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.

Mary Peters interview

Friday, November 29th, 2002 - 20:00
Mary Peters
Radio show date: 
Sat, 11/30/2002
Intro text: 
Mary Peters
Complete transcript: 

Arlington, Virginia

Monday, September 23, 2002

Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, the co-chairman of The 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

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 Mary Peters. Mary is the administrator of the Federal Highway Administration in the U.S. Department of Transportation.

Good morning, Mary.

Ms. Peters: Good morning.

Mr. Lawrence: Joining us in our conversation is Dave Abel.

Good morning, Dave.

Mr. Abel: Good morning, Paul.

Mr. Lawrence: Mary, let's start by talking about the Administration. Could you give us an overview of the mission and activities of the Federal Highway Administration?

Ms. Peters: Sure. The Federal Highway Administration basically consists of two major programs. One of those is the Federal Aid Program, and the other one is the Federal Lands Program. What the Federal Aid Program does is provide funding and oversight for highways and bridges throughout our country that are eligible for federal funding, for the most part on the national highway system and the interstate highway system. Interstates are part of the national highway system.

The second, and this is about a third of our responsibility, is our Federal Lands Program, and it's a part that's less well-known. That responsibility is particularly for the roadway segments within federal lands throughout the country, national parks, national forests. In the Washington area, most of the national monuments are on federal lands. That's much more of a hands-on program.

Mr. Lawrence: I was curious, how does the FHWA interact with state departments of transportation?

Ms. Peters: I like to think of it as very much a partnership between the state departments of transportation and the federal government. Our role is -- I like to call it a federally assisted, state-administered program as it relates to our Federal Aid Program. What that means is the federal government provides funding and oversight, but the states actually select what projects will be built, when and where they come in to the program, and actually to build those projects.

Mr. Lawrence: How about the employees who work with you? How many are there, and what type of skills do they have?

Ms. Peters: We have a little over 2,800 employees in the organization, throughout the organization as a total; 936 of them are in the Washington area, in what we call headquarters, and the balance are out in field offices. Interestingly, our organization has 52 field offices in all 50 states as well as the District of Columbia and in Puerto Rico. In addition to that, we have four what we call regional centers where we have specialized expertise that supports the areas throughout the country.

That's our predominant organizational structure. The skills, a lot of people think that we're just a bunch of engineers in the organization and walk around with slide rules and white socks and things like that. But in fact, there are a variety of people who work in the Federal Highway Administration: economists, environmental specialists, planners, ecologists, community planners, as well as, of course, engineers.

Within our engineers, not unlike the medical profession, there are some very specialized areas of engineering. You can be a structural engineer of a hydrology engineer. So it isn't just this broad title of engineers, but some very specialized areas of engineering.

Mr. Abel: I would imagine that with the diverse workforce in FHWA, it creates some challenges for you as the administrator. Can you tell us a little bit about your role as the administrator and what you do in that role?

Ms. Peters: I like to think of my role as the administrator of the orchestra, if you will, in carrying out these programs. My responsibility is to work with the state and local governments, to work with the parks and the forests and tribal governments, but also a variety of industry stakeholders, the construction engineering industry, a lot of environmental activists or those who are interested in environmental issues, historic preservation interests, and others to follow the direction that is set by Congress and endorsed by President Bush so that we're carrying out these federal land programs and federal highway programs throughout the country.

At the end of the day, I think our job is to provide mobility to America's citizens, visitors, and businesses, and we need to keep that overarching theme. So that that is my goal, to get all these various players and all this various expertise working toward that end.

Mr. Abel: Let's take a look at history. Tell us a little bit about your career prior to your appointment as administrator.

Ms. Peters: Just prior to be asked by Secretary Mineta and President Bush to take this job as federal highway administrator, I was the director of the Arizona Department of Transportation. What that means, it's very similar to administrator in that it was the top job, and the job responsible for all the programs within the organization.

That job was an interesting job, because we had in Arizona as the director of the Arizona Department of Transportation not just responsibility for highways, but we had, as the name suggests, the broad responsibilities in transportation. We owned and operated the Grand Canyon Airport. We were responsible for motor vehicle functions within the state, meaning licensing and titling vehicles as well as drivers. We were responsible for the ports of entry, both the international ports of entry at the point of Mexico entries as well as interstate ports of entry. We had responsibility for transit functions as well. So a much broader area of responsibilities, whereas now I'm focused more on highways.

Mr. Abel: It's interesting that you have had considerable experience in state and local government and now experience in the federal government as well. Can you tell us a little bit about differences in the culture, or perhaps an adaptation you needed in your management style to work in the different sectors of government?

Ms. Peters: I think some of the things that I found in common with both federal and state government are the dedication and the qualifications of public employees. I have found without a doubt that these are among the hardest working, best-qualified individuals that I've worked with ever in my career.

But I think a difference that I would perhaps contrast, in Arizona, we were very interested in what was good for Arizona. While we believed that things of a national interest were important, of course, we were basically interested in what was good for Arizona. In this job, I have to take much more of a national focus and look at issues much more broadly and determine what is good for this nation, what is in the federal interests of this nation, and take that perspective.

Mr. Abel: Is it difficult to resolve some of the differences that you work with? You mentioned 52 other entities in the state and local government area; is it difficult to resolve the perspectives of state interests versus federal interests?

Ms. Peters: Sometimes it is, and especially with the way that our legislation, the federal highway legislation, works. Again, it's a federally assisted, state-administered program, so the lion's share of the decision-making goes to the states, but we sometimes, as relates to the interstate highway system in particular, have to say what is important in terms of interstate commerce, national security or national safety, and help work with the states to ensure that decisions are made that respect local interests and local decision-making but also don't somehow compromise important federal interests as well.

Mr. Abel: One of the things that you mentioned when you were describing the structure of your organization was the fact that it is geographically diverse, one of the challenges in that certainly has to be the communication of your vision, how you would like the organization to move forward.

Ms. Peters: Yes.

Mr. Abel: How do you effectively communicate your vision or your view for FHWA across that geographically diverse workforce?

Ms. Peters: You have to do it consistently, and you have to do it with every means at your disposal, and that's what we have learned: if we're going to communicate with these 52 division offices and 4 regional centers and from here in Washington as well and make sure that we're all playing from the same sheet of music, it's important that we have a lot of communication about our strategic direction, what it is that's important for us to accomplish in the near term and the long term, get everyone in the organization engaged and involved.

We use the Internet. I use e-mail extensively. I travel to these field offices and visit with them. Then we work with our leadership team to make sure that we are providing a clear, consistent message. But also that we give everyone in the organization an opportunity to be involved in how we carry out that message. So that's important in terms of communicating with everyone.

Mr. Lawrence: Do you find that the e-mail is a good substitute for traveling and meeting people in person? It's simply impossible, I would imagine, for you to be there on a regular basis, and so people are using e-mail communications. I'm just curious, does it replace, or how adequately does it replace the face-to-face meetings?

Ms. Peters: It doesn't replace the face-to-face, and I think you have to have a balance of both. But clearly, with the entire nation and two districts, I can't travel all the time or I wouldn't get as done as I need to here. So I think it does help. It doesn't substitute for it, but it supplants I think that ability to communicate.

One of the things that's always been important to me is to answer my own e-mail and be very accessible to all the employees in the organization so that they know if they have an issue or if they have a concern, they can send an e-mail to me and I'll always respond to them.

Mr. Lawrence: Let me ask you about just a management style issue which has come up as we've talked to other officials who were officials at state levels that come to the federal level. They've described the following feeling, which I'm paraphrasing: as a leader of a state organization, I had customers call and complain, I could pick up the phone and do things and things would happen and their complaint would be resolved. Now I'm in a federal organization and I don't have that.

Much of what you described about the relationship between FHWA and the state seems to mirror that. So I'm wondering if you're finding that to be true and how you're dealing with that.

Ms. Peters: Paul, I think you're right; it's much less. When I was the director of the Arizona Department of Transportation and if someone phoned me about a problem with a roadway section, I could pick up our maintenance office or something and do something about that. Here, you're a step removed, so it is much more difficult.

But what we have found, and I think this was really epitomized when we had the tragedy on I-40 in the bridge collapse early this summer, was the ability to pick up the phone and work with the state of Oklahoma, provide expertise where we could to resolve that situation. While they were the people there on the ground doing the work, we were behind the scenes providing expertise, ensuring that the funding got there to them. So it's less of a direct effect, but I think you will have the ability to meet customer's needs.

Mr. Lawrence: How about the level of layers in your organization? With a large organization, I'd imagine you'd need some layers because you can't coordinate everything, but layers have traditionally filtered information both up and down, so people want to reduce layers. I'm wondering how you figured out the right mix for the number of layers between you and everybody else.

Ms. Peters: I was fortunate in that I inherited an organization that had gone through a rather substantial reorganization in 1998 and eliminated a number of layers. What we want to do is have no more than two levels between ourselves and our field offices so that ultimately, we are communicating well and carrying out a clear sense of strategic direction.

So in my office, myself as administrator, a deputy administrator and executive director, communicate then with directors of field services and they with our field offices. So we just have those few layers, and I think that helps us tremendously in communicating well and again being consistent.

Mr. Lawrence: That's a good stopping point. We have to go to a break. Rejoin us in a few minutes as we continue our conversation with Mary Peters of the Federal Highway Administration.

Traffic congestion on our highways is getting worse. What can we do about it? We'll ask Mary for her thoughts when The Business of Government Hour returns. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Mary Peters. Mary is the administrator of the Federal Highway Administration in the U.S. Department of Transportation.

Joining us in our conversation is Dave Abel.

Mr. Abel: Mary, near and dear to the hearts of people who are in Washington is traffic congestion. Congestion throughout the country, not just in Washington, continues to worsen. What actions are FHWA planning to address this issue in the long term?

Ms. Peters: Dave, I think you make an excellent point, and the most important thing to people when they're dealing with people is reliability and predictability. They want to know if they leave their home at a certain time that they're going to be able to get to their destination within a defined period of time, even though that may be longer than they'd like, and they want to know that they can do that day after that, that it isn't going to change dramatically from one day to the next.

There isn't a single solution, but what we're working on with the Federal Highway Administration and with state and local governments is to use technology to improve transportation. In other words, get more information so that if there are breakdowns or congestion points, we're getting that information out quickly, we're clearing that incident quickly, we're letting the public know what to expect when they get out and enter the transportation system. But also, we can use tools such as ramp meterings to make sure mainline freeways are running more smoothly by metering how many people enter that freeway and at what point.

But we also do need to consider capacity expansion or building new segments of highways as part of the solution as well. So I'd like to say there's no silver bullet, but there are many ways that we can attack congestion.

Mr. Abel: One of the things that's always interesting to me when I'm stuck in traffic and in the car by myself, I look and see lots of other people in their cars by themselves. It just seems that congestion has a lot to do with the increase of vehicular traffic. We hear a lot about multimodal management of transportation. What's your view and the state DOTs' view on road transportation together with rail, air, and other modes to be able to ease traffic congestion?

Ms. Peters: I think we have to use all those solutions. That's been perhaps part of the problem in the past, is we've looked at these issues in a single-mode focus; we've only looked at highways, we've only looked at rail or transit, and I think we have to look at the interaction of those systems. Really what it is, is a transportation system, not a highway system or a transit system or a rail system.

For example, I'll often ask people, to get from where you left your home today to where you are now, how many modes of transportation did you use, and most of us have used more than one; if you consider walking a mode, and I do, most of us have used more than one mode of transportation. So what the customer wants, whether we're shipping freight or whether we need to get ourselves as a passenger from one place to another is how do I get there, and customers don't want to worry about the interaction from modes.

What we have a responsibility to do as transportation professionals is make that transition from one mode to another as seamless and as efficient as possible.

Mr. Abel: How are the views of multimodal transportation handled within the Department of Transportation? With your responsibility for FHWA and some of the other modes that are handled in other administrations and other organizations within the DOT, how is that interaction handled in the organization?

Ms. Peters: It's something that Secretary Minetta has placed great importance on, and we really have an opportunity to work with each other and across modal lines. Other members of the surface modes of transportation in addition to myself, or Jenni Dorn with the Transit Administration, Allan Rutter with the Federal Rail Administration, and also Joe Clapp, who works with Federal Motor Carriers, the trucking industry, we call ourselves the surfers, and we work together quite often on issues that relate to surface transportation, because it should be, again, transparent to the users. So the Secretary has really emphasized collaboration across the modes.

Mr. Lawrence: I'm just curious, on a non-theoretical basis, you described in terms of what could be done to do away with congestion, capacity expansion. To the extent that that's not possible, I'm drawing on your experience in Arizona, and I imagine it as a big state with lots of places to build roads; where it's not possible in some urban areas, what can be done? At some point, capacity eventually can't be expanded, so then what happens?

Ms. Peters: I think you have to look at it on a demand and supply mentality, look at it that way. One way is to reduce demand, get people to telecommute, get people to carpool, get people to use a variety of things so you're reducing the demand wherever you can. But studies show that there are only incremental differences that we can make in terms of reducing demand, particularly with the population growing and vehicle ownership growing.

So the other way is to increase the efficiency of the system you have, especially whereas, you said, it isn't feasible to add new capacity to it. The ways you can do that, there are two types of congestion: recurring, meaning that every day there is too much traffic for the roadway system. You can mitigate that by having people spread out their commutes or doing other things; again, some incremental effectiveness, but not a lot.

But it's that non-recurring congestion that is the most frustrating. There's a crash, emergency vehicles have to get there, a car breaks down, or there is a weather system or something else that causes non-recurring congestion. In that case, having technology that tells us exactly what's happening so we can get the right emergency response vehicles out there and get that incident cleared as quickly as possible, that will help substantially in reducing that non-recurring congestion.

Mr. Lawrence: That cues up my next question here about the intelligent transportation system. Could you tell us about that?

Ms. Peters: All the intelligent transportation system means is applying technology to help us with transportation. Knowing what's going on on the roadway system is critically important if we're going to take a systems operation focus, which I think we have to do.

So there are things called loop detectors that are absolutely transparent to the user but they're buried in the pavement that tell us if the traffic moving or is it not. There are also cameras on the system that allow us to actually see what's going on on the system. There is ramp metering that I mentioned earlier that helps meter the flow of traffic onto the mainline system. All of that information, real-time information, feeding back to a traffic operations center, allows the operators there to make adjustments.

In the ramp meters, for example, the freeway is congested, let's meter traffic a little bit slower onto it; there's an incident, let's get that incident cleared. Having real-time information in an operations center that helps us manage the system can be tremendously effective.

In the future, we think that vehicles themselves can be both receptors and transmitters of information. As we get more intelligence or more technology in itself, the vehicle could send a signal that says I'm stalled in traffic. There can be very good systems such as crash avoidance systems that can help prevent crashes, which, again, cause congestion.

Mr. Lawrence: How far away are we from that now; I know where we are in terms of automobiles, but in terms of using those technologies now?

Ms. Peters: The technology exists today to do all of the things I described. It's a matter of instrumenting the roadway system and instrumenting the cars. Part of the dilemma that transportation professionals at state and federal levels face is with the finite amount of revenue, where do you spend it? In the vernacular I used to use, you can either spend it on concrete or you can spend it on technology.

So part of it is making decisions about where money is best spent and how much money to spend on those various applications, but instrumenting the roadway system is an important part of that. Cars are already coming out with these intelligent systems. You can map your route out, you can plug in and say here's where I want to go and the vehicle will actually talk to you, lay out a map for you and tell you where to go. Those systems are available now, and as demand for them increases, I think the price will go down and you'll see more and more of those in cars.

So the technology exists today. It's just a matter of instrumenting the vehicles, instrumenting the system, and then finding a way to consolidate that information and use it in a real-time manner.

Mr. Lawrence: You mentioned spending money. Earlier, you told us that FHWA awards funds to states to improve transportation infrastructure. Could you tell us how that awarding takes place?

Ms. Peters: Well, 99 percent of the federal money that goes to states goes out from what we call an apportionment formula. It's a formula that's adopted by Congress and signed by the President, which says how much of the money that's collected nationally goes back to each state. States then determine, as I said earlier, what specific projects to build or how to use that money.

But the other 1 percent of the program is what we call the discretionary program, and there are a variety of ways that projects are awarded on that program. Some of it is congestion mitigation and air quality, using money to build high-occupancy vehicle lanes or other things that will help move traffic more efficiently. There are borders and corridors programs to help us, especially as NAFTA is implemented, have better routes from our international borders into the interior of the country.

Some not well-known but I think very important programs, the transportation enhancement program that will restore, for example, old rail terminals or other transportation facilities as part of a community development. There is a covered bridge program that restores and maintains covered bridges throughout the country. As well as a ferry boat program, because the marine highway is actually part of our responsibility in this nation as our highway system as well.

Mr. Lawrence: How is the discretionary money awarded or divvied out?

Ms. Peters: The discretionary money is awarded in two ways. The way that it happens most often is through congressional earmarking and congressional designations where members of Congress specify that the money would be spent on certain projects in certain areas. The other way is through merit-based competition, where states or other applications submit grant applications, they're evaluated based on criteria and recommendations are made to award the most meritorious projects.

Mr. Lawrence: Is part of that selection criteria portability across the different states in terms of a good idea?

Ms. Peters: It is. For example, on the ferry boat program, obviously not every state is eligible for a ferry boat program, but more than you would imagine when you consider that navigable rivers are often eligible for those. But we try to make sure that the money, again, goes to the most meritorious projects, and we try to ensure that it's part of a larger mobility plan for that region. So is a ferry boat is going to take the place, for example, of having to build another bridge across a scenic river, that may be the better option.

Mr. Lawrence: Are there any other particularly innovative programs that have come through this?

Ms. Peters: I think one of most innovative programs is a program that tries to deal with this whole issue of congestion that we've been discussing through creating incentives for people either not to drive or creating incentives for building projects. One of the most exciting concepts that I think we have in the future and is part of this program is the demand-based pricing program, where, let's say, we have excess capacity on a high-occupancy vehicle lane. We could allow folks to use that excess capacity in a single-occupant vehicle if they were willing to pay a fee for doing that, and the fee would increase. As the congestion increased, the fee would go up so that it would be such that you would divert some users away from it and could keep free-flowing traffic.

Those kinds of innovative programs I think could be a part of the future of the way we manage transportation.

Mr. Lawrence: That's a good stopping point. We have to go to a break. Come back with us in a few minutes as we continue talking about management with Mary Peters of the Federal Highway Administration.

This is The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Mary Peters. Mary is the administrator of the Federal Highway Administration in the U.S. Department of Transportation.

Joining us in our conversation is Dave Abel.

Mr. Abel: Mary, how does the Federal Highway Administration balance the goal of ensuring access and mobility for citizens with protecting the natural environment? There's a clear balance that needs to be maintained. What are the mechanisms you use to do that?

Ms. Peters: It's a balance that needs to be maintained, and there are some people that think you can either be respectful of the environment or you can build transportation systems, but you can't do both, and I theoretically disagree with that; I think you absolutely can.

What we have to do is recognize and respect the surrounding environment while we are providing important mobility projects. A phase that I always liked to use in the past is we build transportation projects for the communities we serve, not in spite of them. But we have run into some real bottlenecks in making that happen with the environmental interests on the one side, pulling and taking a very long time sometimes to get important projects through, and some very duplicative processes, sometimes unnecessarily duplicative processes.

We're very fortunate in that just last week President Bush signed an executive order on environmental stewardship, which establishes a task force chaired by Transportation Secretary Mineta. This task force reports through the Council on Environmental Quality to the President. It consists of the Secretaries of the Department of the Interior, the administrator of the Environmental Protection Agency, and a number of other federal agencies that we need to work with to move projects through this very importantly rigorous but unnecessarily time-consuming process of getting environmental clearances for projects.

What the executive order and the task force will do is allow us to work together to have more concurrent working of these processes instead of sequential working of them so that you can at one time go through the various processes and make sure, for example, that we're in compliance with the National Environmental Protection Act, or NEPA, that we aren't doing something that endangers air quality or would make air quality worse in certain situations. But you do those things concurrently and consistently instead of separate, sequential processes.

The task force will have two things it will ultimately accomplish. One is to look for a list of high-priority projects throughout the country and focus some time and focus some time and attention on those projects within the context of the task force to get them unstuck, if you will, and get to a decision on the projects.

But the other part of it is to look at processes and where we can improve the processes so that we aren't having this unnecessarily burdensome process in moving important transportation projects through. The benefits to the public are going to relieving congestion, improving safety, making sure that environmental concerns are met and are looked at, but to do so in a much more consistent and much more effective manner than it's been in the past. I think that's what the President has really asked us to do in all of our programs: what is effective government, that's what our citizens want, and they want it to be results-oriented.

Mr. Abel: What do you believe to be the time frame where we will see the effects of the task force, that things will be more expedited? How long do you think it will take to start the process of the task force?

Ms. Peters: We believe that the process will be started by the end of this year. In just a matter of months, we will have identified some projects and some processes to move forward with, and there are some good examples of projects that exist out there right now that we believe we can get early on and get moving very early on so that, again, the public will begin to see results by early next year.

Mr. Lawrence: In terms of the second charter of the task force, it was to fix processes or potentially streamline the process, not for the particular project, but overall. What are the expectations? You were I think very articulate in describing incremental change versus non-incremental change, and I know it takes years in some cases to get these things through the environmental process. Will that be down to days or weeks, or will it be a few less years? I'm just curious.

Ms. Peters: We believe it will be significantly less time, but one of the lessons we have really learned is there just isn't a magic process by which we can say an environmental impact statement should never take more than 3 years, 2 months, and 5 days, because it depends on the project. What we want to be able to do is to establish timelines for specific projects and then look at how we can improve that.

An example I would give you, if we're building a new bridge, we have to go through nine different agencies and nine different specific permitting processes before we can build that bridge. I have to think, in fact I know, that some of those are duplicative. So why can't we collapse those down and maybe only have two or three permits that cover the needs of the Department of the Interior, the Fish and Wildlife Service, that respects the rivers, that looks at endangered species, all of those things? We could probably do that, I'm convinced that we can do that, with fewer processes and fewer permits than we have today.

Mr. Abel: How will the state and local organizations, the state and local departments of transportation, interact with the task force?

Ms. Peters: They will have the opportunity to nominate projects to the task force, especially if they have projects that either they contemplate doing in the future or are currently doing today that they see as being complex and probably a recipe for some of this complexity that I've described earlier. So they'll have the opportunity to nominate projects.

They also will have the opportunity to tell us about processes that they would like the task force to look at. But we really do want to go to state and local governments and other transportation industry stakeholders to tell us which projects are most important instead of those of us here in Washington making that determination.

Mr. Lawrence: It seems as though industry trends are moving away from constructing new roadways to maintaining and improving existing ones. What management challenges does this shift pose?

Ms. Peters: It really takes a different bent on things than what departments of transportation in state governments as well as the Federal Highway Administration have had in the past. In the past, our legacy is building the interstate system, and it's a very, very important accomplishment and one that we don't want to forget, but that isn't what our responsibility is in the future.

I really believe our responsibility in the future is, again, looking at the system from an overall asset perspective and how do we manage that system so that we get the best value from that system in meeting America's mobility needs and then serving our customers. In the past, we've kind of carved it up into segments: planning, design, construction, maintenance operation, when in fact we ought to be looking at that whole range of activities as ultimately affecting the outcome of the system and what does it do in terms of providing mobility. That shift is going to cause a shift in how our organizations are actually organized, and it's going to cause a shift in the expertise that we need within our organization.

Here at the Federal Highway Administration, we're no longer about walking projects and measuring the distance between rebar or guard rail. Our processes now have to look more programmatically and more systematically at how the transportation system is operating.

Mr. Abel: One of the things that's a challenge to that systematic approach are inevitable disasters, evacuations, and things of that nature. If we just focus on highway disasters for a second, what actions, what role does FHWA have when there is a highway disaster, and how does it change your relationship with state and local authorities?

Ms. Peters: The roles that we have are twofold when there is a natural disaster or some major incident. Through our emergency relief funds, we have the ability to provide extra money to a state or to a locality when they suffer a disaster and need to replace a transportation asset very quickly. We also have the ability to provide expertise. I think those are the two areas that are most important to us: immediate funding to help them get the transportation system resolved and back up and running; and expertise.

We have available within our organization and through networks with other states and other countries in fact a wide variety of expertise that can bring new ways of looking at problems and new ways of fixing issues to bear. In Oklahoma, for example, when the I-40 bridge collapsed, we were able to bring in a team of experts from California and Texas who had dealt with similar bridge collapse situations, folks that the Oklahoma Department of Transportation wouldn't have had immediate access to, as well as through the President bringing some immediate money to the table so that they could get started right away in rebuilding that important bridge.

Mr. Lawrence: I understand that bridge was completed ahead of schedule and there were some innovative things that took place. Could you tell us about that?

Ms. Peters: It was completed substantially ahead of schedule. In fact, under normal circumstances, it could have easily taken as long as 18 months to replace that structure, and that was just unconscionable in a major interstate route. That was completed in just over 60 days. The way that that was done was through some very innovative contracting methods that the state of Oklahoma employed and that we were very pleased to help them identify.

One of those was design/build, meaning concurrently designing and building the project instead of sequentially designing, then bidding, and then building the project. Another was incentives, and Oklahoma built in incentives to where the sooner the contractor completed that project, the more money the contractor could make. When you look at the costs to the economy of that structure being down, that was money that was very well spent.

So one of the bidding mechanisms is what we call an A plus B bidding, where the contractor bids both time which is the A component, and says which is the B component, and the quicker they can complete the project, the more opportunity that they have to make money. Clearly, delivering a quality project has to happen along with that, so they have to build in the proper quality and control mechanisms to make sure that we're getting a quality product, but much quicker. In fact, they worked 24 hours a day, 7 days a week there in Oklahoma to rebuild that structure. The contractor earned incentives. Again, it was worth every penny.

Mr. Abel: Do you believe that concepts like design/build and the incentives in the contracts will work their way into the fabric of other state initiatives and through FHWA into the states?

Ms. Peters: I very much do. In fact, right before I left Arizona, we had just completed a major rebuilding of the interstate that ran through the heart of Phoenix, 17 miles of freeway in about 22 months, and it was done without disrupting traffic at all. I was very, very pleased with the project and the way it ran.

The Federal Highway Administration has an opportunity to take those success stories and spread those out to other states. Many states have now adopted state-level legislation that will allow them to employ tools such as that, and that's part of the value that we can add in sharing those best practices, sharing model legislation, things like that, that can help states be successful.

Mr. Lawrence: What were the barriers that prevented people from doing this before?

Ms. Peters: In fact, in the past, federal law specifically prevented that, and it was probably through some efforts in the past by industry that didn't want it to happen that way. There was also a belief in the past that if someone designed a project and then built the project, they would be less apt to call out faults in the design, or something of that nature. But we feel there are plenty of ways to ensure that we have a quality product today without having those two separate processes.

Mr. Lawrence: That's a good stopping point. Rejoin us in a few minutes as we continue talking about management with Mary Peters of the Federal Highway Administration.

This is The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Mary Peters. Mary is the administrator of the Federal Highway Administration in the U.S. Department of Transportation.

Joining us in our conversation is Dave Abel.

Mary, we know that FHWA is giving more attention to the full life-cycle asset management for bridges, roads, and highways. Could you explain what that means to our listeners and tell us why it's become so important?

Ms. Peters: I think it's important, Paul, because when we look at the transportation infrastructure system in this country, it's an asset that's a very important asset, and we ought to be managing it more like an asset instead of looking at kind of tinkering around the edges, where do we maintain, where do we build or add capacity, what do we do to it, but to consider it from a life-cycle standpoint.

I guess the best way I can describe is we're homeowners, many of us are homeowners, and we have to make decisions every day about what we do with that home. Maybe I want new carpet but I have a leak in my roof, so obviously I need to repair that leak in the roof because that's going to extend the longevity of my home more so than adding new carpet to it.

We need to take that same kind of an economic approach to the infrastructure system in our country and approach it from an asset management approach; what investments will extend the life of that asset most expeditiously or most effectively, and invest where those things will happen. If we choose to expand that system, where are we doing so that it's going to meet our needs over the long term.

So we really have to look at it much more like I call a utility concept. Utility companies very much take that idea of looking at the system, what's the customer demand going to be in the future, how do I preserve my ability to meet that demand with the existing system, and strategically add capacity where I need to do that.

So that's the approach that we really think is important, looking at the system as a whole and not components of the system and managing that system to give the citizens of this country the best return on investment.

Mr. Lawrence: Is ownership an issue in that example? The home is owned by the person and they have a tremendous incentive not to have a leaky roof. Is ownership of these things an issue?

Ms. Peters: It is, but that, again, Paul, is what I think we really need to drive home in this country, that this infrastructure system belongs to America, it's our investment, a tremendous investment. So we together have to make decisions that best have that asset last a long time for us and serve us well over a long period of time.

But you're correct, state and local governments own these assets, we don't own them, the federal government doesn't. So what we have to do is incentivize state and local governments to take this kind of an outlook on their systems and really begin to manage their transportation systems, and I think most of them do. They simply lack the tools to do it, and that's an important part of our responsibility helping provide those tools.

Mr. Abel: To change gears just briefly, it's interesting that most of the conversations that we have on this program, in one way or another, national security and homeland security comes up. First of all, what impact has the heightened national security alert had on street and highway traffic systems?

Ms. Peters: It has caused us to look at and conduct what we call vulnerability assessments on our infrastructure, on our highways, and bridges and determine where they might be vulnerable, and then to harden those assets where it's appropriate to do so. But also to be much more alert, much more aware of what's going on. If there's an abandoned tanker truck, for example, on a segment of highway or approaching a bridge, a much higher level of awareness.

As the Secretary has said, last September when we had the terrorist attacks in this country, transportation was used in a manner that no American ever expected, and his goal and ours collectively at the Department of Transportation is to ensure that the nation's transportation system is never again used in a manner like that.

Mr. Lawrence: So in a long-term strategy, do you foresee changes in strategy from FHWA related to homeland security?

Ms. Peters: I see us using probably more an aspect of, again, overall management of the system, how would we respond if there were another terrorist attack, God forbid, how would we evacuate large areas a quickly and as efficiently as possible, how can we protect those infrastructure assets. That is the new emphasis on security. A lot of it ties into how we're managing and operating the system every day, but a much stronger emphasis on ensuring that we're assessing vulnerability, hardening assets where appropriate, and making sure that we remain aware of situations that could endanger those assets.

Mr. Lawrence: Even though I think you talked about this, I'm curious as to what you would define as the major challenges to the nation's highways that you're expecting in the future. Is it through these security issues, or are there others?

Ms. Peters: I think the major challenge we face in the nation's highway system is our interstate system is approaching 50 years old. It's aging, as are a number of other highways and bridges in our country. And it's making sure that we're protecting and preserving those assets so they can continue to serve us into the future. Many states are much more concerned today about maintaining or replacing assets than building new transportation assets. So I see that as a real challenge in the future.

Another challenge is this overall concept of managing the system well. We need to take more of a demand-side approach to this than a supply-side approach. In the past, we've taken a supply-side approach, build a mile of freeway, add a transit car, add a transit line, add a rail line or something like that. In the future, I think we again need to focus it from a demand side and look at what we need to provide so that we can meet this nation's mobility needs from a demand side.

Then the third area I would say is reauthorization. We have an opportunity in 2003 to reauthorize surface transportation funding for the next 6 years, and it's a tremendous opportunity both in terms of funding and in terms of policy to set the right groundwork so that we can move the nation's transportation system and management of that system into what we want it to provide us well into the future in this country.

Mr. Abel: You made a comment earlier in our conversation that the user of the transportation system measures success of that system on dependability; that I know it should take me 15 minutes to get somewhere, and it does take me 15 minutes. How do you measure the success of the Federal Highway Administration?

Ms. Peters: Just that way, and I think, Dave, it's important that we do it just that way, what does it look like and feel like to the customer at the end of the day. If I said to you that success was building another 100 miles of highway system or improving some component of that system in the future years, you should be able to say to me, what does that mean to me, how is that going to affect my commute, how is it going to affect my ability to pick my child up from day care on time or to get to my son's soccer game, or to get to work every day so that I'm not spending an extra half-hour commuting instead of a half-hour of quality time with my family or productive time with my employer.

So I think that what we really want to look at at the end of the day is how well are we doing in ensuring that products can make just-in-time delivery, that people who are using our system have the same dependability. If have if I go catch a plane today and I want to fly from here to San Francisco, I have reasonable assuredness that I'm going to leave here and get there in the time that I want to. We want our surface transportation system to perform that way.

So success to me will be defined in giving customers that level of reliability and predictability, of building systems that are environmentally friendly, meaning that they lay easy on the land, if you will, in terms of the way that we deal with our environment, and that our systems are substantially safer, meaning that far few people are losing their lives on the nation's highway system.

Mr. Lawrence: When I think of the highway system, I tend to think of people. I tend to think of people going from destination to destination. I do realize that a lot of it has to do with the trucking and shipping of goods.

Ms. Peters: Yes.

Mr. Lawrence: How much interaction do you have with business and with industry in their evaluation of success of the Federal Highway Administration and the metrics that they use for the delivery of just-in-time inventory and things along that line?

Ms. Peters: We're working much more closely with the trucking industry than I think we have in the past. In fact, we have one whole unit of our organization that's devoted to freight and freight transportation issues. There, we're looking at what are the major freight corridors today, what are they going to be in the future, what kind of capacity do we need on those corridors so that that freight can move efficiently and safely to where it needs to go.

A big part of that is the intermodal connectors. If a ship lands at Long Beach Harbor and the destination of those goods is Chicago, what are we doing? Sometimes, in fact, before the Alameda corridor was built, it could take longer to get that shipment just away from the port itself and onto the highway than it would on the highway system proper. Those type of inefficiencies are just going to kill productivity in our country. So those are the things we're doing now working with the freight industry.

Mr. Lawrence: Speaking of measurement, I'm curious, there are highways all around the world. How do we fare in terms of other countries around the world in terms of our highway system?

Ms. Peters: We fare pretty well. Countries like Germany, with the Autobahn system, do a little bit better than we do. They also invest substantially more than we do in their transportation system there. But by and large, we fare very well both in terms of safety and in terms of efficiency of our transportation system. But, again, if we're going to remain very productive as a country, we need to do even more in the future.

Mr. Lawrence: In looking out, I'm just curious, what advice would you give to a young person considering a career in government?

Ms. Peters: I think I would, to capture a phrase from another product, just do it. I think that there are tremendous, tremendous opportunities and tremendous rewards in public service. I like to think that we all are juggling a number of balls at any given time in our lives. Our work, of course, is important, our health, our families, our spiritual lives, and I think that public service is a ball that we all need to juggle from time to time as well.

You have the opportunity when you're working in public service to set policy, and policy that can really make a substantial difference in the government and in the well-being of all Americans. So I think I would very much encourage young people to enter public service.

Mr. Lawrence: If they had the choice, what would you advise them as to where to start, the state government, like you did, or with the federal government?

Ms. Peters: State government is certainly a very good learning ground. Processes are very similar but it's on a smaller scale, the stakes are a little lower, and there are many good opportunities to get into state government. But I certainly would not want to discourage anyone from coming into the federal government.

I would encourage college students, university students to try an internship and get a feel for what government service is like and what the rewards and opportunities can be.

Mr. Lawrence: Mary, I'm afraid we're out of time. Dave and I want to thank you for being with us this morning.

Ms. Peters: Thank you very much.

Mr. Lawrence: This has been The Business of Government Hour, featuring a conversation with Mary Peters, administrator of the Federal Highway Administration at the U.S. Department of Transportation.

Be sure and visit us on the web at There, you can learn more about our programs and research into new approaches to improving government effectiveness. You can also get a transcript of today's very interesting conversation. Again, that's

This is Paul Lawrence. See you next week.

Mary Peters interview
Mary Peters

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