The Business of Government Hour


About the show

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. The executives discuss their careers and the management challenges facing their organizations. Past government executives include Administrators, Chief Financial Officers, Chief Information Officers, Chief Operating Officers, Commissioners, Controllers, Directors, and Undersecretaries.

The interviews

Join the IBM Center for a weekly conversation about management with a government executive who is changing the way government does business.

Dr. Leo Mackay, Jr. interview

Friday, September 12th, 2003 - 20:00
Office of the Under Secretary for Policy
Radio show date: 
Sat, 09/13/2003
Intro text: 
Office of the Under Secretary for Policy
Complete transcript: 

Arlington, Virginia

Saturday, January 18, 2003

Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, the co-chairman of The IBM Endowment for The Business of Government. We created The Endowment in 1988 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about The Endowment by visiting us on the web at

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation this morning is with Dr. Leo Mackay, Deputy Secretary of Veterans Affairs.

Good morning, Dr. Mackay.

Dr. Mackay: Good morning, Paul.

Mr. Lawrence: And joining us in our conversation is Jonathan Breul.

Good morning, Jonathan.

Mr. Breul: Good morning.

Mr. Lawrence: Dr. Mackay, let's start out by finding more about the Department. Could you describe its purpose, missions, and programs for us?

Dr. Mackay: Okay. The Department of Veterans Affairs does just what its name implies. We are the arm of the federal government that provides benefits and services to veterans, principally in three main types. We have the Veterans Benefits Administration, which takes care of the transition programs: the Montgomery G.I. Bill loan guarantee and job training, educational training, vocational rehabilitation and education, those sorts of things; and also does compensation in pension, processes the disability claims that a veteran would put in if they are injured in the service of the country or, of course, if they are wounded.

We also have the Veterans Health Administration, which is probably the most famous part of VA. People see the hospitals and outpatient clinics around the country with the blue VA logo on them. It's the largest integrated health care system in North America: 163 major medical centers and about 850 outpatient clinics.

And then lastly, we have the National Cemetery Administration, which runs the 120 national cemeteries that provide burial services to veterans when they are in need of those.

Mr. Lawrence: It's a wide range of activities. Could you give us a sense of the size and the types of skills on your team?

Dr. Mackay: I think it comes as a shock to most citizens to find out that the Department of Veterans Affairs is actually the second largest Cabinet agency in government by employment. We have about 220,000 employees, and our budget in Fiscal Year '03 will be about $60 billion. The principal part of it is the Veterans Health Administration; 185,000 of those 220,000 employees are in VHA.

Mr. Breul: Dr. Mackay, what is your role and responsibilities as Deputy Secretary?

Dr. Mackay: The Deputy Secretary is the chief operating officer. So I am the official that looks at the management affairs of the Department. I preside over the governance process, put together the budgetary package, the legislative package when it goes over to OMB during the budgetary cycle. I also work very closely with the Secretary.

As in any Cabinet agency, there's so much to do in terms of outreach to, in our case, veterans who are spread all over the country. There are 25 million veterans in America. So I do a lot of the public outreach as well and participate in the outreach to Congress and also to the interagency, but the Secretary, of course, is our principal spokesman. And also, in an arrangement that mirrors a business-type structure, he is really the CEO. He's the grand strategist and I am the implementer, the operator.

Mr. Breul: Would you tell us about your career before coming to your current position?

Dr. Mackay: Well, I was in the United States Navy for 12 years, and my career was bifurcated between 6 years in training and fleet deployment. I was a naval aviator with Fighter Squadron 11; several deployments to the Mediterranean, Indian Ocean, North Atlantic. And 6 years, where they were divided between education, teaching, and service as a military assistant in the Pentagon. So I spent 3 years in graduate school, a year teaching at the Naval Academy, and then 2 years of military assistant work at the Office of the Secretary of Defense. And then after that, I spent 2 years on the corporate staff at Lockheed Martin, and then 4 years as a vice president at Bell Helicopter Textron in Fort Worth; ended up there with profit and loss responsibility for the after-market portion of our business.

Mr. Lawrence: You served in the public and the private sector. I'm curious about your comparison in terms of the management challenges in each.

Dr. Mackay: In the public sector, we have much more of a statutory and regulatory structure that bounds us. We also have -- at this level, I get to deal with them a lot -- a fairly interested and at times cantankerous group of board of directors known as Congress, and they exercise oversight on the behalf of the American people. They have a very strong role, of course, in budget and in policy voices. And I think that part of the process is political, and I don't mean that in a pejorative way, but it's overtly political in that these representatives have constituencies. They need to see their needs looked after, and that is their primary interest. They have a board of directors, too: a congressional district or a state. And they are generally fierce protectors of their interests.

I think one of the things that is misunderstood about Congress and congressmen and women is that they are not, at least in my experience, so self-interested. They are Congresspeople that have the larger interest at heart, that have spent years on these subjects and know -- have vast knowledge, and really have taken ownership of our department and several others. And they are jealous about what they consider their department. They want to be consulted. But I think, by and large, when an accommodation is reached such that constituents are served, the best interest of the institution is also served, and it can be squared budgetarily. They're more than willing to make the kind of compromise to move the institution and the interest of the American people down the field. That's the principal difference.

There are a lot of similarities. You have a lot of talented, dedicated people in the public sector, just like you have in the private sector. And in so many instances, there is more similarity than difference. Managing a program in the private sector is the same as managing a program in the public sector, in that the basic details of on-cost, on-budget performance, managing people, are the same whether it be a public or a private enterprise.

Mr. Lawrence: What was it about this challenge that drew you back out of the private sector to rejoin the public sector?

Dr. Mackay: Well, I had two of the three criteria that I like to tell myself I judge a public sector opportunity by. I had a President that I got to see up close and personal living in Texas as governor that I admired. The American people have found out that George W. Bush is a man of principle, a man of strong will, and a man of character. And he also has a very good business sense. It's not an accident that he's the first chief executive with an MBA, and that he has structured things the way he has with the President's Management Agenda and other things. So having a President that you could admire and enjoy coming to work for every day.

Also, having like-minded colleagues. I got to know other members of the President's team who have come from Texas, several of them I knew in-state. Men like David Sampson and Clay Johnson, I got to know a little bit when I was in Texas. So I knew that I'd be coming with a group of like-minded people, colleagues that would see things in a similar vein, and that would, in some very tough circumstances like we all have here, make it just a little bit easier if you have acquaintances and friends that you can call on for support and that understand, you know, what you're trying to do.

And then lastly, the one condition that I didn't really meet is, you know, financial independence would have been nice as a pre-condition. I hadn't quite achieved that by the time I took this job, but two out of three isn't bad, and I figured this was an opportunity that could not be passed up.

Mr. Lawrence: As you reflect upon your career, is there any one job or challenge that perhaps you think really prepared you for your present position?

Dr. Mackay: Well, I think, as in so many other instances with other people, it's really an amalgam of all the things you've done. Working at OSD, I worked in the Office of the Under Secretary for Policy, and there, you get to see some of the political considerations of the crafting of policy. I learned that there. A lot of the formal things that go into government and the inner relation and inner position of the various players around the table, I learned that in a formal way at graduate school. And then firsthand management experience, first at the -- as we say in the Navy at the deck plate level, in the Service itself, but also at -- particularly at Bell Helicopter, where I got a chance to run a -- the New Product Development Center, it was called. It's really a factory.

I also got to stand up an international business in partnership with an Italian firm, Agusta. We started a brand-new company, Bell/Agusta Aerospace Company, and I was responsible for the product support, worldwide product support, standing up that business, negotiating with the Italians across their structure of business regulations and practices and our own, mixing strengths and trying to minimize weaknesses, if you will.

And then lastly, having profit-and-loss responsibility at Bell was the sine qua non. You know, the absolute last thing that you need to prepare yourself for large-scale management is to have the bottom line responsibility. And in that instance, it came in a private sector instance, and it gave me the -- sort of the finishing school, if you will, to prepare me to come and do this job. The public sector generally has budget numbers and personnel numbers that really can't be matched in the private sector, but doing things in the private sector is good practice, it's good experience for doing things in the public sector, if you have an appreciation for the differences. And in my case, I think I was fortunate, because of my prior experience in the Pentagon and some of my education, to be able to take the good managerial things out of private sector, but not to think it's an exact one-to-one relation because it is not.

Mr. Lawrence: That's a good stopping point. Rejoin us in a few minutes as we continue our conversation with Dr. Mackay of the VA.

How are the VA and the Department of Defense working together? We'll ask Dr. Mackay when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Dr. Leo Mackay, Deputy Secretary of Veterans Affairs.

And joining us in our conversation is Jonathan Breul.

Mr. Breul: Along with the Department's strategic goals, VA has also articulated a series of enabling goals. Can you describe the purpose of the enabling goals for us?

Dr. Mackay: Well, the enabling goals are the sinews that kind of hold together all the other things that we're trying to do on a strategic level, and they consist of: information technology and its proper management; workforce planning, the important people capital issues; and then also communication and outreach so that both our employees and veterans are knowledgeable of their opportunities in the Department and what the Department is doing for and with them; and then lastly, our last enabling goal is governance, making sure that there's an orderly process by which we consider issues in turn across the board and produce output in the form of decisions that are well-staffed, well-structured, and implementable.

Mr. Lawrence: I also understand that asset management is one of VA's key goals. And we learned about the CARES Program, the Capital Asset Realignment for Enhanced Services. I wonder if you could tell us more about that.

Dr. Mackay: A very fascinating program, very necessary program. The Department of Veterans Affairs, as you might expect, has had several waves of building in the 20th century, largely coincident with the aftermath of the great wars of the 20th century: the First World War, Second World War, Korea, Vietnam. And when those hospitals and other structures were built, they were built where veterans were in, you know, the early part/middle part of the 20th century. And so we find ourselves with a -- and basically we're talking about the medical, not exclusively, but predominantly the medical infrastructure of VA, with an infrastructure that is growing older, that was built for a practice of medicine that was hospitalcentric, and we have now moved with the rest of American medicine to an outpatient model, where about 85 percent, a little bit more actually, of our health care is delivered in an outpatient vein.

Also, veterans have shifted. There's some very strong demographics in the veteran population. Whereas we have about 25 million veterans now, we have a rate of loss with our World War II and Korean veterans of about 1,500, a little bit more, every day are being lost. And what was a cohort of some 12 to 15 million is now down to about 5 million, and that will continue to decrease. And it will, over time, as that generation continues to leave us, take our veteran population from about 25 million down to about 17, 18 million unless there is some large perturbation in the current-day active duty population over the next 10, 12, 15 years.

Also, veterans, like the rest of the country, are choosing to live in different places. In places where we had needed a structure because we were giving hospitalcentric care to a large population of veterans that were in an urban area, that population may have shifted, and our need for a tertiary care facility in that area may have shifted. What people need to understand, though, about care is that it is a capital asset realignment to more closely mirror the patterns and the demography of veterans and their needs.

The E-S in CARES is for Enhanced Services. CARES is not BRAC, which is another government program, which was Realignment and Closure. This is really about realigning capital, but to enhance services. People have to understand that bricks and mortar don't care for people in modern medicine; trained health care professionals do. And dollars that we can save that are not devoted to keeping out-of-date or unneeded, unused infrastructure maintained -- heated, cooled, what have you -- are dollars that can be put back into the care of veterans so that they have first-class health care.

Mr. Breul: You chair the VA's Strategic Management Council. Can you tell us about the council goals, its responsibilities? Just how does the council facilitate the strategic management throughout the Department?

Dr. Mackay: Sure. It's a two-step process. The Strategic Management Council, which I chair, takes decisions and policy matters and vets them, works them over, massages them, and makes them decision-ready for something we call the VA Executive board, which is the Secretary, myself, and the principal officers, the CFO and the Under Secretary of those three administrations. The Strategic Management Council looks at both IT and HR issues, strategic planning, capital planning, asset management issues, and then also the legislative process and the budgetary process.

We take each in turn in a structured pattern now. We have process owners that own the practice of those within VA. It is a cross-cutting group that assembles in the Strategic Management Council so that the whole of the Department is knowledgeable about these big issues that affect all of us. And we really work very hard in there to structure decisions in these six major areas so that the executive board has decision-ready documents and that the decisions, when they are arrived at, are fully staffed and have implementation plans so that they can be rolled out to the rest of the Department or to whatever applicable sphere that they pertain to, and so that we can continue to move down the road in a policy sense.

Mr. Lawrence: I know one of the areas that often get focused on is the relationship between the Department of Defense and Veterans Affairs. Could you tell us about the Joint Executive Council?

Dr. Mackay: Sure. Last February, David Chu, who is a wonderful interlocutor -- I understand the history between DoD-VA relationships has not been all that it could have been. But certainly, we at VA could not have anyone better to work with than Dr. Chu and his compatriots there, Bill Winkenwerder, Charlie Abel, very good, very able people that are serious about VA-DoD cooperation.

And what the Joint Executive Council does is it's an umbrella group that Dr. Chu and I chair. We have two subsidiary groups, a Benefits Executive Council, which has Dan Cooper, our Under Secretary for Benefits, and Charlie Abel, the Air Force Management Assistant Secretary, as co-chairs. And then a Health Executive Council that actually antedates the Joint Executive Council, which has Bob Roswell, our Under Secretary for Health, and Bill Winkenwerder, the Assistant Secretary of Defense for Health Affairs, as co-chairs. And we meet quarterly in the Joint Executive Council. The Benefits and Health Executive Councils meet more frequently.

And we have covered the gamut of issues, from resource sharing between VA and DoD, where we have -- are proud to report that in Fiscal Year 2002, we've made more than 100 percent increase in the amount of resources that are shared between VA and DoD. We also are leveraging our acquisition spend with regard to federal supply schedule prices that are negotiated by the VA that are available to the Department of Defense. But also, we're looking to expand our cooperation into med-surg supplies and then, lastly, into medical equipment; kind of expensive things that we all buy in modern health care.

We have an active program to leverage the DEERS system, an enrollment system that DoD has, as a VA system: a means by which a single enrollment that captures data for a DEERS enrollment, that data will also be used for VA purposes. And some of the information that we need will now be sort of front-loaded into the DEERS system as we evolve this so that they get all the data they need and we get the data that we need, so later on, a veteran doesn't have to enroll twice in each system.

We're looking at joint discharge so that -- and we actually have a pilot up running in the Pentagon so that when a soldier, sailor, airman, marine musters out of the service and takes the discharge physical, that same physical and that same information will be used for compensation and pension purposes to qualify them for their disability rating from VA.

We're working very hard on a -- really an overarching structure in information technology that will allow our two different patient record systems, computerized patient record systems, that the information in one system will be able to be moved to another system. We're working on the DoD-to-VA movement first, because that one is most often needed. But we're looking at a structure in a building-block fashion that will allow us to have interoperability between those two systems and then finally with HHS. So there will be a total federal system of information technology that will be essentially transparent one to another.

We are working on a pilot for consolidated mail order pharmacy systems that will allow people that go to military treatment facilities and need refills for their drugs to utilize the VA CMOPs. We have a well-established program that is extraordinarily inexpensive, and we're looking to make that available to the Department of Defense on a basis that would dovetail with their needs.

There are other things that we're doing: coordinating on deployment health as we look at contingencies that may face us in the future so that we can do a better job, an ever better job of coordinating the lifetime health care of those service members that go off and deploy in a contingency. So we are working across a plethora of things.

And importantly, we're starting to look at joint strategic planning. This is a long-term effort, because we both have our own strategic planning systems, our own ways of producing budgets and long-range plans, but we need to harmonize those so that we look across each other's capital planning so that we do things that are intelligent. We have individuals from DoD that are part of our national CARES Program office right now. And when a second round of BRAC occurs, I believe in 2005, we will have the reverse: VA people actively planning so that in places where we have a VA facility and a DoD facility, if one of the other of us sees fit to move for capital asset realignment or other reasons, that a capability remains that could, you know, go a long way towards serving both communities. It's straightforward good government. And it is actually part of the President's Management Agenda for VA and DoD to increase their resource sharing and working together.

Mr. Lawrence: Great. That's a good stopping point. Come back with us in a few minutes as we continue talking about management with Dr. Mackay of the VA.

The VA has recently improved its score on the President's Management Agenda scorecard. How did they do this? We'll ask Dr. Mackay when The Business of Government Hour continues.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Dr. Leo Mackay, Deputy Secretary of Veterans Affairs. Joining us in our conversation is Jonathan Breul.

Well, Dr. Mackay, in the last segment, you were talking about the relationship between the Department of Defense and VA. And I'm curious, from a management perspective, what's changed?

Dr. Mackay: Well, there are a couple of ingredients. One of the things is structural, and the other is really personality-dependent, because even something as large and as abstract as the federal government is, after all, made up of people. This President has done a signal job in something called the President's Management Agenda, which was a -- the structure of a way to approach the management of the federal government.

We've also had some really strong leadership from -- principally from Mitch Daniels, the director of the Office of Management and Budget. I hope he's listening this morning. I said something nice about you, Mitch. It's getting to be budget time and so everybody's nice to Mitch these days. But he is a first-class, top-notch manager who, in his own experience, has that mixture of public sector experience and private sector real bottom line management; has a very strong team with him. And the Management Agenda and the Management Scorecard have been a way to incentivize several departments to cooperate among themselves, but also principally to cooperate with the Office of Management and Budget in a way that I don't think has been done -- it hasn't been done quite this way before.

And so, that's the structure. We have a lot of incentive. There's a very powerful incentive in having a scorecard sent out to the public and out to Congress very half-year saying how you're doing in these five critical areas.

Also, there's the effect of personality. I talked a little bit about David Chu, but he really is a remarkable government executive. He, in all of his professional life, has either been in government itself or thinking about government. He's terrifically intelligent and he's very motivated to put right some of the things that have been wrong in the VA-DoD relationship. And he and I have been able to form a very close partnership between our teams and to attack, as I mentioned previously, a very broad range of issues.

VA and DoD have had legislative authority for about 20 years that would allow them to cooperate, but there have been several impediments. One of the simplest ones was that any time a military treatment facility or a VA medical center wanted to cooperate, the first question was what's the price? How should we exchange goods and services across this departmental boundary? And we arrived at a very simple solution; that we used an existing schedule, CMAC, and said that CMAC less 10 would be the standard price between DoD and VA to trade services in the health care arena across that boundary. And that instantly produced a price list, so that let people know what the value of things were if they wanted to trade them across that departmental boundary. We also made the decree, though, that if this was not the best price that could be arrived at mutually, in the case where there were existing agreements, we were going to let those stand in place. Our objective was not a single solution, but progress.

And as I mentioned, we have more than doubled the amount of resource sharing between DoD and VA in just Fiscal Year 2002 versus Fiscal Year '01. And we've also had some real accomplishments, like in North Chicago, at a place where we have the Great Lakes Recruit Training Center and the North Chicago VAMC side-by-side. We have agreed to use a common co-generation plant so that energy will be supplied to both the Navy customer and the VA customer by a common plant. We've leveraged the enhanced-use lease authority that VA has to produce a common solution.

And so those sorts of common sense, progressive projects are possible when there's agreement at the top and a certain amount of leadership can be exerted. And I'm just very grateful to have the kind of partner that I have in David Chu over there.

Mr. Breul: On the most recent OMB scorecard for the President's Management Agenda, VA was one of only a handful of agencies to improve in one of the five areas. Could you tell us a bit more about what the Department's accomplished in the area of budget and performance integration?

Dr. Mackay: Sure. The first thing to acknowledge is that we have a very long way to go. This is a very aggressive area, which if we can make a breakthrough in it, it will completely -- it won't eliminate politics and it won't in and of itself revolutionize government, but it will give us the kind of good, hard tie between where it is we invest the taxpayers' money and the results we get for those taxpayers. Part of that is simplifying budget documents and budget presentations. And that is the part where we have really made some progress initially at VA

We are now working on the very hard tasks of putting in place the kind of performance metrics that do a good job of measuring, you know, that ephemeral public value. In the private sector, you know, you have profit, you have dividends, you have earnings. Oftentimes in the public sector, you have the concept of public value that you're delivering. For compensation and pension programs, you know, what's the public value of that, and how do we know that we are succeeding at accomplishing the intention of the American people to compensate those who have served this country, but doing it in an effective and an efficient way? We can do a lot of metrics on how well we process disability claims, and we've made some signal improvements there, but this budget performance integration in its sort of ultimate application is looking at those real bedrock issues of are we delivering public value.

And this is something that I think goes right back to Mitch Daniels. It's a real passion of his, and it has actually been -- it's a tough process. And I can't tell you that we have always been happy with the decisions that we've worked out with the Office of Management and Budget, but it's a necessary process if we're going to improve the performance of government. And even though we've gotten some attention and some congratulations for what we've done, we're really only at the beginning.

The really hard thing to do is to get metrics together so that we know and can measure what it is that we are doing with the laws that are given us by Congress. What will take an act of political will, even over and above that, will be to actually allocate resources based on performance. And that is something that will have to be worked out with Congress, who, of course, has oversight and budgetary powers. But having the data that shows that our budget can be linked to performance will be a very powerful tool to argue for funding those programs that are successful and actually shifting funds away from those that are less successful.

Mr. Breul: Are there any lessons learned from VA's experience in integrating budget and performance that you could share with us?

Dr. Mackay: Well, the most important step that we have made in budget and performance integration is really to simplify the display of our budget and to trace it more closely with program intent. And that's the first step. I'm a little hesitant to offer advice to my colleagues in government about metrics, because we still have several important issues that are outstanding there. But I think just the simplification of -- first, of laying out budgets in ways that map very closely with the programs that they're intended to execute so that you can trace dollar to program execution is the beginning. And that's the thing, I think, that we've been successful with so far.

Mr. Lawrence: Let me shift to another area of the President's Management Agenda and that's competitive sourcing. What are the Department's plans in the area of competitive sourcing?

Dr. Mackay: We have some very aggressive plans to look at about 52,000 jobs over the next 5 years and to save about $3 billion. So we have some very aggressive plans with respect to competitive sourcing. We have worked out a streamlined process with the Office of Management and Budget that allows us to set such ambitious goals. We're also looking at certain activities right now. Even in those 52,000 jobs, they are biased toward the ancillary and support functions, things like laundry activities, lawn mowing, food service; areas that are important, of course, to the overall operation, but are not core processes, if you will, with the provision of benefits, service, and processing, health care, or burial services.

Mr. Lawrence: That's a good stopping point. We have to go to a break. Rejoin us in a few minutes as we continue talking about management with Dr. Leo Mackay of the VA.

What role will the VA have in homeland security? We'll ask Dr. Mackay for his thoughts when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Dr. Leo Mackay, Deputy Secretary of Veterans Affairs.

Joining us in our conversation is Jonathan Breul.

Mr. Breul: Homeland security has become a top priority for government organizations. What role will the VA be playing in the event of a national emergency?

Dr. Mackay: Sure. I think it'll be an enhanced role, but the role that we've played historically in the federal response plan, which is principally bound up with public health and with mass casualties. Interestingly enough, on September 11th, I spent the evening in a relocation facility outside of the District of Columbia coordinating the Department's response as part of the federal response plan. We had three hospitals in the New York area that all were poised to accept casualties. Unfortunately, as we now know, there were not very many casualties, there were mainly fatalities, but 60 people were -- 6 prompt casualties were treated in VA facilities, mainly in our hospital in Manhattan.

We also have medical and surgical supplies that we store. One of the things that VA has is a very large acquisition system, actually the second largest in the government. It's very far behind the Department of Defense, obviously, but we procure medical and surgical supplies, pharmaceuticals, and others. And we conducted a cross-country airlift under Air Force escort from -- it originated on the West Coast, stopped in the Midwest at a place that we have med-surg supplies stored for emergency contingencies, and then went into the New York City area. So we were executing our homeland security mission.

Now in the wake of September 11th, I think all departments have taken a good, hard look at what they do and how they do it. And in order to make sure that we are both protecting our own employees, the veterans that come to us, and the assets that are entrusted to us by taxpayers, and also to enhance our ability to support the Department of Homeland Security that's been newly established, we had about a 6-week study that looked very closely at what we do. And the central recommendation of that study that has now come to fruition is the Office of Operations Security and Preparedness in the Department. It's a new assistant secretary-level part of our Department, and it has the task of pulling together all of our response capability.

One of the things we've done is we have now an operations center that is manned and operating 24 hours a day, 7 days a week, that gives the Secretary and myself the kind of situation awareness that we really didn't have before September 11th. So we're much more able to do the things that we do in response to, you know, manmade or natural disasters.

In addition to the, you know, just the capability of our hospitals and our health care professionals as a reserve, a strategic reserve if you will, that's spread out across the country, we also have the tasking in support of CDC and the Office of Emergency Preparedness at HHS. We acquire and manage the inventory of national stockpiles of pharmaceuticals and other equipment and supplies that would be utilized in a public health emergency or in a mass casualty scenario. So those are the things we do in homeland security principally, and that's the way that we have moved out to do it better in this post-September 11th world.

Mr. Lawrence: Let me ask you to take a step back and put on your big picture hat and talk about your vision for the VA over the next 5 years.

Dr. Mackay: The vision really has two parts, I think. With respect to health care, when my tenure is over and the Secretary's tenure is over, we want to make sure that we are healthy in that area, and that we're poised to continue on as a system of direct provision of health services to veterans as a veterans system. The value of VHA and the veterans health care system is that it is a system designed and built for veterans. It is no accident that the bulk of our research is clinical research, that it centers in areas like prosthetics, blind rehabilitation, spinal cord injury, and long-term care. Those are the things that veterans are demanding and need. And those are the kind of things that we have to be able to supply in a first-class manner in order to earn our keep as a veterans health care system. So I think that is one goal.

As an organization, as an organizational entity, I want to be focused on continuous improvement. I think when the new management scorecard is put out, you'll see that we made some progress, as Jonathan alluded to a little earlier, in that goal. But I want to make sure, in all those core processes and in all those key activities, like cooperating with DoD, competitive sourcing -- and I want to emphasis it's competitive sourcing, and in so many of those competitions, the government workers actually win, but they win in a most efficient organization -- strategic management of human capital, the financial management and budget performance integration across the board; in those activities and so many others, we want to continually improve.

An organization as large, as complex as VA can't really aspire to any kind of utopian ideal. We're not going to be the perfect organization. But I think we can legitimately aspire to continuously improve; to continuously do a better job of managing our assets; to continuously improve in the job of strategic planning; continuously improve in the way we develop and run our information technology programs to make sure we have an enterprise architecture, so that we have a rational IT structure and we have a new telecommunications modernization project; that we're better at cybersecurity; that we do a better job of safeguarding the privacy of veterans and abiding by the HIPAA guidelines as they come online and reach force. So those are the things that I think animate at least my tenure as COO.

Mr. Lawrence: When you think about that vision, what are a couple of the key management challenges you're going to have to work through to get there?

Dr. Mackay: The biggest challenge, and this is a challenge across government, is in people. The biggest threat to the provision of government services of the federal government over the next 20 years is attracting, retaining the right sets of people with the right skills. You know, 15 years ago, the biggest single hiring we did was for clerk-typists, and now we don't own a typewriter in central office and most of our filing is done electronically. So a whole job classification has just been done away with, and that is going to be replicated in the next 10 years. And so, staying up-to-date with people skills is the biggest threat to that agenda of continuous improvement in the provision of quality health care to veterans.

Mr. Lawrence: Well, that tees up my last question quite nicely. What advice would you give to a young person perhaps interested in a career in public service?

Dr. Mackay: I would say to plan for it at some point. I know that a good number of the professionals, the educated young people that go to college and then pursue their careers, are going to pursue their careers in 3- to 5-year chunks. And I would come into them to look at spending a 3- to 5-year chunk in the federal government, or state/local government, for that matter. Not only does it give you the chance to give back, but skills, like, particularly information technology, financial management skills, are the kind of critical skills that are in need.

And I would love to get somebody into VA to work in those areas that had spent a couple years after graduating from college someplace else and wanted to spend -- came with an open mind, but if they wanted to move on after 5 to 7 years, I think that's a fair exchange; to give that service back, that public sector service which recompenses you in so many ways. Some of it is tangible, but most of it is intangible.

One of the worst things that you can say about and most inaccurate things you can say about government bureaucrats is that they're boring, drab people. I find them to be the height of idealism. Most of them serve and make the kind of tradeoffs that you make to be in the civil service long-term consciously. They know they're not going to make top dollar, but they know that the quality of their life is improved because what they're doing is being done, you know, for this land that we all love. And in our case, at the Department of Veterans Affairs, it's being done in service to those who have served this country under some very trying and difficult circumstances, and that animates the people at the Department of Veterans Affairs.

Mr. Lawrence: Well, we're out of time for this morning.

Dr. Mackay, Jonathan, I want to thank you very much for being with us.

Dr. Mackay: It's been a great pleasure. Thank you.

Mr. Lawrence: This has been The Business of Government Hour featuring a conversation with Dr. Leo Mackay, Deputy Secretary for Veterans Affairs.

Be sure and visit us on the web at There, you can learn more about our programs and research and you can get a transcript of today's very interesting conversation. Again, that's

This is Paul Lawrence. Thank you for listening.

Dr. Leo Mackay, Jr. interview
Office of the Under Secretary for Policy

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