The Business of Government Hour

 

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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.

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

John Marshall interview

Friday, November 28th, 2003 - 20:00
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John Marshall
Radio show date: 
Sat, 11/29/2003
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Missions and Programs; human capital management; Managing for performance and results...

Missions and Programs; human capital management; Managing for performance and results

Complete transcript: 

Thursday, May 15, 2003

Arlington, Virginia

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 1998 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 www.businessofgovernment.org.

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is John Marshall. John�s the assistant administrator for management at the U.S. Agency for International Development.

Good morning, John.

Mr. Marshall: Good morning, Paul.

Mr. Lawrence: And joining us in our conversation is Patti Fisher.

Good morning, Patti.

Ms. Fisher: Hello, Paul.

Mr. Lawrence: Well, John, perhaps you could start by describing a little bit about USAID for us, its mission and its activities.

Mr. Marshall: Sure. USAID is an independent agency that provides economic development and humanitarian assistance throughout the world to developing and countries in transition. Its origins go back to the Marshall Plan that rebuilt Europe following World War II. And it actually, in the early 1960s, spinned off from the State Department; it had been a bureau of the State Department. But John F. Kennedy created USAID as an independent agency, and since then, it�s been more or less in the purview of the State Department. Today, it actually reports to the Secretary of State, although it still has independence as an agency.

Mr. Lawrence: Could you give us a sense of its budget and the number of people and sort of the size of its activities?

Mr. Marshall: Sure. The budget in this fiscal year is about $9.4 billion. There are about 8,000 employees around the world: about 2,000 here in Washington and about 6,000 overseas.

Mr. Lawrence: How about the range of skills? As you were describing sort of the mission, I sort of had different types of different visions of what those skills would be. What are the skills of the employees?

Mr. Marshall: Well, it�s a variety of skills corresponding to the main programmatic areas. Humanitarian assistance are individuals who understand the governance of countries around the world, governance systems, economic systems. They try to help countries who are transitioning bring forth modernization in their governmental structures, moving towards accepting the rule of law, free market economies, and democratic values.

We have health professionals who are working on all kinds of health issues around the world. HIV/AIDS, for example, is an enormous driver today in our health-related programs. Other forms of humanitarian assistance: people who can mobilize quickly and get food and emergency relief supplies into distressed areas; and economic development specialists, people who know who to drive the levers of growth in an economy and help economies take root and flourish and improve the standard of living for the citizens of these countries.

Ms. Fisher: John, with all of those tasks underway, how do you determine where AID focuses its attention?

Mr. Marshall: Well, we focus on countries, again, that are challenged, that are developing, that are in transition. We concentrate primarily on four regions of the world: Latin America and the Caribbean, Africa, Europe and Eurasia, and Asia and Near East. We get a lot of help in terms of how we select the countries we work in. The Congress earmarks money for political purposes all around the world and for programmatic purposes. And so the amount of discretion we have is somewhat limited within a budget as large as $8- or $9 billion a year, but almost all of the activity has to do with one of those three or four programmatic themes I mentioned.

Ms. Fisher: I know AID has many accomplishments, but are there a couple that come to mind that you could discuss with us?

Mr. Marshall: Well, right now, the real focus is on the part of the world in the Middle East where there�s so much of a challenge. We�re in the middle of rebuilding Afghanistan, and now we�re moving rapidly into rebuilding Iraq. We�ve had some pretty remarkable success in Afghanistan over the last number of years in rebuilding the economy and providing humanitarian assistance and getting agricultural production, improving medical and health services and educational services in place. And we�re doing those same kinds of things in Iraq, immediately providing humanitarian assistance and then following that up with economic development assistance to repair the damage, get the roads and systems of commerce moving again, and helping the country lift itself back up from the conflict.

Ms. Fisher: As the assistant administrator of management and the CIO of USAID, you have an awful lot of responsibilities, John. Would you expand on your role and responsibilities at the Agency?

Mr. Marshall: I head the largest bureau in the Agency in Washington, the Management Bureau, which has about 425 employees. And they encompass five offices which correspond to the five management systems that we use in Washington and around the world: financial management, procurement, the information technology area, human resources, and administrative services. I also serve as the Agency�s CIO, and I�m responsible for managing the administrator�s management reform activities as well as the President�s management reform agenda.

Mr. Lawrence: Tell us about your career before you got to AID.

Mr. Marshall: Well, thanks, Paul. I actually was cursed with a public service work ethic, so about half of my 20-some-plus years have been in the private sector and about half in the public sector. And even when I�ve been in the private sector for several consulting firms, it�s been when I�ve been out of the government and focusing on helping, working with the government as a consultant.

I started in government not long after business school back in the early �80s in the Reagan Administration and the Bush 41 Administration. And I served in appointed positions at the Education Department, at OMB, and at Agriculture Department. When I left the first Bush Administration in 1990, I had been head of the Federal Crop Insurance Corporation, and then I went back into consulting and then did a term on the U.S. Senate Committee on Governmental Affairs, working on legislative reforms to the management of the federal government. And then I joined my latest consulting organization before coming back to the government two years ago, which was IBM�s consulting group, and I was with IBM from 1997 to 2001.

Mr. Lawrence: You said you were cursed by a draw to public service. I�m curious, what drew you and what drew you back?

Mr. Marshall: It�s just been an interest throughout my life of public sector-governmental issues, and it was something I got into early in my career and something I just have found a continuing interest in. And it�s been a mixed blessing. There are a lot of challenges, a lot of rewards. It hasn�t provided as much prosperity as other careers might provide, but a lot of rewards. And you never run out of challenges in the public service.

Mr. Lawrence: Well, let me ask you to do a little contrasting because of the different sectors you�ve been in. In terms of management style or culture, how would you contrast the public sector versus the private sector?

Mr. Marshall: I think both sectors certainly have capable employees. I think the TEL-IT levels are pretty comparable. The government, unfortunately, is hampered by a lot of bureaucratic systems that get in the way and impede progress and results. The private sector organizations I�ve been with have tended to be smaller organizations, where you have more flexibility and can react with more speed to changes in the market and business dynamics. And so I�d say that�s the biggest difference that you notice right off the bat is that it takes longer to get things done in the government.

Also, particularly at USAID, I�m at an agency which has suffered enormous staffing cuts during the 1990s. And the Agency doesn�t have a whole lot of capacity to not only perform its day-to-day work, but to change the way it does business, which all of the reform agendas are driving it to do. And that makes getting progress and seeing results a very difficult challenge in the government.

Mr. Lawrence: How about the scale of government? Often when people come to government, I know you�ve been in and out, people are surprised at the scale. So I�m just curious how that would fit into the comparison.

Mr. Marshall: Yeah, scale is part of it, although any individual agency you might work for, you know, there are three or four that would rank, if they were commercial, among the top 5 or 10 in the Fortune 500. But there are many other large corporations that are comparable scale to a number of government agencies which are also have their bureaucratic aspects, but aren�t nearly as bureaucratic as the federal government. So I�d say that, scale is an issue, but certainly it just seems to be more ingrained into the systems, and modernizing is just a whole lot tougher in the government.

Mr. Lawrence: Let me ask you to contrast your experience with the Senate and the Legislative Branch versus now in the Executive Branch.

Mr. Marshall: Well, it was a fascinating experience being part of a Senate staff that creates a lot of the laws that, as a government manager and executive, it�s been my responsibility to implement. It�s a fast-moving environment developing legislation. You see it is a bit like making sausage; it�s not the prettiest sight. And you see the interest groups at work. You see results oftentimes, you know, pretty quickly. The impetus for a bill can come up pretty rapidly and the Congress can act when it needs to. Witness the Homeland Security legislation that was just passed this year in response to a national emergency. It can do things. They created that new department a whole faster than the federal government, than the Executive Branch will put it in place.

You also see the compromise. You see a lot of, you know, the pressures for differences between the House and the Senate side, you know, where things -- the Senate, things are more collegial, things take longer. You have the filibuster threat always. It takes 60 or more votes to get a law enacted. It gives you a whole different perspective on where the laws came from and what the impulses were behind them. But I think it�s helpful overall in being a manager in the Executive Branch knowing how the legislature works, and having contacts down there I think can be very invaluable.

Mr. Lawrence: Interesting, but we�ve got to go to a break. Rejoin us in a few minutes when we continue our conversation with John Marshall of USAID.

This is The Business of Government Hour.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I�m Paul Lawrence, and this morning�s conversation is with John Marshall. John�s the assistant administrator for management in the U.S. Agency for International Development.

And joining us in our conversation is Patti Fisher.

Ms. Fisher: Hi, Paul. John, you spoke a little bit earlier about some of the exciting programs that you implement as part of AID. And I was wondering if you could expand a little bit more on what you�re doing in Iraq.

Mr. Marshall: Well, USAID is fully committed to providing humanitarian assistance to the people of Iraq. And we�re also providing economic development assistance, but the first commitment is to saving lives and reducing suffering. We actually began planning and training for Iraq several months ago, and took time over several months to assemble the largest ever U.S.-led humanitarian rapid response team. We pre-positioned stockpiles of emergency supplies around the world and spent a lot of time coordinating the response planning with international humanitarian organizations, and funding the preparations with private and nonprofit groups. And fortunately, as a result of all the work that�s taken place and all the food and relief effort that we have prepared and are now putting in place, the people of Iraq are not facing a humanitarian crisis. In fact, total spending on emergency relief and reconstruction to date is over $600 million, mostly emergency relief and the rest on reconstruction.

Ms. Fisher: Wow. Did you learn a lot from the rebuilding of Afghanistan, and were these areas that you also assisted Afghanistan in developing?

Mr. Marshall: Afghanistan, yes, has provided some lessons learned. It�s been largely a humanitarian effort in Afghanistan helping the people recover from 24 years of conflict and four years of a very, very extreme drought. And our efforts to get food and relief supplies in, we believe, has adverted famine for between 8- to 10 million Afghans. We spent a lot of investment in revitalizing agriculture, providing seeds and fertilizer for the spring wheat planting season last year that produced over 100,000 metric tons of wheat, and benefitting over 140,000 farmers. This led to an 82 percent increase in production from the previous year. We also rehabilitated over 6,000 wells and irrigation canals, dams, reservoirs, and water systems, and reconstructed 31 bridges. And that�s just in the agricultural segment.

In educational relief, we provided 50 million textbooks, 4,000 basic teacher training kits, food and salary supplements for teachers, enough for 50,000 teachers. And in the health sector, particularly in a tremendous amount of aid in maternal and child health, we provided over 4 million immunizations for children against measles. We�ve provided about one-quarter of the water supply in Kabul. And we�ve provided basic health services to some 2 million women and children.

Mr. Lawrence: Let�s shift from the Mideast and return here to Washington and talk about things at USAID Headquarters. I�m curious, we understand there�s a reorganization taking place. Could you tell us about the reorganizations?

Mr. Marshall: Sure. One of the first things that Administrator Andrew Natsios did when he took office nearly two years ago was, looking around the Agency, he decided that he needed to make some changes to concentrate our programmatic and technical expertise in three organizations that would be the thematic policy, major initiatives of the Administration; and also to put more resources into the regions and out in the field where the rubber meets the road. And so he created three new we call them pillar bureaus. They respond to the three pillar thematic areas of peace, prosperity, and health, or as we call them, democracy, conflict, and humanitarian assistance is one of the pillar bureaus; economic growth, agriculture and trade, EGAT, is the second; and global health is the third.

And the point of the reorganization was to focus again on program delivery in the field and to centralize the technical expertise in the three pillar bureaus I just mentioned, which were restructured in a way that�s incented them to provide service to the field in a consultative way. The four regional bureaus are still the main implementers, you might say, of our programs. And we have 70-some missions around the world that report up through the four regional bureaus, and they are Latin American and the Caribbean; Africa; Europe and Eurasia; and Asia and the Near East. And as the restructuring took place, again, resources were devolved from what had been the central pillars into the regional pillars and out into the field to provide more expertise in the field and to set up a service, a customer relationship between the technical experts in the central bureaus and the implementers in the field.

Mr. Lawrence: It sounds as though the outcomes that were expected were quicker decisions, more efficient use of the resources. Is that correct, and did those happen?

Mr. Marshall: Those were among the objectives of the reorganization and we do think that�s starting to happen. The reorganization was in the planning stages for a number of months and it�s getting into place this year. And we seem to be seeing some significant benefits through improved focus and faster decision-making, and hopefully, improved results in the field.

Mr. Lawrence: As you know, the President�s Management Agenda is on top of everyone�s mind these days. And as you described your responsibilities as assistant administrator for management, I heard many of the things in the PMA that you�re responsible for. I understand recently you participated on the National Policy Association�s Forum on Human Capital that brought together different perspectives on human resources. And I�m curious, what did you learn from the forum, especially in talking to the people from the different sectors, government and the private sector and the nonprofits?

Mr. Marshall: Well, it was a fascinating and far-ranging discussion. And the interesting thing was I think we all understood in the room together that we�re all dealing with the same fundamental challenges. The issues aren�t any different in the private sector as they are in the public sector. They�re a little bit ahead of us, and in some areas, they�re quite a bit ahead of us.

But they have to deal with the three main areas of the human capital reform initiative of the President. Leadership, talent, and performance accountability are kind of the three thematic areas that the entire human capital initiative gets at. It�s how do you identify and develop leadership, how do you achieve alignment between the leaders of your organization and the overall goals and objectives of your organization, and how does the leadership communicate that down through the ranks. How do you identify talent and get it to align with the right skills and the right place at the right time in the organization? How do you train more efficiently? How do you manage for performance accountability? And it�s all a cyclical process. There�s a life cycle process in the human capital system, and we need to get all of those components of the system in sync and operating efficiently. And, you know, we�re farther ahead in some areas than we are in others, but the same issues exist everywhere.

Ms. Fisher: John, in March, the Endowment published some specific recommendations stemming from that forum on human capital. Can you tell us those that you�ve adopted and how you�re approaching implementing some of those recommendations?

Mr. Marshall: There were about 25 recommendations altogether, and they�re very solid recommendations and they were all very consistent with initiatives that we have underway that are part of our overall human capital reform initiative -- human -- strategic management of human capital initiative that�s part of the President�s Management Agenda, in three areas particularly that came out of the forum.

First, on reforming the culture of the Agency, a couple of recommendations that we felt were right-on were the need to define our core competencies in context of the Agency�s mission. As the Agency�s mission is changing and evolving, we need to do a better job of defining core competencies that will support that mission. We need to strengthen workforce planning and better link workforce planning to the Agency�s mission and accountability system. So those are two cultural areas where we need to focus.

Also, on rethinking the concept of career; what it means to have a career at USAID. Workers in the government, you know, just like in the commercial sector, are more mobile these days. We can expect a career encompassing a number of different stages or moves throughout the career, mobility. So really the notion of an entitlement to lifelong commitment with the federal government is no longer a valid one, just as it�s no longer the norm in the commercial sector. And so we need to see our workforce that way. And as we�re constantly thinking through and revisiting what are the core competencies we need, and we need to invest, attract, and recruit and retain the competencies we need, we also need to recognize that there are some competencies we no longer need and make those tough decisions.

Mr. Lawrence: How are the human capital challenges at AID affected by the cuts that have been taking place that you described?

Mr. Marshall: Well, it�s created a background. There�s a palpable sense in the culture at USAID that the Agency took very severe cuts in the 1990s that were not based on a systematic analysis of the workforce and our needs; that they were fairly arbitrary, and, unfortunately, left the Agency pretty well cut, not just fat, but some bone and some muscle tissue. At the same time, our requirements have been growing, new missions have been added to the Agency, unfunded mandates, you might say, and that we are increasingly strained just to keep up with the volume of work that we have, let alone take on new responsibilities.

And the crucial ingredient to helping us change, to manage the management reforms and take on these new responsibilities that we lack is an increment of capacity to think and plan and execute a change strategy, and that�s just what we don�t have. We�re so busy just answering the mail day-to-day that we don�t have enough people who can step back and think and plan and change the way we�re doing business. We�re kind of like a car hurtling down the highway at 70 miles an hour, and we�re having to change the tires while we�re in motion, and we just can�t get that done as effectively as we�d like to be able to.

Mr. Lawrence: That�s a good stopping point. Come back in a few minutes when we continue our discussion about management with John Marshall of AID.

How�s AID doing with the rest of the issues called out in the President�s Management Agenda? We�ll ask John for his perspective when The Business of Government Hour returns.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I�m Paul Lawrence, and this morning�s conversation is with John Marshall. John�s the assistant administrator for management in the U.S. Agency for International Development. And joining us in our conversation is Patti Fisher.

Ms. Fisher: John, you mentioned that in addition to being the assistant administrator for management, you�re also responsible for the CIO role and technology. Can you tell us how you�ve addressed IT challenges at AID?

Mr. Marshall: Well, there certainly are a number of IT challenges at USAID, but we have some very, very good people who are doing a lot of good work. And I must say, I inherited a pretty well functioning organization. The new challenges in this Administration, though, are those associated with the President�s Management Agenda, particularly the E-government reforms from OMB, which really want to jump-start and rapidly move in more transformational ways into using the Internet as a business driver.

Along with that are a number of reforms intended to improve the way we manage IT and to ensure that we�re strategic and have risks well-identified and don�t make wasteful investments. We are making great strides to comply with the federal enterprise architecture requirements, and that�s developing a blueprint really for how your IT maps to the needs of your business. It�s a very complex subject, but it�s a way of better managing your IT investments so you maximize your value and reduce risk and don�t duplicate systems.

The capital investment planning and capital planning investment control process is also a reform that�s been underway. We�ve had a CPIC process in place before, but we�re upgrading it. And it�s all about making sure that your investment decisions are actively managed by a high-level executive steering committee representing the interests of the entire agency and not just the IT shop. And so that we�ve got structures in place now to ensure that we manage and our investment decisions are much more business-like than before.

We�re also participating in a number of the government-wide E-government projects, which are leveraging investments over a number of agencies who have similar needs and, again, as a way of eliminating wasteful agency-specific investments, encouraging the agencies all to invest together in joint projects that serve all of their needs. And another area, finally, is in IT security enhancements. We have a tremendous amount of activity, again, as an international agency with some high security requirements to make sure that our computer systems worldwide, our e-mail systems, and all of our databases are well-secured.

And so those are the areas we�re focusing most of our attention and made a whole lot of progress there. And I must say, OMB and the other oversight agencies have been very pleased by the amount of progress they�ve seen from us recently.

Mr. Lawrence: You�re also responsible for financial management. What are the challenges you�re facing in an effort to improve financial management?

Mr. Marshall: Well, we�ve made tremendous improvement also in financial management in the last few years. The two biggest priorities are finally achieving and then maintaining a clean audit opinion so that our financial statements are certified by our auditors and our inspector general as being valid and sound. Also, developing a new worldwide modernized financial management system. Those are really the two biggest priorities.

And I must say, we�ve made a tremendous amount of progress recently. As recently I think as two years ago, the audit of our Fiscal Year 2000 statements we received, there are five statements in our financial statements, and we weren�t able to receive an auditor�s opinion on any of the five statements. Following the 2001 audit, we finally got qualified opinions on three of the five. And this year, after the 2002 statements were submitted, we received unqualified opinions on four out of the five and a qualified opinion on the fifth. And so that�s just tremendous improvement in the last couple of years. We were on OMB�s list both the last two years of among the most improved agencies.

We also have deployed, a couple of years ago, 2000, a new commercial off-the-shelf financial system in Washington headquarters. And that�s been one reason the audit results are improving; that we now have a modernized system that�s doing a lot better job. Our next challenge is to deploy that system around the world. And we�re just planning now in putting together and getting together our financing to move forward with that, and we hope to get that completed over the course of the next couple of years.

Ms. Fisher: Performance budgeting is another component of the President�s Management Agenda. How is AID dealing with the problem of creating reliable performance measures for all of its programs?

Mr. Marshall: That�s a very challenging question, Patti. As you know, we�re working with the State Department on a joint strategic plan. And I think State and USAID are particularly challenged in this area because we have far-reaching objectives for diplomacy, diplomatic objectives, and developing humanitarian objectives, and some of our programs, particularly in USAID, tend to be controversial. Some of them have squishy objectives. It�s really hard to determine what are the outcomes. How do you measure, for example, the value of U.S. foreign assistance to the U.S.? How do you measure the value of diplomacy? You know, those are some of the questions that we�re trying to address.

And the way we�re getting at this -- in an ideal world, we would have real performance results that would inform our budget decisions as we move forward. I�m not sure we�ll ever become completely performance-based or performance-driven in our decision-making. The best that we think we can become is performance-informed. And so we are capturing data about our performance, about our results. We are thinking about that. Those are being plugged into our decision-making up front, our budgeting process. But I�m not sure we�ll ever be, you know, completely performance-driven.

I would say one new development, though, the Millennium Challenge Account is a new program that the President has proposed, which proposes a $5 billion increase in foreign assistance. And the whole notion of the MCA is to reward countries that are performing, that are doing the right things, that are implementing reforms towards market economies, towards improving their governance structures, towards respect for human rights and the rule of law. And the good-performing countries will be the ones that receive the benefits of financing through the Millennium Challenge Account. And those principles of competition and rewarding high performers are ones that we also in USAID are using increasingly in our decision-making.

Mr. Lawrence: Even though it�s hard to come up with measures, has the process of working through the measures yielded the benefits that I think people imagine? As you were describing just how difficult it is to identify those measures, I sort of wondered about the value of the process.

Mr. Marshall: Yeah, and that�s also a good question. It�s very, very challenging, as I said, to do that in our kinds of programs. Humanitarian assistance, you know, we do save lives. We do have some measures of lives saved. In our health-related programs, we do show that we�ve achieved health outcomes: the reduction in the mother-to-child HIV transmission rate and reduced pregnancy rates and a number of health objectives.

Economic development objectives, you know, in specific countries, there are some project-specific benefits that can be quantified, but how do you roll that back up and say what�s the value to the United States of seeing these outcomes achieved in these foreign countries? That�s where it gets a little tough.

And then the other part is that given that so many of our programs and our decisions, frankly, are not ours to make, they are legislated by Congress in earmarks, in mandates, and we don�t have a whole lot of discretion as to how we spend our money. And so in those cases, you wonder, you know, if you don�t have discretion, does it really matter whether you measure the results or not.

Ms. Fisher: John, in terms of becoming or aiming at becoming a more performance-informed agency, do some of the systems that you mentioned earlier that you�ve rolled out at headquarters, and will, I assume, roll out globally facilitate capturing that information and using that information for decision purposes?

Mr. Marshall: Yeah, certainly our new accounting system is a key component of that. Ultimately, we�d like to capture much more accurate and timely information from the accounting system. We hope someday to combine, with the new accounting system, a new procurement system. And so that would capture very important information from those business operations. We need to capture that.

We need, also, to complete the picture, the performance and results information, which could come from another set of databases. A lot of this information right now comes up from the field in a very labor-intensive reporting process. And so as we get modernized systems in place that can capture from multiple databases a number of different pieces of data that show a complete picture of our program, we�ll be in better shape. But, you know, that�s I think going to be a few years down the line before we�re as fully performance-informed as we can be.

Mr. Lawrence: One of the areas of the President�s Management Agenda is competitive sourcing. So I�m curious how that�s evolving at USAID.

Mr. Marshall: We�re starting to get off the mark in competitive sourcing. We�re a little slow. When the administrator arrived a couple of years ago, again, as he launched his reorganization, he made some commitments that the reorganization would not result in any reductions of force, largely due to the sensitivities of all of the RIFs we�d had in the 1990s.

Now competitive sourcing is not intended to produce RIFs, but it�s a possible result. Competitive sourcing properly understood is about improving performance of a function which is commercial in nature to test whether a government-managed delivery is as effective as a commercially managed delivery of the same service. And so it�s a test which is intended to force the government to become more efficient, not necessarily to result in outsourcing, as oftentimes it�s been perceived.

So we are now taking steps with the State Department. They�ve also been a little bit slow on this one, but we�re approaching this in a collaborative way with the State Department. There�s a steering committee that is looking at -- I�m a member of the State Department�s Executive Steering Committee on Competitive Sourcing. We have a steering committee set up within USAID that�s looking at competitive sourcing, and we�re starting to look for those kinds of opportunities, but it�s a hard sell and, also, in an agency like USAID,, where most of our activity is actually performed for us by contractors in the field.

USAID is not in the business of delivering our health, humanitarian, and economic development services through U.S. Government employees. We are contract managers, and we deliver our business through contracts and through grants to nonprofit organizations, private voluntary organizations, and commercial contractors. And so our entire delivery system, if you look at it this way, has already been outsourced. So there aren�t a whole lot of opportunities remaining in the structure in Washington that could be outsourced. But those that do remain, we think it�s appropriate. It�s a Presidential Management Agenda objective to put them to the market test and again prove how effective they are. And those that can be improved internally, keep them in the government. Those that could be better performed by the private sector, we�ll look at private sector delivery.

Mr. Lawrence: Interesting. It�s a good stopping point. Come back in a few minutes when we continue talking about management with John Marshall of USAID.

This is The Business of Government Hour.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I�m Paul Lawrence, and this morning�s conversation is with John Marshall. John�s the assistant administrator for management at the U.S. Agency for International Development.

And joining us in our conversation is Patti Fisher.

Well, John, what are some of the unique challenges of managing an international organization like AID?

Mr. Marshall: That�s a good question, and believe me, there are a number of them. I think number one is it�s a very far-flung enterprise, it�s worldwide. We have missions in more than 70 countries. And the missions have always operated with a high degree of autonomy, they do their own things. And as we�re in a time of trying to transform the way we do business and modernize systems, we�re looking for efficiencies and we�re looking to reduce risks and we�re standardizing business systems and business practices across all of our regions. That runs somewhat counter to the dominant culture of the Agency, so that makes it a challenge.

Another challenge, I think, is overcoming the legacy of failure that the Agency�s had in the past. It hasn�t been known as a well-managed agency. Again, I mentioned the challenges getting a clean audit opinion. We�ve never achieved a clean audit opinion. And a number of years ago, we had a failure of a financial management system that became a very conspicuous horror story of a government-failed IT initiative. And the Agency has been somewhat stigmatized by that experience and by the continuing perceptions that we�re not very well-managed. And so coming into an environment and trying to establish a foundation of best practices, to move forward and modernize and transform, again, overcoming some of the culture of autonomy and resisting standardized practices and that legacy of failure are two very, very big challenges.

Another challenge that�s a technical challenge more than a management challenge in the telecommunications field has to do with, well, you know, we do business in a lot of Third World countries where there aren�t very modernized telecommunications systems. And so the more we want to do business over the Internet, the more we�re dependent upon having an infrastructure that can be supportive of that. So that�s one of our, you might say, our major technical challenges. But really the larger challenges are those related to the organization and the culture, the people issues.

Ms. Fisher: John, there must be other challenges with regards to coordinating your programs with the Department of State. Are there also benefits, and can you embellish on the challenges and benefits of working with the Department of State?

Mr. Marshall: There are challenges and there are benefits, and I think we�re making a lot of very positive strides in these areas. We are developing a joint financial management system, which could serve both agencies around the world. This has been underway for the last six months or so. It turned out that both agencies were independently planning to develop or to implement a very similar system overseas. And now we�ve gotten ourselves together and we�re going to combine and integrate and have a single system that could meet both agencies needs.

We�re doing a lot of cooperation in information technology, again, since we are co-located in many of the same cities, and in many cases, on the same compound with the State Department around the world. And so there�s no reason why a lot of business systems couldn�t be developed to serve the needs of both agencies rather than have us reinvent the wheel. And in HR, human resources, we�re recruiting and doing workforce planning in a more collaborative or integrated way. So there are a lot of real benefits here that we�re seeing from coordinating.

The challenges, on the other hand: I think the primary challenges are the ones I alluded to a few minutes ago: the culture of autonomy; the culture of each agency, particularly our agency, being smaller wanting to keep its distance from the larger agency; you know, a little bit of concern of being merged. There had been proposals in the past to completely merge USAID into the State Department, and that�s always brought up concerns on the USAID side that we were going to be swallowed up by this much larger organization. So making steps to integrate and collaborate in a number of business systems where we have shared interests is both very beneficial, but challenging from the standpoint of fears that it tends to kindle in the workforce that maybe there�s a larger agenda, a hidden agenda behind those first steps.

Mr. Lawrence: You�ve described some of the benefits from technology, especially in the back office, financial systems and the like. But how else is technology changing the way you do business?

Mr. Marshall: Well, it�s primarily so far I would say in the telecommunications area. Our Internet service is really quite good around the world, and that has brought the Agency much closer together. We�re doing a whole lot better job of sharing information and lessons learned just staying in day-to-day contact. And particularly in the field, individuals who are in remote areas, a small number of Americans in the Third World are part of a communication network that gives them real-time communications with their peers around the world and, you know, more of a shared sense of community. So that I think has been a big benefit.

I would expect technology, as we modernize our systems and, hopefully, we�ll have Internet-based accounting and procurement services on board within the next few years, you know, we�ll see many more improvements in terms of the speed of information, transactions processing, more knowledge sharing, and related improvements.

Ms. Fisher: Where do you see AID in the next 5 to 10 years?

Mr. Marshall: Well, if you asked the administrator that question. I think he would say he would see us being the preeminent humanitarian and economic development institution in the world on the international scene. Certainly we�d be more streamlined in the way we do business, more agile. We would respond more rapidly to emerging crises. We would have more surge capacity so that as new crises develop, we could get in and respond to them quicker with a fuller force of resource behind us. We would be transparent in that our decision-making processes would be open and there�d be no doubts about the efficacy of our decisions and how we arrived at our decisions. Our processes would be more transparent.

We�d have more, again, more modernized business systems and there�d be more E everywhere, a much more electronic and hopefully Internet-driven delivery systems. And hopefully, a culture that�d be a little bit less rule-bound and bureaucratic in some ways and a high-performance culture where rewards are directly linked to individual performance, and the merit system is used as it�s intended to be used, you know, to stimulate and incent and reward highest performing activities.

Mr. Lawrence: I want to go back to your answer to the question about competitive sourcing where you described that so much of the service rendered by AID is done not by AID employees. Elsewhere in the government, people are concerned about that point from the opposite perspective, arguing that it must be delivered by government employees. I�m curious what lessons learned you might share with those folks.

Mr. Marshall: Well, it�s interesting, because there are a number of agencies, like USAID, the Energy Department, and a few others, that rely heavily on contractors. NASA, you have a fairly small number of government direct-hire employees who manage a vast workforce who deliver their services and run their programs for them. And in fact, some may ask the question, in fact, OMB has asked the question in some cases, have you gone too far? Have you outsourced too much? And one way of responding to the competitive sourcing initiative is to examine that question, and you might source back in functions that you have previously outsourced, because in many cases, agencies do go too far to the point that they lack the management capacity to manage in an effective way and they have vulnerabilities to fraud, waste, and abuse from contractors who aren�t adequately supervised.

So I don�t know if I have any lessons learned except I think it requires an analytical capacity to stay on top of those issues and continually raise those issues and assess and reassess on a cyclical basis your functions and achieve the right balance of in-house versus out-house. But continually test and ask the question and select the highest value option, but making sure that you have controls in place so that whichever way you go, you aren�t creating vulnerabilities.

Mr. Lawrence: Well, perhaps not unrelated then is this question. What advice would you give to a person, perhaps a young person, interested in a career in public service?

Mr. Marshall: Well, again, I started by telling that I�ve been cursed myself with a public service work ethic, but I�m glad I have it in a number of ways. I would say there are a lot of reasons that younger people would get discouraged by what they see in government, and perceptions of the challenges and the bureaucracy and so forth, but I would tell them to go for it and not to be discouraged. I think the rewards are still there. It�s often frustrating, but if you�re patient and persistent, results can happen. It may take longer to achieve them, but the rewards are still there and they can be very substantial. You can�t expect miracles to happen overnight, but if you stick with it and if you don�t give up, I think many will find it to be a very rewarding career.

One other point that I�d like to add to about the government service and to my organization is I think it�s very important, despite the challenges, that people in the government remain optimistic and enthusiastic, particularly in USAID. There�s no greater, there�s no more noble mission in any government agency than doing what we�re doing to relieve the conditions of poverty and distress and conflict around the world. I like to quote Ralph Waldo Emerson, who once said that nothing great was ever achieved without enthusiasm. And if you can�t be enthusiastic about the mission of USAID, and so many of our other great public services, I think you have to ask some questions about, you know, what business are you in? What are you doing? This is a very, very exciting enterprise and I would encourage young people to go for it.

And if they�d like to learn more about USAID, check our website. We have job opportunities that are posted there at all times. It�s www.usaid.gov.

Mr. Lawrence: That�s a good ending point, John, because we�ve run out of time. Patti and I want to thank you for being with us this morning.

Mr. Marshall: Thank you, Paul. Thanks, Patti.

Mr. Lawrence: This has been The Business of Government Hour, featuring a conversation with John Marshall, the assistant administrator for management at the U.S. Agency for International Development.

Be sure to visit us on the web at businessofgovernment.org. There, you can learn more about our programs and get a transcript of today�s very interesting conversation. Once again, that�s businessofgovernment.org.

This is Paul Lawrence. Thank you for listening.

John Marshall interview
11/29/2003
John Marshall

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