Grants Management in the 21st Century: Three Innovative Policy Responses

Friday, October 21st, 2005 - 20:00
This report describes how the federal grant system has come under increased stress in recent years. In an effort to modernize the grant system, the report analyzes three recent reform initiatives in the area of grant management: performance partnerships,, and extensive waiver authority. The report explores the potential of each to mitigate some of the challenges facing grants management and design. The report concludes with a series of recommendations to improve federal grants management. Financial Management

David Walker interview

Friday, September 2nd, 2005 - 20:00
“We must recognize that we’re on an unsustainable path. It’s not a pretty picture. We had deficits over $560 billion last year. We're now mortgaging our children’s future. There needs to be increased transparency from the financial and fiscal standpoint.”
Radio show date: 
Sat, 09/03/2005
Intro text: 
Managing for Performance and Results; Financial Management; Leadership; Strategic Thinking; Innovation; Collaboration: Networks and Partnerships; Organizational Transformation...
Managing for Performance and Results; Financial Management; Leadership; Strategic Thinking; Innovation; Collaboration: Networks and Partnerships; Organizational Transformation
Magazine profile: 
Complete transcript: 

Thursday, February 24, 2005

Arlington, Virginia

Mr. Lawrence: Good morning and welcome to The Business of Government Hour. I'm Paul Lawrence, partner in charge of the IBM Center for The Business of Government. We created the Center in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can visit us on the web and find out more at

The Business of Government Radio Hour features a conversation about management with a government executive who is changing the way government does business.

Our special guest this morning is David Walker, Comptroller General of the United States, and head of the Government Accountability Office.

Good morning, David.

Mr. Walker: Good morning. It�s good to be with you again, Paul.

Mr. Lawrence: Thank you for joining us. And also joining us in our conversation from IBM is Al Morales.

Good morning, Al.

Mr. Morales: Good morning, Paul.

Mr. Lawrence: Well, David, let�s start by talking about GAO. Could you tell us the history of the Government Accountability Office, the vision and the mission?

Mr. Walker: Well, the GAO has been around since 1921. We are a legislative branch agency; we were created the same time of the Bureau of Budget, which is now called the Office of Management and Budget. And initially, we were called the General Accounting Office, but now we�re the Government Accountability Office.

Mr. Lawrence: And how do you describe its size in terms of its budget? And you know, I'm interested in the skill set of the employees.

Mr. Walker: Well, we have about 3200 employees; 70 percent of whom are in Washington, D.C. The balance are in 11 other cities around the United States. Our budget is about $460 million a year, and the skills and knowledge is very diverse. You know, candidly, we probably have about the most diverse array of skills and knowledge of any organization in the world.

Mr. Lawrence: And what I always find interesting is, who do you report to?

Mr. Walker: The answer is I report to the Congress, but no one particular individual. As you know, there are 100 members of the Senate, 435 members of the House, and we do have an Oversight Committee in the Senate and the House. In the Senate, it�s Senate Homeland Security and Governmental Affairs; in the House, it�s House Government Reform, but there isn�t a single person that I report to.

Mr. Lawrence: You mentioned in your answer to the last question that GAO has just changed its name. Why was the name changed?

Mr. Walker: Well, there are a number of reasons. Number one, we were not in the accounting business; we�ve never been in the accounting business, and so the word "accounting" was not reflective of who we are and what we did. And it caused confusion with regard to recruiting; it caused confusion with regard to new members of Congress, with regard to new Cabinet-level officials who have never been in Washington before. And so my view was, and it was shared by a vast majority of the people within GAO, is that we needed a name that more accurately reflected who we are and what we do.

And we have three core values: accountability is who we are and what we do; integrity is how we do it; and reliability is how we want the work to be received. So we went from the General Accounting Office to the Government Accountability Office, which enabled us to maintain our brand acronym, which is GAO.

Mr. Morales: David, what are the specific roles of the Comptroller General of the GAO?

Mr. Walker: Well, I am the Comptroller General of the United States and head of the GAO, and as Comptroller General of the United States, I am the de facto chief accountability officer of the United States, and obviously, the CEO of the Government Accountability Office.

Mr. Morales: Great. That�s a very large responsibility. Can you describe the previous positions and experiences that you had prior to being appointed to the Comptroller General?

Mr. Walker: I�ve had about 20 years in the private sector with PricewaterhouseCoopers, that should sound familiar, and also with Arthur Andersen, as well as in consulting with an international consulting and executive search firm. I also have had positions in the executive branch. I was head of the Pension Benefit Guarantee Corporation, Assistant Secretary of Labor for Pensions and Health, and also served as trustee of Social Security and Medicare while I was with Arthur Andersen, so a pretty balanced public and private sector background, more private sector than public, but by the time I get done with this job, it will be about half and half.

Mr. Morales: Can you describe to us how the experiences you�ve had in both the public and private sectors help shape your current role?

Mr. Walker: I think there�s no question that my experiences both from the public and the private sector have helped me to be more effective in my current job. You know, there are a lot of transferable knowledge and skills that you can get between sectors, but there are some important differences between the sectors, too. One of the things that I know -- that when my position was open, and when I was competing with about 59 other people for appointment, that there were a lot of people who were involved in the appointment process who really wanted somebody who had both public and private sector experience, who had a proven track record of success in both sectors; recognizing that you need new ideas, you need people who are coming in from the outside who can challenge the status quo. At the same point in time, you need people who understood government and that there were different cultures, and there were very important differences between the public and private sector that you need to be aware of in order to be effective.

For example, in the public sector, you have many more bosses; you have a lot more constraints on what you can do; you live in a fish bowl. And generally, a lot of the top executives, especially in the executive branch, don�t stay in their jobs very long. And so it�s actually much more challenging to be successful in the public sector than it is in the private sector, but that�s a real opportunity as well.

Mr. Morales: You�re nearly halfway through a 15-year term; why does this position carry such a long term, and what are some of the challenges with this type of assignment?

Mr. Walker: Well, my term is the longest of any position in the federal government that has a term. Second place is the Federal Reserve Board; third place is the director of the Federal Bureau of Investigation, the FBI. And the reason being is because the idea is that you want to have at least one person in government who has a long enough term that you can think long-term, and take on complex and controversial issues that may take years to effectively address. And so that�s the reason for the 15-year term.

But I think you have to couple that with the fact that the Comptroller General of the United States can only be removed by impeachment for specified reasons, and so therefore, once you�re in, it�s very difficult to be removed. And that provides you a degree of job security to be able to speak truth to power, tell it like it is, say what you mean, mean what you say, et cetera.

Mr. Lawrence: I know our audience would be interested in terms of the other changes you have been making at GAO besides the name. I think you�ve been involved in a lot of transformation, and in a relatively short period of time. Could you tell us about some of the changes that have been taking place since you took over?

Mr. Walker: Well, GAO has always been a great agency; it�s always had great people and it�s had strong and effective leadership, but one of the things that I found when I came to GAO was that it itself needed to engage in a fundamental transformation of what it did and how it did business. And I gained agreement among our top executives early on in my tenure to a very simple concept: leading by example. Since we were the agency that audits, investigates, evaluates others, my view is that we should be as good or better than anybody else that we audit, investigate or evaluate; we should practice what we preach. And as a result, our people have rallied to that, such that we are recognized externally by others as being the best or among the best in strategic planning, organizational alignment, human capital strategy, financial management, information technology, change management, knowledge management, which helps us do a better job, but also enhances our credibility.

Mr. Lawrence: That sounds like pretty radical change. Maybe you could take us through a couple of steps; I am wondering, sort of, how you got everybody there, because getting people on the same page for change is the first step, and then whether many of the same people continued with you or you had to make some changes in people as well.

Mr. Walker: Well, first, obviously, to the extent that you make significant changes, you have to be able to make a compelling case for change. You have to convince people that the status quo is inappropriate, unacceptable, unsustainable, whatever is the case. And that�s a challenge, but if something needs to be done, it�s especially challenging when you talk about an organization that doesn�t change that much; an industry, government, that, by definition, is fairly rule-bound. You know, fortunately, I was able to make that case as to why we needed to make changes and why it was in everybody�s interest to be able to do that, but as you know, whether you�re in the public sector, private sector or not-for-profit sector, you have to start at the top, and you start with the new people.

And so as a result, I gained agreement of the executives, and during the last six years since I have been at GAO, we�ve hired a lot of new people. In fact, over 40 percent of the people who work at GAO today have come to work since I�ve been Comptroller General of the United States. So by starting at the top and starting with the new people and working to the middle, you can end up achieving a lot in a fairly short period of time.

Mr. Lawrence: Now, I remember once you told me this math, so if I don�t get it right, it�s just from my recollection: that prior to your arrival, GAO�s budget and the headcount had been either reduced or was flat. Could you tell us what�s changed in that area?

Mr. Walker: Well, in the five years before I joined GAO, the Agency was downsized 40 percent, and it had a virtual hiring freeze for about five years. So at the time that I joined, less than five percent of the employees had been with the Agency for less than five years, and so therefore, that was a challenge for a variety of different reasons. You know, we had a development gap in the pipeline, we had succession planning challenges, we had a variety of skills imbalances, et cetera. And so we took that very seriously and took it on to be able to deal with it.

I am pleased to say that since I�ve been at the GAO, the Congress has, I think, treated us well. I think they�ve treated us as well or better than others, and what I have tried to do is to make sure that we have modest budget requests, that we don�t try to build up the base and try to just ask for what we think we need; don�t play games on the budget; and generate a very, very strong rate of return, or return on investment. Last year, our return on investment was $95 to one, an all-time record, number one in the world; nobody�s even close.

Mr. Lawrence: How did you engage the Congress of the United of States? In a previous answer, you told us there�s 535 individuals. I mean, how did you do that?

Mr. Walker: Well, you obviously have to be able to respect the views of every single member of Congress, no matter how long they�ve been there and whether or not they�re a freshman, or -- you know, where they�re from and what committees they�re on. And at the same point in time, you spend a disproportionate amount of time with the leadership of the Congress and the chair and ranking members of various committees; in particular, the committees that are our oversight committees, the ones that I mentioned before. So one has to end up allocating your time, you know, strategically, and that�s what I�ve tried to do.

Mr. Lawrence: It�s interesting, especially when you think about your comment earlier about not having a boss.

What are the challenges of the 21st Century, and what do they mean for citizens and government? We�ll ask David Walker of the GAO to take us through this when our conversation about management continues on The Business of Government Hour.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning�s conversation is with David Walker, Comptroller General of the United States and head of the Government Accountability Office.

Also joining us in our conversation is Al Morales.

Well, Dave, according to the GAO report, Challenges of the 21st Century, that just came out recently, where are we headed now as a nation in terms of fiscal conditions?

Mr. Walker: Paul, it�s not a pretty picture. Last year, we had an operating deficit of over $560 billion; we had a unified deficit of over $400 billion.

Of that unified deficit, less than 25 percent had anything to do with Iraq, Afghanistan and incremental Homeland Security costs, and yet we had strong economic growth. But more importantly than where we were last year and where we are this year is where we are headed. We face large and growing structural deficits due primarily to known demographic trends, namely the retirement of my generation, the baby boom generation, and rising health care costs. And it�s a serious problem; it�s getting worse, and we need to start doing something about it.

Mr. Lawrence: Can you take us a little bit more through the problem of deficits? I mean, how does it affect government programs, and its impact on the American citizens?

Mr. Walker: Sooner or later, you have to be able to match your revenues with your expenses. And right now, what�s going on is we are mortgaging our children and grandchildren�s future, because we are not matching revenue with expenses. There is no free lunch, and ultimately, the crunch will come, and that crunch will come in the form of significant increased budget pressures on existing government programs; significant additional pressures for higher taxes; which could have, you know, adverse economic growth consequences. And ultimately, we�re talking about, you know, our competitive posture and the quality of life of Americans in future years.

Mr. Lawrence: Before I ask you about your recommendations, I�d like to drill a little bit further into what would it look like if the conditions continue, I mean, sort of, unabated? I mean --

Mr. Walker: Well, we run several simulations, long-range budget simulations, several times a year at GAO; we�ve been doing that since the early 1990s. And depending upon whether you want to go with an optimistic or pessimistic scenario, the bottom line is, even under the optimistic scenario, we face large and growing structural deficits that we�re not going to grow our way out of. Under the pessimistic scenario, we could be doing nothing more than paying interest on federal debt by 2040, 2042. That�s obviously not an acceptable outcome. I think the likely scenario is between the optimistic and pessimistic, but the bottom line is this: we face large and growing structural deficits that are too great to grow our way out of, and tough choices are going to be required.

Mr. Lawrence: In terms of those scenarios -- and maybe you can help me calibrate them -- one expectation of the future is the quality of life increases. If we were to reach a point in the pessimistic scenario where we were just paying interest, would that mean the quality of life would be equal to a period of time in the past? Is that kind of what we�re taking about?

Mr. Walker: Well, realistically, what we�re talking about is you�re not going to be in a scenario where all you�re doing is paying interest on debt. If you don�t end up restructuring the base of government, the likely outcome to that is tax levels that are two and a half times as great as they are today. Well, think about, you know, if your federal taxes went up -- you know -- two and half times what they are today -- by the way, that doesn�t count state and local, which also face, you know, challenges as well in the out years. And so that, obviously, would have a significant adverse effect on economic growth; it would have a significant adverse effect on quality of life issues. And right now, you know, the miracle of compounding is working against us. Debt on debt is not good, and time is working against us, and so it�s important that we act soon.

Mr. Lawrence: All right, now let�s go to the recommendations. What were some of the recommendations to turn the current situation around?

Mr. Walker: Well, in our report, we recommended the fact that we need to increase the amount of transparency with regard to where we are from a financial and fiscal standpoint. That means revising and enhancing current financial reporting. It also means revising and enhancing reporting dealing with the budgetary process. We�ve recommended a number of budget process reforms; to reconsider PAYGO rules on both the spending side as well as the tax side; to look at some type of spending caps; to look at triggers for mandatory spending that would prompt needed action by the Congress because now we�ve got a situation where over 60 percent of the budget is on autopilot, and it�s growing every year. And so there are a range of proposed possible reforms that we lay out in the report as a beginning.

Mr. Morales: David, in a keynote address, you mentioned that key indicators can help inform strategic planning, enhance performance and accountability reporting, and improve decision-making. Can you describe to us what these key indicators may be, and what ways the U.S. can adopt these key indicators at a national level?

Mr. Walker: Well, Al, it�s amazing to me that the U.S. Government that spends, or will spend in fiscal 2005-2006, about $2.5 trillion, does not have a set of key national indicators in order to be able to assess our nation�s position and progress over time, and relative to other countries. Other countries have this; some states and local and localities have it, and we need a set of outcome-based indicators, a dashboard, a portfolio, if you will, of indicators that deal with economic, safety, security, environmental, social indicators, in order to do just the three things that you said: to help inform strategic planning; help enhance performance and accountability reporting; and help to facilitate that baseline review that we�re talking about in the 21st Century Challenges Report, that needs to be undertaken.

Mr. Morales: You mentioned other countries. What other countries have these national indicators?

Mr. Walker: Well, some examples would be the United Kingdom, Australia, Canada, and New Zealand, as well as the European Union.

Mr. Morales: You mentioned in the 21st Century Challenge Report the need to engage in a baseline review of the entire federal government. Why must there be a review of the entire federal government?

Mr. Walker: Well, basically, what the report notes is that to a great extent, the current federal government is an accumulation of policy, programs, functions, and activities that have arisen over a number of years and that in fact are based on conditions that existed in the United States and around the world in the 1950s and 1960s, and that we have not engaged in a fundamental review and re-examination of discretionary spending, of entitlements and mandatory spending, and tax policies and preferences, in decades, and that the assumption has been that the base of government is okay and the great debate that occurs every year is are you going to plus up something a little bit, or cut something a little bit.

But the fact of the matter is the base is not only not okay, it�s not well-aligned with 21st Century realities, and it�s not sustainable. So we need to engage in that fundamental review and reassessment. And in our report, we raise generic questions that should be asked about every major policy, program, function, activity, and over 200 illustrative questions that need to be asked and answered. Hopefully, it will stimulate discussion and debate on this very important issue.

Mr. Morales: How can policymakers examine and engage in the review of federal government?

Mr. Walker: Well, one of the things that we have in the report is there are a variety of ways this could be done. I mean, for example, we clearly need more rigorous oversight; we clearly need to make sure that the reauthorization process is substantive; we clearly need to re-look at which programs and policies are working and which ones aren�t working as part of the annual appropriations process. And so those are just three examples, but we may also have to, in some circumstances, have additional studies conducted by GAO or others as input. Commissions may be necessary or appropriate in order to deal with particularly complex and controversial issues.

So there are a variety of different means and vehicles that I think we are going to have to be using. And candidly, I think we�re talking about an effort that could take as long as a generation to effectively address all of the issues that are going to have to be addressed.

Mr. Lawrence: It�s hard not to think about the big challenges facing our country without thinking about Social Security and health programs. What�s your perspective on the status of these programs in the United States?

Mr. Walker: Well, both Social Security and our health programs are unsustainable in their present form. Social Security represents a large and growing problem; health care is a much bigger problem. For example, the Social Security has an estimated unfunded obligation of about $3.7 trillion in current dollar terms for the next 75-year period. That�s how much you�d have to have today invested at Treasury rates to close the gap between projected revenues and expenditures. Medicare alone has a gap of $27-28 trillion, so about eight times greater. And yet Medicare is only a subset of the much broader problem. Clearly, we�re not going to be able to get back on a sustainable path and a prudent course unless you reform entitlement programs, and these are the two biggest entitlement programs.

Mr. Lawrence: You�ve talked about entitlement reform before and said that it�s essential, and problems with Social Security are not that difficult to solve. What do you mean by this?

Mr. Walker: Well, first, the imbalance in Social Security is much less than the imbalance in Medicare. Furthermore, what I have found over the years in my speaking and other interaction opportunities with the American people around the country, of all ages I might add, is that people who are retired or nearing retirement are the ones most fearful of change; whereas young people are discounting Social Security and in many cases don�t think they�re going to get it at all.

Therefore, that means you have an opportunity. You have an opportunity to restructure Social Security in a way that will leave current retirees and near-term retirees alone; that will make progressively greater changes to the program the younger the person is; and has an opportunity to be phased in over a number of years and exceed the expectations of every generation of Americans. In other words, everybody will get more than they think they�re going to get -- not more than they�ve been promised -- more than they think they�re going to get. And after all, if you can exceed expectations, I call that a win.

So I mean, frankly, it�s going to be a lot easier to do that for Social Security and we need to get on with it because time is working against us. And if we can reform Social Security, that will end up improving our credibility with the markets and enhance confidence to be able to deal with much more difficult issues.

Mr. Lawrence: That�s fascinating. You described quite a lot of challenges in just a short period of time.

How is GAO changing and facing its own challenges? We�ll ask David Walker of GAO to take us through this when The Business of Government Hour continues.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning�s conversation is with David Walker, Comptroller General of the United States and head of the Government Accountability Office.

And joining us on our conversation is Al Morales.

Mr. Morales: David, in GAO�s strategic action plan for FY �04 through �09, I understand there are eight themes. Can you give us an overview of these eight themes?

Mr. Walker: Sure. These themes are themes that represent trends that have no geopolitical boundaries and also cross all different sectors: public sector, private sector, not-for-profit sector. Things like long-term fiscal imbalances; changing security threats in a post-cold war environment; increasing global interdependence; the changing nature of the economy from the Industrial Age to a knowledge-based economy; a variety of demographic trends; fewer and fewer workers supporting more and more retirees; longer life spans, more diverse country; rapidly evolving science and technology; a variety of quality of life issues, such as education, the environment, work, family, urban sprawl, and changing governance structures, where more and more issues have to be handled on a multilateral basis, and between different levels of government and crossing different sectors in order to achieve positive and sustainable outcomes.

Mr. Morales: Can you tell us about the four goals of GAO�s strategic action plan?

Mr. Walker: Well, we have four primary goals. The first two goals are tied to the Constitution of the United States. You know, there�s not a lot of things that people agree on here in Washington, but hopefully one of the things that will stand the test of time is the Constitution of the United States. So the first two talk about supporting the Congress in meeting its Constitutional responsibilities in areas dealing with areas under the Constitution; the third one talks about us trying to help the federal government transform what it does and how it does business. And the fourth one is about GAO being a model federal agency and a world-class professional services organization.

Mr. Morales: How does GAO plan on measuring performance and progress against these goals?

Mr. Walker: Well, we have a number of performance metrics and many of them -- in fact, most of them are outcome-based metrics. For example, we have certain ones that can be quantified, like financial benefits; to the extent that institutions or -- whether it be agencies or departments, or whether it be the Congress as an institution -- if they adopt our recommendations, then does it save money, does it free up money for re-deployment to higher priorities? Last year, $44 billion, $95 returned for every dollar invested in GAO.

But we also have other non-financial benefits, things like safety, security, privacy, you can�t measure in dollar terms, but they�re significant and so we do it in descriptive terms. We look at, you know, pipeline statistics, to what extent are we making recommendations? What percentage of the recommendations are adopted? How frequently are we being asked to testify? Because these are kind of leading indicators, if you will, that can give us a sense as to whether or not we�re going to develop, we�re going end up having positive outcomes over a reasonable period of time. So we�re very, very results-oriented, and everybody is focused on how can we maximize value and manage risk; how can we minimize resource requests and maximize return on investment.

Mr. Lawrence: David, I know you�re interested in human capital. It dates back on probably your entire professional career. So could you tell us about GAO�s human capital strategic plan?

Mr. Walker: Well, first, we�re only as good as our people. We�re a knowledge-based enterprise. We�re a professional services organization, and as I said, we�re only as good as our people. So we take our people very, very seriously; we not only have an overall strategic plan, we have a human capital strategic plan. We have very aggressive recruiting efforts. We do a lot with regard to trying to maximize the chance that the people that we hire will stay with us at least three years, because history has shown if they stay with us at least three years, the likelihood they�ll stay with us long-term increases dramatically. We are an empowerment organization; our employees are very much involved in providing input on all the major issues that we have to deal with as to who we are and how we conduct ourselves as an employer. For example, one of the things that we have is a democratically elected Employee Advisory Council that I meet with and my fellow Executive Committee members meet with at least once a quarter, typically more frequently, to be able to talk about issues of mutual concern and how can we make GAO a better place.

Mr. Lawrence: It�s always interesting to hear a leader like you talk about dealing with people. It seems so obvious that many organizations don�t. I�m just curious about your perspective as to why they don�t deal with that; that training tends to be one of the things that�s cut and people don�t pay attention to their most important asset.

Mr. Walker: Lack of enlightenment, and myopia might be two good reasons, I would say. You know, there are a lot of people, in fact, almost everybody will tell you people are our most valuable asset, but you know, actions speak louder than words. And I think that you need to look at the facts and circumstances and find out whether or not they practice what they preach.

Mr. Lawrence: Interesting. Now, GAO has a human capital office, and what I am always curious about is when you think about human capital and even HR, it was once just a support function, and now people are beginning to think about it more in terms of strategy and managing. How are you making that work at GAO?

Mr. Walker: Well, first, I believe there are a number of factors that are critically important in connection with any particular transformation effort: you know, people, process, technology and environment, for example, of which I believe people represent the most important. People are the source of all innovation, all technological enhancement; they are ultimately the ones that make things happen. And so I think you have to put people first. You have to make sure that the human capital function is strategic, that it is well-aligned with the overall strategic plan, that they are working in partnership with the major operating entities and units to try to achieve positive results. It�s a fundamental philosophical change, and I believe very strongly that it�s necessary.

Mr. Lawrence: Some would say, and you might call them cynics, that gee, you can�t do a lot around human capital and government; we�re constrained by pay, we�re constrained by conditions, we can�t offer stock options. I mean, how do you address this sort of criticism?

Mr. Walker: Well, I think 80 percent plus of what needs to be done in the human capital area in the federal government can be done without changes in laws. I find many times, people end up assuming they can�t do something because it�s never been done before, or they�ve got regulations that they promulgated where they�ve shot themselves, and therefore need to step back and basically re-examine what they can do. I�ve done that at GAO. I mean, there are many times when I wanted to have things done, I have asked why can�t we do it? Or stated differently, here�s what I want to do, can we do it? And I�ve pressed on a number of occasions: show me the law that says we can�t do this or what type of legislation might we need in order to be able to do this, if it makes sense to do it? And I find there�s a lot of that.

One of the critical missing links I find is, everybody now wants to move more towards market-based and performance-oriented compensational arrangements. But what I find is there are very few agencies that have modern, effective, and credible performance management systems, including performance appraisal systems. And if you don�t have those, and if they�re not linked to the strategic plan, tied to desired outcomes, and if they don�t have adequate safeguards to prevent abuse and minimize the chance of discrimination, then you�re not going to be able to effectively deliver on a performance-based compensation system. And so everybody is out there saying they want it, but they don�t have the infrastructure in place. We have the infrastructure in place; it isn�t perfect, and never will be, but it�s clearly the best in government.

Mr. Lawrence: In an earlier answer, you mentioned the fact that if folks stay with you for three years, they�ll stay longer. Is there any one or two critical things that have to happen in their first three years to make them stay?

Mr. Walker: Well, most people that we hire today are highly educated. For example, over 90 percent of the people that we hire for our mission side have Master�s degrees and some have Ph.D.s, and really from the top schools in the country. So they want to be able to make a difference. They want to be constantly learning; they want to be challenged. That�s the real key, and so you need to make sure that you do that.

Now, obviously, people want to be paid fairly, and if somebody�s primary motivation is compensation, then they may not want to come into government, although our people make pretty good money, quite frankly. You can have a very good standard of living by working at GAO and many other government agencies. But if somebody measures success primarily based upon net worth rather than self worth, then they might not want to come into government.

Mr. Morales: David, you mentioned in an earlier answer that since you�ve arrived, 40 percent of the organization is new. Where do you attract people from to join GAO?

Mr. Walker: We have very aggressive recruiting programs, in particular at the entry level. We take it just as seriously as any professional services firm does. We have targeted universities, where we have executives that are assigned responsibility for those universities; to develop relations with the key faculty, with the Dean, with the placement office. We try to end up giving speeches and do other types of activities with the university. We have an internship program which is critically important to our recruiting effort. We hire 200-300 interns a year; that gives them an opportunity for them to look at us and us to look at them. We have an ability to make timely offers to those interns. We don�t have to compete those jobs; if somebody works with us at least nine weeks, then we can hire them on a non-competitive basis.

And so there are a number of things that we�ve done, not only with regard to how we�ve recruited, but also from the standpoint of using student loan repayments; being able to review performance every six months rather than every year; making compensation adjustments every six months rather every year; having a very aggressive training and development program for the first two years that somebody�s with us. And when I talk about those six-month reviews and compensation adjustments, those were in the early years. After that, you go on an annual cycle. So we do a lot to hire the best people, treat them well, and give them a lot of opportunity to make a difference.

Mr. Lawrence: You talked about a lot of very interesting programs. What kind of external recognition has GAO gotten?

Mr. Walker: Quite a bit. Obviously, one of our objectives is to lead by example and be as good or better than anyone else. A couple of examples that I would give off the top is our strategic plan has been widely acclaimed externally. Our performance and accountability reports have won awards every year that we�ve sought to apply for consideration; for example, the AGA being one. CIO Magazine just rated GAO as one of the top 100 information technology organizations in the United States, including the private sector. And so we�ve got a lot of external recognition.

I know that Harvard Business Review is doing a case study on GAO now. In fact, I think IBM is doing a case study on us now, if I�m not mistaken, with regard to our transformation. So quite a bit; there�s no doubt that we would be green across the board in executive branchspeak, if we were part of the executive branch. But our objective is not just to be green, it�s to be as good or better than anybody else that we audit and evaluate and to stay that way. And to stay that way means continuous improvement. I mean, sometimes it�s tougher to stay there than it is to get there.

Mr. Lawrence: Maybe we'll change the G to Green instead of Government.

We've heard about the challenges facing our nation. What does the future hold as we address these? We�ll ask David Walker of GAO for his insights and advice when the conversation about management continues on The Business of Government Hour.


Mr. Lawrence: Welcome back to The Business of Government Hour. I�m Paul Lawrence, and this morning�s conversation is with David Walker, Comptroller General of the United States and head of the Government Accountability Office.

And joining us on our conversation is Al Morales.

Well, David, can you elaborate on how the debate about our fiscal future is ultimately not about numbers, but about values?

Mr. Walker: Well, first, we�re talking about very big numbers. When you�re talking about total liabilities and commitments of $43 trillion, those are huge numbers. It�s tough for people to be able to relate to it, but my point is that, yes, numbers are involved, but the real important thing is two other dimensions: values and people. Values like fiscal responsibility and stewardship to future generations, needing -- having a responsibility not just to leave things better off when you leave than when you came, but better positioned for the future; and people from the standpoint of our children, our grandchildren and future generations of Americans. Those are the type of issues that will move people to act. Numbers won�t do it by themselves; it�s about values and it�s about people.

Mr. Morales: Dave, we spoke earlier of the major fiscal challenges that the U.S. is facing. What can Americans do now to mitigate the circumstances?

Mr. Walker: Well, a couple of things. One, I think they have to recognize that we are on an unsustainable path from a fiscal standpoint. There are going to have to be dramatic changes, and that individuals ultimately are going to have to assume more responsibility in the future than may have been the case in the past. They need to plan, save, and invest for retirement, among other things.

Yes, Social Security will still be there, but it�s going to be reformed. Yes, Medicare will still be there, but it�s going to be more dramatically reformed over the years. And secondly, I think what they need to is they need to exercise their civic responsibility to become informed and involved with regard to a lot of the issues that we�re talking about in order to play a meaningful role in the coming debate about that baseline review and the future of government.

I think it�s particularly important for young people to be informed and involved, because ultimately, we�re talking about their future. And ultimately, they�re going to bear the burden if others fail to act in a timely and responsible manner. They�re going to get what we call a double whammy. They�re going to end up paying much, much higher tax rates, get less, and have less choice about what they think the proper role for government is. And it�s important they recognize that reality and act.

Mr. Morales: In turn, what can government leaders do today to address the fiscal challenge debate?

Mr. Walker: Well, the first thing that we have to do is face the facts and recognize that we are on an unsustainable path. You know, you can�t solve a problem until you admit that you have a problem, and that it�s more prudent to deal with it sooner rather than later. So that�s the first thing. Secondly, I think we have to make sure that we have more transparency over where we are and where we are headed. I think we need to have some process reforms with regard to the budget process. And in that regard, the first thing you do when you�re in a hole is to stop digging. And then I think we have to engage in this fundamental review and reassessment of the base of government, to figure out what�s the proper role of government in the future; how should it do business; and how are we going to finance and pay for whatever the revised role and responsibilities might be?

Mr. Morales: What advice can you give to government leaders working on their financial statements today?

Mr. Walker: Well, financial statements are important, but frankly, not enough people are reading the financial statements of the U.S. Government. That�s part of the problem. I think you have to keep in mind that we�re dealing with the people�s money. We have a stewardship responsibility; we serve a public purpose and work for the public good, and that the taxpayers have a right to make sure that we�re handling their funds in a responsible manner.

And part of that is an appropriate transparency and accountability mechanism in the form of annual financial reports and audited financial statements. But it�s not just with regard to financial reporting; it�s also performance reporting. You know, the taxpayers have a right to know what kind of results have been achieved with the financial, human, and other resources and authorities that agencies have. And so I think it�s important that we not just look at financial statements and continue to make progress there, but we also have to enhance our performance reporting in order to provide more meaningful information that hopefully people will pay attention to.

Mr. Lawrence: David, as you�ve talked a lot about the challenges, this morning, we face, I�ve heard a lot of sort of what I might characterize as pain now for gain later. And I�m sort of wondering if you think that�s correct, and if so, it seems like a pretty hard equation for people to work their way through naturally. How would you reflect on this or give people advice to think about it?

Mr. Walker: Well, this isn�t easy. Nobody said it was going to be easy, but it�s essential and, you know, sometimes I think back to the old Popeye show. I remember Wimpy, you know, �I�ll gladly pay you Tuesday for a hamburger today.� Well, we�re eating a lot of hamburgers and we�re delaying the day of reckoning, and I think that�s got to stop. We�ve got to get serious, we�ve got to remember what those values are, we�ve got to be able to see the faces of our kids and our grandkids and think about future generations to do that. But I believe, in America, anything is possible with persistence and dedication and leadership and commitment. And I am confident that ultimately, we will end up effectively addressing these. What I�m concerned about is when we�re going to start. And I believe it�s critical that we start now.

Mr. Lawrence: In the last segment, you talked a lot about GAO, and I was reflecting on one answer you gave to hiring. And you spoke a lot about hiring entry-level professionals. Does GAO hire experienced folks, or have you hired experienced folks?

Mr. Walker: We do, and we do to a greater extent today than we did before I was at GAO. While a vast majority of the people that we hire will end up coming in at the entry level, we have brought in a number of people with various skills and knowledge that we need, including at the highest levels. For example, our chief administrative officer, who also serves as our chief financial officer, came in from the outside. Our current general counsel came in from the outside, although he didn�t come in in that position. A number of top executives did.

And we�ve hired people in the middle as well, who have skills and knowledge that we need. In part because of that gap in the development pipeline that I talked about before, where when I came to GAO, we hadn�t hired very many people at all in the five years before I was there, and therefore, there was a development gap. And I think it�s important to bring in people from the outside in order to be able to get people with different experience, different perspectives, in order to try to help facilitate the change necessary.

Mr. Lawrence: I know in the first segment, you described your career and you�ve been in the private sector and in the public sector, too, but I think if people will reflect on it, they would describe you as a public servant. And I guess I�d be curious about the advice you�d give to someone interested in a career in public service, and maybe even with a focus on finance, because I think you�ve talked a lot about the financial aspects of government in our talk this morning.

Mr. Walker: Well, if I talk about the federal government, for example, but I will say that public service is a lot more than federal government. You know, it�s federal government, state government, local government, and frankly, it�s more than government. It�s not, you know, not-for-profit organizations, NGOs if you will, there�s a lot of public service that can be done there. But if I focus on the federal government, what I would say is that the federal government represents the largest, most complex, most diverse, arguably most important entity on the face of the earth. It�s 20 percent of the U.S. economy, the only superpower on earth, and therefore, you need to have top-flight talent running that type of enterprise. There are tremendous challenges, tremendous opportunities in the federal government. Individuals can assume a lot of responsibility very early. They can make a difference that involves billions of dollars and millions of people. It�s rare that you get that opportunity.

You know, I�ve had the pleasure and privilege of being able to have responsible positions both in the private sector and the public sector. And I�ve enjoyed every job that I�ve had. And I enjoyed the private sector to a great extent. But I�ve never enjoyed anything more than public service. You know, obviously, my wallet�s not as well off as it used to be, but my head and my heart are much fuller than -- well, I -- certainly, my heart is; not my head, hopefully. I mean, my -- I know a lot more, let�s put it that way, and I feel a lot better about what I�m doing. So it�s a real opportunity to make a difference for your fellow citizens and for the future of our country.

Mr. Lawrence: David, that will have to be our last question. Al and I want to thank you for joining this morning and fitting us in your very busy schedule.

Mr. Walker: Well, Paul and Al, I want to thank you again for being a repeat customer. And don�t forget that GAO website, Thanks.

Mr. Lawrence: Thank you, David.

This has been The Business of Government Hour, featuring a conversation with David Walker, the Comptroller General of the United States and head of the Government Accountability Office.

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

For The Business of Government Hour, I�m Paul Lawrence.

Thank you for listening.

Forum Introduction: The Second Term of George W. Bush

Tuesday, April 12th, 2005 - 17:12
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Empowering Diplomats with Leadership and Management Skills

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The Quest to Become One

Monday, January 31st, 2005 - 20:00
This report examines the efforts by three federal organizations--the Department of Veterans Affairs, the Department of Transportation, and the National Aeronautics and Space Administration--to change the behavior of those within the organization to move in greater concert toward the achievement of organizational goals. The three initiatives--One VA, ONE DOT, and One NASA--were each unique and faced distinct challenges. The report examines what it means for a federal organization to become "one," the hurdles each agency faced, and which strategies appear to work well.

Pay for Performance: A Guide for Federal Managers

Sunday, October 31st, 2004 - 20:00
This report provides timely advice to federal managers involved in the planning and implementation of pay-for-performance systems. It examines arguments for and against pay for performance, reviews various approaches to pay for performance, and discusses the challenge of implementing such systems. It also provides a framework for developing and evaluating specific pay-for-performance policies and management practices.

Performance Management for Political Executives: A 'Start Where You Are, Use What You Have' Guide

Thursday, September 30th, 2004 - 20:00
Wye describes how political executives can overcome common problems in the design, alignment, use, and communication of performance measures and information. The report links performance-based management to the higher calling of public service and provides a meaningful rationale as to why political executives should care about performance-based management. In the past, political appointees have traditionally focused primarily on the political agenda, without much attention given to management responsibilities.

David Wennergren interview

Friday, September 26th, 2003 - 20:00
Mr. Wennergren provides top-level advocacy in creating a unified information management and technology vision for the Department and ensures the delivery of the capabilities required to achieve the Department's transformation to net centric operations.
Radio show date: 
Sat, 09/27/2003
Intro text: 
Technology and E-Government...
Technology and E-Government
Magazine profile: 
Complete transcript: 
Friday, July 18, 2003

Arlington, Virginia

Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, partner in charge of The IBM Center for the Business of Government. We created The Center in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about The Center and our work by visiting us 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 David Wennergren, Chief Information Officer of the U.S. Department of the Navy.

Good morning, Dave.

Mr. Wennergren: Good morning, Paul.

Mr. Lawrence: Joining us in our conversation is Tim Connolly.

Good morning, Tim.

Mr. Connolly: Good morning.

Mr. Lawrence: Dave, let's start by talking about the military. Could you tell us what's the role of the Navy?

Mr. Wennergren: The Department of the Navy is a large organization, and of course it includes both the United States Navy and the United States Marine Corps. Its mission is to project force and protect the sea lanes around the world, which makes it a very unique organization to work in: 800,000 people deployed in virtually every time zone, tens of thousands of them literally on mobile offices, ships, deployed Marines, and to be able to be connected around the world in real-time is one of the great challenges of that organization.

Mr. Lawrence: Tell us about the activities and the programs of your office.

Mr. Wennergren: As the chief information officer, I am responsible for information management and information policies across the Navy and the Marine Corps. It's a fascinating opportunity because it's a very big organization. We have an information technology budget of over $6 billion a year, and as I mentioned, hundreds of thousands of people, and to try to bring those people together to work your way through the entire range of information technology work, networks, knowledge management, e-business, security transformation, is a wonderful opportunity.

Mr. Lawrence: What types of skills would your team have? You just described a whole range of functions, and I would have thought they would have all been computer science folks doing that sort of stuff.

Mr. Wennergren: We certainly have some excellent computer scientists in the mix, but it is really a broad range of people, because a CIO's responsibility spans the gamut from making sure that you're giving the right oversight to your systems, all of your systems, weapons systems, information systems, because of course, they all have to work together. To the other end of the spectrum, caring about your work force, making sure your work force is changed and IT proficient. So we need people with lots of different skills in the IT business.

More and more, we see folks with a strong bent towards business, towards management, towards understanding the missions of the Department and how those missions could be improved. Business process reengineering is a very important element of the work that we do in the CIO organization. We have a small cadr� of folks that actually work in the headquarters organization. CIOs have to report to the Secretary of the agency, or in our case, the Secretary of the Navy. So we have a small team there, but then we draw upon the resources of technical experts from throughout the Navy and Marine Corps teams, so there are literally hundreds of thousands of folks who are really adept at being network engineers and being software developers, and then all the other skill sets that you need to actually run a business as big as this.

Mr. Lawrence: When people ask about the budget for technology in the Navy, is there a way to describe it to give people a sense of the size?

Mr. Wennergren: Yes, it's big, and the way that we track the budget the way that OMB and Congress asks us to is kind of interesting because it covers a very broad range. So the Department of the Navy's information technology budget is $6 billion, with a B, and that's a lot of money. The biggest single initiative that we have is our Navy-Marine Corps Intranet, which is over a billion dollars a year.

It also includes a lot of very significant national security systems, the E-2C Hawkeye and other programs that are heavily IT-oriented that make up that bill. So it is not just $6 billion spent on back office functions, it's $6 billion spent on command and control systems and command support systems and all the things that go into running the business of the Navy.

Mr. Connolly: Dave, can you tell us a little bit about your roles and responsibilities as chief information officer of the Navy?

Mr. Wennergren: I work directly for the Secretary of the Navy, and my job is to provide advice and counsel on the mission of the Department. I'm part of the leadership team for the Navy and the Marine Corps, where, of course, my responsibility would be making sure that we do our information systems and our information management correctly. So I have a responsibility for policy development, for oversight, for ensuring that we have a trained work force, ensuring that our systems are operable, that we have a robust enterprise architecture structure, that we're complying with the President's management agenda, and working your way through that whole portfolio of IT initiatives that happen in the world today. We are big proponents of electronic business and the web and wireless technologies.

Again, it's about having a small team of change leaders that can work with all of the commands across the Navy and the Marine Corps to help them as they do their jobs, because one of the things that we learned early on in this adventure as we were walking through the Y2K days is that IT is everywhere. It's embedded in every plant floor, every weapons system, and almost nothing works by itself anymore. So it really is all about the difference business lines of the Navy and the Marine Corps, and we view our job as intergrators.

What we want to do is to help you understand that you can use technologies in the work force, but in the end, it's your business process, your mission area, and so the E in e-business is just get people excited that there is a need to change away from paper processes to electronic processes, but the key part of that word is business. It's not about me doing your business for you; it's about me helping you to see a way to reinvent your business to take advantage of the digital age.

Mr. Connolly: So it sounds like you have pretty broad responsibilities on both the business side as well as on the technical side. Can you tell us a little bit about your previous career and how that prepared you for your roles and responsibilities today as the CIO?

Mr. Wennergren: I've had a varied career, I guess you'd say. I've spent my entire government career with the Department of the Navy, right out of college into the Navy as a young management analyst and kind of worked my way up through the organization.

I've had a lot of different kinds of jobs. I used to do outsourcing work, the A76 program, private-public sector competitions. I was involved in the base closure rounds of the 1990s. After the base closure rounds, I had the job of working in the installation management world and restructuring all of the shore establishment that didn't close.

Then I came to the CIO world, and my first adventure was Y2K there. So sometimes people say you must wander from one program of hate and discontent to another, but I'm a hopeless optimist. So I think that the thread there is complex organizational issues, so I think both me and my predecessor, Dan Porter, the last CIO of the Department of the Navy, shared this r�sum� of having worked complex issues and having to work issues that require integration and a good understanding of the mission of the organization.

So while I have had some technology-related responsibilities in my career, clearly my selection as CIO was driven by the idea that we need people that can lead change and integrate it across complex organizations.

Mr. Connolly: Based on that, how do you see that those experiences have really brought you to today to the visionary role of CIO of the Navy?

Mr. Wennergren: The common thread, again, I think is integration. The Navy and Marine Corps is very big and very decentralized. In fact, we have a culture of over 200 years of independent ships at sea and being the captain of the ship and the captain of your destiny. That presents tremendous opportunities for innovation. Having the wherewithal to manage your own resources and go make your own choices gives smart people great opportunities to think of new ideas, and our organization is just full of smart people.

The challenge that comes in this world of being so connected is that pieces have to work together. So the premise of sending a ship out and it will come back some day and you'll have entrusted the captain to have done the right mission is a little different in a world where you're constantly in contact from sensors to shooters to logistics support and those sorts of things. So now there's a great need to take this very decentralized organization and make sure that it's integrated. Integrated doesn�t always necessarily mean centrally controlled or centralized, but that the pieces work together.

One of my responsibilities is the critical infrastructure assurance officer, of the CIAO. I always get a kick out of that acronym. The critical infrastructure assurance officer is responsible for critical infrastructure protection, so physical security, security of our key infrastructures. It's not a job that you would necessarily have associated with being a CIO, the information officer, but we're finding more and more organizations starting to get their CIO that responsibility because protecting all of our physical infrastructures has a lot to do with integrating the efforts of numerous organizations, in our case organizations like our force protection people, our antiterrorism people, our investigative service people, our computer forensics types and those sorts of organizations. So bringing all these pieces together to actually work towards a common good is the resounding theme that we see in CIO work.

Mr. Connolly: Have you seen that the role of the CIO in the Navy has evolved then over the last 10 to 15 years from being much more technically focused to being much more organizationally focused and focused on taking the Navy to the 21st century?

Mr. Wennergren: Yes, I would have said it just slightly differently, because CIOs are kind of a new concept for us. With the Clinger-Cohen Act passing in the 1990s, the first Department of the Navy CIO only arrived on the scene in the late 1990s, the 1996-1997 time frame. If we look at the last 10 or 15 years, I think your point is right-on. While they weren't called CIOs, the CIO predecessor organizations were clearly focused on technical- and acquisition-related issues, and as we stood up a CIO organization through the Clinger-Cohen Act and a lot of the other pieces of legislation, the E-Gov Act, the Federal Information Security Management Act, the Paperwork Reduction Act, and the list goes on and on, there's a recurring theme in both the intent of Congress and the intent of the administrations that CIOs are there because information, knowledge, the intellectual capital of the organization, has to be managed effectively so that it's available.

As the most classic case, a statistic from Gartner, I believe, about how over 70 percent of an organization's information lives on a C drive, and in a world where you're imagining people thousands of miles away from each other trying to get work done together, that just doesn't cut it. The intellectual capital, the wonderful knowledge and learning that we each have and can bring to the table, has to be available for people to share.

Mr. Lawrence: That's a good point, especially about the C drive.

What's NMCI and what lessons have been learned? We'll ask David Wennergren of the Navy to tell us about this when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with David Mr. Wennergren, Chief Information Officer of the Department of the Navy.

Joining us in our conversation is Tim Connolly.

Mr. Connolly: David, the Department of the Navy has been pretty much a pioneer in outsourcing. With the Navy-Marine Corps Intranet, affectionately known as NMCI, can you tell us a little bit about the background of this effort, and what is NMCI?

Mr. Wennergren: NMCI is a fundamentally important part of our transformation. It is the foundation of much of the IT transformation that's going on in the Department of the Navy.

I sometimes tell folks a story about a place called the Winchester Home, which is out in San Jose, California. If you're familiar with it, you know the story about it, but you've probably near heard it as an IT analogy. The Winchester Home was built in the late 1800s by the heir to the Winchester Rifle fortune. There's a whole story about why she built this monstrous house, but she built it for 30 years. It has hundreds of rooms and tens and thousands of square feet. It's one of the biggest houses in the entire United States. There were hundreds of builders involved in building it and no architect, no orchestra conductor, if you will. Lots of builders with lots of money to spend built lots of really cool stuff. There are patents associated with this house, innovations in the 1800s that had never before been seen in homes in America. If you translate the $5-1/2 million price tag to today's dollars, it was a $160 million job building this house.

But because they each worked independently, some odd things occurred. There are doorways that open into a wall; there are stairways that lead to nowhere; there are skylights embedded in the floor of the ceiling above; there's a chimney that starts in the basement and rises up four stories, only to stop three feet short of the roof. So without that common infrastructure, architecture, enterprise vision, big organizations tend to build lots of little things. Each little thing might be innovative on its own, but they don't work together so well, and that was the environment that we found ourselves in in the Navy and the Marine Corps team.

We found two apparent problems. We had organizations that were haves, and organizations that were have-nots. Some organizations, because of the way money flowed, had pretty robust networks, and some of our organizations had pretty pathetic networks. Unfortunately, a lot of the organizations that were not wired properly were our operational commands, which clearly needed to be.

We also found ourselves with a problem of not being able to refresh technology well enough. It takes government sometimes a long time to buy stuff, and of course you know the way technology is. I remember several years ago buying myself a 450 MHz computer and thinking that was a real hot machine there, and six months later it was who cared because technology changes so fast, and having refresh rates that take years and years and years will leave you always behind.

So we reached the point where we imagined in our minds that it was probably a couple billion dollar job to actually bring the Navy's infrastructure up to a level where you could be a really seamless enterprise network. So we have a hundred disparate networks, they didn't talk together very well, they had different security structures. We had a work force of network managers and network engineers that we were having trouble retaining. They come and they'd get trained by us, and they'd go for more lucrative salaries in the private sector. So we had to do something different.

So we landed upon the concept of the Navy-Marine Corps Intranet, which is a performance-based contract approach to buying IT as a service. This was basically a big seat management contract. There are lots of seat management contracts in industry, but this was a big deal for the government. It's the largest IT contract in federal government, it's the largest seat management effort in federal government history. So it really was a change of course as it was this basic premise that said electricity, the outlet here in this room, I plug my plug into it and if the light comes on, I get billed for the electricity of using that light. If the light doesn't come on, I don't pay a bill for it. I don't really care about what kind of transformer, what kind of stuff is on the other end of that power line out there, Virginia Power or something.

I care about service being delivered. I care about performance. So that was the path we embarked upon. It really was a novel path, because the beauty of the Navy-Marine Corps Intranet contract is that the services that it provides are the computer on your desk, the software that runs that computer, the help desk support, the long haul connectivity, to bring that enterprise network together for almost 400,000 people, 400,000 seats. It basically encompasses the entire United States and a couple of our overseas locations. Bringing that together into a performance-based contract has provided us with a world of wonderful change management experiences that we'll probably talk more about in a few minutes.

But getting that basic premise across that you could have somebody do this work for you and do it by providing a service, and the best way to take care of that would be to have a fixed price contract in terms of seat price. I'll have a menu, I'm a command and I'd like a laptop, I'd like a desktop, I'd like these kind of additional services and those sorts of things, and I understand the price and I'm willing to pay that. Then the contractor team is motivated for success by a lot of incentives. So the contract is really a wonderful novel contract vehicle because it's based on the premise of numerous service level agreements that are measured. So what I want is lots of access; I don't want latency. I want a good refresh rate, I want good security, and I'm going to measure you on that. If you exceed my expectations, then you get incentive payments.

Over half of the potential incentive payments that the contractor can get are based on customer satisfaction as measured by the individual users. What a novel concept for all of you that have relied on help desk support before, that you actually get to grade your help desk team, and that's part of how they get paid is that they've responded well to your needs.

It was an interesting adventure to go on. We're a couple of years into it now and we're making great progress now, but the early days were really a challenge because we had a fascinating dynamic. We were able to explain to people that this idea of seat management and this idea of performance-based contracting was really important and the right way to go. But you'd have this interesting dynamic when you would explain this to members of Congress, the Office of Management and Budget and the Office of the Secretary of Defense. We would almost consistently get back the answer that would say, yes, this sounds like a really great idea. You'll want to do this very quickly. You'll want to do this over a two-year period. Isn't that like awful fast for something this big and this different?

Then we would go to audiences like the Naval Postgraduate School, where we have young officers who are working on their master's degrees and are really savvy on technologies, and of course the postgraduate school is out in Monterey, not far from Silicon Valley, so they had a lot of exposure to the Internet age, if you will. So they would go, this really sounds like the right thing to do, but you're going to take two whole years to do this? Why can't you do it in months?

So it was an interesting set of dynamics, and it took us a long time to get the project actually started. We awarded the contract, and EDS is the prime contractor. Then there's a pretty august group of subcontractors: Microsoft, Dell, Raytheon, MCI. So it's a robust group of teams. But again, the important point was that we didn't say we wanted Dell computers, we didn't say we wanted Windows 2000 as the operating system. What we said to the bidders was we want good service, we want to be able to measure it, and we want service delivered well to all of these places with these service level agreements, and then you pick the teaming arrangements that you want to have to make that happen, so I don't have to be the one that goes out and buys all the servers and routers and worries about every computer and every help desk, every network operations center. I worry about getting service delivered well to me and being able to measure that service being delivered well to me.

Mr. Connolly: Tell us about the timeline. The idea began in the mid 1990s. Walk us through the big things. We're two years into it. Then what's out there?

Mr. Wennergren: We did a lot of thought work about this in the late 1990s. The contract was awarded at the end of 2000. From there, it took time. Again, it got back to this idea about seems like a good idea, but we're very nervous, it's very different. I probably shouldn't say this, but we tested this thing like it was some nuclear submarine. We were talking PCs. They only cost hundreds of dollars each now. We're talking about Microsoft Office. We're not talking about nuclear power plants. So there was a lot of initial testing and a lot of initial turmoil to get the thing up and rolling.

This year has really been the year that made a difference. You go through a two-phase process, of course, as they come in. The first thing that happens is the team comes in and assumes responsibility for your existing network. Of course then, after they assume responsibility for the network, they cut over to the new equipment and the new processes. So you assume responsibilities and then you cut over.

We've cut over about 88,000 seats at this point. We have assumed responsibility for over 200,000 seats, we, the contractor team, and our hope is by the end of the year, we're up to about 300,000 seats, assume responsibility, and a couple hundred thousand seats cut over.

So this is the year now that we're actually seeing the power of it. So had we all been having this conversation a year or so ago, I would have told you about this vision about interoperability, access, greater security, but now I can actually talk to you about the results, and there are some wonderful examples of the results.

After September 11th, in addition to the tragic loss of life at the Pentagon, the Navy also lost 70 percent of its office space there. So we had literally hundreds of people that had no place to go to work. We were able to leverage this information strike force, this EDS team, to help us reconstitute that capability literally over a weekend. By Friday after the event on Tuesday, we had found an office building in Crystal City that had been vacant. It was pretty gutted, and the EDS team had tractor-trailers full of Dell computers and Sisco routers and everything on the road. They arrived in town, and virtually over the course of the weekend, put together the network and the infrastructure inside that office building for hundreds of people. If you think about it in the old view of the world what would have had to have happened, we would have had to have people buying computers, buying software, buying telecommunications services, buying servers, and installing all those things, and integrating all those things together would have taken days, weeks, months.

The other place where we've seen dramatic improvements is because you're moving away from this idea of a hundred disparate networks with different kinds of security strategies, seeing a significant improvement in our security posture, it really is beginning to pay dividends. But it also really is the foundation of transformation, and that's the thing that oftentimes confuses people, because they think NMCI is the whole IT game for the Department of the Navy, and it's really not. I often use the description of a highway system, local story right here, just interstate 95. I've got a great superhighway now, and NMCI is that superhighway. On the interstate heading down to Richmond, I don't have to get stuck in traffic. Maybe I picked a bad example. I don't have to stop at stoplights all along the way. But all the cars and all the drivers of those cars are still fundamentally important to the success of your organization. So imagine NMCI as the big superhighway we just built, so that where you are is connected to where you need to be, and wherever you are, you have the power of reaching back to the intellectual capital of the organizational team. But you also have to then focus on all the things that have to ride on that highway system if you're going to be successful.

Mr. Lawrence: The Department of the Navy includes both the Navy and the Marine Corps. How does the CIO make decisions for the entire department when it consists of these two unique groups? We'll ask David Wennergren of the Navy to tell us about this when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with David Wennergren, the chief information officer of the Department of the Navy.

Joining us in our conversation is Tim Connolly.

Mr. Connolly: David, we spent the last segment talking a lot about NMCI. Now as we look forward, if you had a choice of starting over again, what would you change about NMCI to make the process more effective and more efficient?

Mr. Wennergren: I wouldn't change a thing about the performance-based contracting concept, and I wouldn't change a thing about the team that we have. We have a great team working with us on the project.

How we began the implementation both from our side and from the contract's team, we learned a lot, because it really was something different for us. People really enjoy personal control, and federal agencies don't always do a good enough job of public relations work. So I think we probably could have done a better job of selling the value proposition to our individual organizations so that when they went through the pain of having to give up something that they used to control, to allow somebody else to do the work for them, although I don't know how much you could ever stop some of those cultural change issues from happening. So there was a lot we learned about how you could do the implementation smoothly. But I think that's really the only place that you probably could go back and have done it better.

What I really have seen happening out of this is that it was an amazing opportunity for us because it proved to be this wonderful forcing function. If you don't build yourself an enterprise network, you have no idea how many applications you own. I remember in the Y2K days, we were keeping track of our mission-critical and mission-essential applications and systems. We were looking out for a couple thousand of them. Then when we put into place the Navy-Marine Corps Intranet, we said to these hundreds of commands that had their own local area networks and had built the stuff to run on it, just give us your applications, identify them by name, we'll check them out to make sure they're complying with security rules and they work on Windows 2000 and we'll put them on the network, and those couple thousand mission-essential applications grew to almost 100,000. A hundred thousand applications, what could you possibly do with that many? Somebody told me they were at the Gartner conference last year in Orlando, I think it was somebody from Disney was there, and they were talking about their 4,000 legacy applications that they were trying to work their way through. Somebody from the audience stood up and said, how could you have allowed that to happen? I thought I'm glad I wasn't the one up on stage there. I would have had a hard time explaining tens of thousands of them. But because you didn't have that central visibility, that ability to do configuration management, you didn't know.

So NMCI has been a wonderful forcing function to get us to do things like designate functional area managers, functional leaders for business lines in the Department of the Navy that are now responsible for looking at all the logistics applications that these different commands have built and says this is the supply chain management program we're going to use, this is the online purchasing solution we're going to use, and we're going to get rid of these other ones. It's a phenomenally complex problem. We've done a great job of working our way down from that first initial list of 100,000 to several thousand now. But you wouldn't have been able to do that, nor would you have been able to achieve the significant cost reductions that you will get by not having to build each one of these solutions over and over and over again unless you have built this enterprise network.

We used the NMCI as the fulcrum point for bringing on board infrastructure and SMART card technology. Every computer is going to show up with a SMART card reader and Middleware. You'll be able to use your PKI digital certificates. Those kinds of changes wouldn't have happened if you didn't have this forcing function of building the enterprise network to get you going.

Mr. Connolly: You talk about NMCI as a transformation, and transformations are about change. What change would you say occurred in your own roles and responsibilities as CIO, and how do you see that continuing to change going forward with the implementation of NMCI?

Mr. Wennergren: I think we've greatly benefited from a really strategic leadership team in the late 1990s as this whole vision got created that recognized that there is a road map of transformation that you had to do, and you had to start with your infrastructure. If you couldn't get your infrastructure right, you had no hope of doing things like digital marketplaces and knowledge-sharing and those sorts of things. But having the NMCI network now being implemented is allowing the Navy and Marine Corps team to turn attention away from those network tasks, to focus on the rest of that transformation agenda.

The NMCI contract is a really big contract. Like I said, it's over a billion dollars a year, but it is just that superhighway system. There is a whole bunch of other really important work that is being focused on, and that needs industry participation and working together, creating knowledge management structures, business electronic government, web enablement of our legacy applications, building of an enterprise portal, greater security, all those pieces of work are the rest of that transformational agenda that actually gets you to be that interconnected organization that's secure and a learning, knowledge-sharing community.

Mr. Lawrence: The Navy includes both the Navy and the Marine Corps. How are decisions made for the entire Department?

Mr. Wennergren: We've gone through a significant restructuring over the last year, and I think that one of the great benefits of that restructuring was a tightening of those organizational relationships. So in our new vision of the world, as the CIO, again, I report directly to the Secretary of the Navy, I have a deputy CIO for the Navy. That's Rear Admiral Tom Zelebor, who is the command and control leader for the Navy chain of command. I have a deputy CIO for the Marine Corps, who is General John Thomas, who is the director of C4 for the Marine Corps. So there's this wonderful match-up now of the person who is responsible for the command and control and computer systems for the operational chains of command now has a working relationship with me and a very close relationship in terms of dialogue and problem-solving together to make sure that the information management agenda is working in synch with those chains of command. I then have a third deputy, Rob Kiery, who works in my office, who is the deputy CIO for policy integration, who works with me to help shape and integrate those transformation efforts along those two chains of command.

We then said that each of our major commands, or what we call echelon 2 commands in the Navy and major subordinate commands in the Marine Corps, imagine business units under the Chief of Naval Operations and the Commandant of the Marine Corps, each must have a command information officer, and that command information officer must have a working relationship with Admiral Zelebor and General Thomas. We sort of leveraged some of the things that we learned from visits to GE about the way that they managed IT, this idea that if you're a business unit or a command information officer, you really need to make two people happy if you're going to be successful. You need to make that business unit leader happy, and clearly our command information officers in the past did that. They worked for the commander of the Naval Air Systems Command, and if you didn't make the Naval Air Systems Command's mission work, then you weren't getting a good CIO for that command.

The second piece of that puzzle that the folks at GE realized a while back was you also have a reporting relationship with the agency CIO, because otherwise, you'll suboptimize because you'll build great systems for -- I need an online small purchase system at NAVAIR and so I go out and build one. But I'm over here at the Naval Supply Systems Command and I say I need an online small purchase system so I go build one, and I'm out at the Pacific Fleet and you see how it goes, and each one of those cost me millions of dollars. So if you only focus on that command, you miss the important point, that we are an enterprise. Up until a couple of years ago, enterprises for us were organizations like the Atlantic Fleet, the Pacific Fleet, because that's the way the money flowed and that's where your responsibility flowed. So this new set of organizational relationships really kind of helps everybody think a step up, to say that the enterprise is the Navy and Marine Corps team, because if you don't think that way, you can't build a Navy-Marine Corps Intranet, you can't build a Navy-Marine Corps enterprise portal, you can't align yourself about interoperable single authoritative data sources, et cetera.

Mr. Lawrence: One of the things driving management is the President's management agenda, and it calls out specific items. One of them is e-government. What are you doing in the area of e-government?

Mr. Wennergren: Absolutely. E-government is so crucially important to us. There were some terminology things we had to work our way through first. I have a PowerPoint slide whose title is �a constantly changing world� that goes e-commerce, e-business, e-government, e-war fighting, because you go out and talk to an audience in the Navy and they go we're not business. What do you mean e-business? We don't do that kind of stuff. We're not selling products. And you're like absolutely, you're a business. Your business is national defense and you still have labor-intensive, cumbersome paper processes that you do and that's eating our lunch, and you need to find ways to leverage technology and get with it, and get with the web, and get with wireless technologies and develop E kinds of solutions. So we have done a lot of work to really take the President's management agenda, and even before the President's management agenda, to build ourselves organizations that will help us achieve that goal.

We established a Department of the Navy E-Business Operations Office that is a single innovation center for the Navy and Marine Corps team. There's a small cadr� of government folks with a number of private sector partners that basically helps you. If you're a command and you say I need some help trying to figure out how to do this e-business stuff, they'll bring out consultants, they'll come work with you and help you develop solutions.

They actually operate a pilot fund. We put aside $20 million and say let's go find great ideas and pilot new ideas. What classically happens in large organizations in I think government or the private sector is that you have this great idea, it's going to save us a million bucks a year, I need $100,000 to make it go. The controller says feel free to use your savings. I don't have those yet. Well, I don't know, I guess you're going to have trouble getting started. So we have found there is tremendous power in planting these small seeds of change.

I can tell you one quick story. A hospital, the Naval Medical Center in San Diego, California, a neonatologist and a CIO for that hospital came up with an idea regarding a very cumbersome process about how a patient goes from visiting a general practitioner to getting a specialist's appointment. It was bad. It was just really cumbersome. You didn't know whether the person actually made the appointment or whether they kept it, your general doctor didn't know if the person was getting treatment, whether he was well until he saw the person again in six months. They said what a great way to leverage web technologies and wireless devices to change this experience. So they developed this wonderful solution where the doctor sits in the room with the patient, he's got a little wireless device in his hand and he's saying you have a problem but Mary is really good at this and she has an opening next Wednesday at 9:00, can we lock you in for that, and he just pushes a button on his wireless device and locks the patient in for the appointment right there. Here come your lab results, and all the while maintaining that face-to-face contact as they work through this issue; $100,000 they needed to do this.

I have to tell you, $100,000 is not a lot of money for the Department of the Navy, but it's an incredibly large amount of money for a hospital. So the e-business operations officer comes and brings the $100,000, brings the private sector partner in for the solution. The neonatologist and the CIO, which I get a kick out of because when they both talk, you really can't tell who the IT person is because the neonatologist can talk babies, he can walk web. They build the solution; they love it so much. They, not us, they the hospital folks, take it to the Department of Defense Health Affairs Board, the surgeon generals for the Army, the Navy, and the Air Force, and say you can implement this solution DoDwide for $2 million. The surgeon generals say we were about to do something like this that had less functionality and was going to cost $20 million. We can take this idea and put it across DoD and avoid spending $18 million. That's a powerful example about how planting that $100,000 seed will help the Department of Defense avoid spending $18 million.

I have the benefit of being the best practices co-chair now for Federal CIO Council, so I'm able to start to take these ideas and the ideas that are going on in lots of other federal agencies and build this portfolio of best practices that are going on that tie directly to all parts of the President's management agenda.

Mr. Lawrence: That was an interesting point about the collaboration between the doctor and the CIO.

What role does IT play during a military conflict? We'll ask David Wennergren of the Department of the Navy when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with David Wennergren, the Chief Information Officer of the U.S. Department of the Navy.

Joining us in our conversation is Tim Connolly.

Mr. Connolly: David, we spent a lot of time this morning talking about change. The real question I have is, what do you see as the CIO's role in not only delivering change in programs like NMCI, but really in creating and leading change as the Navy progresses toward the future?

Mr. Wennergren: I think the measure of an effective CIO is the ability to lead change. You have to understand technology, but I believe firmly that technology is only a percentage of the answer. I may spend 20 percent of a day worrying about some technology issue and 80 percent of the day worrying about the cultural change issues that go along with actually making an organization transform. There is so much that you can learn from that. I could have spent the whole hour talking about that, but there are some important nuggets that you pick up.

Change takes on two forms. There are evolutionary types of change. When we go and do knowledge management, it's a real grassroots kind of thing. You go to a command and you say you could do this kind of stuff, you'd be a learning organization, that's great. They all get excited about it and they go off and do it. The beauty of evolutionary change is that it has great consensus and support. You can build a great little solution there. The problem is that evolutionary change on its own doesn't do sweeping enough change. So while we've embraced this theory of teaching people to fish, we've developed tools. We have tools about how you do knowledge management, how you develop a work force, how you do critical infrastructure protection/vulnerability assessments, CDs or web-based tools, and we give these tools to commands.

If you think about it, if each command takes that tool and uses it to do knowledge management, they all end up doing knowledge management in a consistent way, and I get the same kind of answer that I would have gotten if I had just mandated that they all do knowledge management, but of course, they all did it willingly.

The problem is they may not all do it, and so sometimes in order to get broad, sweeping change, you have to embark on a revolutionary change. We would not have a Navy-Marine Corps Intranet if we had not just said you will do it. We would not have 2-1/2 million access cards, SMART cards, in the hands of DoD people if we had not just said we're going to go to a single SMART card. So you have to couple these evolutionary change approaches with revolutionary change approaches.

Of course, the challenge with revolutionary change approaches is I didn't get each of your buy-in. So I have to then deal with the personal/cultural issues of change is coming to you, and there's a book about managing transitions that's out now. Or the guy makes an interesting point about we don't like change, we don't like transitions because in order to have a new beginning, you must have an end, and people tend to not like endings. So every time I do something that's sort of forceful, you have to worry about how you're going to deal with those cultural change issues. But you have to embrace them, because the world is changing at such a fast pace, if you don't think about change which means accepting some risks, you really do risk irrelevancy. So we've learned a lot.

We've learned about moving with speed. The solutions that are working best for us right now are those that we do in months. Take an e-business pilot like the one we talked about, put it in a place in three months, leverage industry best practices and go. The things that are not working well for us are the things where we try to build this perfect solution, build it to death, and two or three years later try to deliver it. Because in our world, over two or three years, technology changes, military people rotate in and out, political leadership comes and goes, and you never quite close the deal. You have to move with speed. You have to look for forcing functions. You have to say if you're going to change a little, you might as well change a lot. There is no point in just getting a few computers. At the moment that you're going through that stress of a change in a computer, I'm also delivering you new processes and those sorts of things.

You need to think about how you change the status quo. We had a culture where once you're in the budget, I'm a legacy application, I got approved, and now I get $5 million a year, and next year I want $6 million. So people go why do you need an extra million, but you're basically in the game. Of course, with those legacy applications that are the old mainframe client-server kind of solutions, they're not my web services view of the future of the world, so it's the new stuff that is going to be wireless and web-based that really is where we need to focus, but of course they're new and so they get tortured to death. Where is your testing plan? Where is your business case? Where is your this, where is your that, before you ever get to the place where you say let them go or let them try because that's where I want to spend my money.

That's why our legacy application process is so important, because that's where we're going into each of those people with the baby and saying that's not a web-based thing, that's not PKI-enabled, that's not available on the enterprise portal, you are not part of the future vision. The status quo stuff needs to go in favor of the new path.

I think finally and most importantly, it's this idea about the Indiana Jones movie, "Indiana Jones and the Last Crusade," and he's on the search for the Holy Grail. This is another IT analogy, because he's got the little book and he knows what his vision is. His dad has been shot and he has to find the Holy Grail to save his dad. He gets to that chasm and he has to get across and the book says it's a leap of faith. His reaction is don't you hate that? But of course, he eventually takes the step and there's a pathway and he gets across. That's what this is about for all of our commands. There is that moment when you do have to take that leap of faith. So you need to give people as much confidence that they should be trusting to take that leap of faith, but in the end, you have to find some way to encourage them to take it or you'll never get this change in.

Mr. Connolly: Can you tell us a little bit about web enablement means to the Department of the Navy? And can you expand on the role of the Department's new portal policy in achieving this objective?

Mr. Wennergren: We've been getting it for a while. We have a senior leadership course that we teach at our Naval Postgraduate School where we send our senior flag officers and general officers, and they go spend a couple of weeks talking to folks in the Silicon Valley and elsewhere about what's going on in the world, and they come back very energized. They get it. They understand the power of the web, the power of the web in terms of access, the flow of information, better security structures, all the things that go into being web-enabled. But then you turn around and look at your organization and you still have a lot of old legacy systems that aren't that kind. So we've embarked upon a lot of work to try to change that.

We created a task force web team whose job was to go encourage and push for web enabled solutions, and Monica Sheperd and her team of folks that have been doing that for the Department of the Navy have been doing an outstanding job.

In order to have a web strategy work though, you have to have a place for that stuff to hang. So we've just released our policy for the Navy-Marine Corps portal, our enterprise strategy that says we're going to have a constituent portal structure where you really will have a single front portal that you get to do work whether you're aboard ship, you're ashore, you're in a hotel, you're at your wireless device waiting for the bus, whatever kind of channel delivery you need, you have a common access to the intellectual capital of the Department. That will again be like the legacy application process where we have hundreds of portals. Portals became cool, so everybody wanted to build one. I don't really need the Surface Warfare Officer's School in New England to be the 505th place to build another portal. What I need them to do is to focus on content. They may have content they want to deliver to students. You find that content, we'll give you the portal to hang it on as a database, as a transaction. I don't need you to be the next person to worry about a customized look and feel.

So with this portal strategy linked with the Navy-Marine Corps Intranet, linked with this web-enabling path, what you see is this change now. In the past, you were the aircraft maintenance technician out on an aircraft carrier thousands of miles from home in the Pacific Ocean and all you had to go by was your knowledge, your tech manuals, your engineering drawings, the knowledge of your supervisor, and you had to fix the plane. Now through a distance support portal, you can reach back to the engineer in Crane, Indiana who actually designed that part that you're trying to work on and have like a voice/video/data whiteboard exchange with him. So now these young men and women that you would be so proud of deployed far from home in harm's way have the power to reach back to the literally hundreds of thousands of people that are back here in the United States. And all that expertise, all that knowledge, all that intellectual power is now available to them, and that's compelling.

Mr. Lawrence: Could you tell us about your role as the chair of the Defense SMART Card Senior Coordinating Group?

Mr. Wennergren: I have a lot of great jobs, and that's another wonderful one, being the chair of the SMART card effort across the Department of the Navy. We talked about NMCI being a big change management issue because it's going to touch 400,000 people's lives. The SMART card program is touching 4 million people's lives across all of DoD. So everybody has an opinion about that.

We're really thrilled. I think there are great kudos that go out to Mary Dixon, who runs the access card office for the Department of Defense and is my partner in crime in this adventure, and the folks at the Defense Manpower Data Center who actually do the programming and such that makes this program happen, because this is truly a testimony to the power of industry/government partnerships. We knew we needed a SMART card. We knew we needed them for millions of people. We couldn't afford to build some government-only solution, and we really did get it. We worked with industry and we came up with standards where there weren't any and we leveraged standards where they were, and we did the right things. PKI digital certificates were going to live on this card, x509 version 3, standard base certificates, Global Platform, the security structure that Visa and others use, JavaCard, using all the common approaches that would make this thing be affordable and that we wouldn't have to build all the things that make it work. The x509 version 3 certificate is recognized by Microsoft Outlook. I don't have to build special stuff into every commercial product that I want to have touch this SMART card. So I think we really got it right, and we got it right because of the work of people like Mary, Ken Shefflin, Robbie Brandaway and all the other folks who do this kind of work.

We have 2-1/2 million SMART cards out there now. It is one of the largest SMART card deployments in the world, and it really is changing the way we work and live. So if you followed me around today when I go back to the office, I'll use this SMART card to get into my office as my physical access badge. When I get up to my computer, I'll use the PKI digital certificates on the computer chip on the card to get on my computer and do a cryptographic logon, much more secure than user IDs and passwords. I'll use the digital certificates to launch myself to secure websites, again getting past the idea of about 50 websites I need to go to, so I have 50 passwords I'll keep on a yellow sticky. I use the digital certificates to do digital signatures, which of course are the key to electronic business. So I'll file a travel claim this afternoon and digitally sign it. Then when I leave to go to lunch, I'll pull the card out of the computer, the screen will lock up and nobody else can be me, and off I go. So this power of having a digital key in the hands of every sailor, every Marine, every airman, every soldier, every civilian, every contractor that works on our facilities is really a key part of this vision. It's the way that we'll get PKI in the hands of everybody, and it's the way that we really get this idea about e-business and digital signatures in place.

Mr. Lawrence: What advice would you give to someone considering a career in public service?

Mr. Wennergren: I think it's a wonderful calling, and you have to want that. As I said before, I look around the nation and I see young men and women doing phenomenal things on behalf of all of us in defending this nation, and it just makes your heart glad and you feel really proud.

There's a wonderful team spirit. I think it's particularly true of the military departments. There's a wonderful team camaraderie about being part of this together. So there are some great opportunities, great opportunities for public service, and it is that idea about service to the nation that is so important. So if that's the kind of stuff that turns you on, there's are such opportunities now. The work force is aging. People are retiring. The skill sets that are needed are different. We need people who are web-savvy. We need people who are Internetmeisters. So the skill sets that we need are the skill sets that the people coming out of high school and college have and live this kind of multitasking kind of work. So there are phenomenal opportunities for those that feel that calling to help serve the nation.

Mr. Lawrence: Dave, thank you very much for joining us today. That has to be our last question, but Tim and I want to thank you for squeezing us into your busy schedule.

Mr. Wennergren: Thank you, Tim. Thank you, Paul. It's been great being here with you. I guess I could point out that if you liked anything you heard today, is our CIO website and has more information about everything we talked about today. So thank you again.

Mr. Lawrence: Thank you.

This has been The Business of Government Hour featuring a conversation with David Wennergren, chief information officer of the Department of the Navy. Be sure and visit us on the web at There, you can learn more about our programs and research and get a transcript of today's fascinating conversation. Again, that's

This is Paul Lawrence. Thank you for listening.

Patrick Pizzella interview

Friday, November 15th, 2002 - 20:00
Managing for Performance and Results; Financial Management; Leadership; Collaboration: Networks and Partnerships; Strategic Thinking; Human Capital Management...
Radio show date: 
Sat, 11/16/2002
Intro text: 
Managing for Performance and Results; Financial Management; Leadership; Collaboration: Networks and Partnerships; Strategic Thinking; Human Capital Management...
Managing for Performance and Results; Financial Management; Leadership; Collaboration: Networks and Partnerships; Strategic Thinking; Human Capital Management
Complete transcript: 

Friday, November 1, 2002

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

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 Patrick Pizzella. Patrick is the assistant secretary for administration and management and the chief information officer of the U.S. Department of Labor.

Good morning, Patrick.

Mr. Pizzella: Good morning.

Mr. Lawrence: And joining us in our conversation is Morgan Kinghorn.

Mr. Kinghorn: Good morning, Paul.

Mr. Lawrence: Well, Pat, let's begin by setting some context. What functions does the office of the assistant secretary for management and administration perform?

Mr. Pizzella: Well, the Department of Labor, for the benefit of your listening audience, is a $56 billion, 17,000-person/employee department, with 568 locations spread out across the country.

The assistant secretary for administration and management handles several functions there. One has to do with the budget development for the Department, human resources function of the Department; administrative services, dealing with things that go on actually inside the building; mail management, and some of the sort of nuts and bolts things of a government agency; information technology. And we also supervise the Civil Rights Center, which makes sure that recipients of financial assistance that the Department provides to the citizens is being done in an equitable way.

Mr. Lawrence: How big is your team, and what type skills do they have? You described such a wide range of activities.

Mr. Pizzella: The right people are in the right jobs I guess is what I'll say. They have a variety of skills. The professional staff has a terrific background to accomplish the tasks and missions of the Department. And administration management is really a service part of the Department. We really work more with our fellow employees and my fellow assistant secretaries than we work with our recipients of federal aid or the other people we serve in America.

Mr. Lawrence: And what are your specific roles and responsibilities as the assistant secretary?

Mr. Pizzella: I'm at sort of a 50,000 feet view of it. I provide advice to the Secretary and the deputy secretary on those administrative matters that I mentioned earlier. I coordinate much of the President's management agenda. President Bush, from early in his administration, laid out a management agenda for the entire federal government. And the coordination of that, or most of that in the Department, falls within my responsibilities.

Mr. Kinghorn: Pat, you also serve, as Paul said, as chief information officer. And those are sort of very broad responsibilities in and of themselves. What are those responsibilities, and how do you integrate, really, those two different positions you have; head of administration and broad management of the information technology resources?

Mr. Pizzella: Right. Well, let me go back to the President's management agenda for a minute, because one of the key components of his agenda is the expansion of e-government, which really falls to the chief information officer to implement and carry out. And I think your listeners are probably aware that the Office of Management and Budget has a scorecard that they put out annually, that rates all the departments and agencies regarding how they're doing against the President's management agenda.

We're very proud at the Department of Labor to have been the Cabinet department with the highest rating in the recent scorecard. On the red, yellow, green rating system, we had three yellows. And one of those was for e-gov.

And I think the success of our e-gov efforts are very much attributable to the integration of the role of assistant secretary and CIO. We have a very strong, capable professional staff. The President's management agenda helps focus everybody -- political appointee or career, it's very clear. And so that serves as sort of a real guide stick. And so there's not so much a division of time as it's really making sure that we integrate well the various components and responsibilities that I have, so that the agenda moves forward.

Mr. Kinghorn: You've had a very varied career, I think both as a career employee and now as a Presidentially appointed. Tell us a little bit about your career prior to coming to the Department of Labor, and perhaps a little bit about how you got to the Department of Labor.

Mr. Pizzella: I have always been in the excepted service. I have always been an appointee. And I came to town with the Reagan administration. And I've served in six federal agencies between the Reagan and the Bush administrations now. And in between that time, I spent 5 years working as a government affairs counselor, a lobbyist, for a Seattle-based law firm here in Washington, D.C.

And I wanted to come back into public service if the candidate I was supporting ended up winning. And President -- Governor Bush succeeded. And I volunteered, and was assigned the task of heading up the transition for the Bush-Cheney team regarding the General Services Administration, which is an agency I spent almost 4 years at in the Reagan administration.

And then on the first day of the new administration, I was asked to go over to the Office of Personnel Management and serve as chief of staff. I was one of those people who were on the landing parties that arrived on the first day. And so I spent 8 weeks there, which was a very useful experience leading up to the assistant secretary position at the Department of Labor. And then after about 8 weeks there, Secretary Chao asked me to come over and prepare for the role at the Department of Labor.

Mr. Kinghorn: Yes. I think our paths first crossed in the early '80s when I was at EPA and you were there also. And it's been about 10 years, I think. Eight to ten years. Do you find anything significantly different in how you approach what you're doing now than you might have approached it 8 years ago, when you first came into public service?

Mr. Pizzella: Well, I don't want to embarrass both of us, Morgan, but back then there were very few personal computers. And --

Mr. Kinghorn: What were they?

Mr. Pizzella: But I think the difference is -- a lot of it has to do with just agenda, and the way agendas are approached and advocated. From the standpoint of management issues, the President's management agenda is a superb roadmap for people in that area of government to follow. There's even a website,, that sort of focuses on the President's management agenda.

And the team that Secretary Chao has assembled is a team made up of both veterans from previous governments' experience and newcomers to government, but those with real specialized talents in the areas they've been assigned. And so we have a very coordinated and good working relationship. And it helps us move the agenda forward.

Mr. Lawrence: You indicated you were deeply involved in the transition. And I'm just curious, because your description of the first landing seems to conjure up the picture I have in my mind. What are the management challenges of being there on the first day and working through the transition like that?

Mr. Pizzella: The challenge is to sort of immediately meet the right people who are there and really know what's going on. And the career staff that is in place, I think most people will tell you are very helpful and provide some sound advice. But on your first day, you have a lot of questions that you ask. You have some assignments that you're expected to carry out. But you've got a lot more questions that you need answers to, so that, you know, you can keep sort of the ball rolling, and you can be responsive to the other parts of the Executive Branch, where everybody is calling everybody else, and making sure they've got the right phone number and then the right e-mail address, and so on.

But it was a very good experience at OPM. There's a very talented staff that was there. And it was an area that I had some knowledge of human resources issues from my previous stint at Education and GSA, and so forth.

Mr. Lawrence: Are there cultural differences? Morgan was asking you to compare across different time periods. How about across different administrations, having been in the Reagan administration and the Bush administration there?

Mr. Pizzella: I wouldn't say that there's cultural differences. There's - I guess a few of the differences - those of us who were in the Reagan administration and now are in the Bush administration are much more experienced. So, we come with a bigger knowledge base.

The President's management agenda was extremely helpful to new managers, because it answers a lot of questions even before you have to ask them. And I guess also just the idea of, certainly from my own experience, just there's a difference between coming to Washington for the first time and taking a position, versus leaving your office at one end of, you know, Pennsylvania Avenue, and going to a building at another end. So, that made it a lot easier.

Mr. Lawrence: And that's a good stopping point. Rejoin us in a few minutes as we continue our conversation with Patrick Pizzella of the U.S. Department of Labor.

What's the state of e-government at the Department of Labor? We'll ask Patrick when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence. And this morning's conversation is with Patrick Pizzella. Pat's the assistant secretary for administration and management and the chief information officer at the U.S. Department of Labor.

And joining us in our conversation is Morgan Kinghorn.

Mr. Kinghorn: Pat, let's begin with e-government and the Department. Labor is the lead agency for one of the e-government initiatives. I think there are something like 24 across government. This one is We know the website was recently updated to include more benefit programs. Can you tell us a little more about what the citizen might find when they reach that site, and what your objectives are?

Mr. Pizzella: Sure. was launched -- it was a public launch in April of this year. And it was the first really major launch, as you've referred to the 24 e-gov initiatives, that the administration is working on. And primarily, it's to provide citizens a 24/7 access to find out if they might be eligible for the many federal government benefit programs that exist. Hopefully, it reduces the runaround time that people had to do in the past, where they had to go walk from office to office to figure out where they really belong regarding their situation, or if they had to start calling -- you know, dialing for information.

The site. I'd encourage people to visit the site because you enter it, and your identification is not known. But you answer a series of specific questions, and then you're steered towards benefit programs that you might be eligible for. And then from there you can drill down on those sites and find out more information. And like I say, you can do this 24/7. Right now, we've got about 180 or so federal programs up on the site. And we're hoping by January to actually have all -- close to 300 federal government benefit programs listed. So, it will be -- this is Phase I. The first one is really inventorying and getting them all linked to the site, and then we'll go on from there.

Mr. Kinghorn: You mentioned that you got some yellows on the PMA, which are hard to come by. So congratulations.

Mr. Pizzella: Thank you.

Mr. Kinghorn: And a lot of it I think was to do with e-government initiatives. And this one, like e-gov itself, the concept requires you to go beyond the walls of Labor. And you mentioned hundreds of programs you're trying to consolidate for our citizenry. What were some of the challenges that you faced as a department trying to coordinate and develop improve their website that crossed the labor borders?

Mr. Pizzella: Well, it was challenging; it is challenging. You've heard those analogies of people of sometimes trying to work on these joint efforts with a lot of different agencies or individuals is like herding cats. Well, this is more like herding tigers, because some of these are rather large government departments that we're working with as partners.

We had really good coordination assistance from OMB. We were very focused on what our objectives were. The President's management agenda -- the existence of it -- really made some of what we had to do a little easier, because we weren't -- this isn't something sort of we created. We were assigned the task of being the managing partner, and we got to work on it. And there's always some places that cooperate more than others. But in the end, we really had good cooperation. And I think that the site itself is a testimony to that.

Mr. Lawrence: As managing partner for the initiative, what were your roles? Do you get to make decisions, or do you facilitate?

Mr. Pizzella: There's a lot more facilitation goes on than just sort of decisionmaking in a vacuum. And we had a project manager on it, we had a regular e-newsletter to the partners. And we set some specific time frames with goals and objectives, and that seemed to work well.

Mr. Lawrence: What can other departments and agencies learn from the implementation of

Mr. Pizzella: As a matter of fact, we thought it would be useful to other departments and agencies if we did a little lessons learned ourselves. And our deputy secretary at the Department, Cameron Findlay, provided the President's Management Council and the Chief Information Officer's Council a "lessons learned from govbenefits memorandum" back in June. Because we wanted to do it very quickly after we launched it. Because like I say, we were the first ones to launch. There were 23 other initiatives.

And the lessons learned was -- I'll run through them for you rather quickly. One was to make sure you secure upper management's commitment to deliver results. We had that at the Department of Labor for sure, with Secretary Chao and the deputy secretary. Communicate effectively was lesson two. We had lots of meetings with partners. We set up a regular newsletter for them. And we really tried to keep everybody in the loop.

Lesson three was to develop an indisputable value proposition. And that proposition is, is building govbenefits the right thing to do for the citizens? And every time we ask the question, the answer is yes. So we kept working back to that with our partners, and to make sure that we had the cooperation that was necessary.

Lesson four is to recognize project champions and then channel their energy. Like every endeavor, there's some who have a higher degree of energy towards the project than others. So we try to recognize that and make sure we could maximize that. Lesson five was to demonstrate tangible results quickly. And sometimes in partnerships, there's a tendency for perhaps a lot of agreement and then not results. And we set an aggressive 100-day time frame for producing the first release, and we met that.

Lesson six was to promote risk-taking. And we wanted our partners, as well as the people we had working on the project, to think outside the box and look at ways to be creative in gathering up all these programs and the information. Lesson seven was to understand what drives your partners, because your partner is always asking the question, how does my organization benefit from this? And we were always mindful of that. And I think that very much contributed to the success of it.

Lesson eight was to apply pressure when appropriate. And we had, like I mentioned earlier, good coordination from OMB on that. Lesson nine, we found, was to appoint a full-time project manager. And we did that early. And actually, our project manager was hired away by the private sector just recently, but we have another project manager on board. The idea of someone full-time focusing on this is really a key. You cannot just sort of have collateral duties, if you're a managing partner.

Lesson ten was to build for the future. We focused on coordinating govbenefits with firstgov. From the beginning, our sites hosted firstgov. So as firstgov grows, we grow, too. And lesson eleven was to solicit citizen feedback. And we get feedback. And we utilize it to make adjustments and improvements.

Mr. Kinghorn: What's interesting is OMB, in a report they did after the summer process, where they gave the report card, the second phase of the report card, really indicated there were two factors. And you've named them, so you may have been the poster child. One was the fact that someone was in charge of each initiative. And the second, the agencies that did well saw the integrating force of all the five elements. So it sounds like you were probably one of the promoters of those two rules.

Mr. Pizzella: Yes. Well, our deputy -- and Cam Findlay was recently named, I guess in the last 4 or 5 months, as chairing the President's Management Council e-gov subcommittee, which I think was another credit to the Department, that this is an area that we spent some time on, an issue that we really are interested in.

Mr. Lawrence: Let me ask you about a couple of the lessons learned. One of them talked about the importance of involving top leadership. And often in the cases, people have great intentions, but top leaders have so much on their plate and so much to deal with. How is that actually done?

Mr. Pizzella: At our department, I had a weekly meeting that we still have on just our e-government strategy group. It includes a member of the deputy secretary's staff, someone from our intergovernmental affairs staff, obviously folks from the CIO's office. And so we go over a variety of e-government issues, and govbenefits -- obviously, the project manager would always be in those meetings. And so we would in essence have a weekly update and report on this.

And we also assembled an e-gov team at the Department, which is made up of the individuals from our department that are our representatives on the other e-gov initiatives that we're not the managing partner of. And that group meets about monthly, so that we have a continuing update of what's happening with all the e-gov initiatives that we have an active interest in.

And we exchange information, and keep each other posted so we can sort of -- sort of our own best practices session that goes on on a monthly basis there.

Mr. Lawrence: Another one was taking risks. And I'm just curious. At some level, that seems counterintuitive in the environment you're in. I wonder if you can give me some examples or some insights into how that was done.

Mr. Pizzella: Some of the risk was to keep meeting with agencies who maybe were not so enthusiastic at first. Don't take no or "not interested" for a final answer. And again, try to play to the partner's best interests as to why they should participate, and increase their participation. So I guess I would cite that as probably the key one.

Mr. Lawrence: That's a good stopping point. It's time for a break. Come back in a few minutes as we continue talking about management with Pat Pizzella of the U.S. Department of Labor.

Who's hiring MBA these days? Would you believe the Department of Labor? We'll ask Pat about this when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence. And today's conversation is with Patrick Pizzella. Patrick is the assistant secretary for administration and management and the chief information officer at the U.S. Department of Labor.

And joining us in our conversation is Morgan Kinghorn.

Well, Pat, could you describe the Department's Management Review Board for us, and how it monitors the progress of performance goals?

Mr. Pizzella: Sure. The Secretary established the Management Review Board early in her tenure, actually in August of '01. And how it works is it's really -- we meet monthly. And all the agency heads from the Department are represented. And we largely tackle the President's Management Agenda and the issues that relate to it. And we always have a guest from the Office of Management and Budget. And we often have guest presenters also. We've had Mark Everson and Mark Forman and Angela Stiles come and make a presentation before the Management Review Board; Dan Blair from OPM has been over.

We've had Maurice McTeague from the Mercadus Institute come over and talk just a little bit about their approaches to things. So we get input from outside, and then we focus internally on a variety of issues: e-gov, human resources issues, budget issues and so forth.

Mr. Kinghorn: One of the areas, when you talk about in government service anyway, but management, you come back to the budget at some point. And you do have the budget under your umbrella. What are some of the techniques you've used to sort of use the budget to deliver results for the Secretary in terms of budget performance and that portion of the PMA?

Mr. Pizzella: Well, budget performance and integration is one of the five components of the President's Management Agenda. So we have spent a good time focusing on that, to make sure budget and performance are linked. The Secretary's priorities, because she's been so articulate in spelling them out throughout the Department, we don't get as many surprises in the budget request process, because agency heads know that their budget requests should reflect the Secretary's priorities and the President's Agenda.

It's very useful to utilize the budget process in order to eliminate redundancies, and to minimize, not maximizing the resources that are available within the Department of 17,000 people and $56 billion. If you coordinate that money well, you can get the results you want. And that's been a big part of our success.

Mr. Kinghorn: Let's turn to the other really critical factor of getting things done, and that's people. And as you know, the administration has, as one of its five elements, the human capital challenges. The General Accounting Office, obviously, has been discussing that. What do you think for the Department of Labor are your most significant human capital challenges? And what do you think you'll be able to do about it, and are doing now?

Mr. Pizzella: Again, going back to the OMB scorecard, that was a -- strategic management of human capital was one of those categories we scored well on. And we did that because we really focused on that early. The Secretary's a firm believer that personnel is policy, and that if you don't have the right people in the right jobs, you're going to have a tough time implementing your programs.

One of the things we tackled immediately was the performance management system at the Department. Through the Management Review Board, we overhauled that. When we first got there, there were three different performance management systems. We were at the end of the year, we were looking at comparing apples and oranges and grapefruits, because one agency had a three-level rating system, another had a four-level. A few had a five-level.

So we tackled that, and we now have one five-level performance rating system. We have moved -- we're in the process of moving everybody to the same cycle, because actually we had people on different cycles. We've connected it now to the fiscal year, which helps us in budget and performance integration. And we also successfully negotiated the inclusion of this with the union representing 8,000 of our field staff. So it's not only senior executives, but it's all about 2,400 or so supervisors and managers, and now the field staff, the rank and file. And we have also set parameters on critical elements.

We found, in the previous management systems, some agencies had four critical elements in our department, some had -- one had 12. So what we did in order to have some consistency, we set eight critical elements down for everybody. Four of them were going to be consistent in all performance agreements. There were four sort of managerial competencies that are expected in each one of the performance agreements. And then we left four up to each individual agency so they could be more focused on their particular missions. So now we're going to be able to evaluate both ratings as well as just individual performance, because we'll be talking about -- off the same performance management system. That was very helpful to us.

We are very -- obviously, like most agencies, concerned about succession planning. We had an SES candidate development program. There was one at the Department a few years ago. We decided to have another one. And actually, the Secretary just welcomed 27 new entrants into our SES candidate development program just a couple of months ago.

As we're in the 21st Century here, we knew that job skills are changing. In order to sort of create some liquidity in that, we sought a voluntary early retirement approval from OPM. And they provided that to us. We had 4,000 employees that were eligible for voluntary early retirement. And in the end, a little over 250 accepted it. So about 6 percent.

So I'm fond of saying that when it comes to the idea of mass retirements, that, you know, many are cold but few are frozen. There's quite a few people that are eligible, but not everybody always takes that. But you have to be prepared for that succession that goes on.

Mr. Lawrence: One of the initiatives that the Secretary set up is the MBA Outreach Program. Could you tell us about this program?

Mr. Pizzella: The Secretary -- as you know, we have an MBA President, the first time ever in history. And at the Department of Labor, we have an MBA secretary. Secretary Chao is a graduate of the Harvard Business School.

And so we thought it would be worthwhile to try to attract MBAs in these changing economic times. There are around 400 or so MBA schools out there that offer MBAs. And the Secretary as an MBA herself was very enthusiastic about this. And she as a matter of fact first announced it at the Society of Human Resources Professionals organization gathering in Philadelphia last June.

And our -- we have two objectives. One is to make people who are graduating from MBA school -- to take a look at the federal government, because historically, I think they tend to look towards Wall Street, the private sector, Silicon Valley, and so forth. And the government might be not in their immediate sights. And secondly, we want those people who already have MBAs and are out there in the workplace, who may be looking at changing a job, or in recent times may have provided them incentives to see what else is out there, to look at the Department of Labor and our job postings. Like I mentioned earlier, we're a $56 billion department and 17,000 employees. So if -- you know, we'd be in that Fortune 100 somewhere.

And we actually just completed the application process. And we're going to have very few slots for this program. We expect to have maybe 12 to 15 slots for the first MBA class, which we anticipate starting in January. But we had 250 applicants from across the country. So we face a challenge now of finding, you know, the best and the brightest.

One newspaper columnist referred to this as sort of a man bites dog approach, with the Department of Labor going after MBAs. But again, Secretary Chao is always challenging us to sort of think outside of the box as to how we can do things a little better and a little different at the Department. And the MBA outreach program is one of those things.

Mr. Lawrence: Have you had any early intelligence on what it is the draw was? Because you did describe a difficult situation. The investment bankers hire MBAs, and people would have us believe that the pay and other benefits are often not comparable to the private sector. So what's bringing all these people in?

Mr. Pizzella: We'll probably know more after we've gone through the resumes and interviewing them. But when you get 250 applicants on a brand-new program you announced, something's caught their attention. So we're looking forward to that.

Mr. Kinghorn: Even in the MBA schools, I know historically at Harvard or at Syracuse, many of them weren't really into non-profits. And in the last 2 years, that shifted dramatically -- that they're going back into public sector federal. So it sounds like you're catching the wave at the right time.

Mr. Pizzella: I also think that the President's Management Agenda, that the way he spelled that out may contribute to the interest in business schools where people actually see something that sort of reflects the things that they've studied: human capital, you know, e-government, financial and performance and so forth.

Mr. Kinghorn: People talk in the private sector on how you retain people. And I come out of the public sector, where me, my compatriots and myself remained, you know, in a lot of different jobs, but maybe 20, 30 years in an industry called government, federal government. How do you expect you'll be able to retain? What kind of things are you going to retain? Because we have trouble retaining MBAs and MPAs because they want to do a lot of different things.

Mr. Pizzella: We've set up a program where they will be on rotational assignments within the Department. We've assigned mentors -- we will be assigning mentors to them. So we're going to try to exercise some good care and feeding from the Department standpoint. And we think that some of the programs we have there, they'll find interesting. And you've just got to find the right fit. So we're cautiously optimistic that we'll be able to retain them.

I think the fact that they've applied to come to the Department of Labor is a first big step. They've probably -- we anticipate they have visited our website and looked at a lot of the programs. And they may even have some particular interest themselves, which we would facilitate them working on.

Mr. Lawrence: It's time for a break. Come back in a few minutes as we continue talking about management with Pat Pizzella of the U.S. Department of Labor.

What does the future hold for the Department? We'll ask Pat for his perspective when The Business of Government Hour continues.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Patrick Pizzella. Pat's the assistant secretary for administration and management, and the chief information officer at the U.S. Department of Labor.

And joining us in our conversation is Morgan Kinghorn.

Mr. Kinghorn: Pat, going back for a moment to sort of the human capital issues and expectations. In the future, how common do you think it will be for people to switch back and forth in mid-career?

Mr. Pizzella: I think in the non-career ranks, political appointees, I think it will be very common. And I think in the career ranks, it will be more common than it is today. You know, portability of pension plans, the government's thrift savings plan approach, and so forth makes the likelihood of that occurring more likely because of the similarities between the systems that used to be so distinctly different.

Mr. Kinghorn: Do you think there is a value? Because you've sort of done it in your career. Not only of being able to come back -- come and go -- but also work in different entities. I mean, the career public service rarely has a lot of movement, even at the SES level historically. Have you found that's helpful to you in terms of approaching different agencies and bringing with you some experiences, good and bad?

Mr. Pizzella: Yes. I mean, obviously, the experience is always a plus, because the government does have its own culture and its own systems. And when you arrive at it the first time, it all seems very foreign to you. But after a while, you know, you adapt. And like any other situation, you figure out what works and how you can advance the agenda that you've been assigned.

Mr. Lawrence: What's your vision for the strategic management of the Department over the next, say, 5 to 10 years?

Mr. Pizzella: Well, I think that the Secretary has often talked about the workforce and the 21st Century, and how the Department of Labor needs to play a role in that, a leadership role. I think internally to the Department, regarding its management, I think the e-gov initiative in particular will impact how we serve customers. The 24/7 concept just keeps growing and growing, and it's inevitable from that standpoint.

I think you'll see more and more people visiting the Department of Labor through its website,, rather than walking into an office or sending a letter. So I guess from a visionary standpoint, I think you're going to see a smaller, more efficient, smarter department. And probably government in general will be that way, as more people sort of make a lot of decisions on their own by just acquiring information by visiting websites. Rather than always having to go to a government agency, they can go to a website, and they could spend some time, and make some of their own decisions.

Mr. Kinghorn: In our business approach, we're really approaching sort of this whole area of e-government sort of in an idea of on demand; on demand finance, on demand information. And we'd like to get your thoughts, having been very successful in these initial probably very difficult forays into integrating government through e-government, how far do you think we are as a government in becoming a truly seamless and integrated government through the use of technology and better business processes?

Mr. Pizzella: Well, it's really, you know, yard by yard to get to truly seamless. There are certain factors that drive everything. The effort of everybody to be more efficient, to do things quicker, faster, and better sort of just drives the process.

The technology is another driving aspect of the process. And when you combine those things, it's a healthy race as long as you're being cautious and avoiding mistakes and pitfalls. I think that the U.S. obviously is a leader in this. I mean, if you just look at the industries, the private sector here, we are leaders in that field as a country. And I think the government, particularly now with a lot of interaction with the private sector, we are gaining knowledge as to the best practices that are happening in the private sector as fast as they are happening. And we're just applying them to government.

Mr. Lawrence: As you've been rolling out the e-government initiatives, what changes are you seeing to the sort of classes of people -- their employees? And so at some level, paper-based processes are now being replaced by electronic processes. I'm curious sort of how that's being digested, and if we're seeing any changes. And then even that's understandable, but I'm wondering, is it changing the way the managers are now managing, because one might have imagined a long time ago they had a big staff of lots of people processing stuff, and now with e-government, they don't have those people or they don't need those people. And as a result, the need for that type management would disappear?

So I'm curious how you're seeing changes roll out.

Mr. Pizzella: Well, the people joining the government today are -- have already sort of experienced the advent of the technology age. So newer employees -- it's not new what they're arriving at, or what they're seeing. The knowledge and skills they're bringing with them are knowledge and skills that the government is implementing as quickly as it can.

So there's obviously that sort of transition period where programs go from being very paper-intensive to being web-based. But that's happening daily. The challenge is to make sure you prioritize those items that you want to accomplish more quickly than others, and make sure that you allocate the resources in a way that you can focus on that.

Mr. Lawrence: Is this leading to additional expenditures on, say, training as people learn new things?

Mr. Pizzella: I don't know if you have to label it additional expenditures. A lot of training is web-based now. So in the past, where you had to send someone away or they could only do it at a certain time, but people can take web-based training. So again, the whole idea -- the 24/7 nature of the way the world works and government is starting to work, is transforming the way we manage.

Mr. Lawrence: How is it transforming the way we manage? Is it changing the way the managers interact with the staff?

Mr. Pizzella: Well, just e-mail alone, the flow of information. People -- you don't have to wait so long for a memo to be answered, so to speak, because e-mail shortens all that. And I think almost certainly all our managers -- you know, e-mail is just something that is constant. And it particularly makes what I'll call the easier, the low-hanging fruit decisions, occur quickly, because people can comment within 10 minutes on a proposition that's served up on one e-mail. And then people can leave that and spin away from their desk and go into motion as to what they need to do.

Mr. Kinghorn: Management reform. Obviously, most administrations have had some form of management reform. I think what's unique from my observations on this is its comprehensive nature. And you've mentioned it many times, that it's not only comprehensive, but it gives you some powerful impetus behind what you're doing as head of administration.

Do you find that there is on your other stakeholders -- some of your customers, some of the citizens you interact with, or the Hill, or the GAO outside the administration, a similar interest now? Is there anything changing there that when you go up to the Hill in appropriations, they're actually interested in how well you've done on the e-government initiatives, or how well you've done on integrating budget. Is that changing?

Mr. Pizzella: One of the things in our budget, we have something that's been in there a few years called the IT crosscut. We manage our -- not all of it, but a portion of our IT funds from a crosscutting aspect, where we look at the proposals from a department-wide view and decide whether there's some duplication, whether there's another way to address this rather than just everybody's IT request is assumed to be the best request.

And we've had good success with that in making sure we maximize our resources. And I think OMB views it as a best practice, as a way to manage some IT spending. And in our current budget proposal, we've developed a management crosscut for the first time, where we -- again, agencies will have, as an example, human capital needs that they're looking at. And rather than sort of duplicate need after need in agency after agency, we're trying to coordinate that in a management crosscut, and then utilize it during the course of the year.

Because in the budget process, there's a planning part, and then there's the execution part. And sometimes between planning and execution, a manager's or agency's priorities may change or may shift. And by having a crosscutting approach to that, you're able to maybe move resources from one agency to another without harming sort of one agency, because their priorities have shifted, and to the benefit of another agency, who was hoping to do something that they originally didn't think they'd be able to do.

Mr. Lawrence: We're almost out of time, but I want to ask you one last question since you've had such a unique perspective. What advice would you give to a young person considering a career in public service?

Mr. Pizzella: The short answer is, you know, try it, you'll like it. But my experience of course has been as an appointee. And so my motivation was one of a leader who had an agenda that I wanted to assist in implementing. So that was sort of an easy motivation.

For someone who is looking at it from a different standpoint of just the idea of government and a career, I would -- the government is large. And I would try to shop around. There's a lot of different programs and a lot of sort of unique responsibilities, particularly in the area of homeland security now and technology, where the concept that there's only sort of paper-pushers in the government is not entirely accurate by any means. And there are some really unique challenges that -- where the government is looking for really competent people, and they have to compete with the private sector. So it would be a good experience, if that interests somebody.

Mr. Lawrence: Well, Pat, we're out of time. Morgan and I want to thank you for joining us this morning.

Mr. Pizzella: Thank you.

Mr. Lawrence: Thank you very much. This has been The Business of Government Hour, featuring a conversation with Patrick Pizzella, the assistant secretary for administration and management and the chief information officer at the U.S. Department of Labor.

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

This is Paul Lawrence. Thank you for listening.

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