effect a major overhaul in the personnel, morale, culture, practices, discipline and order of the new institution, the Bureau of Ocean Energy Management.