Collaboration

 

Collaboration

Leading the U.S. Coast Guard

Thursday, April 12th, 2007 - 15:31
Posted by: 
Profiles in LeadershipAdmiral Thad W. Allen Commandant, United States Coast Guard

Vice Admiral John Harvey, Jr interview

Friday, March 30th, 2007 - 20:00
Phrase: 
"I [the Navy] can offer an incredible array of training that prepares young men and women for a future that's theirs to make."
Radio show date: 
Sat, 03/31/2007
Intro text: 
Human Capital Management; Strategic Thinking...
Human Capital Management; Strategic Thinking
Complete transcript: 

Originally Broadcast Saturday, December 16, 2006

Washington, D.C.

Mr. Morales: Good morning and welcome to The Business of Government Hour. I'm Albert Morales, your host and managing partner 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 by visiting us on the web at businessofgovernment.org.

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 Vice Admiral John Harvey Jr., Chief of Naval Personnel and Deputy Chief of Naval Operations for Manpower, Personnel, Training, & Education.

Good morning, Admiral.

VADM Harvey: Good morning.

Mr. Morales: And joining us in our conversation is Bob Bleimeister, partner in IBM's human capital practice.

Good morning, Bob.

Mr. Bleimeister: Good morning. Glad to be here.

Mr. Morales: Admiral, can you tell us about the mission of your office and how it supports the mission of the department, and the Navy specifically?

VADM Harvey: Certainly. I think the best way to think of it is I am the Navy's people-guy. I represent every aspect of the people part of our Navy, the best talent that our nation has to offer, and how we bring them into the Navy, how we take them through the Navy -- their training, their education, their assignments -- and then how we either retain them up to the point where it's time to retire or they separate and go on to another career. So it's a pretty all-consuming version or view of the people in the Navy and everything about their lives with us in uniform.

Mr. Morales: Admiral, I probably should have asked you this to start with, but perhaps you can give us a sense of the scale here. When you say Navy, how big is the Navy -- the military, the reserves, civilians -- and can you relate this size to the scope of your efforts and how your office is organized? And perhaps you can tell us a little bit about the budget that you manage.

VADM Harvey: Sure. The numbers will I think make clear that we stay pretty busy. On active duty today, in the active duty force, we have about 350,000 sailors -- that's officers and enlisted. About 50,000 officers and about 293,000 enlisted, with 4,400 midshipmen at the Naval Academy on our books. For the reserve component of the Navy, for the ready reserve, it's a total of about another 130,000, with 70,000 in our selective reserve who we have in a drilling status, who we still see in Iraq, in Afghanistan, and around the world in various places, and then in our individual ready reserve who are on standby working through their lives but on our books as potential to serve, that's about 60,000. When you look at the civilian component, which I am not strictly responsible for, that's another 175,000 individuals. So when you total it all up, we've got close to 900,000 folks in the Department of the Navy doing the nation's business every day. Now in terms of my budget, I spend about $30 billion a year in terms of direct costs in our military personnel accounts -- that's paid allowances, training costs, et cetera. So it's a pretty hefty sum to take care of all those folks.

Mr. Morales: So just to clarify in terms of the scope, it is the men and women in uniform, both active and in reserves, but not the civilians.

VADM Harvey: Correct. That is correct.

Mr. Bleimeister: Admiral, you've got a dual title: Chief of Naval Personnel, and Deputy Chief of Naval Operations for Manpower, Personnel, Training, & Education. Could you describe in a little more detail your personal role and responsibilities?

VADM Harvey: Absolutely. When you look at the title "Chief of Naval Personnel," that's rooted in law and deeply rooted in our history. The first chief of the Bureau was put in office in 1862, and that was in result to the growing demands of a rapidly expanding navy in the Civil War, when you used to just bring in and pay off the crew members on the ship and never worried about anything beyond that immediate tour of duty. When they expanded the Navy to fight the war, they realized that model was not going to be a model for success.

So today, the Chief of Naval Personnel is responsible for the recruiting function of all our officers enlisted, the training function across the board, getting them ready for what we want them to do, distributing them throughout the Navy to where we need them to be, and then again retaining those that we want to keep in for their career, who want to stay with us who we want to stay, up to the point where it's time to either retire or separate. So that's kind of the today job.

There's a future look to it, which is the Deputy Chief of Naval Operations, where I look ahead and say, "Okay, here's what the Navy's structure is going to be 5, 10, 15 years from now. What do we have to lay in in terms of our plans and policies to ensure we have the right kind of people to match that kind of structure for the global environment we expect to face out at that time frame." So that's the future look, if you will. And making sure we have those roadmaps in place to get us from today to what we believe will be our future that will match up with what we think the Navy's going to look like at that time as well.

Mr. Bleimeister: Admiral, you've had a very interesting career up until you took over this job about a little over a year ago. Could you talk about how your career in the Navy started, and leading up a bit to before you took this role?

VADM Harvey: Certainly. Like so many others, it started at the Naval Academy, and I graduated from there in 1973 with a degree in political science, but I don't want to go into too much detail. It's important because one of the really big things I learned there set me on the path that has carried me through for 33 years. I was a political science major and I loved it, and the math and science and technology, the physics, electrical engineering, didn't come that easily to me, and because it didn't I sort of avoided it and didn't perhaps make the level of effort I needed to along the way. But I went on a summer cruise and realized that at its heart, this was a technologically-oriented Navy, and that to make the most of the ships, the aircraft, and the systems that we operate, you really do have to have a deep understanding of what it is -- the fundamentals of what you're doing.

And so I looked around and said getting into the nuclear propulsion program would be a way of helping to really upgrade the technical side of my education, and that was putting it mildly. I was lucky enough that I had a good enough foundation to go and be interviewed by Admiral Rickover, be accepted into the nuclear propulsion program, and since that time, I've been able to blend together my desire to command a ship with a career of working my way through the surface side of the nuclear propulsion program, where I ended up as a reactor officer on board an aircraft carrier, as well as being able to go on to command a destroyer and a cruiser. So I blended the nuclear side -- the nuclear propulsion side -- of our Navy with the surface side and that sort of defined my at-sea career.

And then on the shore side of the house, when you weren't at sea, just by accident I developed a sub-specialty in the people business, and it was purely just a random assignment when I was younger, but I really loved it. I really enjoyed every aspect of dealing with the individuals and finding out what makes them tick and how do we find the best fit for their knowledge, skills, abilities, and talents in our great Navy. And so I stayed with that on the shore side and worked the personnel piece and then the manpower policy piece, and so it just so happened I ended up ready to be given the job that I have today. So a combination of good fortune, good experiences, and great teachers made this all happen.

Mr. Morales: For someone who admitted that he didn't care for math or physics too much, that leap into the nuclear program must have taken a lot of courage.

VADM Harvey: It was a non-trivial event, let me tell you.

Mr. Morales: It's one of those life-defining moments.

VADM Harvey: Right, it really was. It was a very challenging program, and I just can't overemphasize what it meant, the sense of accomplishment that it gave me when I came through the program. And I didn't just sort of reach the finish line and collapse, I went through well and it really gave me a lot of confidence for the future. I have always felt one of the best decisions I ever made was one of the first ones I ever made.

Mr. Morales: Admiral, you have served in a variety of roles, and you've just described some of them, but can you tell us, based on some of these experiences, how have they prepared you for your current leadership role and have informed your management approach and your current leadership style?

VADM Harvey: Well, I think one of the very important things I do today is to convey to our Chief of Naval Operations, to our senior leadership, the Secretary of the Navy, a sense of the force, a sense of the people -- how do they view themselves and their Navy, their place in the Navy, their future, their opportunities, are their capabilities being exploited to the maximum that there is? And so that's a very important thing for me to understand and be able to pick up on what that is, and then turn that into something coherent for our CNO -- here's what we need to be worried about, here are things we need to be focused on, and here's where we need to be headed for the future. So my experiences in command of a battle group, of a cruiser, of a destroyer, and then my experiences ashore in the people business I think have really helped me be able to develop that sense for where the force is, and what we need to be worried about, thinking about, and doing. And that's the first big thing.

The second big thing is really getting a bead on the future, having a good understanding of where the rest of the Navy is headed so we can integrate the human capability with the technological capability we're building, understanding the global environment we're going to be in, and then pushing that forward. And so I've been very fortunate to have some tours, whether it's my postgraduate education, my experiences when I worked in the office of the Secretary of Defense for Policy, getting a global view of that, and then some other jobs I've had on the Navy staff, where I've understood what the future is in our ships, our airplanes, and our weapons systems. So to blend that together to help give that good, coherent picture that the people need to fit into.

Mr. Morales: Excellent. How is the Navy transforming, maintaining, and shaping its force structure?

We will ask Vice Admiral John Harvey Jr., Chief of Naval Personnel and Deputy Chief of Naval Operations for Manpower, Personnel, Training, & Education, to discuss this with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Vice Admiral John Harvey, Chief of Naval Personnel and Deputy Chief of Naval Operations for Manpower, Personnel, Training, & Education.

Also joining us in our conversation is Bob Bleimeister, partner in IBM's human capital practice.

Admiral, would you tell us about the Navy's strategy for our people? How does this enable the Navy to assess, train, distribute, and develop its manpower to become a mission-focused force that meets the warfighting requirements of the Navy?

VADM Harvey: Sure. There are two very distinct but interrelated components on the strategy for our people. The first part, the people side, starts with understanding and defining the workforce of the future -- what is the work that our sailors will have to do, what are the knowledge, skills, and abilities that they're going to need, and then how will these knowledge, skills, and abilities be utilized on our ships and aircraft and systems? So that's the people side, and understanding the work that those people will have to do.

Then there's the business side, which is how will we transform our existing processes that govern all those activities I just described to ensure that we deliver the skilled sailors we need to have who can do the work we believe we're going to have to do? Now the goal of the people side, or the strategy for our people is to define the future Navy workforce, and then what is that human capital strategy that will govern how we recruit, train and manage them for mission accomplishment? And the business side is taking a look at my domain, if you will, the manpower, personnel, training, and education, bringing those together into a single value chain, and focusing that value chain on getting the best value from the people we bring in. So it's two pieces put together, and that would comprise the total strategy for our people.

Mr. Morales: Along this same theme, Admiral, could you elaborate on the Navy's new Sea Warrior program? How does this enable a more flexible and responsive development and deployment of the total Navy workforce and provide sailors with more control over their careers?

VADM Harvey: Sea Warrior is how we brought together the training, education, and career management systems that provide and govern the growth and development of our people. Sea Warrior is how we look at this in a holistic fashion. At the heart of it is giving the individual a real input into their own career development, their buy-in, if you will, to the Navy. For 200 years, we sort of told people where to go, what to study, and what to do. What we need to do for the future is bring these individuals in and make them part of that process -- put them at the heart of it -- because it's their future that we're trying to bring together with the Navy's future. And if we get that kind of buy-in in terms of career management development, then I think we really unlock the full potential of these folks when they commit to us for a career. And so that's the growth and development of our people.

Then there's that piece I talked about -- better understanding the work and what it is that the future's going to demand of us, and then relating that work to the mission and to the capability that our ships and aircraft have to provide. So at the end of the day, I don't want to just say that a sailor delivers on a particular job, I want to be able to say that this sailor delivers this capability to the Navy and to the nation.

Mr. Bleimeister: Admiral, you've talked a bit about this -- it's really a newer focus on skills, capabilities, competencies, as some people call them -- can you elaborate a little more on how you think that's going to impact the future force, and what are some of those skills and capabilities you think are going to be more in need?

VADM Harvey: Oh, sure, and this is really exciting stuff, and I mean that in the fullest sense of the word. Since 9/11, we have been coming to grips with the rapidly changing global security environment that we're going to have to deal with today, three years from now, ten years from now. And so you have these kinds of rapid changes, and these very new demands on our sailors of what they're going to have to be able to do and where they're going to have to be able to do it. And we look at where we've been traditionally -- we've sailed to the Pacific, to the Atlantic, we've sailed in what I think people have as this vision of the victory-at-sea Navy, their view of what we did in World War II -- and now we have to expand that so dramatically in places we haven't gone before, in mission sets we haven't done before, and that type of thing.

And so as we bring that together, how do we look at the capabilities that have changed that are going to be demanded of our sailors? And within those different capabilities, what are the bundles of competencies -- those knowledge, skills, and abilities -- that we have to bring together? Because we're getting beyond "single sailor, single job" -- this is the real breakthrough concept, I think. We're looking at single sailor brings a competency, a group of competencies, that enable that individual to go in many different directions for us. Because that's the kind of flexibility and agility that our force is going to have to have, so therefore, it must be the flexibility and agility that our people are going to have to have as well.

Mr. Bleimeister: Great, and if we take that down to a specific ship, there's a relatively new ship coming to the Navy, the littoral combat ship, and a program called Train to Qualify that will help enable those sailors that man those ships to be fully ready when they arrive. Can you talk about that?

VADM Harvey: Well, absolutely, because this is a dramatic change that is driving a lot of what we've just been talking about. The littoral combat ship is our newest ship. We've just launched the first one, the Freedom. We expect to commission it and place it in service in July of next year. That ship will have a basic crew of about 40 sailors doing what used to take a ship of that size between 180 and 220 sailors to do. Obviously, when you change the math like that, you have to change some other things very dramatically as well. One of the things that we no longer have the luxury of doing is putting a sailor on board that ship and then taking the four to six months to qualify on all the various jobs that that sailor may have to do. Because there are only 40, and because they operate as such a coherent and cohesive team, that sailor must show up ready to go in all respects, with the knowledge and the ability to deal with all different watch stations, to do the specific functions and skills that we require. A very different concept, and so we call it "Train to Qualify" -- train before you get there, be qualified when you get there. So we get the maximum out of that sailor right from the minute he or she shows up to the ship.

Mr. Morales: So there's really no more on the job training with this new model.

VADM Harvey: Well, there's always on the job training, no matter where you are and what you do, but it's going to start from an incredibly high level of proficiency, and so I would call it not so much on the job training, but really the enhancement of the team that would start when you get there. The training, we're going to have to provide before that individual shows up.

Mr. Bleimeister: Great. There's another dimension to development: the Navy's professional military education continuum. Could you talk a little bit about that, what that consists of?

VADM Harvey: One of the things that we've talked about so far in this show is the rapid pace of change across the board that we're having to deal with. And so one of the ways we deal with that is recognizing that at every step in a career, we want to be sure we're investing in the individual -- officer or enlisted -- and that investment is in education. How do we keep that individual current? How do we help enable the critical thinking for that sailor that enables her to do what we need them to do in a very uncertain world? And so it starts with a required reading list that we now have. Wherever you are in the food chain -- at the lowest level of our enlisted ranks or the most senior officers -- we have a required reading list we think you need to execute and absorb in order to be proficient in what we expect you to do.

And then at every step in the career, we feel there's going to be some points for professional military education, for particular graduate education, and then for joint military education, because now we fight as a joint force. There are no Navy-only or Army-only battles anymore. So we try to blend this in across a career, both for our officers and enlisted, so that we're always bringing them more new topical knowledge to help them develop and be more effective in the jobs we expect them to do.

Mr. Morales: Admiral, you referenced the dramatic changes in the landscape that occurred since 9/11, and I would imagine that the Navy is seeking to develop and enhance its foreign language skills, its regional expertise, and its awareness of foreign cultures. Could you tell us about some of the key initiatives that fall under this effort, specifically your language, regional expertise, and cultural strategy?

VADM Harvey: Yeah, this has been a very significant line of effort for us since 9/11. It was really in the most recent quadrennial defense review, and this is the big review that went through in the last year within the Department of Defense saying, "okay, what does our future look like and how do we as a Defense Department respond to that?" Obviously we were part of all that, and the big piece of this was understanding what our language requirements are to be effective in the future. We don't just go to Europe anymore, or we don't go to Hong Kong where they speak English. We're now going throughout Indonesia, we're going into Africa, we're going all around the globe in places we never really used to engage that much before. So how do we do that? It's not just language, it's the expertise, the cultural awareness, those things you've just mentioned.

So we've stood up a new foreign area officer program, where we will educate specialists in each one of these areas that we have strategic interests in for the nation and the Navy. And we'll build around them. They will serve as naval attach�s; they will serve in key policy positions to be sure they bring that detailed area knowledge into our policies, our programs, and the decisions about what we do and where we do it.

We're realigning our personnel exchange program. If you looked at where we sent our officers and enlisted on the exchange programs that do so much to develop a really good mutual understanding with other navies and other nations, you would see we were perfectly aligned to the foreign policy of 1806. So we need to get that up to 2006, and that's what we're doing right now in terms of our exchange programs. We're heading south and east; we're not so much focused on north central Europe any longer. Languages: we just finished about 138,000 individual assessments of our sailors in 274 different languages. I was stunned at what I learned about what our sailors already know.

And now we're taking that baseline and saying, okay, where are these strategic areas that we have to have a far better linguist capability, which is really native-speaker type capability, and then just awareness where you can engage with someone but not necessarily in a perfectly-translated way? What are those requirements, where are they, and how do we fill them? And so we're very focused now on developing that program to be sure we cover all those areas. We've stood up down in Pensacola in our training command a center for language, regional expertise, and cultural awareness to help centralize how we train throughout the Navy on just those very particular areas.

The first test case of that is we're sending a riverine squadron over to Iraq, so they're getting language, they're getting the cultural piece, the tribal culture that exists over there, the obviously different ethnic backgrounds that we're reading about so much every day today. Making sure that they go in understanding the fundamentals of language and the fundamentals of culture within which they'll be expected to operate.

Mr. Morales: How is the Navy transforming its personnel function?

We will ask Vice Admiral John Harvey, Chief of Naval Personnel and Deputy Chief of Naval Operations for Manpower, Personnel, Training, & Education, to discuss this with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I am your host, Albert Morales, and this morning's conversation is with Vice Admiral John Harvey, Chief of Naval Personnel and Deputy Chief of Naval Operations for Manpower, Personnel, Training, & Education.

Also joining us in our conversation is Bob Bleimeister, partner in IBM's human capital practice.

Admiral, can you elaborate on how the Navy is transforming from the largely blue water force from the Cold War to a much more broadly and joined, engaged force to meet the challenge of an ever-changing world? And specifically, what are some of the key components in terms of infrastructure and force capability associated with this transformation?

VADM Harvey: Sure. The first and most important piece of that is that we stood up a naval expeditionary combat command that took all these types of forces that we found being used over the last four years to support our efforts in Afghanistan and Iraq, that aren't those mainline blue water forces that we all kind of grew up with and understand so well. So it's the CBs, or the construction battalions, civil affairs, the intelligence specialists or master at arms, the riverine force I talked about, maritime security, small boat detachments, and all these types of forces that we brought together in one command so that we can focus their efforts, their training, their development, and their deployment in the right way and what's demanded by our support of the joint fight.

When I took the job, if someone had told me three years ago that I'd have 10,000 sailors on the ground in Iraq and Afghanistan today doing all kinds of missions that they're uniquely qualified to do in support of our fight there, I would have looked at you and said, "c'mon, go back where you came from." But it's true. We have 10,000 sailors on the ground doing all types of things, leading the electronic warfare battle against the IEDs, providing security at prisons, all the things that we're so talented in, that we have so much talent and so much ability to do, and providing that to the joint force in those areas. So a huge investment in our people, in our effort, and our resources to make that happen.

We have 180 sailors on provisional reconstruction teams high in the Hindu Kush in Afghanistan working to bring that country back into the 19th and 20th centuries from where the Taliban took them. So it's just amazing stuff that's going on and we have reorganized and reshaped and recruited and changed who we bring in and how we bring them in in order to be able to be relevant and ready and responsive to these demands that we're seeing now.

Mr. Morales: Admiral, could you describe for us some of the key retention and recruitment efforts being pursued by the U.S. Navy as it transforms itself to a leaner, more agile force?

VADM Harvey: One of the very big things to understand is that we were about 382,000 strong in November of 2002. Today, as I said at the outset of the show, we're about 350,000, and we're going to head down to about 340,000 at the end of this next fiscal year. So as you lean that force, you have to be far more precise in who you bring in and ensure you have the right skill sets available to you at the right time, because you won't have the luxury of just throwing numbers at a particular situation anymore. So we're very, very focused now on the right sailor coming in with that right skills set and qualifications, so that we can train them up and get them out and into the field or into the fleet where we need them right away.

The biggest challenge I have -- this is really with our special warfare communities, our SEALs -- the War on Terror, this long war that we're in now, has demanded a significant growth in our special warfare and special operations skills sets. You don't just go out and find a SEAL on the street here in Washington or anywhere else. We have to go out and find them. It takes a lot of effort, and then it takes a lot of effort for them to get through our training, as you might expect. So that's a very, very tough nut to crack for us -- increasing those numbers from where we are today to about twice the size of the force we have right now, and making that a reality that we sustain over the long haul. Our explosive ordnance disposal specialists, our special operations folks, again very, very unique skills sets, unique individuals, incredibly valued, so big changes for us in the skills sets that we're looking for, in addition to sustaining the ships and the aircraft that we've been doing for so long.

Mr. Morales: Admiral, if I may, on this topic of recruitment, what role do things like bonuses or other incentives, as well as the sailors' quality of life issues, enhance your ability to successfully recruit and retain these types of individuals?

VADM Harvey: Well, I think they're incredibly important. You can image that we have a sustained unemployment rate in this country now of about 4.75 percent, and that defines our recruiting battle space. The job creation market is very strong, and businesses are going for the same very talented young men and women that we are. So one thing that I can offer, though, is an incredible array of training that prepares these young men and women for a future that's theirs to make. And so to help focus that possibility for them, I have a very good array of bonuses that I can pay for enlistment, if you are the type of person we need in our nuclear propulsion plants, or for the SEALs, or for a wide variety of other skills sets, I can put a bonus out there, get their attention, talk to them about the training they're going to receive, the education, and what it means for their future, and generally when we get their attention, when we have this conversation, I can get a pretty good result out of that.

So the bonus structure enables, really helps us get the attention and get the conversation started. I don't think anybody truly just comes in for the money. They come in for the opportunity. That join the Navy, see the world, learn a skill, get educated, build for the future whether in the Navy or outside of it -- that's been true since John Paul Jones took the Bonhomme Richard to sea back in 1775, so it's true today.

Mr. Bleimeister: Admiral, I imagine there's a linkage between sailor and family-readiness and combat-readiness in the Navy as a whole. But with ongoing deployments, how is the Navy helping sailors and families maintain a balance?

VADM Harvey: Well, this is one of the great a-ha moments that we've had over the last couple years. With the increased pace of operations and the lack of predictability of operations in our post-9/11 world, we've recognized that the old paradigm that you took a set amount of time to get the ship ready, to get the sailor ready, and the family ready for deployment no longer meets the mark. What we have to do is get the sailors ready sooner individually, and keep them ready longer, and so that means that families need to be prepared as well sooner and maintained at a higher level of preparedness for short-notice deployments, or deployments that were thought to be going this long in this place and now they're going a different length of time in a different place.

So the family preparedness becomes equal to sailor readiness, which then becomes obviously equal to our unit readiness. So that's that whole paradigm we have to shift to, and we have to solve that equation together. You can't just focus on the sailor, you can't just focus on the ship, you need to focus on the family, the sailor, and the ship at the same time, get them all ready together, keep them ready longer, and make sure that we're paying equal attention to all component parts of our overall fleet readiness.

Mr. Bleimeister: And one of the components of readiness for the sailor, I imagine, is fitness. Can you talk a bit more about the Navy's culture of fitness initiative?

VADM Harvey: Absolutely. We talked about the lack of predictability in our lives right now, whether you're in the Navy or outside of it. And so one of the things we found was that in terms of being ready, we used to be on this long stair-step approach -- take a fitness test twice a year, check the block, and then go back to whatever your lifestyle was until a couple of weeks before the next fitness test. That doesn't meet it for our demands these days. So we have really refocused our commanding officers on saying, "you are responsible to have a program where your sailors are maintaining a much higher level of fitness across the board," and that means they have a better level of wellness across the board, because there's a direct correlation between your physical fitness and your ability to sustain it and your overall health, which has obvious impacts on your overall job performance over a career. So we want to be ready in a physically fit type of way. It's the foundation for getting back into this idea. Think about it -- I've got 10,000 sailors on the ground carrying 60-pound packs in 120 degree weather out there in the desert. You have to be fit to be able to do that. And you may not get a whole lot of notice that you're going to have to go do that. So we've refocused our efforts to say we want to be at a higher level of fitness across the board all the time than what we sustained in the past.

Mr. Morales: Admiral, the Navy has a commitment to maintaining personal links with its seriously injured sailors. To this end, would you tell us a little bit about the recently established Navy's Safe Harbor program?

VADM Harvey: Yes, as you could imagine, when you have some of our sailors -- and there are equivalent programs for all the services, and it's really the right thing to do -- you have some of these sailors who have been very severely injured in the events in Iraq and Afghanistan, and how do you bring them back? Not only just sustain them medically but help them rebuild their lives, rebuild their abilities to function in our society, and then fulfill our moral obligation to help them make whatever transitions they're going to have to make to get on with their future and keep their families in the equation as well? There's a wide array of things that these sailors and their families have to deal with. There are our own fleet and family service centers, there's the Department of Veterans Administration and the wide array of services that they offer, there's the Department of Defense, their pay, Department of Labor programs -- it's really a dizzying array of initiatives, policies and programs that you just can't dump somebody into and say, "Good luck and figure it all out."

So Safe Harbor keeps them within the family, and keeps us engaged with these sailors and their families, help them navigate this very, very difficult process they're going to have to follow, where either they're able to return to duty at the end of a long recovery/recuperation period or transition to another aspect in the civilian world and help them get off to a good start there. It's not simple, it's very challenging, it's demanding physically and emotionally. We owe them this, it's a Navy family thing, and we're going to stay with them right through 'til when they can take care of themselves on their own.

Mr. Morales: That's fantastic.

What does the future hold for the Navy? We will ask Vice Admiral John Harvey, Chief of Naval Personnel and Deputy Chief of Naval Operations for Manpower, Personnel, Training, & Education, to discuss this with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I am your host, Albert Morales, and this morning's conversation is with Vice Admiral John Harvey, Chief of Naval Personnel and Deputy Chief of Naval Operations for Manpower, Personnel, Training, & Education.

Also joining us in our conversation is Bob Bleimeister, partner in IBM's human capital practice.

Admiral, as you take a look over the next ten years, what type of personnel concerns do you think the U.S. Navy will face?

VADM Harvey: There are three big things that I focus on when we take our long look and try to match our people to the demands that the nation's going to place on our Navy. The first one is the changing nature of warfighting. Now, I'm not saying "the changing nature of warfare" -- that I think will stay pretty stable, but the characteristics of warfare obviously are changing -- have changed dramatically. And I think they will continue to do so. We face far more diverse, globally networked adversaries and families of adversaries -- state, non-state, loosely-allied, loosely-allianced actors -- it's a very dynamic situation. And so you're going to have to have a force that can deal with that. Not necessarily the set piece -- there's the Soviet navy, that's what we focus on, that's what we study, and you spend years and years studying that and focusing on that. We really have to widen our aperture and be far more flexible in our ability to understand the threats we face. And so we need people with different skills and knowledge and abilities to do that for us. So that's very important to me.

The second thing that's really important is the changing nature of the society that we serve, and the society from whom we draw our sailors. The demographics of this country are changing dramatically. It's not just a guess; the science of demographics really gives you some very good, hard results that are going to unfold -- a rapidly growing Hispanic population, the shrinking of our Caucasian young males in the age group between 18 and 25. So our methods of recruiting are going to have to change. We have a generational shift going on -- the millenials are coming in and the aging baby-boomers are on their way out, and Gen-X, and so we have to look at this new labor market, if you will, understand where our sailors are coming from, where the talent is, and how we reach that talent and not only bring it in to our Navy, but then make sure that they understand, these wonderful young men and women, that they have a future with us, with the kind of a Navy that we're going to be. So it's that whole nature of the people that's changing, and how we have to change as an organization to get the most out of them.

And then the third thing -- this is Washington so we're going to talk about money -- and what are the fiscal constraints that I'm going to be under. People are more expensive -- it's true in the Navy, it's true at IBM. Anywhere you look, people costs have just exploded over the last 10 to 15 years. I grew up in Baltimore, Maryland and I can remember this big huge industrial complex called the Sparrow's Point, Bethlehem Steel. It doesn't exist any longer, and it was done in partly because of extraordinary labor costs that were locked into the people and the way that their workforce was shaped. We can't afford to have something like that happen. We can't be a dinosaur and have a dinosaur approach to this, so we're going to have to find some pretty innovative ways of dealing with the fiscal constraints, the cost of people, the capabilities we have to deliver, and how we bring those together in a sustainable way for the future. So those are the three big ones that I spend a lot of time worrying about right now.

Mr. Morales: Let's talk a little bit about the base realignment and closure recommendations and the quadrennial defense review decisions. How is personnel and manpower involved in helping to ensure a seamless transition to new structures and missions while preserving its uniquely vital capabilities?

VADM Harvey: Well, this is really a pretty challenging process. One thing, I'm very glad that we had this base realignment closure. I fully understand a lot of the pain it can bring to individual regions, but if we haven't had this to rationalize our support structure, then I am using a lot of people doing things that don't return as much to the Navy in terms of capability as they should. So it's very, very important to us to get the most out of our people, to have the most efficient structure we have from all our supporting bases and installations. The QDR helped to clarify our future and what it is I need to focus on and what my priorities are. So it's given me that impetus to say, "okay, here's what we have to do more of; here's what I have to do less of," and then how we apportion our resources accordingly.

The one thing is that -- I'll take one exception to the wording -- is no transition to anything is ever seamless. If you talk about one of my lessons learned from 33 years, there are seams but how do you recognize them and how do you mitigate them? I think that's the key, and so it's how we work the people piece, how we work this process piece to be sure we're driven by the capabilities we must provide, and taking advantage of the technology, and then putting those together and saying, "okay, what is the infrastructure we require to deliver on these capabilities?" That's what the BRAC has given me, that's what the QDR has helped do for me, and then we're putting that together to make sure that we have that right balance between our capabilities, our force structure, our people structure, if you will, and the fiscal resources I have to sustain them.

Mr. Bleimeister: Admiral, with all this change going on, the Navy's civilian workforce is also going to undertake some transformation with DoD's National Security Personnel System. Could you tell us how NSPS will affect the Navy's civilian workforce?

VADM Harvey: Yes. You heard me use the words through the course of this interview "changing," "agile," "flexible," "adaptable," and "uncertain environment." Well, that applies to our civilian workforce as well. They face the same environment that the uniformed sailors do. So how do we best prepare them -- how do we help shape them to deal with that same type of uncertain world, with that same level of response that we require out of our sailors?

And I think this is what the national security personnel system, which is NSPS for short, does for us. It focuses on individual performance goals that are aligned with the organization's goals. Tell them why we need them to be performing at certain levels in certain areas. And so you keep the people aligned with the mission and aligned with the organization. I think that's a huge step forward. And then it gives me the ability to be far more agile in how I move this workforce around and put the capabilities that these wonderful people have against the problems we need to address. And so it gives you that kind of flexibility that's so important to us in the future. So I think this is tough, it's big change -- it is real deep change, but it is right change and it's the right thing to do.

Mr. Morales: Admiral, you've given us just a wonderful window into the exciting personnel transformations going on within the U.S. Navy. I'm going to give you an opportunity here to put on your recruiting hat and tell us, what advice would you give to a person who's interested in a career, say, in public service, especially in the military? And finally, what do you say to that young sailor out there about the career opportunities and climate of the future Navy?

VADM Harvey: Well, that's a terrific segue and I really appreciate this, because I do have some very deeply-held feelings about both those issues. Number 1, this is a democracy; it is a participatory democracy, and our armed forces across the board and our Navy will only be as strong as the investment that our people make in them. And the most crucial investment the people of the United States are going to make in their Navy is who they send to be in that Navy. And so recruiting is at the heart of everything we do. We need the best young men and women this country has to offer to defend this nation 365 days a year, around the globe, against a dazzling array of very, very deep and dangerous threats. So public service for me is service to your nation. I hope that people think about this and look at the enduring contribution that this Navy has made to this nation for the last 231 years. We are a maritime nation. Our commerce, our economy depends upon the free flow of goods and services and resources across the seas. It did in 1776 and it does today. So we need to make that investment, sustain that investment in our people, in our Navy. I think that's of paramount importance.

To the sailors today, they know and I want them to have confidence in our ability and our commitment to their future with us. They have extraordinary opportunities. We will invest in their training, we will invest in their education, and we will invest in their future. And we are committed to them being able to unlock all the opportunities and potential they have within them, to be the kind of person they want to be, to be the kind of sailor we need them to be, and to recognize that a future in the Navy is a bright one, it is a promising one, and one that offers them tremendous returns individually as well as the ability to say at the end of the day, "I served my nation, I served my Navy, I wore the uniform, and I did it proudly."

Mr. Morales: Admiral, thank you very much. Your passion is very exhilarating. Unfortunately, we have reached the end of our time, but I do want to thank you for fitting us into your busy schedule. But more importantly, Bob and I would like to thank you for your dedicated service to our country in all the roles you've held within the United States Navy.

VADM Harvey: Well, thanks very much. It was great pleasure to be here today, and I look forward to continuing this dialogue any time in the future.

Mr. Morales: Fantastic. This has been The Business of Government Hour, featuring a conversation with Vice Admiral John Harvey, Chief of Naval Personnel and Deputy Chief of Naval Operations for Manpower, Personnel, Training, & Education.

Be sure and visit us on the web at businessofgovernment.org. There, you can learn more about our programs and get a transcript of today's conversation. Once again, that's businessofgovernment.org. As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad who can't hear this morning's show on how we're improving our government but who deserve our unconditional respect and support.

For The Business of Government Hour, I'm Albert Morales. Thank you for listening.

Michael Ryan interview

Friday, January 5th, 2007 - 20:00
Phrase: 
"MCC provides assistance in a manner that promotes economic growth and the alleviation of extreme poverty and strengthens good governance, economic freedom, and of course, investments in people."
Radio show date: 
Sat, 01/06/2007
Guest: 
Intro text: 
Financial Management; Managing for Performance and Results; Missions and Program ...
Financial Management; Managing for Performance and Results; Missions and Program
Complete transcript: 

Originally Broadcast Saturday, January 6, 2007

Arlington, Virginia

Mr. Morales: Good morning and welcome to The Business of Government Hour. I'm Albert Morales, your host, and managing partner of The IBM Center for The Business of Government. We created this center in 1998, to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about the center by visiting us on the web at www.businessofgovernment.org.

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 Michael Ryan, vice president of the Administration and Finance with the Millennium Challenge Corporation.

Good morning, Michael.

Mr. Ryan: Good morning.

Mr. Morales: And joining us in our conversation is Pete Boyer, Director in IBM's federal consulting practice. Good morning, Pete.

Mr. Boyer: Good morning, Al.

Mr. Morales: Mike, perhaps you could start by giving us an overview of the Millennium Challenge Corporation. Tell us a little bit about the mission and give us an overview of the Millennium Challenge Act of 2003, and some of its key requirements.

Mr. Ryan: That would be my great pleasure.

The MCC mission is simply to reduce poverty by supporting sustainable economic growth in developing countries -- in those countries which create and maintain sound policy environments.

The Millennium Challenge Act established MCC to administer the Millennium Challenge account. This was established in January of 2004 as a result of President Bush's commitment at the Monterey summit. And that summit focused on financing for development, and the purpose, as stated, was to provide greater resources for developing countries, taking greater responsibility for their own development. It sometimes been referred to as assistance with accountability.

The act itself mandates that MCC provide assistance in a manner that promotes economic growth and the alleviation of extreme poverty and strengthens good governance, economic freedom, and of course, investments in people.

The MCC program, of course, is only one component of our overall foreign assistance strategy, but it is an important and an innovative one. It's something new, and our work draws on lessons learned from international development organizations over the past 50 years, and it focuses on the long-term mission of reducing poverty, as I mentioned, through economic growth.

In short, we work in partnership with some of the poorest countries to create country ownership instead of long-term dependence on assistance. We want to give assistance in order for countries to take over the job of their economic growth and alleviate poverty within their borders.

Mr. Morales: Mike, this is certainly a non-trivial challenge in mission. Could you tell us a little bit about how your organization is organized, the size of your budget, and how many people are employed in your organization?

Mr. Ryan: MCC was designed as a small and a federal corporation and is meant to ensure accountability for the aid we administer. As a federal corporation, it's managed by a chief executive officer, who's currently Ambassador John Danilovich, and he's appointed by the president and confirmed by the U.S. Senate.

What makes us a little bit different is we're overseen by a board of directors, who make the major decisions, what countries to give assistance to and the like. And that board of directors is chaired by the secretary of state. The vice chair is a secretary of the treasury. Other members include the -- the United States trade representative. The U.S. aid administrator. And it is has interestingly two public members currently, although, there may be more in the future.

Kenneth Hackett, who's the president of Catholic Relief Services, and Governor Christine Todd Whitman, who in addition to being the governor of New Jersey, was also a former EPA administrator and now is a president of the Whitman Strategy Group.

We have a number of departments. We have operations, we have a department of accountability, a department of policy and international relations. Of course, we have congressional public affairs and an office of the general counsel. And then we have the department that -- that I head up, administration and finance.

As far as our budget goes, the commitment had been to rise to $5 billion a year. The current request is for $3 billion. The House passed a bill, and now is at $2 billion. I don't know where that's going to end up. And clearly, one thing that gives us a good deal of flexibility is that all of our MCC funds are no-year funds, which means that we can obligate funds for a five-year compact at the beginning of the five years, and it's available until it's expended on that -- that compact. It saves us from year-to-year ups and downs and countries can rely on this -- this assistance.

As far as the -- the level of staff, as I said, we're small and we're -- we aim to be small. We want to arise to a staff of -- of 300 in Washington, D.C. Currently, we have 20 people stationed overseas that are above that 300 number, and that number overseas should rise as we established additional contacts in other countries. At the present time, we have approximately 280 people in Washington.

Mr. Morales: So, almost 300 people managing $3 billion in assets?

Mr. Ryan: That's right.

Mr. Boyer: Now, Mike, what are your specific responsibilities and duties as a vice president of administration and finance, and could you tell us about the areas under your purview?

Mr. Ryan: Sure, Pete. I -- I'm essentially a chief financial officer in the federal mold. I'm responsible for the same areas that many CFOs are responsible for, financial management and reporting, financial services, budget formulation execution, development of annual performance plans, oversight of financial systems, and producing the annual performance and accountability report and procurement.

I also have oversight of HR, Human Resources, recruiting in development. Facilities management, both in Washington and overseas. IT and personnel security. So, it's just a full range of administrative and financial duties that you'd expect to see in an organization with my title.

Mr. Boyer: Now, Mike, you clearly had a very interesting career. Could you describe your career path for our listeners? Specifically, how did you begin your career?

Mr. Ryan: Well, I should start off by saying that I -- I had been a civil servant until my current appointment with MCC for many, many years, but my first position actually was a mathematics teacher in Baltimore City schools. After I earned an undergraduate degree at St. John's College in Annapolis. But I left teaching math and went to -- to Harvard where I got a -- a PhD in near eastern languages and civilizations. I got that degree in 1981, after having joined the federal government in 1979.

During my studies on -- on that degree, I spent three years researching Egypt and traveling around the Middle East under a Fulbright at Smithsonian and the Center for Arabic Study Abroad fellowships.

I've had several positions in the Department of Defense and Department of State. And when I first joined in 1979, as I mentioned previously, I was a Middle East analyst for the Department of Defense. I've also had senior-level positions, including deputy director of a plans directorate under the Defense Security Assistance Agency. I've been the acting deputy assistant secretary for International Narcotics in Law Enforcement Affairs in the Department of State. I was also the executive director and comptroller of that same bureau in the Department of State.

I also worked at EPA, where I first met Governor Whitman, and I mentioned before, when she was the administrator. And I first started as a comptroller there in 1997, with responsibility for budget formulation and execution. As all -- as well as all aspects of financial management in operations.

I became the deputy CFO of EPA then in 2000, and I had that job until 2006. May, actually, when in joined MCC. At EPA, I also managed their strategic planning, budgeting, financial management, performance measurement analysis, and their accountability functions.

Mr. Boyer: Mike, that's a very broad set of experiences. I'm curious, how have these experiences prepared you for your current leadership role at MCC, and have formed your management approach and leadership style?

Mr. Ryan: I guess being deputy CFO at EPA and acting CFO during periods when EPA did not have a Senate-confirmed CFO in place was the best preparation for my technical duties at MCC. Having a practical experience in managing a CFO shop, including problem-solving in all areas normally reporting to a CFO, and also extremely useful contacts within the CFO counsel, helpful opportunities to share experiences across the federal CFO community.

Previously, I think overseas experiences in the Department of -- of State and Defense, where I was based in Washington, but did extensive travel, in addition to my -- my work, as I -- I -- on my degree that I -- I referred to previously, helped me understand other country's governments and -- and cultures, and how you deal with countries in their own terms and -- and not necessarily bring your own cultural assumptions to play.

So, it was a useful body of knowledge overseas and -- and in the CFO environment because I had to deal with a wide variety of people and -- and people who approached tasks from different angles, and it's tremendously useful in the federal workplace, which is, as you know, wonderfully diverse.

Another useful leadership lesson from defense was that you really have to build a team from the people that you inherit, and then you get to the task of recruiting others. And everybody brings skills to the task. It's a leader's responsibility really to find the best way to use each team member's skills to support the mission and target your recruiting to fill any areas where skills need reinforcement.

I think it's another example of why it's important to appreciate the diversity of abilities and backgrounds represented in the federal workforce based on all the talents that federal employees bring to work everyday, I think we're well equipped for problem-solving from a variety of perspectives, and we're especially well set up to deal with foreign governments, many of whose children, if you will, came to the United States either recently or in the distant past as immigrants and deal very well with those cultures.

Another lesson learned from my experience in defense, state, and EPA, and especially now at MCC, is the importance of public/private partnerships. The private sector has a depth of talent and knowledge that's always refreshed, and government can make good use of private sector expertise to augment its workforce to accomplish the civic tasks without institutionalizing that expertise when it might not be appropriate. To the next set of tasks that lie ahead. It helps to keep public sector organizations more nimble by allowing us to take on specialized talent as needed, while maintaining a basic core of skills in the career ranks.

For example, when EPA was assigned to a government center of excellence to host financial systems, my staff and I argued successfully for a public-private partnership along private sector centers of excellence to compete for technical services in the IT area and in accounting.

This competition, I understand, here at the beginning of December is still going on at EPA. OPM is -- is now, I understand, going to do something similar, and I think that's a good model for a small lien organization like MCC. That is reaching out to the private sector for help in those areas that the private sector does especially well, and can tailor its support for the needs of the day without institutionalizing that support and fixing it in place.

Mr. Morales: That's fantastic. I can -- I can see now why you are focusing on solving some of the world's greatest challenges. Thank you.

What kinds of innovations are being pursued by the Millennium Challenge Corporation? We will ask Michael Ryan, vice president of Administration and Finance with the Millennium Challenge Corporation to share with us when the conversation about management continues on the Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Mike Ryan, vice president of Administration and Finance with the Millennium Challenge Corporation. Also joining us in our conversation is Pete Boyer, director in IBM's federal consulting practice.

Mike, in pursuit of its mission to reduce poverty by supporting economic growth as you described in the first segment, the MCC has identified and defined three key principles to guide the efforts.

Can you elaborate on those guiding principles and what is new about the MCC approach to international development?

Mr. Ryan: Well, thank you. The three principles are first of all, to reward good policy. Countries are selected based on their performance, as shown on objective indicators. Not indicators that -- that MCC develops, but that NGOs of the private sector, someone outside, an objective measurement is done on governing justly, which means investing in their citizens and encouraging economic freedom.

The second thing, in addition to rewarding good policy, is that we operate as partners. Countries are responsible for identify the greatest barriers to their own development, ensuring civil society participation in planning and developing a Millennium Challenge account, or MCA program.

Then, to participate in -- in a MCA program requires a high level commitment from the host government. Now, when I say "MCA," of course, I mean the Millennium Challenge account, which is the appropriate that MCC uses.

Each country enters into a public compact with MCC. That includes a multi-year plan for achieving development objectives and identifies the responsibilities of each partner in achieving those objectives.

The third principle, the first being rewarding good policy, and the second, to operate as partners, is to focus on results. MCA assistance goes to countries that have well-designed programs with clear objectives, benchmarks to measure progress, procedures to ensure a fiscal accountability per the use of the Millennium Challenge account assistance, and a plan for effective monitoring and objective evaluation of results.

Because we focus on rewarding good policy, we are seeing something new, and this is where the innovation comes in. Something new in international development, which our CEO calls the MCC effect.

We are seeing examples of countries making important policy changes on their own in order to qualify for funding for the Millennium Challenge account. This is extremely encouraging because we are seeing positive change even before MCC investment begins. I could give one example of this that happened fairly recently in the last couple of months.

We had one country that had a policy. Actually, it was written into their constitution, that married women couldn't inherit property in their own name. And we determined early on that this would mean that only 50 percent of the population would get any benefit out of the --economic benefit out of -- out of our policies, and we told the government, no, this is just not acceptable. You know, we can't continue our conversations if this stays in place. Although it was a longstanding policy and it was rooted in -- in culture and -- and in -- in prior law, they went ahead and changed that law, and they did that without receiving a nickel from us. And one got the feeling at the end of the day that there was something in just getting the stamp of approval that they had passed the test.

That's one anecdotal account, but a very real one. Two Harvard economists studied the MCC effect in a report released earlier this year, and they concluded that countries are responding to MCC's clear and actionable incentives. This is -- was -- was done in the Kennedy School of Government; it was called "Can Foreign Aid create an Incentive for Good Governance: Evidence of the Millennium Challenge Corporation."

Then there was another one from the manager of the World's Bank's "Doing Business Project," And the quote there I think is a good one, in which they stated that we have seen a number of reforms around the world in both rich and poor countries, but in many of the developing countries, the reform has actually been primarily as a result of the inclusion in the Millennium Challenge account.

Now, I would note that we often see reforms, as I -- as I mentioned before, in anticipation of the funding of the Millennium Challenge account, and not just as a result of projects in those countries.

Mr. Morales: That's a powerful story. Now, you used the word "compact." Can you describe the MCC compact development and implementation process, and what are the criteria methodology for determining eligible countries and establishing these compacts? And can you tell us a little bit about the composition of the projects that make up the portfolio?

Mr. Ryan: Surely. I think around the compact development, you get a lot of the innovation that -- that you asked me about before. I mean, what is different? Well, for example, for the fiscal year 2007, the candidative countries, you know, were identified on the basis of a per-capita income, and they must be in the low-income, preferably, for a lower/middle-income categories established by the World Bank. By law, only 25 percent of our funding may be used for lower/middle-income countries, assuring that most of our support goes to the poorest nations in the world. And I might add that we make every effort that if a lower/middle-income country makes a -- a proposal for a compact, and it is for some of the poorest people in their country, we find that to be a very compelling argument for going to that lower/middle-income country.

We report to Congress on our selection methodology, and our board of directors that I mentioned before, base a selection on specific performance indicators developed by independent, third-party institutions. We also seek public comment on selection methodology.

Right now, we're using 16 indicators in three broad categories, and countries must score above the median to be eligible. These indicators come from organizations including the World Bank, the World Health Organization, Freedom House, and UNESCO. And again, the indicators are -- are in the three areas that I mentioned before, ruling justly, investing in people, and -- and I think I mentioned economic freedom.

And by "economic freedom," we -- we mean things like the costs of starting a business or the days to start a business, trade policy, those things that might be either barriers or spurs to economic development we want to see.

Investing in people, you could have public expenditure on immunization, public expenditure on primary education, and -- and interestingly, girls education completion rate, which we see -- think to be extremely important.

Ruling justly, I think we're more familiar with. I mean, civil liberties, political rites, voice and accountability, rule of law, and significantly control of corruption.

The MCC board selects eligible countries using the above methodology and submits a report to Congress, and the selective countries are then eligible to begin developing a compact proposal for MCC consideration. At this time, we have 11 signed compacts in place, representing a total of nearly $3 billion, supporting programs in agriculture, infrastructure, land tenure, healthcare, and other sectors. Most compacts extend over a five-year period.

Mr. Boyer: Mike, does the MCC dedicate any funds for those countries that do not specifically meet the compact criteria, but are moving in the right direction? And if so, how?

Mr. Ryan: We do, Pete. We offer a threshold program that provides financial assistance to help improve a score on one of our -- of the 16 indicators that I mentioned.

The board of directors selects the countries for the threshold program based on their overall performance on all 16 indicators and their demonstrated commitment to improving the scores and their ability to undertake reform. Countries selected for threshold consideration must create a plan that identifies miserable ways to improve a specific indicator score and they must submit that plan for MCC review and approval. We make threshold program agreements with countries whose plans demonstrate meaningful commitment to reform and a high likelihood of successful implementation. And, of course, the measurement of that success is, again, done outside of MCC. I'll just give you two examples.

In the first case is the government of the Philippines, which actually passed the corruption indicator, but both the government of the Philippines and MCC felt that we would like to work more on this. And so, we made $21 million in threshold funds available to the Philippines in 2006 for anticorruption efforts. And what was really exciting about this was that the government made a decision to match those funds fairly closely so that it doubled the amount that was available, and we view this as a real commitment to reform on behalf of the people of the Philippines.

Another example that's not corruption was in 2005, Burkina Faso in Africa became the first threshold country to be approved for a compact funding. Burkina Faso was awarded $12.9 million for its threshold country plan, which was designed specifically to improve girl's primary education completion rates.

Mr. Boyer: Those are powerful examples. What does it mean for compacts to enter into force, and how does it relate to the actual disbursement of committed MCC funds to recipient countries?

Mr. Ryan: Well, this is another term of art. A compact is a contract is between MCC and a foreign government. It sets out the terms of the programs to be funded along with the funding to be dedicate in each year -- in each compact year for specific project components.

For example, a compact might set out dollar amounts anticipated to be spanned in each five years on a component such as improvement of a particular set of rural roads to get products to market, for example. The compact also outlines the general terms of the road improvement work to be undertaken. The signing of the compact commits the full funding for the specified project in a given country. After the signing, we continue to work with the country, we do due diligence, and we make sure that all conditions are in place to support a proper disbursement of funds.

When those conditions are met, then we declare the compact ready to enter into force, we obligate the funding and technical terms and the disbursements begin thereafter.

Mr. Boyer: Mike, to supplement its organizational structure in assisting caring out its mission, MCC has several formalized interagency agreements, or IAAs, with other federal government agencies. Could you elaborate on these collaborative relationships?

Mr. Ryan: Well, I think that -- that with a small organization, it must be clear to everyone that we can't do everything that is necessary for us to succeed. So, we have a number of these kinds of agreements.

For example, the National Business Center of the Department of Interior pays the MCC employees and provides financial systems and some accounting support. We also work closely with USAID, and to some extent, with the Department of Justice for the threshold programs that we discussed earlier. Treasury also provides technical assistance, especially in the banking sector, and from time to time, no doubt will sign other IAAs with other federal entities as the need arises.

Mr. Morales: Excellent. How is the MCC managing its program development efforts? We will ask Michael Ryan, Vice President, Administration and Finance for the Millennium Challenge Corporation to share with us when the conversation about management continues on the Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to the Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Michael Ryan, Vice President, Administration and Finance with the Millennium Challenge Corporation. Also joining us in our conversation is Pete Boyer, director in IBM's federal consulting practice.

Mike, how does the MCC make sure that compacts with partnered countries are going to produce the results that will satisfy the U.S. taxpayers and meet the goals of the MCC?

Mr. Ryan: Well, I think that the U.S. taxpayer has shown the willingness to fund humanitarian assistance and assistance to poor people, as long as the overhead is not too high, and as long as the goals are worthy, and the people that really need the assistance receive it.

To ensure that we meet some of these expectations, MCC forms a transaction team whose members work closely with representatives from the country developing a compact proposal. Our teams include people with a range of a pertinent expertise in economics, law, and the appropriate technical areas, such as engineering or agriculture. We may also have someone who's an expert on gender issues, for example, or other social issues, or even the environment.

Partner country representatives are expected to engage in wide consultation with members of the public in a civil society in their own countries to ensure their compact proposals reflect needs identified by their own people and the poorest among them, and that the solutions are likely to work best for them.

MCC transaction team members evaluate all parts of a proposal and work with partner country representatives to develop practical, well-designed programs that incorporate steps to measure and evaluate results. MCC's investment committee, on which I have a vote, also plays an important role. It's chaired by the deputy CEO and is composed of MCC's senior officials.

The MCC committee considers all aspects of compact development and votes up or down any aspect along the way. MCC's board of directors, of course, has the final vote on a compact. The best designed compact programs are in the support of the investment committee first, and then the board of directors by incorporating meaningful evaluation of results and showing the promise of reducing measurably the number of people living in poverty. And, I might add, all of our discussions of the size of our staff and the amount of money that we put into overhead I think is an important one because we try to keep the overhead fairly low.

Mr. Morales: Now, Mike, as the -- as the CFO, many of our listeners may find it interesting that the MCC has identified that Chief Financial Officers Act of 1990 and the Federal Financial Management Improvement Act of 1996, and various other financial laws and regulations did not cover your operations.

What is MCC's basis for this position and does the MCC plan to follow at least the spirit, if not the letter, of those laws because they make good business sense?

Mr. Ryan: Actually, Al, we do manage our business according to the mandates of these laws and regulations. As we've said several times, we're small and organized as a federal corporation, rather than as a typical independent agency. And we were established after many of these laws were enacted. But we comply with them, however, and because we're part of the executive branch, and because they make good business sense.

For example, we issued our financial statements on November 15th with the rest of the federal government, and I might add, we got a clean opinion on that, and we intend to do similar things in the future.

There have been a number of government management reforms enacted in legislation in recent years. Most of them aimed at focusing agencies on managing for results and enhancing accountability for program outcomes. I'd like to think that MCC was designed to accomplish both of these ends, so it is not a stretch for us to follow the course outlined in legislation.

Mr. Boyer: Mike, on a similar topic, a key element of all compact development and execution is fiscal accountability. You know, the mechanisms and processes that assure that funds are managed properly and procurements are undertaken in a fair, open, and transparent manner. However, some of the compact countries do not perform accounting on a accrual basis by recording commitments and obligations.

Would you elaborate on the guidance provided to compact countries and requirements placed on those countries, and how has MCC handled this situation?

Mr. Ryan: Well, Pete, that's a question that's going to warm accountants' hearts all over the city this morning. MCC has a department of accountability which is responsible for these matters, and my department, of course, supports their work. Consistent with our model of country ownership of MCC-funded projects, compact countries must have internationally recognized system of accounting in place. It does not have to be identical to the U.S. model, but has to be recognized. We're constantly refining our approaches to this and expect to see continued improvements in the future.

For example, we require compact countries to have a fiscal agent and a procurement agent that we consider to be technically qualified. But while some countries might not use accrual accounting, the accountable entity, which is the organization set up in the country to carry out the compact by the government of that country, the accountable entity, often referred to as an MCA, set up by the government of a compact country must provide us with regular estimates of their cash needs. And these actually can serve as a surrogate for accruals, and indeed, we did an accrual in our financial statements just like every other federal entity on November 15th, as I mentioned before.

Mr. Boyer: Well, Mike we're -- we're glad we can get the -- the hearts of the accountants warmed up this morning.

Mr. Ryan: Let's not warm them too much.

Mr. Boyer: The USAID Office of Inspector General identified vulnerabilities affecting the MCC program in several criteria areas, including procurement, cash management, and disbursement that may adversely impact its financial operations. For example, the IG identified that the MCC Cape Verde compact had problems in the areas of cash management and procurement.

Could you elaborate on the MCC strategy for mitigating such risks and vulnerabilities? Specifically, has the MCC established policies and procedures for evaluating disbursement requests submitted by recipient countries to ensure that the amounts disbursed are only for immediate cash needs?

Mr. Ryan: Sure. First of all, I -- I have to point out that we have a very collaborative relationship with our IG. And I personally engage in conversation with IG staff on many issues, including the one you're -- you're asking me about. And while we do not always agree, we receive many useful recommendations that have caused us to improve our procedures. And we've been working on some exciting -- at least exciting to me, possibilities to enhance mechanism for getting funding out to compact countries.

Our current approach requires quarterly disbursement requests from a country. It comes into MCC, we consider it, and we say yes to the -- to the funding, its justified under the compact or -- or we ask questions. But we disburse on a monthly basis, asking the country to project their cash needs for the coming month, as I mentioned before.

However, we are in consultation with the Department of Treasury right now to see if we might use their Web-based online system for making payments worldwide. They call this system ITS. This would enable us to require that fiscal agents I mentioned previously overseas to request payments based on specific invoices and to justify disbursements in a systematic way in -- in real time. In addition, we're investigating to see if there might not be a private sector that would provide a -- a global payment solution, as well.

Treasury is interested in working with us on a solution in either case, and if we can't do this, I believe it would address the IG's concerns that you've -- that you've mentioned before. I'd also like to be able to try a pilot as early as January of 2007, so quite soon with -- with one or two countries to see how this actually might work in -- in reality.

Mr. Morales: Michael, we talked earlier about some of the interagency collaboration, and we know that the MCC has outsourced much of its administrative functions, including human resource and payroll management.

But does the MCC recognize the value of implementing an integrated human resource and payroll system, and can you elaborate on the status of this effort and the overall strategy to forge an integrated system that reduces the reliance on manual processes and enhances your interface with the NBC systems?

Mr. Ryan: Well, that's a great question. I mentioned before our -- our interest in keeping overhead down and of course manual processes are done by people, and people are overhead. So, we want to cut down on these things. They also introduce errors, as everyone knows, and -- and we'd like to do as much as possible automatically and with an -- with an integrated system.

We get great service from Interior's National Business Center, but it does not have an integrated system at this time. I understand they have long-term plans to make it integrate in the future, but at the current time, it's simply not.

The benefits of integration are especially important for a small organization like MCC. We do not have the personnel to make the multiple entries required by a non-integrated system, especially as we take on more compacts and more countries. We will be engaging consults soon to perform an analysis of how MCC might best achieve full integration of its financial management. And also, I hope a reasonable timeframe for achieving it.

You know, I am intrigued by efforts to engage private sector organization as -- as a center of excellence to supplement governmental centers of excellence. I am very familiar with the competition that's been going on at EPA, and I'm -- I'm looking forward to see the results of that competition for running their financial system. It's something that I saw at the beginning of when I was -- when I was at EPA. And now, I read recently that OPM is -- is also looking for a private public competition in this, and I think that's really healthy and something that might work very well for MCC.

Mr. Morales: What does the future hold for the Millennium Challenge Corporation? We will ask Michael Ryan, vice president, Administration and Finance with the Millennium Challenge Corporation to share with us when the conversation about management continues on the Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Michael Ryan, vice president, Administration and Finance with the Millennium Challenge Corporation. Also joining us in our conversation is Pete Boyer, Director in IBM's federal consulting practice

Mike, in its rather brief existence, the MCC has had some significant achievements, and we've certainly talked about many of those today.

What do you envision for the MCC over the next 5 to 10 years, and what are some of the key challenges and major opportunities facing the organization?

Mr. Ryan: Well, our overwhelming challenge is going to be compact implementation. We've been talking about performing the compacts, and that's what the corporation (off mike) spending its first two and a half, three years of existence doing. But making sure that results that we envision are achieved is our next challenge. Most of the work will be undertaken by partner countries, as they own the projects. So, it's really more of a challenge to them. And the real beneficiaries -- if -- if both us, that is to say MCC and the host governments are successful, the real beneficiaries are the poor people of our partner countries.

Mr. Morales: Mike, with such a small organization, I can only imagine that every single individual has a critical role and -- and is critical to the organization.

To that end, what steps are being taken to attract and maintain a high -- high-quality technical force, and can you elaborate on initiatives to ensure that you have the right skill and the right staff mix?

Mr. Ryan: First of all, let me say that I don't think any organization in my federal career can claim a higher quality workforce than MCC. And we owe that in part to the attractiveness, I think, of our mission, but also we've talked a lot today about public/private partnerships.

We have a partnership with Korn/Ferry International, in particular their Futurestep Division, which ahs been supporting our recruiting and hiring efforts. We've also been energizing our recruiting efforts through partnerships with targeted non-profit organizations who subscribe to our belief that, and this is a term we think has some power, that a diverse workforce can make a world of difference. And as far as training goes, I've been tasked by our CEO to create an overarching training plan for MCC. Everything from language skills to management skills. And we're beginning with training for all our transaction teams in partnership with the Federal Executive Institute.

Mr. Boyer: Mike, you mentioned MCC's focus on low overhead, and we've talked about it on a number of questions today, but how do you respond to people in a developing community that have expressed that MCC's proposed staffing level of 300 is very lean for an organization planning to disburse $2 billion or more per year?

Mr. Ryan: Well, you know, when the road is -- is twisting and turning and you're in a race, you'd rather have a sports car. So, we're -- we're -- MCC is based on a new organizational model. And we think our -- our leanness is an asset rather than a liability.

The key to our ultimate success has got to be related to our ability to identify the right countries with the right governance and respect their responsibility for their own development. We believe this approach is more likely to give arise to sustainable efforts and lasting reduction in poverty.

If we were to increase our own numbers, we might be -- just might be more tempted to give ourselves a larger role in other countries' efforts, and we really don't want to do this. Having said that, we are concerned with the growing workload, and we're constantly looking for ways to streamline our work and procedures.

In fact, it's interesting as far as this question goes that as I left MCC to come to this program this morning, we'd had a little meeting in which we talked about our model and whether we should change it, what aspects we should change to meet the challenge of the growing workload that's -- that's certainly coming. But I'm confident that this is a problem that we can meet square on, and we aren't going to go above 300 people in Washington.

Mr. Boyer: I like the race car analogy, Mike. MCC's compact pipeline seems to be robust and growing. Could you give us a sense of the current and future pipeline, and is there a point at which expansion becomes too much for a fairly new organization like the MCC?

Mr. Ryan: Well, obviously, I can't predict how much the pipeline will develop, and because so much of our future activities will depend on congressional funding, and that again will depend on what we do in our measurements of success. But we've been signing. This past year, we've signed six compacts, and I would think that this year, I would hope we'd sign three or four. But beyond that, it would be difficult to speculate.

We've learned a great deal about what works and doesn't work based on our experience with the 11 compact countries so far and recognizing that individual circumstances make each nation unique in its capabilities and the development issues that it seeks to address, we know that we found some approaches that are replicable, and we may identify some efficiencies as a result.

Finally, I really think being a new organization is a benefit because we can implement new ideas without being burdened by our past. Perhaps a real challenge is to remain, as the song goes, "every young," and avoid the bureaucratic impulse.

Mr. Morales: Michael, you've had a highly distinguished career in public service spanning some 25 years, as you indicate.

Is there any advice that you would give to an individual who is perhaps considering a career in public sector, or who may have a specific interest in the efforts at the MCC?

Mr. Ryan: I think the most important question might be why should someone want to work for the United States government? Because, after all, MCC, even though we're different and new, is part of the -- is a part of the federal community. The answer, I think, has to be, because it's the largest, most ambitious, and most diverse enterprise in history. Working for the federal government means upholding the principles on which the country was founded in the form of the Constitution, which is still the model for many countries, and many of the countries we deal with. The federal mission is also large enough to accommodate just about any interest or skill.

What's the best preparation for a federal job? I think everybody has their own concept, but I always recommend that people get the best general education available to them, especially in the liberal arts. But, to me, that means science, math, history, and language, before they specialize.

USA Jobs is a central Web site for all federal jobs openings, and it really does contain something for everything. Our MCC.gov Web site also provides the ability for individuals to go on and do online applications for our jobs, and actually anybody who comes to talk to us, no matter who they are or where they come from or what their background, ultimately, we ask them go back to our Web site, MCC.gov, and fill out an online application.

With respect to jobs at MCC, we find a variety of technical skills useful, much like the other federal agencies in the development community. But I would encourage people to focus on foreign language skills, with French, Spanish, and Portuguese, the most useful to MCC at this time.

To work with representative other countries, there is an obvious benefit to being able to speak and understand their languages. Of course, it's not just language; we can never have too many employees with skills that include communicating across cultural lines, regardless of what their technical expertise may be.

Mr. Morales: That's fantastic. Mike, we have reached the end of our time, and that'll have to be our last question.

I do want to thank you for fitting us into your busy schedule this morning, but more importantly, Pete and I would like to thank you for your dedicated service to our country.

Mr. Ryan: Well, thank you. It's a great honor for me to be here. It's a great pleasure.

I'd like to invite everybody who would like to learn more about MCC, certainly more than -- than I was able to give this morning, to go to our Web site, MCC.gov, and there you can see information about countries, about our programs, and also apply for a job if you want, as I mentioned before.

Thanks a lot; I appreciate being here this morning.

Mr. Morales: Fantastic. Thank you.

This has been the Business of Government Hour featuring a conversation with Michael Ryan, vice president, Administration and Finance with the Millennium Challenge Corporation.

Be sure to visit us on the Web at businessofgovt.org. There you can learn more about our programs and you get a transcript of today's conversation. Once again, that's businessofgovt.org.

As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad who can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support.

For The Business of Government Radio Hour, I'm Albert Morales. Thank you for listening.

Rear Admiral James J. Shannon interview

Friday, December 22nd, 2006 - 20:00
Phrase: 
The Navy and Marine Corps' move toward Open Architecture; Technical and engineering aspects...
Radio show date: 
Sat, 12/23/2006
Intro text: 
In this interview, Shannon discusses: his role as the U.S. Navy's major program manager for Future Combat Systems Open Architecture; Open Architecture defined; The Navy and Marine Corps' move toward Open Architecture; Technical and engineering aspects...
In this interview, Shannon discusses: his role as the U.S. Navy's major program manager for Future Combat Systems Open Architecture; Open Architecture defined; The Navy and Marine Corps' move toward Open Architecture; Technical and engineering aspects of Open Architecture; Business aspects of Open Architecture; and the Benefits and key accomplishments of Naval Open Architecture. Missions and Programs; Leadership; Strategic Thinking; Technology and E-Government; Collaboration: Networks and Partnerships
Complete transcript: 

Originally Broadcast Saturday, September 9, 2006

Arlington, Virginia

Mr. Morales: Good morning, and welcome to The Business of Government Hour. I'm Albert Morales, your host and managing partner 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 by visiting us on the web at businessofgovernment.org.

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 Captain James Shannon, Major Program Manager for Future Combat Systems Open Architecture of the United States Navy. Good morning, Captain.

Captain Shannon: Good morning. How are you doing?

Mr. Morales: And joining us in our conversation, is Bob Reeve, partner in IBM's DoD practice, and a retired officer of the Naval Supply Corps. Good morning, Bob.

Mr. Reeve: Good morning. Good morning, Captain.

Mr. Morales: Captain Shannon, for those who are unfamiliar with the Navy and Marine Corps acquisition community, can you briefly discuss the mission of the Program Executive Office Integrated Warfare Systems, otherwise known as PEO IWS?

Captain Shannon: Sure. PEO IWS, still fairly new PEO, and it's not necessarily a traditional PEO because in the past all of our programs were aligned to platforms. And in 2002, the Navy decided that they had to figure out a better way to integrate across ship platforms, aircraft, and even submarines, and PEO IWS was stood up. Then the leadership was Mr. John Young, who was the Service Acquisition Executive. And the focus for IWS is to ensure that there is commonality among systems in what we invest in across platforms, primarily on ships and submarines.

Mr. Morales: Great. Can you tell us about your role specifically as the Major Program Manger for Future Combat Systems Open Architecture?

Captain Shannon: Yes, again, because we're still a fairly young PEO, I was in the summer of 2004 the Deputy Program Manager for Integrated Combat Systems, which was the program that brought together all of our AEGIS combat system, every combat system we have on all of our ships and also other various and sundry associated programs. When Mr. Young, in that summer, came out with a new policy that required that all Navy programs had to become open, in the sense of adopting Open Architecture principles, we were not necessarily aligned or to do that we had to reorganize the PEO.

So, PEO IWS 7, Future Combat Systems Open Architecture, was created. And I had been the initial Major Program Manager for that. My role is to look across the family of systems in the Navy and not just a specific system. And by a family of systems, my responsibility is to see how aircraft work with ships, how any elevated sensor may pass information to other elevated sensors. So I tried to work those kind of integration challenges. I also look at future in missile defense threats, and make sure we have the right resources towards building programs towards those things. And what's taking up most of my time is what we're here to discuss today, is this open architecture policy.

Mr. Reeve: Captain, can you give us some background about yourself, and how your career path led you to become the program manager for OA?

Captain Shannon: Sure. I'm a surface warfare officer by profession, and spent most of my career going to sea, primarily in cruiser or destroyer platforms. Early in my career, I was an engineer, below-deck engineer. And as I became more senior and served in different ship platforms, different types of combat systems, my training kind of led to combat system development and training. Eventually I commanded two guided missile frigates, and in between my executive officer tour and my command tour, I became very interested in the acquisition of systems. I felt that I could contribute in that way. After my command, I led a project, the evolved Sea Sparrow missile, and I've had a couple of other projects since then, and it's led to this program manager job.

Mr. Reeve: Excellent. You talked a little bit about your role as the program manager, but can you expand on that and tell us what it's like to be the Navy OA Program Manger?

Captain Shannon: Well, I'm defining it day by day. In my role as the program manager for Open Architecture, I'm trying to help establish policy and processes that other program managers can use and adapt to use Open Architecture to help them move forward and follow through RDA's policy, RDA being the Service Acquisition Executive for Research Development and Acquisition. My role as a program manager is to be a leader, to understand the vision of the Navy leadership, and make sure the people on the deck plates can go out and execute the things that we're told to do. We're treading new ground here. We're blazing a new trail. We're learning everyday on how to do it, but my role is to try to manage people in processes and new developments, new systems, new hardware even, and see how we can share that information across programs.

Mr. Morales: Captain, I realize that we've now been talking a lot about your role in the program that you manage. But we haven't specifically addressed what is Open Architecture. When we use that term, exactly what does that mean and what are the business drivers behind Open Architecture?

Captain Shannon: Right. I love that question, by the way, because I think the best way to describe Open Architecture is first to ask what is a closed architecture. And by closed, it's an architecture that only the developer will share within its own specific community or within its own specific company. And it won't be shared outside of that company or outside of that program. When you start talking about opening things, you're letting non-traditional partners develop, and you're allowing some sort of collaboration to happen. So, there is no single architecture in the Navy. There are many architectures to do the various things that the Navy has to do. How we share these architectures, how we understand the interfaces between them is only going to happen as we open them up, and let people look in and see those interfaces. And so the role in Open Architecture is to make that happen.

Mr. Morales: So it sounds like this is really a fundamental shift in the thinking of the way systems are built.

Captain Shannon: It's a big change in the business model, not just for the Navy, but also for industry, and that's what makes it really hard because it requires a cultural change. First thing that people respond with is, what's wrong with the way we're doing it now? Because, don't we have a great Navy? Don't we have great programs in place? Why do you want to break something that's good? And that's tough to answer because the fact is we do have very good ships, we have very good systems and very good programs. But the challenge is not in terms of performance. The challenge is in terms of cost. We simply cannot afford the fleet that we want, and to do that, to get that fleet, we need to change the way we do business.

We have to change it in-house in the Navy, and we have to ask industry to follow us along the way. And that's tough for industry. You know, we're not trying to dismiss this as something that's not important, because industry relies on stockholder investment, it relies on them being able to prove that they're making a profit that they have the right revenue, and for us to simply say, "Change your business," is really not that easy to do. So we're trying to work with industry to do it, but I always try to describe things as either an issue or a problem, or a fact of life. And when you have a problem, that implies a solution. If there is no solution, you have a fact of life, and the way we are doing business today, it's a fact of life we have to change.

Mr. Morales: Great. How is the Navy moving toward Open Architecture across systems? We will ask Captain James Shannon to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I am your host, Albert Morales, and this morning's conversation is with Captain Jim Shannon, Major Program Manager for Future Combat Systems Open Architecture of the U.S. Navy. Also joining us in our conversation is Bob Reeve, partner in IBM's DoD practice. Captain Shannon, why did the Navy decide it needed to move towards Open System Architecture and when was that determined?

Captain Shannon: Well, first there has been, I think, a movement at first in the technical community for several years about moving towards Open Architecture. But nothing in government really moves until there is an instruction or a policy that comes out, and first it came from OSD. The Department of Defense came out with a policy towards Modular Open System Architecture, and some of the listeners may have heard of MOSA, which is the acronym for that. And that requires some sort of test or evaluation of a program before any one of its milestones, and they run through a tool to do that. And the group under acquisition technology, ATNL, OCATNL, they have a program called the Open System Joint Task Force, and they lead this MOSA strategy. So that's how we've been ongoing, but the Navy particularly started looking heavily at Open Architecture in the '90s.

First, it happened in the submarine community.There is a program called ARCI, Acoustic Rapid COTS Insertion, and the Navy had a challenge in that we had an increasing threat to be concerned about, and at the same time an affordability problem on our submarine systems. And the investment in submarine systems is, first always in safety and in the hull and mechanical and electrical part of it. And we had to do some trades, system trades, in the combat system piece of submarines. So they looked at the acoustic processing, and wanted to figure out how we can improve performance there. And so they tested Open Architecture in that program and it was successful over a period of time.

As we learned from that program, the surface Navy then realized that they needed to be able to take advantage of COTS processors. COTS is Commercial Off The Shelf processor, computing technology. And they had to get away from the monolithic legacy development that we have done so well, and is to perform well for us in many of our ships.

And through a series of meetings in the 2002-2003 time frame, the Navy realized that we shouldn't just focus on the surface Navy community of interest, but we had to approach this as an enterprise, really looking at the Navy as a business, and across the whole Navy. And so that's when PEO IWS got the role in 2004 officially to do that, and we set up this enterprise and broke it down across five different communities of interest.

We call them domains, but a community of interest is probably a better way to term it.

One community of interest is the surface. PEO IWS is the lead for that, and we work with the other PEOs, and PEO Ships, PEO Carriers, and PEO Littoral Mine Warfare. Then on the air community of interest, that's the other domain, and that's led by PEOT, and they work with the other PEOs in NAVAIR, the Naval Air community. And then it's a little bit easier to break up the domains for the next three. One is submarine or undersea warfare, and that's PEO Subs. Then there is communications, what we call, C4I & Space and that's the PEO out in San Diego. And finally, PEO Space. So those five communities of interest were set up, and that's when we kicked off the effort that I laid down.

Mr. Morales: Captain Shannon, by any measure, we've established our Navy as the most technologically advanced in the world. And you referenced the AEGIS combat system earlier, and you did talk about some of these points. But why do we need to change the way we're doing things today?

Captain Shannon: You've probably heard the term "stove-pipes" before. The computing infrastructure we have today in the fleet is performance-limited, and it's very expensive to upgrade. And by a stove-pipe system, it's built from the ground up, and it doesn't take into consideration like systems on other types of platforms. The reason we had to change is because that's just too expensive, and we had to figure out a way to take advantage of what's going on in the computing industry. Instead of relying on building our own computers, the question is why can't we take advantage of what we're witnessing out in industry? The demand for computers is so great, that the speed of computers, the processing capability of computers, is better than many of the computers that we had onboard ships to do some of our most difficult combat system problems. So it didn't make sense to continue down that path. It only made sense to take advantage of COTS processors.

Mr. Reeve: This sounds like an awfully large endeavor for one program manager to be responsible for, and I understand you've recently picked some additional duties as well. And your office is setting up the infrastructure that will help change the way the entire Navy enterprise does business. What other organizations are a part of the transformation effort, and how do you manage all of this?

Captain Shannon: You're right. You know, a captain, by himself or herself, cannot do this alone. It requires everybody in the Navy, especially from leadership, making sure that everybody at my level and below are working together. You mentioned that I have a new responsibility. The program manager in Integrated Combat Systems, Mr. Reuben Pitts, was detailed down to the Naval Surface Warfare Center, Dahlgren Division, to work some organizational challenges down there. And my PEO, Admiral Frick moved me over to fill that gap. So my responsibility in that role is I'm responsible now for the computing infrastructure onboard all of our ships, and also the integration effort of our sensors and our weapons through that computing infrastructure.

Again, one person alone can't do this sort of thing. One of the things that we set up in the OA side of the house was something called the OA Enterprise Team. And it's among the five different communities of interest that I already said. We have representatives at the captain or senior government level, GS-15 level. And we meet regularly and discuss things often because each community of interest has their own path forward, and it's too hard and too unwieldy to make everybody travel down the same path together. Somehow, we have to share information where we can build synergy. At the same time, we need to be able to go off and do what we're chartered to do, whatever that may be.

So we set up this organization, the OA Enterprise Team, and from that enterprise team, we've been able to work out issues. And it has required a lot of the typical new organizational challenges, the storm and form and norm kind of thing. But after two years a lot of same people are still around. We're working very well together. We've built a trust. It's, you know, like any family, sometimes there are problems, and sometimes we have to work out those problems. But the thing is we are all headed down the path together, and so that's the good news.

Mr. Reeve: What are the technical and engineering aspects of developing an open system architecture?

Captain Shannon: Well, I kind of described the legacy systems that you had, and when you have a closed architecture, typically the applications, the algorithms, the codes, the source code that's tied to that closed system are unique to that system alone. It might be a specific language. It may be some nuance just associated to that specific system. When you say, "Okay, we want to introduce COTS into the combat systems onboard our airplanes, and submarines, and ships," the companies out there, they're building computers today like Dell or IBM, or any other company like that, you know, they're not building military applications and selling them out to the general consumer.

So we have legacy applications which are unique military applications that we have to then write onboard these COTS processors. So the challenge there is how you make that happen, how do you translate the languages of something very unique and military-specific to write on something that's designed to be used maybe even in the workplace with a commercial technology. The way we do it today is first by breaking apart the operating system code from the unique military code, and we're using Middleware to do that. And we've been fairly successful in doing that. Even in the AEGIS Combat System today, the most recent baseline, they've been able to test that and out in the fleet today actually have systems that are open in the sense of modular openness. Not total business openness, but certainly in the technical side.

Mr. Reeve: And is OA just technical, or are there business aspects or business architecture that goes along with that?

Captain Shannon: No, again, I probably didn't say that well enough in earlier questions, but that was probably the biggest thing that we learned when we set up this OA process. When I took on the job and talked to many industry leaders and people within the Navy, and various engineers, they said, "Hey Jim, all you have to do is get the standards down. Just get the standards straight, and everything will solve itself." They made it sound very easy to me and actually very attractive. Unfortunately, nothing is that easy. And I found soon enough that that technical solution is exactly the way people have tried to approach it for several years, and they were failing because that's all they were trying to do.

Business in industry does exactly what we tell them to do, and they do it well. And that happens only by getting your contract language correct, your business models correct, and setting it up in the way that makes the ultimate product successful. The industry has always done exactly what we've asked them to do. But we have not asked them contractually to open up their business lines, and they're not going to do that until we get that business part set up. There is no forcing function. There is no incentive. There is no way to award them for that type of behavior that we want. So we have to change the business model as well. And it turns out, that's probably one of the key things in this whole policy as we move forward.

Mr. Morales: Typically, we also hear the words "Net-centricity" and "Interoperability." And it sounds like optimally that this effort around Open Architecture would extend beyond just the Navy and Marine Corps. And that the Army, Air Force, and other national defense and intelligence agencies should be doing projects like these as well. Are they, and do you work with them regularly?

Captain Shannon: Yes, and yes. Let me describe it this way. A few years back you may have heard the term Sea Power 21 when Admiral Clark came out for the future of the Navy, and kind of gave us a strategy to focus on the Navy of the future. And one of the elements in that was something called FORCEnet. And people at times have a very difficult time describing what FORCEnet is, but there's really a simple definition for it. FORCEnet is the integration of people and systems, and systems of systems, and family of systems to give some sort of distributive capability by the latter half of next decade.

So when this policy came out or when this strategy came out, there was time to figure what this all meant because we weren't even working the Palm processes or the budgeting process for the latter half of next decade, but we are doing that now. And the budget cycle that starts in 2008, it ends in 2013. And what you build in 2013 gets fielded in 2015, latter half of next decade. So with FORCEnet, the focus there is on this distributive capability which requires some level of interoperability. But you cannot engineer FORCEnet. It's too futuristic. It's something that we still truly do not understand. So you need some sort of tool. You need some sort of enablers to make FORCEnet happen, and Open Architecture is certainly one of those enablers, maybe not the only one, but we're out front on Open Architecture, and it's going to help us along the way.

Mr. Morales: Great. How is the current budget environment impacting the Navy system development efforts? We will ask Captain Jim Shannon, Major Program Manager for Future Combat Systems Open Architecture of the U.S. Navy, to explain this to us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I am your host Albert Morales, and this morning's conversation is with Captain Jim Shannon, Major Program Manager for Future Combat Systems Open Architecture in the U.S. Navy. Also joining us in our conversation is Bob Reeve, partner in IBM's DoD practice. Captain, what is the Navy's current budget, and how much do you expect the Navy to save through Open Architecture?

Captain Shannon: Navy's budget, what's appropriated, and really anyone of your listeners can get this information off the Internet I'm sure, is about $30 billion per year. That's in the fiscal year 2006 National Defense Authorization Act, and I think in 2007 it's going to be roughly the same amount. There is no single dollar amount in savings to the Navy that we'll be able to directly attribute to the implementation of Open Architecture. In fact, when you talk about Open Architecture and return on investment, sometimes people are overly sensitive. They're looking for cost savings to move money around and spend it on other things, but there are other ways to measure return on investment that Open Architecture can help.

And we've already talked about one of them, which is interoperability. Certainly greater interoperability is a return on investment. Cost avoidance is a return on investment. There's different ways to measure it, and one of my challenges is to come up with those metrics, which we're trying to develop now.

Mr. Morales: Are you beginning to see, in fact, some of these benefits as you deploy this program? And if not, what are some of the key accomplishments and specific efforts of the OA approach?

Captain Shannon: There are pockets of goodness throughout the Navy in Open Architecture, and I don't want to come off sounding like I'm the first one to be really leading the way in Open Architecture. There have been program managers before me who already understood the benefits of it and have preceded down a path to make Open Architecture work for them.

I already talked about the program ARCI, or A-R-C-I, the Acoustic Rapid COTS Insertion program. It's already there. They're leading the path, and actually they've evolved that into the Virginia class submarine combat system processes. So we're seeing that happen. We're seeing great return on investment in those areas. And in other programs, we're coming along the way. The Advanced Hawkeye Program, the E2Delta -- that's its designation. They've made some tremendous strides in mission computer development using the tenets of Open Architecture. And I would say, in most things involving the anti-submarine warfare communities of interest, they tend to be blazing the trail there because of what they learned from ARCI. And that is now crossing into the surface ship Navy because of sharing of information, being more open, and making our overall performance in synergy and undersea warfare across any kind of platform, because of this openness, improved.

So I'm seeing that. As far as key accomplishments go, I kind of just hit on a couple, but we've recently come out with a program manager's guide. In fact, it's on our website. But through this program manager's guide, which we just released, we had our legal and contract community to help us develop these guidelines, so that everybody has an equal understanding of what kind of things the Navy is looking for in terms of Open Architecture.

From that, and from all the efforts that led to that program manager's guide, we've seen improved coordination with and across domains to better aligned programs, and develop their domain-specific Open Architecture roadmaps. For example, the C4I domain is synchronizing requirements with resources and mapping programs to joint capability areas to better support Open Architecture. The air and surface domains are undertaking similar efforts. We are really working to build an enterprise view of Open Architecture. So we're learning as we go. And like I said, today there are many pockets of goodness. What we need is an enterprise view, and we're still not there yet.

Mr. Reeve: Navy and Marine Corps ships, planes, ground vehicles, and the accompanying combat systems last a long time. You mentioned the ARCI program. Is this the approach about how you integrate those platforms that are already in service as opposed to just working on the new systems in the future?

Captain Shannon: Yes, that technology insertion is really one of the fruits of our labor. We have to figure out a way to not just focus on new development, but also the legacy systems that we have. I actually don't like the word legacy. It implies old and used. Many of our ships and platforms are going to be around for many years. And we have to make sure that we have the tactical edge with these systems. We have to make sure that our sailors are on ships that are safe and can perform, whatever the threat may be. So we are trying to determine where are the opportunities to open up these systems.

In the surface Navy, we're looking at the AEGIS computing plan. We're focusing first on just breaking apart the hardware from the legacy applications. I mentioned that earlier. And we're finding success in that. But we're maybe not moving as fast as we would like to, and we have to, as we understand the technical openness and we are learning more about the business openness, we're moving out even faster. We're at a time now where we have to step on the accelerator in this process, and really take advantage of the opportunity. There are great challenges in budgeting. The whole nation is feeling these challenges and the Navy owes it to the nation to figure out the best and most efficient way to invest in our ships and airplanes and submarines.

Mr. Reeve: How does the Navy then evaluate which programs can cost-effectively be migrated over to open systems? You know, which programs are these that you're working on today?

Captain Shannon: Super question. One of the ways we are addressing that is we came up with something called the Open Architecture Assessment Model. This model was agreed upon throughout the Navy in the winter of 2005. And to make this model easier and user-friendly for program managers, we came up with a tool, the open architecture assessment tool, which helps baseline any discussion in terms of openness. So every program in the Navy has to run through this tool and from this tool you get a sense of how open you are on both the business and technical side. Any of our listeners will be able to have access to this tool through our website and I'll even say the website right now, just it's acc.dau.mil/oa and that anybody could get into that website and you can look at this tool and it walks you through, it's user friendly, and it gives you a sense of the questions that we're asking.

From that, a program manager then has to make a business case if he or she finds out that, "Hey, I'm not as open as I thought I was," or, "I may be less relevant if I don't open up more." They have to make a business case to move forward and that's the traditional way that program managers compete among themselves on where should the investment be. But in Open Architecture, as you open up and share information, the idea is to do your system engineering and make your trades in a more global manner.

To be able to make them so that everyone understands why this trade is better than that trade instead fighting each other to get the resources you need, making the best decision based on sharing of information and good collaboration, making the right investment decision. And that's going to be a great benefit and a change in the business model that the Navy should see.

Mr. Morales: Captain Shannon, we've talked a lot about the technical aspects of OA. We've even touched upon some of the business aspects. However, I would imagine that it takes significant amount of organizational and cultural change throughout an organization like the Navy and the Marine Corps to really bring this to life. What are you doing to help change behavior within the Navy? And I don't mean you specifically.

Captain Shannon: Yes. Well, it's very hard. Cultural change is always difficult. You see it your whole life, you see it as you grow up, you see how some people are left behind just because they won't make a change. We're working through a variety of outreach programs. Coming here today and talking to you is one way. Going to conferences is another way. Putting out the program manager's guide.

We've also developed a continuous learning module that Defense Acquisition University has helped us develop. That all of our workforce could get actual two hours of credit because we have the counseling due training and they could do that at home on a web-based tool. We have worked with the Naval Post Graduate School and one of their system engineering curriculums has adopted a lot of the things that we are advocating and actually getting some of our young officers to understand Open Architecture and how they can apply it.

So, you have to start at a young level. You have to get your current work force to change. And you have to go out and talk and help people understand what you're doing. It's not easy. But education training and a lot of outreach to our industry partners is important. And hearing good news and good stories from industry partners who have been successful by opening up their systems.

You know, that's always fun when I can sit in a room with a specific company who says, "I don't understand I could do it." I can say, "Hey, company X, you need to talk to company Y because they did it and if they could do it, why can't you do it?" And there's no one way to skin this cat. It's just a matter of trust, it's a matter of understanding that we have to get a little greater balance between intellectual property and intellectual capital.

Mr. Morales: It's interesting you bring that up, because based on what you've told us so far, it sounds like it's not just the Navy personnel that need to change, but really the entire defense industry that develops and builds these security systems as well. What has been the reaction so far of industry as you move down this path?

Captain Shannon: To answer that question, depends on which industry member you're talking about. All of them are listening. Some are more cautious. Some are very excited. Small business today is very excited at the opportunities to get into system designs or system work that they before felt that they were not allowed to get into. We are working this together. We're trying to understand the challenges that industry is facing. But they're listening to us and they're trying to answer our needs.

Mr. Morales: As you mentioned earlier, it's certainly a partnership, right?

Captain Shannon: It is definitely a partnership. We can't be successful without industry being successful. That's important. And everybody understands that in the Navy. You know, we don't want to see businesses suffer. We don't want to see companies suffer. But this is also a national problem. It's bigger than any individual company. It's bigger than the Navy. We have to change the way we do that for us to remain the edge that this nation is used to.

Mr. Morales: What does the future hold for Navy systems? We will ask Captain Jim Shannon, major program manager for Future Combat Systems Open Architecture in the U.S. Navy to discuss this with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Captain Jim Shannon, major program manager for Future Combat Systems Open Architecture of the U.S. Navy. Also joining us on our conversation is Bob Reeve, partner in IBM's DoD practice. Captain Shannon, what are the major challenges that you see our Navy and military in general facing over the next ten years?

Captain Shannon: The biggest thing, and you read this in the paper, it's weapons proliferation. Proliferation of rapidly advanced weapons systems based on low cost, ubiquitous technologies in the hands of unstable entities. I mean, we read about it in the paper every day. Potential enemies that are flexible and dynamic. That's what we're dealing with in the improvised explosive device challenge that we have in Iraq. Rising cost of our weapons systems to counter those threats. I think that in a nutshell is what the public reads about every day.

Mr. Morales: So this really is a lot of the impetus behind OA. So what are some of the biggest obstacles that you've encountered in your efforts to implement OA and can you share some of the lessons learned?

Captain Shannon: The most significant obstacle is frankly the fear of change, of the unknown. Naval Open Architecture and the things that we've been talking about today is disruptive. It represents a new business model for how our Navy acquires complicated systems. It requires a new way of designing these systems and demands new skills and processes from a wide variety of stakeholders. Communication is a critical element of change. Communication and documentation, I guess, for that matter.

Today, we've conducted a couple Open Architecture industry days. We've spoken to numerous conferences. We've held and attended symposia, and we've created and maintained a public Open Architecture website that had seen over 13,000 hits. And that's only 11 months since when we started it. So that's how we're learning from it, that's how we're implementing it.

Mr. Reeve: How does OA fit in with all the changes to, and modernization of the military that the Secretary of Defense, Donald Rumsfeld, is interested in implementing?

Captain Shannon: Open Architecture directly supports defense modernization and simply put, we cannot continue to do the business the way it's done today. That's the message I'm giving you. Open Architecture breeds innovation. It breeds competition. It ensures that we get the best product out there at the right time. Beyond the considerations of affordability, the traditional way of doing business simply cannot react fast enough to get the new capability in the hands of our war fighters as quickly as it is needed in the world environment we have today.

Today's environment is different than the environment that I came in. When I was a young officer, I came in and there was a single threat. It was the Cold War. And what we face today is much more complex. The integration of all these challenges and all these threats and trying to solve these problems, I refer to as the mother of all calculus problems. It's incredible and it's hard and we need Open Architecture to enable us to solve these problems.

Mr. Reeve: Captain, you talked about innovation and competitiveness, and there is a lot of talk nowadays about how important that is to business and to American global competitiveness. That sounds like it fits very well with what you're trying to do in the OA movement. Does OA enable or inhibit that innovation and how can smaller firms -- as you mentioned, they're excited about this -- how do they participate in this movement?

Captain Shannon: Well, by adopting Open Architecture, the Navy and Marine Corps will be able to take advantage of the substantial ongoing investments by commercial industry that's driving advances in many areas in the computing technology. And I kind of hit on that earlier. Open standards and open business practices will lead to better compatibility between the Navy systems and the available COTS technology, the commercial, off the shelf products I mentioned earlier.

And improving compatibility will result in opening competition up to many new providers. Our efforts are focused at opening up opportunities for any qualified vendor to participate. Now the term, when I say "qualified," it's just not anybody coming off the street. There are certain qualifications that are listed in our federal acquisition regulations. But any qualified vendor, and any-sized company should be able to play.

Sometimes I hear people say, "We need small business," and I actually say, "any business." I like competition. David-and-Goliath-type competition is okay. The point is to get the best product out there. It's important that modular software components with fully disclosed interfaces give us the agility and ability for us to get the product that we need. When we talk about Open Architecture, I'm not talking about getting the source code or the niche product or that thing that's truly intellectual property out there.

I don't think that's fair to any company. But the interfaces to those modular systems we need to understand. The government should own the data to do that. We should be able to just provide that information to anybody we want to and we are walking down that path. We're trying to understand how to build our repository or our library, if you will. And this library will require people to have a library card. Some kind of qualification just like when you get a book out, you have to be a citizen of that town where you are.

Well, we need some sort of qualification and somebody comes in and we'll sign out a license and share this information with them, and the government ought to be able to that. And it shouldn't be by program. It should be across all programs. And we don't have that today. And that's one of the challenges in the requirement that I'm trying to define for leaderships, so that we understand how to do that.

Mr. Morales: Captain Shannon, you've enjoyed a very distinguished career in the U.S. Navy and in public service. And I understand that your son is embarking on an equally distinguished career. What advice could you give to any individual out there who is perhaps interested in a career in public service?

Captain Shannon: You mentioned my son. He's a midshipman at the Naval Academy. I'm really proud of where he is going and he joined the Navy in spite of anything I've done wrong in the past. So I'm really happy with that. But my advice to anybody who wants to embark on public service is public service is not just the military service. There are many ways to serve the public and it doesn't always have to be in a government position. You could serve the public by coaching a little league team or a soccer team.

I have three children, actually, and I tell all of them that they need to serve in some way and they need to dedicate their life with some level of service. Because that is the only way that we can work together, that we can survive as a community. So my advice is figure out what your talents are and figure out how to share those talents, and if government service is the way to do it, I encourage you to do it. And there is civilian government service as well. And in the business I'm in, there is more civilian government servants that there are military government servants.

Mr. Morales: Great. That's an excellent perspective. Unfortunately, we have reached the end of our time and so I do want to thank you for joining us this morning. But more importantly, Bob and I would to thank you for your dedicated service to the public and our country in the various roles you've held in the U.S. Navy.

Captain Shannon: Thank you very much for having me. This was a great opportunity for me to help get the message out. I'm proud to be in the Navy and I'm proud to continue to serve and help the Navy get on this path. I'd like the listeners just to write down this website if you didn't have an opportunity to do that already. The website is acc.dau.mil/oa. And thank you again.

Mr. Morales: This has been The Business of Government Hour featuring a conversation with Captain Jim Shannon, Major Program Manager for Future Combat Systems Open Architecture in the U.S. Navy. Be sure to visit us on the web at businessofgovernment.org. There you can learn more about our programs and get a transcript of today's conversation. Once again, that's businessofgovernment.org.

As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad who can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support. For The Business of Government Hour, I'm Albert Morales. Thank you for listening.

David A. Bowen interview

Friday, October 6th, 2006 - 20:00
Phrase: 
"[My IT] strategy basically consists of five components, and they all start with 'C' -- the five C's are 'Confirm, Comply, Consolidate, Construct and Communicate'."
Radio show date: 
Sat, 10/07/2006
Guest: 
Intro text: 
In this interview, Bowen discusses: the Mission and scope of FAA's chief information office; the FAA's key information technology priorities and initiatives; FAA's Strategic Sourcing for the Acquisition of Various Equipment and Supplies (SAVES) program;...
In this interview, Bowen discusses: the Mission and scope of FAA's chief information office; the FAA's key information technology priorities and initiatives; FAA's Strategic Sourcing for the Acquisition of Various Equipment and Supplies (SAVES) program; Collaboration and partnership among agencies; New technologies that enable FAA to manage more effectively; and Information technology security.
Complete transcript: 

Originally Broadcast Saturday, October 7, 2006

Washington, D.C.

Mr. Morales: Good morning, and welcome to The Business of Government Hour. I'm Al Morales, your host, and managing partner 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 by visiting us on the web at businessofgovernment.org.

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 Bowen, Assistant Administrator for Information Services and Chief Information Officer for the U.S. Federal Aviation Administration.

Good morning, Dave.

Mr. Bowen: Al, good morning to you.

Mr. Morales: And joining us in our conversation is Pete Boyer, Director in IBM's Federal Consulting Practice.

Good morning, Pete.

Mr. Boyer: Good morning, Al.

Mr. Morales: Dave, can you tell us a little bit about the history and the mission of the Federal Aviation Administration?

Mr. Bowen: Sure, I'd be happy to. Very succinctly, it's basically to provide the safest aerospace system in the world. And let me give you a little bit of context around that. The FAA manages over 24 million square miles of airspace. Actually, we manage the airspace over about 15 percent of the world's surface area. Airspace we manage covers the continental United States as well as Alaska, goes halfway out over the Atlantic Ocean, and almost entirely out over the northern Pacific Ocean.

That chunk of airspace alone is 15 million square miles of airspace. We handle between 56,000 and 57,000 flights in that airspace everyday -- so it's a big chunk of airspace. There is a lot of air travel, a lot of activity in there, and nothing moves in that airspace without us giving approval. We monitor military operations, we give the space shuttle permission to launch; we know what's going on in almost all parts of that airspace all the time.

Mr. Morales: That's an incredible scope and scale. Can you tell us a little bit about specifically the mission and scope of the FAA CIO office, and can you also give us a sense of scale in terms of budget and number of employees?

Mr. Bowen: Sure. Our scope really has two pieces. It involves the strategic IT planning across the FAA's lines of business, and from an operational perspective, we have the responsibility of making sure that our IT infrastructure and systems are secure from cyber attacks, if you will. The FAA has a federated model where the lines of business have the operational responsibility for managing your own systems, and our role is to coordinate their activities across the agency.

So my office isn't all that big. We have about 94 FTEs, and our annual budget is about $37 million. However, we do get involved in IT spending across the agency, and the FAA has a very large IT budget, exceeding $1.5 billion annually. So it's a pretty big chunk of budget that goes into IT-related activities.

Mr. Boyer: Dave, on a related topic, please describe your role as Assistant Administrator and CIO. Specifically, what are your official responsibilities, and how do you support the mission of the organization?

Mr. Bowen: Well, Pete, to respond to this question, I'll paraphrase from my own job description. Basically, to be the advisor to the Administrator on the agency's information technology, and help direct strategic planning for IT across the agency. We just alluded to that. We're also responsible for ensuring that our technology assets are effectively and efficiently aligned with the FAA's strategic mission needs. And as I said, we oversee the implementation and operation of our IT security programs.

As you can probably imagine, the FAA is very IT-intensive. If you think about what it is we do, my office plays either directly or indirectly into almost all of the agency activities. Our management of the FAA is based around what we call a "flight plan" that has four operating components. One is to make sure that we safely manage the airspace; one is to make sure that we provide adequate capacity for aircraft in the airspace system; the third one is to provide international leadership to the aviation communities around the world; and then the fourth one focuses on the FAA itself, and that is to make sure that we're running the agency efficiently and effectively and basically providing organizational excellence. Our administrator likes to talk about running the FAA like a business, and when I interviewed for the position, her charge to me was run IT at the FAA like you'd be running IT in a large business.

Mr. Boyer: And clearly, you've had a very interesting career. Can you tell us about your previous experiences before becoming the CIO?

Mr. Bowen: Sure. I'm not a federal employee by career, obviously, and I'm not in the aviation industry by way of my career. My career basically has consisted of increasing responsibilities in the IT area at progressively larger health care institutions. I've been a CIO at a 7-hospital system, a 14-hospital system, a system with 50 hospitals, and then lastly with a very large health plan in California: Blue Shield of California, based in San Francisco.

An interesting note here, I did take a diversion for a little while in my career and ran a technical manpower company in Saudi Arabia for a couple of years. So I have some overseas experience, international experience. By way of education, I've got a bachelor's degree, I've got an MBA, and in a little bit of a twist, I'm also a certified public accountant.

Mr. Morales: Dave, from your background, we do see that your connection to FAA could be the fact that you're a certified commercial pilot. People always have interesting stories of how they got started in that field, so I'd be interested to hear your story of how you got interested in flying.

Mr. Bowen: How I got started flying? Well, it's something I've always wanted to do. My dad was a pilot during World War II, although he stopped flying after the war and hasn't flown since. So it's something that I've always wanted to do. I got started back in 1980. I was doing some consulting, had a little bit of a bonus in that enabled me to begin taking flying lessons. So I've been flying ever since, and worked my way up through the progression of ratings and licenses, through an instrument rating, commercial rating -- I've never flown professionally, but I've also owned a number of aircraft and have worked up through the ranks in terms of aircraft as well.

So basically I'm with the FAA because I have a passion for flying. I'm very passionate. I love this stuff. I love going around and talking to the people in the agency about what they do. As I told the Administrator when I interviewed with her, I've been her customer for the last 25 years. I want to bring some business expertise to the government, and I just love working with the people in the FAA.

Mr. Morales: That's fantastic.

What are some of the key priorities and initiatives for the FAA? We will ask David Bowen, Assistant Administrator for Information Services and Chief Information Officer within the FAA, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Al Morales, and this morning's conversation is with FAA CIO David Bowen.

Also joining us in our conversation is Pete Boyer, Director in IBM's Federal Consulting Practice.

Dave, what are some of the organizational priorities for 2007 at the FAA?

Mr. Bowen: Well, it kind of takes us back to the topic that we talked about about the scope of the office, basically coordinating activities across the agency. We have a number of things on the docket, if you will, for 2007, a lot of things around cost efficiencies, cost effectiveness, establishing standards, taking dollars out of our infrastructure operations so that we can put them to better use in doing more customer-focused things.

We're looking at consolidating some of our data centers. We have a number of those, and think that we can get that number down. We've got a number of points where we touch the web, and that's just a concern for us not only from a cost standpoint but also from a security standpoint, and we want to reduce those. We've got an objective around reducing servers.

And then the other thing I feel very strongly about, and that is we need to work on where our next generation of IT professionals is going to come from. To that end, I've had some input from my staff that they would like some assistance with career planning, career development. We have some programs to bring new blood in to the agency; we want to beef those up. And then obviously, to continue to protect our systems from cyber incidents.

When I got to the agency, I embarked on a program that I called meet, listen and learn for the first 100 days, that they talk about the first 100 days in government, and that was really to go around the agency and talk to people, find out what they were thinking about IT, what their issues were, how IT supported their business needs or didn't, if you will.

It gave me the opportunity to get out and really see at ground level what was going on, what people were doing. I got to a number of regions. I was at our Aeronautical Center in Oklahoma City, was at our Technical Center at Atlantic City. I went to Alaska, I flew airplanes up onto glaciers and helicopters and did all kinds of neat stuff. And then came back and was charged by the Administrator to develop a strategy for moving IT forward, and so I presented her this strategy around the Memorial Day time frame. She approved it, asked me to make sure that I ran it by all the other line of business executives, and so finally in July, she came out with an endorsement of our strategy.

The strategy basically consists of five components, and they all start with "C." This kind of comes from my pilot training. When you're learning to fly, at least general aviation, they tell you if you get into trouble, there are four Cs that you need to remember: that's "Climb, Communicate, Confess, and Comply." So this strategy is built around five Cs, and the five C's are "Confirm, Comply, Consolidate, Construct and Communicate." So --

Mr. Boyer: I noticed you left "Confess" out.

Mr. Bowen: Yeah. I'm afraid that's for later.

Mr. Boyer: That's for later?

Mr. Bowen: So what we're trying to do is, first thing we're trying to do is to confirm our standards, our infrastructural standards. And then secondly, develop processes to enable us to make sure that going forward, this new stuff at least that we built begins to comply with those standards. So that's point number two.

Third point is consolidation, and we talked about that: infrastructure, data centers, servers et cetera. The fourth thing refers to the construction of a career development plan for the staff, and start focusing on some of the staff issues. And then finally the fifth point -- as always, you need to communicate, you need to communicate what you're doing, your successes, et cetera. So that's the going-forward strategy for the time being. We may change it over the next year or so, but for now, that's kind of what we're working off.

Mr. Morales: I'm excited to see that you've identified the human capital challenges as a priority of yours. I know that many of the organizations and agencies are struggling with that piece, but I'd like to get to that a little bit later. How has the FAA assisted the Department of Transportation in becoming the first Cabinet -level agency to achieve green in the PMA's e-govern area?

Mr. Bowen: Well, I'd like to take credit for that, but unfortunately, it was all done by my predecessor, Dan Mann. Dan, back in 2004-2005, when this initiative first came out, was very aggressive in getting together with our IT security manager, Mike Brown, and the two of them put a huge push on throughout the agency to get our system certified and authorized in 2004, primarily, and then moving into 2005.

Under the e-Gov. initiative, we had to have 90 percent of our systems reviewed in 2004 and certified, and working with our line of business staffs, we were actually able to beat this percentage -- whereas we had -- I think it was 95 percent was the eventual percentage that we were able to get done in 2004, and then took that to 100 percent in 2005. And so at that time, we had over 275 systems, and it's certainly a credit to Dan and his efforts as well as to the folks across the agency to be able to get that done, and that was a big factor in the DoT being able to achieve that green rating in the PMA initiative.

Mr. Boyer: On a similar topic, Dave, to help the effort to control cost, the FAA has embarked on an important agency-wide strategic sourcing initiative. This initiative is called Strategic Sourcing for the Acquisition of Various Equipment and Supplies, or the SAVES program. Could you describe the SAVES initiative and how it relates to your office?

Mr. Bowen: Sure, Pete. I'm glad you defined what SAVES actually stood for. It's a pretty long title. I had to go back and research it myself. The SAVES program, I would describe it as a managed and highly structured reverse option of standardized packages of goods and services.

Currently, we're packaging goods and services into a couple of different buckets; one is around office supplies, one is around office equipment, one is around career services, one is around printing services, and one is around IT network equipment. And so we are gathering specifications for these goods and services together, we are putting out proposals on the street for vendors to bid on those services; we have a sort of a web-based reverse option, which a lot of people are doing these days. And then we're awarding qualified vendors who are aggressive in their pricing and bidding the ability to have contracts with us for these standard sets of services.

We are right now partway through this program. A couple of contracts have been let, a number of RFPs are still out there on the street, but we do expect to save about 14 percent across the board, or $5 million on these services annually. At least we expected to do that when we put the program together. Our first two contracts I will tell you are doing much better than that. So we're very excited about this initiative, and look forward to the savings that we think it will generate.

Mr. Boyer: Now, we've talked with many of our guests about the use of collaboration and partnership among agencies and with the private sector to achieve mission results. What kind of partnerships are you developing now to improve IT operations or outcomes at FAA, and how do you see these partnerships changing over time?

Mr. Bowen: Well, in my commercial experience, I did a lot of this collaboration. I actually chaired an organization that was comprised of all the Blue Cross/Blue Shield CIOs from around the country. So this is very consistent with the style in which I like to operate and find out what other people are doing, and not reinventing the wheel. So we concurrently collaborate with a lot of different organizations both inside and outside the government. We share data with them, we share methodologies, and then in return get a lot of benefit from that.

Let me talk about two areas specifically. One is the IT security area. Here, we can cooperate with the various intelligence and security agencies of the federal government. We collaborate also with air traffic control organizations outside of the government, outside the United States, those being Canada, Mexico, also with what we call Eurocontrol, and we're in the final throes of signing an agreement with NATO for the sharing of data relative to IT security practices and procedures and alerts.

We also collaborate in the same area with various companies in the private sector who supply us technology, and also as well with large universities who are assisting us in developing state-of-the-art technologies around IT security.

Outside of the IT security area, the air traffic control area is an area where we obviously cooperate with NASA, the Defense Department and others, and we also co-operate with the private sector companies as well, particularly in the development of what we call the next generation Air Traffic Control System. We're sharing data with the National Geospatial Agency and others, and I think going forward, we're going to see much more data sharing, much more collaboration with agencies like the Department of Homeland Security, Defense Department, increasing cooperation with our customers in the commercial airlines, and certainly private sector companies in making use of their resources and sharing information with them.

Mr. Morales: Dave, earlier, you mentioned that one of the priorities was around cost efficiency, and we talked a little bit about some technologies. What are some examples of potential new technologies that may help the FAA manage itself more effectively?

Mr. Bowen: Well, Al, this is really a terrific question, because there is so much new technology coming into aviation, it's unbelievable. A lot of things we're seeing actually are being deployed in the general aviation community before it gets into the commercial aviation community. So there's so much stuff happening, it makes it a very interesting time to be a part of the FAA.

Let me talk about some of these technologies. Probably first and foremost is what we call ADSB, which is Automated Dependent Surveillance Broadcasting. Basically what this is it's based on GPS technology like you're seeing in your cars, where the car knows where it is. But ADSB goes a step further and basically says I'm a GPS receiver, I'm operating in an airplane and I'm going to be broadcasting my position, not only to ground base stations, but to other aircraft who may be operating in the area. And because of this, we can then reduce the separation between aircraft because we now have a much better idea of exactly where in space that aircraft is operating. Before, we had to make allowances for the variability around radar, and so now that can be reduced.

What that means is that we can pack more airplanes into a given airspace, and that is consistent with our capacity, our goal from our flight plan. But not only that, it means that we can actually do that more safely, because the aircraft now know where each other -- where they all are, and where all the other aircraft are, and then the aircraft can actually assist the ground-based controller in seeing and avoiding other aircraft operating in its airspace.

I've flown some aircraft with this technology up in Alaska, and it's really interesting to see what you can do with that. That's one technology that's going to be a real cornerstone for some of the new air traffic control capabilities that we're working to develop.

Some other technologies include what we call ASDE-X. It's basically a surface radar just like operates on the airport, looks across the airport surface to see where aircraft are operating.

There is a new technology coming out called Synthetic Vision. We're actually seeing this being deployed in some general aviation aircraft. And if you really stop and think about it it's really neat, because the GPS receiver knows where it is and it knows where, let's say, the airport is, or the runway that you're trying to land on as a pilot. Unfortunately, you can't see the runway because there's clouds in the way or it's night or raining, or whatever. But because the GPS knows where the runway is relative to your position, the GPS can construct a visual image of what that runway would look like if in fact you could see it.

So you can basically shift your attention to flying -- a CRT display screen that will bring this runway into your field of vision digitally, even though you can't see it outside and enable you to land on it, basically sort of like Microsoft Flight Simulator. So that's pretty neat, and you're starting to see that.

We also flew in Alaska some new equipment that looks at not only where the airplane is currently, but again through GPS where the airplane is projected to be. It's called Trajectory Projection. And there is an indicator that goes ahead of the airplane and says in a minute or a minute-and-a-half or two minutes from now, if you currently are on your course and speed and altitude, this is where you're going to be in space. And that's very helpful in Alaska for terrain avoidance and things like that, so that if somebody makes a turn, again, the GPS knows how high it is and it knows how high the terrain is, and it can alert the pilot if you're turning into terrain that's actually higher than you are.

This kind of technology has been in use in the military for a while now, but it's just now coming into use in the general aviation area. So those are some new technologies that we're really excited about.

Mr. Morales: It is fascinating, exciting.

What is the FAA's IT investment in capital planning process? We will ask David Bowen, Assistant Administrator for Information Services and FAA's Chief Information Officer, to explain this to us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Al Morales, and this morning's conversation is with FAA Chief Information Officer David Bowen.

Also joining us in our conversation is Pete Boyer, Director in IBM's Federal Consulting Practice.

Dave, given both your private and public sector experiences, we'd like to get a sense of your management strategy. Could you provide us an overview of your management strategy?

Mr. Bowen: I'd be happy to, Al. When I joined the agency, I brought with me a set of principles which I call our operating principles. These came from my experience at Blue Shield, and really helped us institute a very disciplined culture there. So we're starting to roll those out, certainly in my group in the FAA and the groups that I am interacting with. It really talks about principles and behaviors -- and I won't go into all of the details, but some of the principles that we are trying to enforce here include enforcing a culture of data-driven decisionmaking, not making decisions based on, you know, hearsay or whatever. Be prepared to know the details of your line of business. Leadership should be in the trenches. That's a leadership principle.

And then one that I think is important talks about alignment. You know, you give everybody the opportunity to participate in a decision, but once the decision is made, we expect people to get in line behind the decision and act accordingly. Don't go out of the meeting room and basically try to undermine the decision that you just made. So that principle says once we get to alignment, act aligned.

Well, there are a couple of behaviors, too, that I want to highlight. There were about six or seven of them that I brought to the agency, but a couple that I'll highlight include one is to be clear and explicit. What are we asking to be done, who are we asking to do it? How are we asking for it to be done, and when are we expecting it to be completed? Oftentimes in a discussion, these parameters aren't agreed to mutually by the parties, and result in confusion.

A big one for the FAA involves taking an enterprise-wide view. This is where we are challenging people to start thinking about doing what's in the best interest of the agency, not necessarily what's in the best interest of either of them personally or their line of business. And that's a very difficult thing to do given the line of business focus that we have in our culture.

Two other ones: one involves responding with appropriate urgency, and then the final one is to take personal responsibility for execution. And that is to hold people accountable and make sure that people understand that they have a responsibility to make things happen. And, you know, if it doesn't happen, then they need to be accountable. They should not be making excuses, "I couldn't do x, y, or z." They need to stand up and be accountable and take on this responsibility.

So those are some of the things that I brought to the FAA from the commercial world. And so far, they are working out well.

Mr. Morales: Earlier this year, the IBM Center for the Business of Government published a report comparing the U.S. air traffic system to the systems in the U.K. and Canada, which have adopted market-based principles and rigorous capital investment processes. Unlike the U.K. and the Canada systems, the U.S. ATC capital investment planning process has been marked by a history of relatively poor performance and high costs. Could you tell us about this planning process at FAA, and highlight some of the more recent improvements?

Mr. Bowen: Sure, I'd be happy to. I think part of this gets back to the context that I tried to set in the beginning of this discussion around the size and scope of the services that we provide. A comparison with the air traffic control system in Canada and in the U.K. is probably appropriate from a structural standpoint, but maybe not from a volume standpoint. Our aerospace is far larger; we handle far, far more aircraft. And so we think that our business is a lot more complex.

Nonetheless, we have had to improve our acquisition and management review processes over the last couple of years. We have been called to task by the IG, and as well the OMB, and have had our projects on the various watch lists of those sort of oversight kinds of agencies. We've taken a number of steps to improve our processes. Obviously we, like most of the -- or all of the agencies in the federal government -- are now doing business cases around our expenditures. We are doing projections of where our projects are.

I happen to sit on the FAA investment review committee that reviews all investments across the agency, so I bring not only an IT background, but also a financial management background to this process. And I am starting to ask a lot of tough questions, as are some of my counterparts on those investment review committees.

So we are actively improving our project management processes. We just had our final project taken off the OMB management watch list, so we are right now not in anybody's sights as far as the oversight boards. Everybody seems to be relatively happy with the way things are going. We discuss these projects periodically, review them, and overall, I think our processes have improved significantly.

Mr. Morales: That's fantastic. I know being under that kind of scrutiny puts a fair amount of undue pressure on your organization.

Mr. Boyer: Dave, there are many exciting approaches to technologies that are vogue in the marketplace today promising significant advantage and cost savings and improved systems integration. For example, there is the rise of Service Oriented Architecture, or SOA, which is the architectural style whose goal is to achieve loose coupling among interacting software agents. What is FAA's investment strategy to enhance its future technology portfolio?

Mr. Bowen: Well, Pete, I'd like to say we are further along in that area than we are. You know, it's funny, you get these sort of waves of timely topics or whatever, and some of it seems to be the most recent sort of wave du jour, if you will, in the IT community. But nonetheless, there are a lot of advantages to moving to a service-oriented architecture.

What I have got to say though is that because we are still operating in a federal model and we haven't established hard standards around software development and the software development life cycle, we have a lot of people doing a lot of different things. So we are not there yet. We certainly want to move to a position where we do have standards in this area, but we are just not there.

Mr. Morales: Well, we've talked a little bit about security earlier, but as you know, information technology security has been in the news a lot lately, with stolen laptops causing major problems in various government agencies, and also causing concern among our citizens over issues like identification theft. FAA has made significant progress in addressing computer security weakness. Could you elaborate on the progress made by FAA remedying such weaknesses?

Mr. Bowen: Al, I'd really be happy to, because we are very proud of the progress that we've have made in this area. It kind of takes us back to the discussion around -- the getting to green in the PMA agenda. And we made huge progress in the area of IT security. We have a state-of-the-art Cyber Security Incident Response Center which monitors the FAA computer networks 24 hours a day, seven days a week.

I talked about the various agencies that we are collaborating with in doing this and sharing data with. We think our center is one of the best in the civilian government, was just certified at a new higher level of CMM, which is a Capability Maturity Model standard that is in use for operations of this type. We have a performance objective in the flight plan of not having any cyber events disrupt our systems.

And despite the fact that we deny over one million access requests to our network each and every day, we have yet to have a significant cyber event. We are looking to set up this Cyber Security Center as a federal government center of excellence for computer system security. We are working with the Department of Transportation in helping them out and moving this forward. So a lot of progress there, things going well, and we are real happy about that.

Regarding the identity issue, this is an area of particular sensitivity to me, and may get back to the conversation we had around the health care experience, because in the health care space, this personal identity issue and identity theft issue has been on the forefront of our activities for the last five or six years going back to the HIPAA legislation that mandated some protections for particularly health-related information. So in the health care sector, we are very sensitive to that.

I talked to our Deputy Administrator probably a couple of months ago about the possibility of encrypting data on all the laptops, and got his endorsement to do that, and so we've embarked on a policy whereby we are not going to fool around with this stuff. We are going to basically make it a policy that every laptop in the Federal Aviation Administration is going to be encrypted, so that in the event it gets lost, stolen or whatever, we know that we are protected from that theft and the resultant loss of data, and any kind of implications that it may have, and not have to worry about it.

This goes beyond recently published OMB guidelines for the protection of what they call Personally Identifiable Information, or PII. But again, I feel strongly about this -- probably my health care background -- this is the right thing to do. We need to do it, and we are doing it.

Mr. Morales: On a similar theme with personal identification, we understand that the FAA is currently planning for the implementation of smartcard technology, programming personal access to facilities and information systems to meet the requirements of HSPD-12. What's FAA's strategy around this initiative?

Mr. Bowen: Well, we do have an HSPD-12 program in place. HSPD-12 has two phases: a physical access phase which allows an individual access to physical facilities, as well as a logical access, which allows an individual access into their computer systems applications and things that they are allowed to use. We are pretty far along in the physical access piece; we have systems in place that have some degree of that kind of capability. We need to put them together, and we need to bring them up to standards that are mandated by HSPD-12 in terms of the information contained on the card and things like that.

We have a little bit more time to work through the logical access implications of HSPD-12. We do have a team working on that. It is being driven largely out of our area, my office, and we are developing plans, we are developing an architecture and infrastructure. I think this is an area where we really want to spend time looking at what industry has done and also what other agencies are done, because unlike most of the initiatives, it seems to me in the federal government this is an initiative that is relatively consistent across all of the agencies.

You know, the Agriculture people need the same kind of physical access and logical access that we do. And so I'd certainly like to see more inter-departmental cooperation in this area so that we can move forward collectively and not all have to reinvent the wheel. Right now, we are taking a build approach to HSPD-12, particularly in the logical access piece. But we continue to look at what industry solutions are out there being offered by various vendors. And some of the agencies I think are taking a leadership position and offering services to other agencies, and we certainly want to explore those. Bottom line here is to make the best business decision that's in the best interest of the FAA.

Mr. Morales: Excellent.

What does the future hold for the FAA's IT office? We will ask CIO David Bowen when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Al Morales, and this morning's conversation is with FAA's Chief Information Officer, David Bowen.

Also joining us in our conversation is Pete Boyer, Director in IBM's Federal Consulting Practice.

Dave, what trends, whether demographic, technical, economic, and/or industry, will have the largest impact on the FAA over the next 10 years, and how will your office adapt to these changes?

Mr. Bowen: Well, this is a really exciting topic, and I think we touched on it when we talked a little bit about new technologies. But there are a number of industry events that are moving to sort of show us the wave of the future, a couple of trends that we are watching very carefully and actually participating in. Obviously, we see an increase in air travel over the next several years.

The air travel business fell off after 9/11, but we are to the point where it is now higher than it was at 9/11, and certainly as high as it was shortly before 9/11, so we see air travel continuing to increase. And that's a factor that we are going to have to deal with. We are actually projecting an increase in air travel overall by a factor of three by the year 2025. So that there is some sort of long-term study numbers that we've had done, and those are the kind of numbers we are seeing there.

There are a number of other things happening in the aerospace industry. You may have read about the coming wave of what we call VLJs, very light jets. These are small, nimble, four- or five-six-passenger jets that we are actively involved in certifying. They are using new technology and new types of manufacturing methods to bring these aircraft to market at much lower prices than we've seen private jets in the past, and so we think we are going to see an increase in that kind of traffic.

We also see commercial space travel developing. I just saw a note the other day, I think it was -- I forget, Paris Hilton or one of the Hiltons -- booked a flight on some space travel junket at some point in the future. We can kind of chuckle about that, but we have a branch in the agency that's dedicated to space travel, and they are actually very, very busy.

We certify space ports and oversee space launches and things like that, and we see this is an area of enormous growth for us. We also see the growth of what we call UASs, which are Unmanned Aerial Systems. We made some press, I think, recently where the sheriff of Los Angeles County wanted to fly some unmanned surveillance aircraft. And certainly we are working with people like the Naturalization Service, who are flying unmanned aerial platforms, if you will, to look at borders and everything else.

The military obviously has been using some of these systems for some time, but we are seeing increasing civilian uses for these types of platforms. So all this has to be dealt with through increased automation as a way of dealing with this, as our current system which is run by humans, largely human-dependent, is becoming more and more -- I shouldn't say incapable -- but it's certainly becoming more and more difficult for us to manage all these different types of air traffic, all operating in the same airspace.

So the solution is really going to be more automation. I mean, we don't see any way around it. We are in the process of developing what we call the next generation air traffic control system, which is going to enable us to deal with these projected volumes of traffic as well as these new types of aerial platforms.

Mr. Boyer: Now, Dave, according to a June 2005 Federal Computer Week survey, the FAA was voted one of the best places to work in the Federal IT. How do you intend to retain this impressive accomplishment?

Mr. Bowen: Well, I wish I had seen that before I joined the agency. And I talked about why I joined, but I think one of the reasons I joined the agency is one of the reasons why we got that high rating. I think we attract people who are passionate about aviation. That's why I joined the agency. My goal is to be sure that our folks in IT understand the mission of the agency and how they clearly contribute to it.

So from a standpoint of somebody coming into the agency, I think our mission around air traffic control and around aviation safety is very, very visible and very real to people. I mean, you walk through an airport and see little kids coming out of the jetway meeting mom or meeting grandma, where they travel to -- you know, travel to go and be with the family -- I mean that's really what we are all about. And I -- you know, I take that very seriously, and I know that a lot of my colleagues in the agency do, too.

We are trying to do some management things I think that will attract IT people to the agency. I think I talked about my management style. Basically, I see my role as sort of a coordination/collaboration sort of facilitator. I like to set goals, get people the resources that they need and get out of their way. I am a very hands-off manager, and my people seem to like that.

We talked about communication. One of the things that we've done and was done based on a suggestion I got out of one of my all hands' meetings is to develop a website, or a capability on our website, where people can anonymously ask the CIO a question. And we've had a lot of response to that, and a lot of questions about all different kinds of things. Not just IT topics, but all kinds of things all across the agency.

So I think that is one thing -- one of many things that we can do to be sensitive to the needs of our people, help communicate the mission of the agency, and clearly show them where their activities tie directly to our mission and to our flight plan. We reward our employees for superior performance, and we also try to have fun in the process.

Mr. Boyer: That's excellent. Given your private and public sector experience, what have you learned about the ideal skills and traits that a CIO must have to be successful across these industries?

Mr. Bowen: Ideal skills and traits? I think the most accurate description that I've heard of the CIO job is to build relationships and execute with excellence. And that came out of a quote by one of the CIOs in CIO Magazine, and I think that's very true, certainly at high levels in the government agencies where I operate. My technical skills have long since departed me, but it's my business skills and my relationship skills that I think are what the FAA is depending upon me to use to move IT at the agency forward.

I think you have to know and understand the business you are in. And I am going to talk probably in another month or so, maybe two months, I think, to a group of health care people about how health care skills may transition to other industries. And we kind of touched upon that in this discussion, but I think the fact that I was a pilot and have operated in the airspace system and owned aircraft and gone through all the pilot-type stuff really helped me to understand the business, plus the fact that I bring a passion to the business as well. So I think in terms of private versus public sectors, those are some universal, I think, similarities.

Mr. Morales: Dave, you've obviously had a very successful private sector career, and now you've made the transition over to government. What advice could you give to a person who is interested in making a similar transition over to public service?

Mr. Bowen: Well, what advice could I give? Kind of a tough question. I would say that you need to find something that you need to be -- that you can be passionate about and go for it. In my limited experience, and I have been in the federal government now six months, the one thing that really surprises me is that there is an enormous range of opportunities to do things in the federal government. Enormous possibilities for interesting assignments, for details, for moving around in the federal, sort of, you know agency world and moving up.

I think we probably have more flexibility to do some of these things than I would say we have in the private sector. And the government certainly encourages that as a way for federal employees to develop their career. So certainly that potential is out there for people to do things, and if you have a positive attitude and you've got initiative and you are passionate about the agency mission and what you want to do, I think the potential is unlimited, so I tell people to go for it.

Mr. Morales: Excellent, excellent. That's great advice.

We've unfortunately reached the end of our time, and that'll have to be my last question. I do want to thank you for fitting us into your busy schedule. But more importantly, Pete and I would like to thank you for your dedicated service to the public and our country as CIO of the FAA.

Mr. Boyer: Thanks Al, I am delighted to be here. If people want to learn more about the FAA, they can go to our website, faa.gov, lot of stuff there. And I hope to maybe come back and talk to you again soon.

Mr. Morales: Excellent, we'd enjoy that.

This has been The Business of Government Hour, featuring conversation with the Assistant Administrator for Information Services, and Chief Information Officer for the U.S. Federal Aviation Administration, David Bowen.

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

Once again, that's businessofgovernment.org.

As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad who can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support.

For The Business of Government Hour, I'm Albert Morales.

Thank you for listening.

 

Dr. Reginald Wells interview

Friday, September 29th, 2006 - 20:00
Phrase: 
"We recognized that because of the retirement wave and the importance of maintaining our workforce, our competency, and our commitment to service, that we needed to revitalize our recruitment program and efforts."
Radio show date: 
Sat, 09/30/2006
Intro text: 
Wells discusses how SSA is assessing and planning for the pending retirement wave. He describes some of the solutions to the retirement problem that SSA is considering, including workforce transition planning, succession planning, and new recruitment...
Wells discusses how SSA is assessing and planning for the pending retirement wave. He describes some of the solutions to the retirement problem that SSA is considering, including workforce transition planning, succession planning, and new recruitment techniques. Wells also talks about SSA's training programs and the challenges facing new and long-time employees. In addition, Wells explains how the Office of Human Resources tracks and uses customer satisfaction information. Human Capital Management
Complete transcript: 

Originally Broadcast Saturday, September 30, 2006

Arlington, VA

Mr. Morales: Good morning and welcome to The Business of Government Hour. I'm Albert Morales, your host, and managing partner of The IBM Center for The Business of Government. We created this center in 1998, to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about the center by visiting us on the web at www.businessofgovernment.org.

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 Dr. Reginald Wells, Deputy Commissioner of Human Resources for the Social Security Administration.

Good morning, Dr. Wells.

Dr. Wells: Good morning, Al.

Mr. Morales: And also joining us in our conversation from IBM is Tony Hess. Good morning, Tony.

Mr. Hess: Good morning, Al.

Mr. Morales: Dr. Wells, some of our listeners may be familiar with the Social Security Administration, but why don't we start with an overview of the history and mission of SSA.

Dr. Wells: I would be happy to, Al. The Social Security Administration came into being after President Franklin Delano Roosevelt signed into law the Social Security Act, back in August of 1935, and it began as a board but then evolved into an independent agency, and over the years it has really been like most federal agencies. As our government tends to enact laws in very incremental ways with lots of amendments and changes, it has morphed into something much larger, serving many more people. The original mission was to serve and basically provide income security for individuals who retired from gainful work.

Over the years, it's evolved, continuing that basic mission, but also evolving into serving or supporting people with disabilities, so it's essentially a social insurance program aimed at making sure that people have the subsistence they need to live in our society. And we do a tremendous job, in my opinion, on carrying out that mission. Essentially, we provide, for example, some 48 million folks in our nation with benefits that, I believe, are worth somewhere in the neighborhood of $521 billion, so it's really evolved into quite a substantial program. A very successful domestic program, obviously.

The Agency has actually once again returned to independent status. It had been part of the AGW; then HHS; Health, Education and Welfare; and Health and Human Services, but in 1995, once again it became an independent agency.

Mr. Morales: You have teased us a little bit with the size of the organization, can you give us a better sense of the scale, in terms of budget, number of employees, and geographic footprint of the organization?

Dr. Wells: Right, the total budget in '06, was $595 billion and the workforce is 65,000. As I think most of our listeners probably know, social security, we estimate, affects at least 95 percent or more of the public, and that range goes all the way from getting a social security card to receiving disability benefits. The mission is carried out through a network of field offices, hearing offices, teleservice centers, and program service centers that essentially allow us to be in communities around the country. And the commissioner often says that social security for many people is the face of the government, because most folks know where their social security office is.

Mr. Morales: Great. Can you give us now, a sense of the role and mission of your office, specifically, the Office of Human Resources? How big is your team and how are you organized?

Dr. Wells: I am responsible for the Office of Human Resources, and that is a cadre in headquarters of about 400 people. Because we are so decentralized as an organization and because we have 65,000 employees scattered over the entire country and beyond, actually we have some international involvement, the Social Security Administration has to administer that HR or human capital role through those regional offices that we have out there. And we have another 300 employees who work technically for the operations part of our organization, but because of our responsibility to oversee the policy for human capital and human resources, we oversee them technically.

One of the things we do in order to ensure that we have consistency across the agency is to be responsible for going out and monitoring the hiring, retention, and support of employees in the field. And of course, we do a similar thing for headquarters under the supervision, in a sense, of the Office of Personnel Management. In addition, my budget is roughly $100 million that includes obviously a lot of the service that we render to the employees for things like training. I have the Office of Training under my responsibility, the Office of Personnel, the Office of Civil Rights and Equal Opportunity, and the Office of Labor-Management and Employee Relations. Then I have a very small, actually new, component, a very small unit we call the Human Capital Planning Staff.

That allows us to do a lot of the coordination between my components and also it tends to oversee the national recruitment for the Agency. The gentleman that heads that component is responsible for our national recruitment campaign and he works through the regional offices and with local managers. It's a relatively small group, given the demands on it, but it allows us to do some of the tracking that is necessary under the President's management agenda. That's one of the important initiatives that all federal agencies are engaged in right now. They are being tracked by the Office of Management Budget and the Office of Personnel Management on how they go about certain lines of business, human capital being one of those.

Mr. Morales: Perhaps you could tell us a little bit more about your specific role. Although, your title is much longer, many of our guests will understand your role as being the Chief Human Capital Officer at SSA?

Dr. Wells: I wear those two hats. My social security formal title is Deputy Commissioner for Human Resources, but the government has the role, similar to the Chief Information Officer and the Chief Financial Officer, a Chief Human Capital Officer for many agencies. In some agencies the HR lead is not necessarily the Chief Human Capital Officer. At social security, the Commissioner's thinking was that those responsibilities should be contained under a single individual who can then coordinate and make sure that what we are doing internally is certainly consistent with what we are being expected to do externally. I will explain that a little bit.

As Deputy Commissioner for Human Resources, obviously, I have the responsibility for managing those areas that I have described a moment ago, personnel training, civil rights and labor management. In addition though, there is an expectation I think with this administration to look across government to make sure that we are achieving some consistency in the way we administer our strategic management of human capital, and so the Chief Human Capital Officers Council, and the Chief Human Capital Officer role was established in 2002 to make sure that we are achieving some continuity and that we have Chief Human Capital Officers coming together in a central place and sharing issues and working on planning for things that will further our interest as a government.

Mr. Morales: And that's very interesting. We also understand that you come from a family of public servants. Perhaps you could tell us about growing up with a family culture of federal government work?

Dr. Wells: Yeah, I do. I come by this work, pretty honestly, through my mother who worked for the Internal Revenue Service for 44 years. And growing up, of course, I heard a lot about the importance of public service, and I was fortunate to have both parents. My father worked in a factory in the private sector, but my mother worked in government and so I heard a lot about what that was like, and I never envisioned necessarily going into a government work, but I guess that acorn doesn't fall too far from the tree.

I also have a brother who works for the Veterans Hospital System. He was a Vietnam vet, came home, and, wanting to counter balance what he had experienced over there, he went to medical school and is now working in the VA System.

Mr. Morales: That's a great history. You obviously have a very distinguished career, including running the District of Columbia's Department of Human Services as well as Associate Commissioner of the Administration of Developmental Disabilities, how have these roles shaped your current management style?

Dr. Wells: Well, it obviously impacted it a great deal. I grew up, if you will, a little bit every time I had a new management experience, a new leadership challenge, and all the way from my early days working in New Jersey in what they called citizen services, the equivalent of what Health and Human Services does at the federal level, and also in their Health and Rehabilitation area, I got a lot of opportunity to see how things work at the local level; how local issues and concerns from direct service to the public sort of challenge you and force you to do your very best and to deliver that service. And working through people to get it done, is what you learn obviously, when you have a team.

And I got a lot of experience with those challenges in New Jersey. And then when I came into the District of Columbia it was probably a good time for me to experience that. I started out managing one of their institutions located in Laurel, Maryland, and was later asked to come into the city proper, and manage some of the programs; initially, the disability programs, but later I was asked to serve as the Deputy Commissioner for social services, and it really was that everything that was in public health and mental health fell under social services, so it really was a challenge and a lot of crisis management. You learn very quickly how to adapt to situations.

And I guess what really impacted me and influenced me was operating without all the tools and all the resources one would ideally like to have. And I think that is one of the challenges that public servants, no matter where they are, whether at the federal, state, or local level are sort of challenged with. There is never enough money to meet the needs of the public, particularly when you are talking about the kinds of programs that we are responsible for and the types of populations that rely on our support, so my management style has evolved into one that's pretty participative. I really believe that we get things done through teamwork, through collaboration, through effective communication, and those have been hallmarks of how I have tried to conduct myself as a leader and as an executive.

Mr. Morales: Excellent. How is the Social Security Administration managing the government retirement wave? We will ask Chief Human Capital Officer, Dr. Reginald Wells, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour, I'm your host, Albert Morales, and this morning's conversation is with Chief Human Capital Officer, Dr. Reginald Wells of the Social Security Administration. Also joining us in our conversation is Tony Hess.

Dr. Wells, not that this topic is immediately going to impact anyone in this room, but it is an important topic, and that's the pending retirement wave. What's happening now at social security in terms of staff retirement?

Dr. Wells: Well, and I'm glad you asked me that question, Al, because that is something we have been tracking as an organization at least for the last decade or so, maybe even a little longer than that. It was the foresight, I think, of the leadership at the time to pay attention to the baby boomers moving through employment and getting to a point in the not too distant future where they would be retiring in larger numbers. I think the leadership felt they needed to take stock of that and social security, maybe because of the role we play, tends to be an organization that is very data driven.

We have, just to give you a sense of the actuaries on staff who project well into the future, the solvency of the program and the service delivery trends and that kind of thing. So we started looking at how many folks are we likely to lose and at what points in time are we likely to lose them over a decade ago. So we do what we call a Retirement Wave Analysis. We update it every year. Right now, approximately 23 percent of our workforce is eligible to retire. Fortunately, most folks work a little beyond their eligibility and that's something that we have experienced at social security.

I think a lot of federal agencies have that. I think our rate beyond eligibility is something like 3.7 years. In five more years that number of people eligible will go up to 40 percent of the current workforce and in 15 years it goes up to about 54 percent, so obviously we had best be in a position to replenish that workforce and to have some sense of when they would be likely to retire. We do projections and we use a model for determining what those numbers are likely to be. And what we are projecting right now is that over the next five years we are going to lose about 21 percent of our workforce.

So it moves us to really pay attention to that and to have some strategies for keeping it from being such a spike. I think the way the model projects are right now, we are looking at the peak of losses between 2008 and 2010. We have been using some strategies however to try to flatten that curve so that we don't have a tremendous spike at any particular point in time over the next few years.

Mr. Morales: So you just referenced this wave of baby boomers retiring across the country, and told us a little bit about how this puts additional pressures on services that supported the SSA. How are you preparing for this perfect storm of resource challenges?

Dr. Wells: Well, it isn't easy, as you might imagine, and I knock on wood every time I talk about this, because we really have not had the difficulty yet. That's why I knock on wood, because I don't take that for granted, recruiting and hiring people. But to address your question about the baby boomers moving into those disability-prone years and moving into retirement causing a greater obvious demand for our programs, we are doing things like a lot of agencies. We are trying to automate as much as we can.

The Commissioner recently announced that we have new regulations for our disability program. We were making some disability service improvements, which should allow us to move them through the process more quickly in general, but where there are appeals, we should be moving people through that process a lot quicker as well so that they have an answer much quicker about whether they are going to be eligible and entitled to benefits. On automation, there has been some reform of some of our systems to try to make it less cumbersome, less labor intensive obviously for us. Technology is not going to be a panacea, but I think it is going to help.

More and more people are applying for benefits over the internet. We are pushing that and promoting that a lot. In my area, people will be able to apply and that's been something that the Office of Personnel Management has been working on as well so that the opportunity to apply for federal jobs is streamlined from what it has traditionally been. So we are using various techniques, technology, systemic reforms, and I guess speaking regarding the human capital issues. We are really emphasizing training within the organization.

We want our employees to be the best they can possibly be. Part of that are the concerns about the loss of institutional memory when these very seasoned employees we have now move onto retirement, well-deserved retirement. We want a group of younger employees coming behind them to get up to speed very quickly. And I think, the retirement wave is a challenge for all federal agencies, and actually, is a challenge for all organizations, because it's not just a public sector phenomenon. But I think you really do have to invest on the front end to make sure you bring people into the organizations who really want to be there and want to do that kind of work.

Our training programs or entry-level training programs are pretty extensive. People can come in and end up in 16 weeks of training before they are even are allowed to attempt to serve the public and that's a substantial investment. So you don't want a serious retention problem early on. If people come into the organization and work five or ten years, and you get a really good service out of them and they choose to move on to other things, so be it, but to have someone new come into the organization, you give them 16 weeks of training and they punch out almost immediately would be a tremendous waste. And fortunately, particularly with new recruits, we have a pretty good retention situation.

Mr. Morales: Perhaps you could tell us a little more specifically about some of the activities your office is doing to develop and manage this kind of challenge? For example, what is the workforce transition plan?

Dr. Wells: The workforce transition plan, actually, was the precursor to the human capital plan. Truth to tell, it actually attempted to do a lot of the same kinds of things. It sort of, describes what the workforce is, what kind of succession planning we should be engaged in, where our greatest needs are from the human capital perspective. We have since adapted it to become really more like a tracking document for us, so we updated quarterly to see in specific detail what kind of activities we are engaged in, in our human capital work. And it just helps us stay on top of what we are doing and allows us to self evaluate whether we are doing all the right things and working on all of the important things.

Mr. Morales: You alluded to succession planning, and certainly this sounds like one of the keys to success in managing this whole retirement wave. Can you provide some lessons or advice to other government leaders who are facing this challenge of succession planning?

Dr. Wells: I think I can offer a little bit of advice. I think that it's very important, first of all, to know what your needs are as an organization. If you have a core mission that requires a certain competency or a certain classification of employee, then obviously you have a little bit of a sense of what kind of skills and abilities the people need and if there are logical pathways to hire or to work, obviously, you want to wait to try to identify the people who are most likely to do the best job there. Obviously, we always have to be engaged in merit principles and you want to never have instances where you regress into prohibitive personnel practices, but it is important to try to identify employees who are interested in moving up into other types of work that are important to the organization.

One of the mechanisms we used to do that, which certainly withstands the scrutiny of meeting merit principles is we have a number of career development programs which allow us to compete within the organization for identification into one or more of these groups where you would be on developmental assignments, getting training, doing this developmental work that allows you then to be a prime candidate for promotional opportunity down the road. We have four mechanisms that we use dealing with the various levels of our organization. For example, we administer our own senior executive service career development program, which is geared toward our GS-15 employees who aspire to be senior executives and they go through a year, or 18-month developmental process where they receive a lot of training.

Some of it is formalized training provided by the Office of Personnel Management at FEI, Federal Executive Institute. Some of it is actually working in areas outside of where they may have come from. So if you were a GS-15 working in operations, you might work in systems, or you might work in human resources and get a better appreciation for the organization as a whole. The next level down for our developmental programs is our advanced leadership program, and it's geared to our 13 and 14 graded employees.

A very similar program, it demands having a mentor, someone that can work with you around your development, developing an individual development plan so that you have some very specific skills you are expected to live up to and meet, and you identify through this collaborative process, what goals you are trying to achieve in terms of self development and professional development. We have a leadership development program, which is the next step down for 9 through 12 graded employees and it's very similar to the others. It is just the level of complexity for the work that you do and the exposures that you get. And then the Presidential Management Fellows is a mechanism we use to bring some pretty talented people into the organization. They may not have grown up in social security, but they have advanced degrees and are willing to come in and get on that track toward leadership.

Mr. Morales: This is a very extensive program. How is the Social Security Administration recruiting new talent? We will ask Chief Human Capital Officer, Dr. Reginald Wells to explain this to us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host Albert Morales, and this morning's conversation is with Chief Human Capital Officer, Dr. Reginald Wells of the Social Security Administration. Also joining us here on our conversation is Tony Hess.

Dr. Wells, we spent a little bit of time in our last segment talking about the folks currently within the administration. What changes are you making to the recruitment process at the Social Security Administration?

Dr. Wells: We recognize, because of the retirement wave and the importance of maintaining our workforce both the numbers that the public, and the Congress, and the President expect, and also the competency, and the commitment to service. And so we, a few years ago, decided we needed to revitalize our recruitment program, our recruitment efforts, and we came up with a tagline: "Making a Difference in People's Lives and Your Own," as a way of branding social security, the service agency that it is.

It was very important for us to do that because, within our mission, the Commissioner, with our strategic plan, has identified four areas: service, stewardship, solvency, and staff, and it's extremely important to bring employees into the organization who bring a skill set that and an interest in service that allows them to really apply themselves to what we expect them to do and what the public expects in the way of service. So we developed this integrated marketing campaign, and we have really updated our materials so that they can be specific to individuals interested in particular career paths.

Social security is a huge organization, and if you have a systems background there is a place for you in one of the largest computer systems in the world. Collecting all of that payroll data, the information on payroll taxes, social security numbers, and the new disability system which is paperless, so there is obviously a lot of work going on in that area.

We have an agency that's large with a tight budget. We have a pretty large budget staff. And well…it's not large. When I say large, that's relative.

Mr. Morales: Be careful what you say.

Dr. Wells: Yeah, exactly. It's not large in the sense of large numbers of people, but they manage a large budget, and they have to be really good at that. So we obviously recruit and hire people who are very good at that. So if you have a financial management background, you are the type of person we would want to bring in to the organization. In that area, our largest operation obviously is our Deputy Commissioner of Operations component. And we need people there who obviously bring a very strong service ethic and who are very good in dealing with the public across the counter and across the desk and who bring an empathy for the types of people who rely on us for economic support.

And in the Office of Human Resources, where it's, as I said, relatively speaking, a small staff, we want people who understand and have a commitment to that type of work. My point is that it's a very diversified organization. And if a young person or even a mid-career person had an interest in this kind of work, we are trying to reach them, so we developed this integrated marketing campaign. We put an emphasis on communicating with people using technology, so we do as much work as we can over the internet.

And we try to get ads and magazines that cater to various populations, because we have to be a diverse organization. Diversity for us is a business imperative, because we serve the entire population. And in order to do that, you obviously have to be able to relate to them. We need that sort of diversity of thinking within our organization to be effective, and so that's very important. We've attempted as have the government as a whole to streamline the hiring process so that people don't have quite the cumbersome role they have coming in.

In fact, the Partnership for Public Service just put out some information from a study that they've done that is focused on college graduates. And what they reported was that people were basically very interested in doing public service, but they very often found it cumbersome or they didn't know where to go to pursue that interest. And so we do go out to colleges and universities and we do job fairs that try to let people know just what kinds of career opportunities there are at the Social Security Administration.

It really requires a lot of outreach, a lot of coordination, and we, because we are so decentralized, while we have recruitment lead and headquarters, we actually work through lead recruiters in all of the regions so that we can have a local presence. And they can cultivate relationships with local colleges and universities, and people who can refer the best and brightest to us.

Mr. Morales: You touched upon, in the last segment, some of the leadership programs that you have at SSA as well as potentially up to a six week training program for some of the new hires. Many of our guests across government share that a great deal of their focus is on ensuring that staff have these appropriate skills. With such a large organization distributed across the entire country and in some foreign territories, how do you manage this at SSA?

Dr. Wells: It's not easy, as you probably appreciate. It requires a lot of focus and attention. We have an office of training, as I mentioned at the outset of this discussion that is solely focused on trying to make sure that our workforce is receiving the best training they can possibly receive. And we've put a lot of emphasis, as you would probably hope we would, on our entry level folks coming into the organization. Our programs in one sense are very basic in terms of providing income security for people.

But in other ways, they're very complex, because there are a lot of rules around eligibility and assets that people bring to us when they come in requesting support. And so it's vital that we do that entry-level training and that we get our new employees up to snuff. But the employees who stay with us, and work with us over the years, and do an entire career with us, of course, have to be nurtured as well. They have to be kept as interested and committed in work. And so you have to replenish them, you have to give them support.

We have a significant e-learning mechanism that employees have access to. It allows them to go online and take over 2000 courses that are available in a variety of areas. Some of it is technical, but it can also be self development; it can be courses that allow them to perhaps make a career or transition to another part of our organization. It's really a tremendous resource, and folks can access it either from their PC at work, or from home. So that part of it is good.

We are really focusing on honing in this year and last year on our leadership training, because we like a lot of organizations when resources are tight, tend to not do as much of that as is really warranted by the needs of your management cadre. And so we have dedicated ourselves. And I'm really pleased that the commissioner in her foresight felt that in order for us to really be effective into the future, we have to cultivate that talent, and build a leadership cadre that will take us obviously into the next 30-40 years of this program.

Mr. Morales: Can you tell us about the role the Office of Human Resources plays in promoting diversity at the SSA, and do you have any advice you'd like to share with other government leaders?

Dr. Wells: Well, my Office of Human Resources plays a major role with the support and the commitment of all of the senior executives. As I said earlier, diversity is a business imperative for us in a lot of ways, and I'm defining diversity in the broader sense, not simply the EEO compliance focus that I think a lot of organizations focus on very appropriately. But we broaden it, because we feel that in order to be inclusive, we have to have a diversity strategy that encompasses all employees, not simply certain groups of employees. So we basically pay attention to the data. Once again, SSA has always been a data-driven organization.

We track, very closely our hiring, and promotions, and training and on a lot of dimensions. I am proud to say that as of today, because it's constantly changing, we are at parity with all of the numbers for all of our protected groups. And our workforce is comparable to a civilian labor force across the board. And that's something we're very proud of. In addition, we really do well hiring employees with disabilities. And it's not something we rest on our laurels about, because it is a very underemployed group of folks in this country.

But we feel, given that it is part of our mission to serve people with disabilities, that we really should have a workforce that also reflects and has empathy for that population. So we do real well there. Some noted magazines: Careers & the Disabled, have recognized us as one of the better agencies in this regard. And we put a lot of emphasis into things like reasonable accommodations for employees with disabilities.

We are bullish about hiring veterans, and we're working as a matter of fact, with Veterans Affairs to basically step up some of the things we are doing in that regard.

One of the things we're talking with them about, because we do serve people with disabilities as a core part of our mission. We're really interested in some of those vets coming back from the war, who may choose to get employed with another federal agency. And we're hoping it can be us, because of the insights they'll bring, and the commitment that they have to service. But I think the important thing really is to pay attention to your workforce, understand the ways in which it's diverse, and the ways in which it is not and be deliberate in going about addressing that.

And obviously in doing so, you have to be sensitive, as I said earlier, to avoid prohibited personnel practices and maintain merit principles. Those are always a given. But I think within that, there's still a lot of opportunity to reach out and communicate to populations that you may not have traditionally talked to or approached about coming into your organization and being a part of it. The other thing we do, which is a little unique, although I think there are a few other agencies that do it, is we have a number of advisory groups that we charter and work with very closely.

Most of them represent those protected categories. But we have found that has been a really good resource, because at the Social Security Administration, those people not only advise us on how to recruit and hire members of their group, but they also do a lot of volunteer work in the community, building relationships with the community, and of course, that then accrues back. People who they may have helped, or people who may have observed them helping others will want to come and work for an organization that's willing to do that.

Mr. Morales: What does the future hold for the SSA? We will ask Chief Human Capital Officer, Dr. Reginald Wells to explain this to us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour, I'm your host Albert Morales, and this morning's conversation is with Chief Human Capital Officer, Dr. Reginald Wells of the Social Security Administration. Also joining us in our conversation is Tony Hess.

Mr. Hess: Dr. Wells, we know that customer service plays an important role in the SSA's strategic plan. How do you track customer satisfaction within the Office of Human Resources, and what kind of feedback do you typically receive?

Dr. Wells: Well, Tony, we get a lot of feedback. Fortunately for me, most of it is very positive. There are no shrinking violets among the executive team at Social Security, and so I get a lot of weekly feedback. The Commissioner holds an executive staff meeting once a week, every Monday. We gather as a team and we share important things, we discuss things. Very often, before and after, and sometimes during those meetings, people are commenting on the level of support we offer from HR, and I'm fortunate, because as an executive, most of that feedback is very important.

And when there are issues, I think what they understand is that we are there to serve them. We are there to facilitate their ability to serve the American public, and so it's very important for us to meet the needs of our workforce. And that's not always easy, because we do have legitimate limitations in things that we can do. Certainly as a public sector organization, you're protecting stewardship which is one of the things I mentioned. It is very important to our Commissioner and our strategic plan, and you really do have to utilize the public dollar in a very responsible way.

So there aren't opportunities to do Cadillac things sometimes for employees. But I think the fact that we focus on their needs and we try to meet them where they are, and support them when meeting the needs of the public, I think goes a long way. We have a number of programs that we do under the group of work which we call "All Ages All Stages." And that is really a way of trying to address the needs of the workforce as an intergenerational group, particularly now, with a lot of new employees coming in, and a lot of senior folks, you know, moving to retirement.

So we do surveys of employees. We often get feedback unsolicited, good and not so good, when people feel that way. And we just remain very receptive to any and all feedback. I think that having me at the table as a partner goes a long way. And there are some organizations that don't have that opportunity. In fact, the Chief Human Capital Officer role was intended particularly for those agencies where the HR human capital interests were not always sitting at the corporate table. At Social Security, that has been true for a long time. They've had a Deputy Commissioner for human resources for a while, well before the CHCO was established. So it really has worked very well for us.

Mr. Hess: We understand that the Social Security Administration was involved in providing relief to the hurricane victims. Can you tell us about SSA's involvement, and what lessons did you learn that can provide insights into possible future emergency responses?

Dr. Wells: Well, I've been with the agency for over four years, it was four years in April. And I don't think I've ever seen a better example of public service than I saw with that particular crisis. Last year when hurricane Katrina, and then Wilma and Rita hit, I think everyone became painfully aware of the devastation in that part of the country. We have countless examples of where our employees, even though their houses were washed away, were, within a day or two, mobilized in meeting with hordes of people who obviously were reeling from the devastation of the hurricanes.

And it doesn't get any better than that as far as public service is concerned. They worked, 12, 14, 16-hour days, 18-hour days, or more. They were reeling back and forth between Baton Rouge and the New Orleans area in shifts, keeping around-the-clock service to the people, and we got checks out within a matter of days. It really was one of the success stories. I didn't get the sense it got a lot of publicity in terms of the main media, but within government, I think, we were recognized as having really hit the ground running.

And it really was not a surprise to us within the agency. I mean, obviously there was no storm as devastating as that one. It was a once in a lifetime kind of catastrophe. But that's what we do. Every year, there are hurricanes some place. Every year, there are earthquakes of some sort. Every year there are brush fires that may destroy the peoples' homes and displace people. And our agency always adjusts to it. It always has been on a smaller scale obviously, but we apply the same approaches in terms of this large scale catastrophe.

And really the lessons that we can offer are things like the importance of communication, making sure that people know what they're supposed to do and being prepared, having done that planning, or having that experience, even if it's on a smaller scale, addressing those kinds of needs is really, really important. And being visible, I think, one of the things we took away from it was that leadership really does matter, and our people stepped up when the need was there, to become the leaders for distribution of checks or whatever was necessary to keep people going.

Mr. Hess: Many in government encouraged folks who are starting their career to think of government as a stop in a long career. Do you encourage this philosophy and can you tell us what advice would you give a person who's interested in starting a career in public service?

Dr. Wells: There is a lot of discussion about that today. I know that Director Springer is trying to address that issue. Director Springer, the Director of Office of Personnel Management, she's doing a lot of very fine work, and she is looking at the fact that some people are not necessarily looking at government as their final stop in terms of their career path. At Social Security, we've had a little bit different experience, and again, I knock on wood, because it could change. But we've had a lot of young people coming into the organization.

And I think because we are so big, relatively speaking, and because we do direct service, which gives that sort of tremendous intrinsic reward feedback to people, we've had a lot of our young people coming, and saying, "You know, we think we do want to spend a career with you." Of course the caveat is, "as long as we're able to continue to progress in the organization and advance and move into areas that we really want to move into as we get older and more established in our careers." So we're really sort of shaving it that way. As I said earlier, we do a lot of training on the front end.

And we ideally don't want to lose any of those people even after 30-40 years. But where people are looking at us as maybe the first stop, obviously you've got to be prepared to address that too, and if you only want to serve for 10 years we're still interested. And, you know, it's not servitude. We happen to think if you come and work for us, you'll probably want to stay for a career, because I think there are a lot of opportunities working in the Social Security Administration.

Mr. Morales: That's great. So what advice would you give a young individual who's getting ready to launch their career?

Dr. Wells: Come work for us.

Mr. Morales: Excellent, excellent. This has been a wonderful conversation, and unfortunately, we've reached the end of our time. I want to thank you for fitting us into your busy schedule. But more importantly, Tony and I would like to thank you for your dedicated service to the public and our country in the various roles you've held at the SSA and in the federal government.

Dr. Wells: Well, as a follow-up to your last question, I just want to offer to anyone listening, our website: it's www.socialsecurity.gov/careers. And if you go into that site, you will get a really good sense of all that we offer, and as I said earlier, I think there are a lot of opportunities not only in terms of direct service delivery to the public, but also all of those support roles behind the scenes, that infrastructure that allows our frontline workers to be so effective.

Mr. Morales: This has been The Business of Government Hour, featuring a conversation with Social Security Administration, Chief Human Capital Officer, Dr. Reginald Wells. Be sure to visit us on the web at businessofgovernment.org. There you can learn more about our programs and get a transcript of today's fascinating conversation. Once again, that's businessofgovernment.org.

As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad, who can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support. For The Business of Government Hour, I'm Albert Morales. Thank you for listening.

Jennifer Main interview

Friday, August 18th, 2006 - 20:00
Phrase: 
Chief Financial Officer U.S. Small Business Administration
Radio show date: 
Sat, 08/19/2006
Guest: 
Intro text: 
Chief Financial Officer U.S. Small Business Administration
Magazine profile: 
Complete transcript: 

Originally Broadcast Saturday, August 19, 2006

Arlington, Virginia

Mr. Morales: Good morning, and welcome to The Business of Government Hour. I'm Albert Morales, your host and managing partner 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 by visiting us on the web at businessofgovernment.org.

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 Jennifer Main, Chief Financial Officer at the Small Business Administration. Good morning, Jennifer.

Ms. Main: Good Morning.

Mr. Morales: And joining us in our conversation is Steve Watson, partner in IBM's financial management practice. Good morning, Steve.

Mr. Watson: Good morning, Al, and good morning, Jenny. Thanks for joining us.

Ms. Main: It is good to be here. Thanks for having me.

Mr. Morales: Jenny, let's start at the beginning. Could you tell us a little bit about the mission and the history of the Small Business Administration?

Ms. Main: Sure. The Small Business Administration was founded in the 1950s -- 1953 to be exact. So we just had our 50th birthday. And the mission has really been the same since the agency began, which is to serve the needs of small businesses, particularly in the United States. We do a little bit of outreach across the world, but the United States small businesses are our focus.

And the programs that we provide have also essentially been the same since the beginning of the agency, which is to provide credit opportunities. We used to do direct loans. Now we usually are partnering with the banking community to provide guarantees on loans that they are doing for small businesses around the country. We provide a lot of entrepreneurial development assistance, technical assistance you might call it, through partners across the country, the biggest program in that area, the small business development corporation program. There are over a 1,000 SBDCs -- they're called small business development corporations -- across the country, tend to be in colleges and universities that support entrepreneurs in their areas of local resources

And also procurement -- obviously the SBA's 8(a) program, which was named for the section of the act, but it's to assist small businesses, and particularly economically disadvantaged small businesses to get procurement opportunities, particularly with the federal government. We have a goal of ensuring that 23 percent of the federal contracts go to small businesses across the country.

So those are the main programs, particularly for small business assistance. We also advocate on behalf of small businesses within the federal government, for example, regulatory issues that come up that could have a particularly burdensome impact on small businesses.

And we also have a major role in disaster recovery across the country. And that one is not just small businesses, but homeowners as well. And that's the long-term economic rebuilding in an area after a disaster has struck. We provide long-term loans at very reduced rates. They tend to be -- right now, probably around 3 percent, which is a nice rate to get. For homeowners and businesses that have suffered physical damage or for businesses that have suffered economic injury, losses of -- there are no customers for the business and it shuts down, for example, so they can get recovery for those type of things.

So those are the main programs and the main areas that we've been working in. And really, although the programs have, you know, sort of, modernized over the years, they've really stayed the same in terms of their core purposes, and who they're -- they intended to serve.

Mr. Morales: That's great. That's certainly a very broad mission. Can you give our listeners a sense of the scale of the operations over at SBA? How many businesses are supported by your organization?

Ms. Main: Well, currently we're doing about over a 100,000 guaranteed loans through our main business programs each year. That totals a portfolio of about $60 billion right now in our primary lending program, again named for the section of the act that it was made under, 7(a), as the loan program that most people are -- the most familiar with. Between that and our Section 504 real estate development program, we have over a $60 billion loan portfolio. And of course we actually have a venture capital program as well, which some people are familiar with.

And then separately, our entrepreneurial development programs -- we reach, we believe, over a million businesses every year, and of course some of them are existing businesses, some of them are startups -- people who are considering going into business and trying to make that decision. And on the procurement front, I don't -- I'm not sure we have a good measure of how many we've assisted.

We have a lot of different things we try to do. We do business matchmaking opportunities, for example, where we've reached thousands of small businesses that are meeting up with either large contractors or potential government agencies or other entities that could be looking for small businesses to help them. So it's in the -- well over millions range that we've helped; certainly, you know, aggregate, you know, it's over 20 million over the years.

Mr. Morales: Can you tell us about the mission scope of your office specifically within SBA? Give us a sense of the number of employees, the size of the budget that you manage.

Ms. Main: I'll tell you, the whole agency is about 2,100 people -- our regular staff. We have disaster staff that can range -- 400 or so is our typical baseline. In the Katrina situation over the last year, the disaster employee base actually grew to about 4,000, which is, you know, twice the agency's size. So you have to, you know, kind of -- the core regular agency is 2,100. So it's a fairly small agency. The CFO's office is about 107 of those. And our budget in the CFO's office is, you know, $1-1/2 to 2 million range. It's pretty small. For my discretionary, you know, things that we need to get done. With the staff included, it's over 10 million in terms of their salaries.

The overall agency budget is just over maybe $650 million on average. Of course, the big factor's disaster. This past year we're going to spend a couple of billion dollars at least lending to victims in the disaster in the Gulf area. So our budget, if you looked at it at any one time it really is dependant on disaster.

Mr. Morales: It's just a variable component too.

Ms. Main: Right. If you exclude disaster, we are in the $600 million range.

Mr. Watson: Jenny, can you tell us a little bit about your responsibilities as the CFO, and how you support the mission of the SBA?

Ms. Main: Sure. I kind of think of what we do on two different fronts. On the one hand we're the financial operations, which means we have to work through the budget process, ensure that we get the funds, and just properly track them and account for them, make sure that everyone knows how much they get, what they are authorized to spend, that we don't spend a dime that we don't have all the paperwork properly in place for, and track that all the way through and do the financial reporting that's required.

We're one of the 24 CFO Act agencies -- we're one of the smallest -- but that means we're required to do anything that a CFO Act agency is required to do. So we have audited financial statements and quarterly reporting, et cetera. So the CFO's office covers all of those basic operations. And we certainly I think are typical in that sense in terms of what our role is.

The other side, in my mind of what we do is performance management, performance measurement, really trying to help support the agency in achieving its goals, ensuring that the funds that we spend are accomplishing what we intended them to accomplish.

In that regard I think of us a bit -- the program offices I think are very focused on serving their customer, identifying with their customer's need and making sure that they are doing everything they can to create creative products and interesting tools to help support their customer. And in the CFO's office, I feel a bit responsible, sort of, for the shareholder if you will. The taxpayer. Is the taxpayer getting, for the funds that are going into our agency, the best that it can get?

And ideally we have strong alignment between what we're trying to do for the customer and what we're trying to do for the taxpayer. That's the best scenario and usually it's the case and we're all in alignment. But sometimes you have a conflict there. You might have to look at them, and obviously, there are a lot of people who would have been very pleased if we could have just given out grants in the Gulf coast to people who had such disastrous events impact their lives. But from a taxpayer perspective, we don't have a program that budgets to give grants to everyone; we have a long-term loan program, and that means we can only make loans to people who meet our standards for the likelihood that they will pay those back. So in the CFO's office, I tend to think of myself as the one who's trying in our office. It's our job to make sure that the taxpayer's voice is at the table when the agency is making some of these kinds of decisions.

Mr. Watson: You know, responsibilities for CFOs differ across the 24 agencies. What responsibilities do you have as the CFO of SBA? Do you budget, for example?

Ms. Main: Yes. Yes, I have. Specifically, I have budget, accounting, financial reporting; I have internal controls. We also have performance management. And that's something new that we created in office about two or three years ago within the CFO's office that's called the Office of Accountability, Planning, and Analysis, with an emphasis on ensuring that we are measuring the results that we're getting from the funds that we're spending, that we're tracking outcomes, that we're tracking outputs and using that feedback to influence the business decisions we're making in terms of the funds that we request and how we spend the money that we get.

Mr. Watson: That's a broad scope of responsibilities. I know in reading your background before the show started that you had some private sector experience as well. How has that private sector experience prepared you for this role as CFO of SBA?

Ms. Main: Well, it's interesting. I actually -- and my private sector experience kind of spans a wide range. I worked at a very large consulting firm, multinational, huge place. And I actually worked in several small businesses, one of which I started with two other people, so from the very biggest to the very smallest. And I would say that I got some good experience in both of those places to work in an organization like the one I'm in.

From working -- having started my own business, the thing you have to do if you start a small business is be prepared to wear any hat. You could do every job in the business during one day. So you have to be ready to roll up your sleeves, no job is too big or too small to tackle. And the CFO's office that I came into almost four years ago now at SBA was really struggling. We were in a disclaimed audit opinion and we had a lot of challenges in front of us. And I think one of the things that helped me a lot personally, and helped me create a good rapport with our staff, was that I was willing to roll up my sleeves, get out my pencil and my calculator, and sit down and go through all the issues and really understand what was happening, why it was happening, and what was going on, and I think that earned me respect from my staff, which was -- is very important for a lot of reasons. And it just gave me an understanding of what was going on and helped me come up with better solutions, and provided opportunities for leadership.

So that's on the one hand. On the other hand, working at a very big firm I got an opportunity there to see that people have different skill sets, different styles, different roles. And that's what a team is made up of, that you're going to have different things coming to the table, and as the leader of the team, my goal is to leverage, bring out the best in all those skills in people that we have. And frankly, in some cases, try to minimize some of the weaknesses, you know, find a way to not have them impact the team while you work on making improvements, for example.

So between the two of them I really do feel like I used some of the skills that I got from those two different kinds of experiences in my regular work at SBA.

Mr. Morales: Jenny, we only have about a minute left, but I do also want to get to some other public sector experience that you've had outside of SBA. I understand that you spent a portion of your career as an expert in credit programs at OMB. How has this experience at OMB affected your perspective now at SBA?

Ms. Main: I think a couple of things on that front. The main one is certainly having been at OMB I really have an -- obviously an inside understanding of what they're looking for. So when we get into issues that OMB is going to be concerned about, and it happens very regularly, I have a pretty good sense of anticipating what their concerns will be, and that helps us be more prepared.

The other thing is, I really feel like I recognize that OMB is the policy entity for budget and financial management. We are the operations, so it helps me sort of frame issues with them sometimes that they may have a goal of what they want, but on the operational side it may just not really work that way. And so it's a nice opportunity. I have a lot of colleagues who still work at OMB that I have good relationships with, and I think it's been helpful on both sides to be able to engage in a sort of a knowledgeable dialogue about the issues.

Mr. Morales: Great. What are the Small Business Administration financial priorities? We will ask Chief Financial Officer Jenny Main to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Small Business Administration Chief Financial Officer Jennifer Main. Also joining our conversation is Steve Watson, partner in IBM's financial management practice.

Jenny, can you describe for us what are the goals for your office in 2006?

Ms. Main: Sure. Probably the primary goal is the maintaining our unqualified audit opinion that we were able to achieve in 2005. I'm very optimistic about that, but I also have a new auditor this year, so that just by its nature brings a new set of folks looking at the issues and having different perspectives. So certainly we are anticipating that we'll get feedback that, you know, of a different nature than we've gotten in the past. So maintaining the unqualified opinion is our top priority.

We also have had a repeat material weakness for several years now. And that is really our target to get rid of that material weakness. We've taken a lot of action over the last few years, and I'm hoping that the cumulative effect of those is going to pay off this year in terms of eliminating that.

And the other big item that's on my radar screen is the implementation of the Sarbanes-Oxley type work for the federal government, the OMB Circular A-123. We started that last year like everyone else did, and I really want to get something valuable for the agency out of that. I don't want it to be a paperwork exercise. I want it to be something meaningful. And I think we're on track to do that. But that's been a real goal this year, is to make that add value at the agency, and not be something that people are just feeling they have to do.

Mr. Morales: I wanted to go into this audit opinion, because I think there's a wonderful story here. We understand that -- I believe it was in 2002, in your audit, you did have a disclaimer, but by 2005, you went back to an unqualified audit status. Can you describe some of the steps that SBA had to take to improve controls to get to unqualified?

Ms. Main: Sure. The cornerstone kind of the problem of the disclaimed audit opinion was that SBA had done a series of asset sales where we sold loans, primarily defaulted, but in some cases performing loans. And over time -- the sales were between '99, and 2002 -- and over time it became clear that the books that we were keeping, the accounting books, were not reflecting that we were making money on the sales. And yet the budget tools that we were using, the budget models, were showing that we were making money on the sales.

And I have to add that we were following the guidance that OMB has in its circular for how you do this type of thing. But it was complicated. It was a difficult problem and it was complicated and we were not -- by late 2002 when I got there it was clear that our accounting situation was very out of whack. I mean in effect the loans that were left on the books had to be valued at more than a 100 percent of the return. In other words, borrowers were going to pay us $120 for every $100 they owed us, which simply couldn't be true.

So that was kind of the cornerstone of the issue that got the disclaimer. And we had to resolve that issue itself, which we did through a team effort. We brought in experts from consulting firms. I obviously from my experience at OMB and credit accounting had a lot of expertise to add, and we worked with OMB. We actually asked them to be a partner with us in resolving that issue. So we worked through that and got those things resolved.

And then separately I really felt like we also had to look at what was it that allowed this to happen. And really we needed to address the culture in the CFO's office. So we did it primarily by creating teams. We created two teams, one for all loan programs credit issues in the CFO's office, and really anyone who works on credit issues within the CFO's office is a member of the credit team. And then we met biweekly. And I could give you a lot of details about exactly how we did it and what we did, but our goal was to expand communication and accountability.

Collectively we identified what the key issues were, and then we divided ourselves up into sub teams, and held ourselves responsible for getting those issues resolved. And that meant that everyone who was there had a role in finding solutions. And I think it really worked well just at a lot of levels in terms of getting folks involved in a constructive way to solve problems, empowering ourselves that we could solve problems and address the issues, and communication. If something was going on and someone knows about it in a pocket of our organization and two or three months later -- and they don't say anything -- and two or three months later it comes back as an issue, the whole group was willing to hold that person accountable for not having communicated and participated and worked through the issues.

So we really -- we broke down the silos. The budget, you know, team, the accounting team, the financial reporting team would -- you know, when I got there were sort of pointing fingers at each other. We broke those silos down and we said we're all on the CFO's team. Collectively we have to figure out how to solve these issues. So that was really to me the way that we moved from, over a three-year period from 2002, with a disclaimed opinion all the way up to the 2005.

Mr. Morales: A specific question. We understand that you also had to -- aside from the asset sales valuation method, which I think you needed to work on, was that you improved the cash and tracking of loan performance. Can you describe that a little bit?

Ms. Main: Sure. When I got there, we really didn't have adequate reports on what was happening. Particularly, as I mentioned, we had the $60 billion loan portfolio. And what that means is we have cash coming in every month, fees and repayments of loans, all sorts of different potential sources of funds that are coming in to our account there, as well as funds that are going out. Payment of defaults, payment for care and preservation of collateral, for example. And the fund that these loans are in, it's called a financing account in budget terms, and it's technically a non-budgetary account, because you've accounted for the cost on the budget front in the -- what's called the program account.

So these financing accounts don't have all the same controls on them that a traditional budget account would have. And the problem was that they were -- the team that was there at the time didn't have adequate knowledge of what was coming in and what was going out. In fact, when I got there that summer -- I'm happy to say it happened a month or two before I got there -- we overdrew the account by $50 million that they paid out. And so they clearly did not have enough knowledge about that.

And so we instituted a really tight monthly report -- I would say it took us literally a year and a half to get the report to where it should have been, you know, honing and improving it. But we have a really tight monthly report now that everyone takes a look at and understands exactly what's coming in each month, what's going out. And if you do that and you break it down by your loan programs, you can really understand, are we on track for the defaults that we expected to occur this year? Are we on track for the fees that we expected to get? How are we doing on recoveries? And you can do that by every program that you have. And that's really helped us in our long-term modeling that we have to do to understand what the costs of these programs are.

Obviously, loan programs by their nature -- you make a loan today, you expect to get paid back, but you don't know until year three, four, five, whether the borrower was really going to do that. So we're constantly modeling these long-term liabilities. And having much better data, much more accessible, has really improved the models that we have. And I think that's also been a big part of eliminating our disclaimed audit opinion. And we also had a mature weakness in that area, and that was eliminated in 2005 as well.

Mr. Watson: Jenny, I read your auditor's report before coming here. And they had strong praise for the corrective actions that you've implemented and the financial improvements you've made. Yet SBA's still not at the green status on the PMA. What additional improvements are needed to get to green?

Ms. Main: Well, the last remaining item is this repeat material weakness in financial reporting. And there were a number of items in our audit recommendation list particularly setting up, for example, change control process around accounting -- that's an example. I feel like we should have had some miscellaneous weaknesses last year, certain items that the auditors found that they weren't comfortable with. My hope is that we've addressed all of those. And we really feel like we have a solid quality assurance process in place.

They recommended that we continue to improve our quality assurance. We did hire an additional credit accountant this year. And with the A-123 internal control initiative, we've also done more of our own testing and our own analysis in the financial reporting front.

Another thing we've been doing is -- most agencies have been doing this, to meet the accelerated financial statement deadlines -- is quarterly -- the level of quality assurance and analysis that you're doing quarterly has really increased. Things we used to just do at the end of the year, now we're doing quarterly, you catch a problem much easier earlier in the year than you had before.

I don't think we have a pervasive weakness that I can see. So I think we have some smaller issues that last year our auditor felt like we had enough small ones that they added up to enough of a big thing that they didn't want to say okay, the material weakness is gone. I've been of the view that we're there. And we'll see. We have a new auditor coming in, and I'm actually very much looking forward to getting their views on how we're doing, and in comparison to the other agencies they worked with.

Mr. Watson: Well, good luck with moving to green this year. Moving away now from the audit and the financial reporting to your additional responsibilities to work with program managers better support the business. What steps are you taking there to help the program managers better operate at SBA?

Ms. Main: Best way I can answer that is to sort of tell you my philosophy about that role, which is, I feel very strongly that the CFO's office is a support office, and I'm excited -- you read articles today about CFOs getting a seat at the table. And I'm excited about being, you know, perceived as having a strong role in an agency. But I really want us to use that to empower the program offices to be responsible for their programs, and to ensure that they are getting results that they have established.

I don't want to be the one setting up goals, then telling them that they have to meet them, and then hearing from them that they don't believe in the goals. I want them to establish the goals, and then we'll help hold them accountable. We'll give them tools, try to give them resources. The whole point is to have -- they're the program managers, they know the programs best, and I want to support and help them in achieving what they've identified as the best way to achieve the agency's mission.

So that's really my philosophy about it. Again, the best example I have is this year with the A-123, the internal control situation. We did a sit down kind of qualitative assessment with each of the managers in the main program areas and said, what's keeping you up at night? What's happening in your area that makes you worried? And we identified a couple critical ones. And we've used the contractor that the CFO's office had hired to do this implementation, to go in and do extra testing and create recommendations for them about what they could do to address some of those issues.

So really to make it practical and valuable for them, that they'd have something additional to say when the IG or someone else comes in and says, "What have you done about this?" And we've helped them solve a real tangible problem that they identified that they were worried about. It's a big thing for me. I want them to have ownership of those types of things, the goals and the issues.

Mr. Watson: Following up on that, did ownership of data change, or processes, or the way the CFO interacts with the program offices?

Ms. Main: Well, it's interesting. The data ownership -- we were actually -- the last couple of years the CFO's office has expanded the amount of data that we kind of are tracking for our performance and accountability report, to the annual report that the agency has to do like all federal agencies. And one of my big goals this year is to trim back that data that we all say we're going to track. And if the program officers want to use the data that we've been collecting for their own management purposes, then great. But if they don't, then we shouldn't be tracking it. I think we've accumulated some data in the last few years that we've taken on ownership of, and I'm trying to push it back out. I want them to be the owners of it, because that's where the quality's going to come from. If they use it, the data quality will be good, because they care about it, and they'll notice when something is askew. If they don't use it, it could take a long time for someone to notice that there's a problem with the data, if no one's using it, keeping an eye on it.

Mr. Watson: Moving beyond basic scorekeeping, do you work with the organization to actually help them achieve their goals?

Ms. Main: Definitely. SBA's a very small agency. And literally, the headquarters, the whole management team is in one building on four floors -- five floors. So I see the folks that I work with, I see them at the management meetings, and I see them down at the lunch counter. And I've developed, I think, pretty good relationships with them as I'm working through them -- with them, and trying to keep my eye on what tools do they need, what things do they need that I can help them with.

Mr. Morales: Jenny, we talk with many of our guests about this topic of ownership, of about working together in collaboration. What kinds of partnerships are you developing now to improve the operations or the outcomes at SBA? And how will partnerships with other federal agencies, or the private sector for that matter, change over time?

Ms. Main: I guess I have two different answers for that question. In the first answer, SBA is very much about delivering its products through its partners. Almost all of our programs are delivered through the lending community, and as I mentioned, the small business development companies around the country. Partnership with the private sector is really what we're about. We can't afford to be having a lot of one-on-one relationships with small businesses. So the entire model of the agency's delivery mechanisms has changed to this partnership notion. And we actually engaged in some discussions internally about, is the customer the lending community, or is the customer the small business? And obviously the small business is the ultimate customer, but we recognize that those partners in the private sector are the ones really delivering the services. So we're focused on both. So it's been -- that's a big area for SBA.

In the CFO's office in particular, I would also add -- and I think this is also happening across other federal agencies -- we are recognizing that there are areas of expertise that we can just leverage private sector expertise. We don't to have to do it ourselves.

This notion of outsourcing, hosting -- SBA moved to -- shifted its administrative accounting system to -- we outsourced it to a -- through a competitive bidding process. And that has worked out very well for us. And I think we'll continue to do that, and we're looking for more opportunities to outsource the hosting of our major systems. And potentially, even some of the core functions that repeat commercial operations that could be done anywhere in this budget environment, which is just extremely tight, and anyone who pays attention to what's happening to the budget can see that 10 years from now it's going to be -- it's only going to get worse. We have to be finding ways to lower our costs. And the outsourcing, working with the private sector, is absolutely a top priority for us.

Mr. Morales: How is SBA integrating budget and performance information? We will ask CFO Jenny Main to share the details with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host Albert Morales, and this morning's conversation is with Small Business Administration CFO Jenny Main. Also joining us in our conversation is IBM's partner in financial management, Steve Watson. Jenny, many agencies are working to implement the budget and performance integration aspect of the PMA. And we've talked a little bit about the PMA in our last segment. What is the status of SBA's plan for this effort?

Ms. Main: I'm really pleased to be able to say that SBA has been green on the budget and performance integration in President's management agenda item since a quarter or two after they started the PMA. We were one of the first agencies to be green. And I think the reason for this is that the agency has had a lot of experience that probably since 1998, we've had an activity-based cost model that we used to identify the cost across the agency of the activities that we do. And we've been pretty successful at linking our whole budget environment to -- you know, having a strategic plan that's the baseline that identifies the key outcomes we're trying to achieve.

Our budget itself is mapped to those, and then includes the activity-based cost results in terms of what things cost us, and then our performance and accountability report reports against those same things with the costs identified all the way through.

So that framework has really helped us demonstrate that we're focused on budget and performance integration. And actually, if you went to the culture within the agency, we have what we call -- it makes me laugh -- it's called the execution scorecard.

I always wanted to call it the executive scorecard, but it's the execution scorecard that the chief operating officer uses to manage the program managers and all the managers throughout the agency. And the items that are in there are the same things that are in our budget, on our performance accountability report. He meets monthly with the major office heads to go over the results and how they're doing to date, against those things. So you can really kind of show that we have an integrated performance culture. And I think those different components all put together have helped us achieve green in the first place, and then sustain it going forward.

One thing that concerns me though in this march towards budget and performance integration, which I wholly support, is that there are really two sides to what you have here. You have the cost side, and we're getting better and better. The tools, the data, are more readily available. It's cheaper to track data and keep it and look at it. So we're getting really good at identifying what it costs us to do things. The other side though was the benefits. Unfortunately, particularly in a lot of the programs that the federal government is involved in -- we're involved in them because for some reason the private sector isn't doing them, but collectively our government and our country have decided that they're important activities for us to do.

So there's a benefit there. And it's very hard though for us sometimes to figure out what the benefit is. We have a range, as I mentioned, of different loan programs at SBA. What's the benefit of a small business getting a loan on the terms and conditions that a private sector bank wouldn't provide them? That's the criteria for our primary loan program that the lender wouldn't provide that loan on the same terms and conditions. So figuring out exactly what benefit -- how much revenue we add to the economy.

Well, did, you know, the business retained a person or two, a job or two, or maybe even the whole company that they wouldn't have otherwise. Figuring out how to measure the incremental effect of that is really challenging. We've been working on it a lot, and it's not new to folks who follow this type of issue in the social services world. Because we're so focused on costs and benefits, and because our benefit data isn't so great, we're driving to the lowest cost products.

And I think maybe, especially since I'm in the -- I'm the CFO, I'm the one who's supposed to keep my eye on the budget, I worry that if we keep doing our jobs so well, we're just going to have all the low-cost programs funded, and anything that's higher cost, because we haven't shown what the -- that the benefit is commensurate with the higher cost, you know, we're not going to be able to do those things. So that scenario I've been struggling with. Our office has been leading a large multiyear program evaluation trying to quantify the benefits of some of our loan programs.

But it's challenging. I know when we're done there'll be, you know, a potential for people that, well, you didn't have a prefect comparison sample, because you can't.

Mr. Watson: Jenny, shifting gears here a little bit, the internal control requirements of Sarbanes-Oxley have moved into the public sector in the form of an expanded circular A-123. How is SBA implementing the new A-123 requirements?

Ms. Main: Well, we've really done what I would call, sort of, a traditional A-123 implementation, and I'll confess in the government you're allowed to do this. We just took OMB's guidance that they provided us last summer and used it as the basis of our plan. We just went section by section and said, "Okay, OMB wants us to do these things, let's put them in our plan." So we're kind of trying to do the baseline traditional version of it. And it's actually worked well for us in the sense that I think everyone's clear about the goals, there's a lot of documentation for exactly what we're doing and why we're doing it.

But as I mentioned earlier, from my perspective, the number one thing is to bring this back to the actual issues the agency is facing, and allow it to give us a few solutions to problems that we know we have. SBA has literally a couple hundred open IG audit recommendations, and we are not alone in that. Any agency you go to is going to have a lot of open audit recommendations. We have unresolved issues. If there are issues around that the resources we're using under A-123 can help solve some of these problems then my view is let's do that.

Rather than going finding more new things, let's make it really hands-on and practical and solve a few of those problems. So we picked to go deep, if you will, in a couple of key places. Rather than 10 miles wide and an inch deep, we said we'll go five miles wide and pick two or three and really drill down. And that's how we've done it. And I feel like I've gotten some really good feedback from our program managers, because they're going to have something tangible that they can use in a response to the IG, for example, on a problem they've been working on.

Mr. Morales: As a result of your efforts, are there any lessons learned you will apply for next year, or could provide to other government agencies that are going through the A-123 process?

Ms. Main: Well, certainly the most practical one that we're learning right now is because we spent the whole year planning, and this is the first year of it, we're testing the exact same time that the auditors are testing. It's frustrating on a number of fronts. We certainly wish that we would -- could and hopefully next year will test -- you know, February-March range. It'll separate the sampling process. Right now, we have program offices getting request for samples of loans from our internal management's auditor, and which is -- because we hired a firm to help us -- and from the IG's external auditor.

And they don't know the difference. You know, we can try to tell them, and I've tried, believe me. But when all is said and done, you know, they're auditors, whatever, you know. So hopefully if we push our testing back a few months, maybe February-March, and then I would say we'll have the results earlier. And if there are issues that you can address and get them solved, that's the ideal situation. At least by September 30th you might be able to show that you've cleaned up whatever the problem was, and that you have a practice in place that the auditor, then when they test it in June or July they'd see something that they're comfortable with.

Mr. Watson: Do you envision being able to integrate that testing going forward so that there's not the A-123 auditors and then the traditional financial statement auditors both testing and looking at data?

Ms. Main: Well, from everything I can tell, the intention is that they want us to test for ourselves, and have the auditors test on top of it. That's my understanding of where they're headed. I think they're willing to let us document -- you know, the first year they want us to test every -- a baseline of the key processes, and then going forward it seems like there's some opportunity to show, hey, we have a really strong track record that we don't have any issues. We have these processes in place that would tell us if there's an issue, and therefore we're only going to -- we're going to sample a smaller number, we're going to sample less frequently in a sort of a multiyear kind of thing. But I think the notion that management has to have something of its own to stand behind the assertion where we have to assert as to the quality of our controls that are in place -- in the past you could make that assertion based on whatever your --- process would let you get away with in a sense.

You know, you had to write a letter, and it said, "Yeah I've looked things over. I've checked it out. Based on my management judgment, I think we're fine." And my understanding is now you have to say, "Hey, I feel good about the internal controls, and I tested them. And we didn't have any exceptions." Or, "The exception I had I could understand and explain it away," you know, whatever the case may be. But you have to have that testing, I think, to make the assertion that you have things under control.

Mr. Morales: Jenny, how has SBA handled the accelerated financial reporting requirements implemented in '05 and '06, and what steps is your office taking to ensure the deadlines will be met?

Ms. Main: This one I -- near and dear to my heart. We actually had a disclaimed audit opinion the first year that they -- that was actually in '04, the first year that they were -- we had to meet the November 15th. The number one that was one word, "planning." And we literally planned down to the day who was doing what, when. We had plans and sub-plans because our auditor -- and of course our auditor was nervous about making November 15th too, it's a lot of work for us, it's a lot of work for them.

Our IG and OMB, we had so many planning meetings and discussions, we had literally almost 100 pages of planning documents of exactly what was going to happen when we tracked every component of the financial reporting process down. And then the audit process, I think they did the same thing on top of it. And that's how we made it. And it served us very well because we could just update those plans in subsequent years.

Mr. Morales: What does the future hold for SBA? We will ask CFO Jenny Main to discuss this with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with SBA's chief financial officer, Jenny Main. Also joining us in our conversation is Steve Watson, partner in IBM's financial management practice.

Mr. Watson: Jenny, in the last segment we were talking about various OMB initiatives for internal controls and accelerated reporting. I want to talk to you a little bit about the line of business initiatives. Where is SBA with respect to implementing lines of business?

Ms. Main: We're very supportive of the lines of business initiative. I can tell you as again, one of the smallest of the CFO Act agencies, we are constantly looking for opportunities to team up with a bigger agency who has gone the path of getting all of the standards and requirements in place for some sort of technology that we can just piggyback on. But we're just too small to be developing our own things. That said, we had just outsourced our administrative accounting system in 2003, right when the line of business initiative was kicking off for the financial management side.

And so we're anticipating when that contract is up -- we have a very, very good contract that has been very cost effective for the agency. So we don't want to move away from that in the short run. But when that contract is up in a couple more years we'll be anticipating transitioning to one of the existing centers of excellence or, you know, our service provider is actually I think becoming a center of excellence. So that will be a competitive opportunity that we'll look at. We are a small entity that benefits from others who want to do this. I don't anticipate us becoming a center of excellence because we're a small fry in the mix.

Mr. Morales: Jenny, I want to transition, now, to the future. What trends will have the largest impact on SBA, say, in the next five to ten years?

Ms. Main: I think it continues to be technology. We're primarily a wholesale provider of services to the small business community. We're working through our partners as I mentioned. And technology -- you know, the number of people who have computers and Internet and access to things -- we really want to move to 100 percent electronic transactions with everyone that we deal with. Obviously, aside from training and counseling type of activities where although you can do a lot of that through the Internet, and we've been expanding our presence on that front, you know, person-to-person is still I believe an important part of like a training or a counseling program.

But lending and those types of things -- the lenders are going to be the ones that interface directly with the small businesses, and we really will just interact electronically with our lenders. And we're using technology now to monitor our lenders much more effectively. We can get data. We have over 4,000 lenders. We need to know very quickly which ones are high risk, and you can use data to do that today. And we'll just become more efficient and proficient at that in the future.

The other area that, unfortunately, I'm not so optimistic about -- I know it's going to impact us, but it's not in a good way, is the budget. As a small domestic agency, very small, we have already shrunk almost, well, over 30 percent as our -- what our budget has declined over the last five years. Our staff has gone down 20 percent. We haven't given up any programs or any major programs at least, and our loan portfolio only grows. When you make loans, it creates a liability that can be 5 to 10 to 15 years down the road that you're still working on it.

So we have to maintain sufficient infrastructure. As a steward of the taxpayer's dollars, it is penny wise and pound foolish not to be maintaining an adequate infrastructure to manage that portfolio. In this current budget environment we're looking at cuts, you know, across all the agencies. I'm not the only one, you know, singing this problem. But I -- when I look at the impact of that on our agency it makes me very nervous, and we've been working hard for the last few years to try to figure out strategies. But you get to a point where you can't tighten the belt anymore, there's bone there, and just need a different approach.

Mr. Morales: Certainly a challenge. I want to transition back to some comments you made earlier in the show around disaster and disaster planning. And we've talked to many of our guests about what their organization's role is in this area. What role does SBA play in national efforts to support businesses and the economy during a disaster response?

Ms. Main: Well, SBA has one major disaster program. It's a loan program. We provide long-term recovery loans for rebuilding either homes or businesses after a disaster. And that's -- it's been a bit of a challenge. And over the past year with the extreme nature of the disaster in the Gulf, I think folks really wanted, for example, a bridge loan type of thing. Something that could keep them going for a few months while they were trying to figure out how they were going to salvage their business, or whether they were going to be able to return to the area.

And unfortunately, SBA doesn't have a statutory program that provides a short-term bridge loan product. And that was a source of, I think, a lot of frustration. But what we really have is the long-term recovery program. And in fact, most of the loans are 30 years. We will extend the payment term out as long as it takes for the borrower to be able to make the payments on their forecasted, you know, income that's available. So that's our primary program. It's been around for more than 30 years.

And overall, I would call it a very successful program. Folks who have used it -- Northridge earthquakes, for example, we did about $4 billion there in Southern California. We've gotten, over the years, a lot of positive feedback about it. But in such a dire circumstance like the Gulf, I think we found that that program alone was challenging. It caused a lot of frustration that there weren't more things. And, you know, today you can find that Mississippi and Louisiana are actually giving out grants to homeowners who have gotten SBA loans, and we're going to use -- and we're coordinating with them to coordinate that benefit.

But the devastation has been so bad that the federal government responses said, you know, we want to go a step further. So we've been working with them to make that happen.

Mr. Morales: Great. Jenny, you've enjoyed successes both in the private and now in the public sector as well as starting up your own business. What advice could you give to a person who's interested in a career in public service?

Ms. Main: Well, certainly, I've always loved being a public servant. I actually have a master's degree in public policy. So I really enjoy the challenges, the issues that you face. I mean, I kind of define the issues that the government frequently is looking at, or the things that didn't get taken care of in the private sector. There are issues that people care about, but the for-profit bottom-line isn't making them happen. So that by its nature I think makes it interesting. And I would certainly offer encouragement.

And we're looking at a huge demographic shift in the federal workforce in the next 15 years -- 40 -- 45 percent of SBA staff are eligible to retire in the next 5 years. So we need good people. So I would very much encourage anyone who's interested in public service. I would say that it's a -- it can be very challenging. There's a lot of tough things about it. But I personally feel like I make a difference every day. Personally being there, helping to make a decision or change something that otherwise would have gone a different way, I feel like I make a difference everyday, and that's very rewarding.

Mr. Morales: Great. Excellent. Jenny, unfortunately that -- we've run out of time here, and that'll have to be my last question. I do want to thank you for fitting us into your busy schedule today. But more importantly, Steve and I would like to thank you for your dedicated service to the public in our country in the various roles you've held at OMB and now at SBA.

Ms. Main: Thank you very much. I really appreciated the opportunity to be here. And I just want to make sure that all of your listeners know that if they're interested in the Small Business Administration and the products and services that we offer, particularly if they're considering starting up a small business, you can go to our website, which is www.sba.gov, and take a look at all the many great programs that we have.

Mr. Morales: Great. Thank you. This has been The Business of Government Hour featuring a conversation with Chief Financial Officer of the Small Business Administration, Ms. Jennifer Main. Be sure to visit us on the web at businessofgovernment.org. There you can learn more about our programs, and get a transcript of today's conversation. Once again, that's businessofgovernment.org.

As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad who can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support. For The Business of Government Hour, I am Albert Morales. Thank you for listening.

David Combs interview

Friday, February 10th, 2006 - 20:00
Phrase: 
"Globalization, advances in secure communications, and customer expectations for electronic access have prompted the department to assess its infrastructure and explore options for accommodating these trends."
Radio show date: 
Sat, 02/11/2006
Guest: 
Intro text: 
Combs discusses how the USDA Office of the CIO works closely with each of the CIOs in the department's various agencies, develops project management training programs, and works toward the electronic government goals in the President's Management Agenda....
Combs discusses how the USDA Office of the CIO works closely with each of the CIOs in the department's various agencies, develops project management training programs, and works toward the electronic government goals in the President's Management Agenda. Combs describes how USDA's Information Technology Services (ITS) provides service and support for more than 40,000 employees in the USDA's "service center agencies," such as the Farm Service Agency and the Natural Resource Conservation Service.
Complete transcript: 

Wednesday, January 18, 2006

Arlington, Virginia  

Mr. Morales: Good Morning, and welcome to The Business of Government Hour. I am Albert Morales, your host and managing partner 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 by visiting us on the web at www.businessofgovernment.org. 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 Combs, Chief Information Officer at the Department of Agriculture. Good Morning, Dave.

Mr. Combs: Good Morning, Al.

Mr. Morales: And joining us in our conversation, also from IBM, is Mike Wasson. Good Morning, Mike.

Mr. Wasson: Good Morning, Al. Good Morning, Dave.

Mr. Combs: Good Morning, Mike.

Mr. Morales: Dave, can you begin by telling us about the history and mission of the Department of Agriculture?

Mr. Combs: Sure. In 1862 President Abraham Lincoln founded the U.S. Department of Agriculture. He called it "The People's Department." In Lincoln's days 58 per cent of the people were farmers. They needed good seeds and helpful information to grow their crops. Well, today, USDA continues Abraham Lincoln's legacy by helping America's farmers and ranchers. But today we also do much more. We lead the federal anti-hunger effort with programs like food stamps, school lunch, school breakfast and the Women, Infants, and Children's, or WIC, program. We are the steward of our nation's 192 million acres of national forests and range lands. We are the country's largest conservation agency. We encourage voluntary efforts to protect soil, water, and wildlife on the 70 percent of America's lands that are in private hands. We bring housing, modern telecommunications, and safe drinking water to rural America. We are responsible for the safety of meat, poultry, and egg products. We lead research in everything from human nutrition to new crop technologies that allow us to grow more food and fiber per acre using less water and pesticides. We help ensure open markets for U.S. agricultural products. We provide food aid to needy people overseas. The U.S. Department of Agriculture touches virtually every aspect of rural life in America.

Mr. Morales: Dave, that's a very, very broad mission. Can you tell us about your office specifically, the Office of the Chief Information Officer? How many people work there and what kind of skill sets do you have?

Mr. Combs: The USDA is a very diverse organization as you just saw from our mission. It's comprised of 29 agency and staff offices. And my office, the Office of the Chief Information Officer, is responsible for managing the IT assets and the direction of IT investments needed to improve the quality, timeliness, and cost effectiveness of service delivery by the many agencies of the department. My organization has more than 1100 information technology professionals. And as CIO, I am responsible for nearly $2 billion a year that is spent on information technology to support the entire Department of Agriculture. Our information professionals come from very diverse backgrounds: project management, finance, programming and analysis, policy, telecommunications, and security. But most importantly, we need folks that know how to leverage technology to deliver services. Several of my senior managers do not have technical backgrounds. But they do possess the leadership and customer skills that will get us where we want to go and need to be.

Mr. Morales: I understand that you've been in the Office of the CIO at USDA for some time but you've recently been appointed to the CIO position. Congratulations. Can you tell us a little more specifically about the responsibilities as CIO, and to the extent that you have a typical day, what your typical day looks like?

Mr. Combs: Well, thank you very much. This has been a wonderful opportunity for me. But I want you and the audience to understand upfront that this is not about me. It's about getting results and establishing the people processes and tools that will support the mission of USDA long after my tour of service is over. And under my watch the OCIO has taken an integrated approach to ensure that all technology disciplines are woven together. These disciplines include capital planning, cyber security, e-government, telecommunications, and enterprise architecture. This integrated approach is intended to create a strategy that provides customers with access to the information that they need, protects the safety of USDA information resources, and strengthens the management and use of USDA information technology resources.

This past fall, I took my executive team on a retreat, to take a fresh look at what we do and where we're going. We took a look at the foundational legislation that established this office. And we found that according to the Clinger-Cohen Act, we needed to do several things. We needed to insert ourselves into the USDA agency, CIO selection and evaluation process which we now have done. We've developed performance standards to be used as a critical element in the evaluation of every agency's CIO's performance. We have also established performance standards for agency project managers. And speaking of project management, USDA is leading the federal government with its project management training program. So far we have graduated over 500 students. 200 of these students have received their Project Management Professional or PMP certification. This professional training is critical for USDA as the demand for skilled project managers increases. The President's management agenda is without question my top priority. As the CIO, I am considered the owner of the expanding electronic government initiative. And in this initiative we're evaluated in seven major areas: Enterprise architecture, acceptable business cases, earned value management, IT system certification and accreditation, implementing electronic government lines of business and smart buy initiatives, privacy impact assessments, and systems of records.

And USDA continues to make tremendous progress in moving this initiative forward. The scoring method is simple: Green, yellow, red. The President made it clear to me in a recent meeting that he does not like red or yellow. And neither do I. We're scored in two categories: Status and progress. And I am proud to report that USDA continues to be green for progress. Right now we're yellow in status but we're closer than ever to green. We're doing well and our goal is to be green by the end of June this year. This is truly a team effort involving a very talented and dedicated team of USDA agency CIOs and IT professionals that I'm proud to work with every day. We're also fortunate to have at USDA the full support of Secretary Johanns and Deputy Secretary Chuck Connor.

Mr. Morales: Dave, you have held several high level positions in federal agencies in the past. Which has best prepared you for your current role?

Mr. Combs: Well, we're all products of our past experiences, and my 30 plus years of experience in the private sector, in IT and telecommunications, and as an entrepreneur, were a great foundation. Serving for a year as acting deputy CIO here at USDA, and working with my good friend and colleague Scott Charbo was also great preparation.

Mr. Morales: Dave, you referenced a little bit of your past. You spent 23 years at AT&T prior to your service in government. And then you also spent some time in your own music business. This is sort of a fascinating background. I'm curious what led you to government and how has your leadership style changed over the years.

Mr. Combs: Well, I came to government primarily to -- first of all, to be in the same town with my wife. She, as you know, works in the federal government as well, as controller at OMB. And, rather than me living in Winston-Salem and her up here I decided to rearrange things in North Carolina and come up here and see what I could do productively as well. So that's how I ended up here. But, in asking about my leadership style, obviously, you know, years of experience certainly have been helpful in my leadership style, and I've come to appreciate the importance of selecting and depending upon an executive management team that will carry out the mission of my organization without being micromanaged. I've learned to delegate more, and always though with the motto of President Reagan: Trust but verify. I have surrounded myself with seasoned professionals and they know what is expected of them. I have a great team.

Mr. Morales: Dave, we talked a little bit prior to the show about your music business. I was hoping you just share a little bit about that business with us.

Mr. Combs: Well, it was basically one of those things, it was a hobby that turned into a career and now back into a hobby for the time being anyway. I come from a musical family and happened to be fortunate to have written a song called "Rachel's song" which kind of took off. Everyone that heard it on the radio and wherever they heard it just fell in love with it, and it's now been played millions of times around the world. And that one song launched me into a career of writing music and I have written over 150 songs and now have 15 albums of music. But that was, it's basically a hobby that kind of took on a life of its own and I had to catch up with it and enjoyed 10 years of doing nothing but my music as a support for my wife and myself.

Mr. Morales: That's fantastic. What is the information technology service? We will ask USDA CIO Dave Combs to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host Albert Morales and this morning's conversation is with Department of Agriculture Chief Information Officer David Combs. Also joining us in our conversation is Mike Wasson. Dave, what is the Information Technology Service, otherwise known as ITS? Who are its main customers and how do you ensure that your customers are satisfied with the services provided by ITS?

Mr. Combs: Well, the information technology services, or ITS as we call it for short, was born into OCIO on November 28, 2004. On that date it became the in-house provider of information technology service and support for over 40,000 USDA service center agency employees. ITS supports all their networked computers, IT equipment, and the shared infrastructure that their agency networks and applications run on. The shared infrastructure is also known as the common computing environment or CCE for short. Our customers are the three service center agencies and their partner organizations. They are the Farm Service Agency, or FSA; the Natural Resources Conservation Service, or NRCS; and Rural Development, or RD. The Farm Service Agency, FSA, administers farm commodity, crop insurance, credit, environmental, conservation, and emergency assistance programs for farmers and ranchers. The Natural Resource Conservation Service, NRCS, is the primary federal agency that works with private landowners to help them conserve, maintain, and improve their natural resources. And Rural Development, RD, creates partnerships with rural communities to fund projects that bring housing, community facilities, utilities, and other services to increase rural Americans' economic opportunities and improve their quality of life. The service center agencies use many sophisticated applications to provide over $55 billion in vital programs to over 6 million farmers and thousands of rural communities across the country. These programs include loans, grants, technical assistance, and basic information.

The goal of ITS is to keep the computing environment operating flawlessly so customers at the service center agencies, offices throughout the country, almost don't even know that it's there. Our goal is for their computers, applications, networks, and communications technologies to do what they're supposed to do and let the agency spend their time supporting the efforts of farmers, property owners, and rural communities.

ITS was formed by combining the service center agency's highly skilled IT specialists and support teams with a core team from OCIO into one organization of about 800 people. These folks are distributed in agency offices all across the country. I believe that this convergent plan is unique in the U.S. government. ITS is adapting best industry practices to organize IT resources and personnel efficiently and deploying them where and when they are needed. The point of creating ITS was to have one unified organization dedicated to supporting both the shared and the diverse IT requirements of the service center agencies and their partner organizations. On the one hand the agencies were already sharing and investing in a common computing environment with its infrastructure and network systems and associated hardware, software, and training. But on the other hand, each agency had to manage its own distinct computer system, software, and IT support teams. By converging both the technology resources and the skilled IT staff into one organization, ITS efficiently focuses on a broad range of technology, investment, and diverse support planning and management services spread equitably back to the agencies replacing what might be considered triplicate efforts. ITS has formed a customer-service support system based upon a central help desk that can flexibly and efficiently dispatch technical support specialists who are co-located in teams at many agency offices.

Mr. Morales: What kind of telecommunications services are provided by your office? And how does centralization impact the costs of services, and what other impacts does centralization drive?

Mr. Combs: During the fourth quarter of fiscal year 2005, we completed the launch of our new wide area network telecommunications infrastructure known as the "Universal Telecommunications Network" or UTN. It's a new corporate data network backbone for providing our customers with more secure, robust, and flexible telecommunications capabilities, and enhanced network support services. The UTN project team worked collaborative with USDA agencies and offices to transform the old USDA telecommunications environment into one that is state-of-the-art and well better to meet the delivery challenges of today and tomorrow.

Telecommunications voice and data services are increasingly critical to successful delivery of USDA programs and services. Since 1998, USDA's Internet access capability has increased 20-fold. The ability to interconnect systems and entire local area networks via the web has created increased demand for telecommunications capacity to carry information in multimedia formats to increasingly sophisticated USDA customers. And greater reliance on the Internet to conduct business and deliver services is also generating requirements for improved access, speed, reliability, robustness, security, and related standards.

In recent trends towards globalization, advances in secure communications, and growing customer expectations that electronic access will be made more widely available by the federal government within a five-year time span, have prompted the department to assess its current state of infrastructure support and explore options for accommodating these future trends as we move further into this century. The Universal Telecommunications Network Project is meeting those challenges.

Mr. Morales: It certainly sounds like a lot of bandwidth that's going to be required.

Mr. Combs: Yes, and very flexible.

Mr. Morales: We understand that your office is taking steps to innovate in the area of asset management. What are the goals of this effort, and what's its current status? And how does an organization called the IT Management Advisory Committee support this effort?

Mr. Combs: USDA has a vast number of IT assets, as you can imagine, and they are currently managed de-centrally, through disparate approaches. These dissimilar approaches present a challenge for managing USDA's IT infrastructure. USDA can gain significant efficiencies and productivity increases by establishing a uniform IT asset-management program that provides the information necessary to manage these IT assets from an enterprise perspective. We are in the early stages of this effort. Our goal is to implement an IT asset-management program that supports the establishment of standards-based technology architecture for USDA.

The IT Asset-Management Program will implement an automated system for managing USDA's IT assets from both an agency and enterprise perspective. Having a good inventory of USDA's IT assets will better enable enterprise approaches for procuring commonly used products. The Information Technology Management Advisory Council, or ITMAC as we call it, is a group of professionals representing many agencies throughout USDA. The ITMAC advises OCIO on best practices and approaches to enterprise issues. And one of the key roles of the ITMAC in this effort is to identify key issues and concerns and management decision points to ensure successful completion of the IT asset management initiative.

Mr. Morales: Dave, we understand that many of the forms at the government have now gone electronic. What role does your office play in supporting the forms? What are the benefits of the electronic processes, and what lessons could you share with other government leaders about your experience?

Mr. Combs: Well, that's correct. Over 500 of the department's most commonly used forms are available in an electronic format to provide citizens and businesses with an alternative to traditional paper-based processes. My office plays the lead role in coordinating this effort in several ways. First, we manage the paperwork and reporting burden that USDA imposes on citizens and businesses. To participate in our programs under the Paperwork Reduction Act, using online forms may reduce burden by permitting customers to compile information when it's most convenient for them, and to reuse information from prior submissions of the same or similar information. Electronic forms may also reduce travel time associated with completing the forms at a USDA office.

Further, USDA's participation in the President's interdepartmental E-Government initiatives has provided integrated access to forms required by multiple agencies within specific business areas. For example, businesses may locate forms required to apply for permits, and report compliance in a single location at http://business.usa.gov, regardless of which government agency requires them. Grant applications will find both the common and unique forms required to apply for grants at www.grants.gov. And USDA's export-related assistance and market information has been consolidated with similar information from our partners in the federal and private sector in one location at www.export.gov. There are many other examples.

The demand for electronic interaction in government is continuing to grow at a steady pace. But it isn't for everyone served by USDA. Government is striving to consolidate the presentation of its information and services in a seamless online manner similar to what many state governments have already accomplished. Forms will ultimately be replaced in this venue by fully electronic transaction tools that further simplify interaction with government by reusing information from prior transactions. However, many of the department's program beneficiaries prefer to visit a USDA office, or they do not have easy access to computers or sufficient bandwidth to make using electronic forms a viable alternative.

USDA will continue to offer the more traditional interaction methods for this group of customers. And many of our forms, though, are now electronic. Not all are electronic, but the amount of information we generate has increased exponentially over the past few years. The expectation is that over the coming few years we will generate even more information. There will be commensurate expansion of records, and much of this will be electronic. And my office plays a lead role in coordinating this effort across the department.

Mr. Morales: How do you ensure that customers are involved in technical decision-making, and what role does the Capital Planning Investment and Control play in this effort?

Mr. Combs: In the past, agencies and IT personnel across the department were not used to collaborating on IT. Although the Clinger-Cohen Act required greater coordination of USDA's IT budget at the department level, agencies still planned many investments and activities independently. They often did not collaborate even when other agencies were planning similar investments, usually for the simple reason they did not communicate with other agency IT staffs, and did not know that collaboration opportunities even existed.

Through activities such as what we call CPIC, USDA has been working to increase coordination across agency and department IT activities. This included developing a shared vision and purpose for IT collaboration, as well as developing the enterprise-wide governance structures to integrate coordination into all aspects of the USDA's IT activities. At USDA we have a very active internal CIO council that we call IT Leadership. This council is made up of all of the agencies' CIOs and IT leaders. We meet twice a month with the purpose of communicating on all IT issues, both technical and non-technical.

The foundation for IT portfolio management at USDA is the Capital Planning Investment Control or CPIC process. CPIC is a structured integrated approach to managing IT investments. It ensures that all IT investments align with the USDA mission, and support business needs while minimizing risks and maximizing returns throughout the investment's life cycle. CPIC relies on a systematic pre-selection, selection, control, and ongoing evaluation process to ensure each investment's objectives support the business and mission needs of the department.

Mr. Morales: Dave, how do you ensure your customers' data is secure? And perhaps you can share with us a little bit of the experiences during the recent hurricane disasters.

Mr. Combs: Well, securing USDA's IT assets is of paramount importance to the department and an integral part of USDA's enterprise architecture and IT transformation activities. Cyber security considerations are included at every stage of USDA's CPIC process. All proposed investments are required to develop robust and detailed security plans before they are even funded. Systems in the development require creation of adequate security infrastructure and the obtainment of a certification and accreditation, or what we call CNA, for continued funding. Annual security reviews are also required for major investments to receive continued funding.

And the recent experience with the hurricanes and the Katrina certainly emphasize the need to secure the data that we have. For example, at our National Finance Center in New Orleans, to make sure that that was securely transported to our backup site in Philadelphia, brought up, and which was done within a two-week period. And they actually just didn't miss a beat and actually brought on two new customers at the same time. So security and protection of our customers' data is of paramount importance to us.

Mr. Morales: It's a great story. How is the department ensuring data quality? We will ask USDA CIO David Combs to explain this to us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Department of Agriculture CIO David Combs. Also joining us in our conversation is Mike Wasson.

Dave, we understand that your office has implemented a set of quality guidelines for information. Could you share a bit about the guidelines with our listeners? And what was the process that was used to develop and implement them?

Mr. Combs: Sure. The quality guidelines apply to all types of information disseminated by USDA agencies and offices. Now, I won't read them to you, but the basic premise is that USDA will strive to ensure the maximum quality, objectivity, utility, and integrity of the information that its agencies and offices disseminate to the public.

Well, what do I mean by "objectivity"? USDA offices and agencies will strive to ensure that the information they disseminate is substantively accurate, reliable, and unbiased, and presented in an accurate, clear, complete, and unbiased manner, and to the extent possible, consistent with confidentiality protections, USDA agencies and offices will identify the source of the information so that the public can assess for themselves whether the information is objective.

And what do I mean by "utility"? USDA offices and agencies will assess the usefulness of the information they disseminate to its intended users, including the public. When transparency of information is relevant for assessing the information's usefulness from the public's perspective, the USDA agencies and offices will ensure that transparency is addressed in their review of the information prior to its dissemination. USDA agencies and offices will ensure that disseminated information is accessible to all persons pursuant to the requirements of Section 508 of the Rehabilitation Act.

And what do I mean by "integrity"? USDA agencies and offices will protect information they maintain from unauthorized access or revision to ensure that disseminated information is not compromised through corruption or falsification. USDA agencies and offices will ensure their information resources by implementing the programs and policies required by the Government Information Securities Reform Act. And USDA agencies and offices will maintain the integrity of confidential information and comply with the statutory requirements to protect the information it gathers and disseminates. And these include the Privacy Act of 1974 as amended, the Paperwork Reduction Act of 1995, the Computer Security Act of 1987, the Freedom of Information Act, and OMB Circulars A-123, A-127, and A-130.

Mr. Morales: Dave, we understand that your office has a role in records management for the department. Are all your records stored electronically? And how does your office manage risk and redundancy in storing these records?

Mr. Combs: Yes, as I mentioned earlier, my office leads this effort at the department, and no, not all records are electronic. But the amount of information we generate has increased exponentially over the past few years. The expectation is that over the coming few years we'll generate even more information and much of this will be electronic. We manage the risk and redundancy in storing these records in various ways. We do it through continuity of operations planning, periodic exercises for the deployment of operations. We do it through vital records exercises, where records are positioned at primary and an alternate site. And through ongoing training of our records officers and project managers.

USDA is in the process of evaluating an electronics records management application. And after evaluating this application, we will be conducting a proof of concept pilot. By approaching electronic records management from a department perspective, USDA will benefit from reduced development and maintenance cost as well from the standardization of processes that will support e-records management.

USDA understands the need to manage a project of this magnitude at the department level to ensure conformity of standards across all USDA agencies to manage risk and redundancy.

Mr. Morales: Dave, how is the enterprise architecture that is already in place at USDA impacting operations, and where are you in the process of implementing the target architecture?

Mr. Combs: USDA's IT transformation framework, has better enabled USDA to manage its IT investment portfolio and select the best combinations of IT systems to effectively and efficiently support USDA's mission. Using the department's blueprint for the vision provided by the USDA enterprise architecture, USDA has conducted an extensive review of IT investments during the fiscal year 2005 budget process.

All USDA investments, major and non-major, were evaluated to determine whether they aligned with the enterprise architecture and provided a necessary and efficient service. The process particularly focused on consolidation with systems providing similar functionality identified using the tools and structure provided by the USDA and the Federal Enterprise Architecture. This careful review allowed USDA to eliminate nearly 150 of its 500 IT investments through consolidation and realignment, saving around $160 million annually. USDA's IT transformation activities have resulted in additional IT portfolio improvements as well. This was accomplished by having the department focus on developing enterprise-wide systems and services to serve business needs and replace the duplicative agency-specific approaches previously used. This activity has increased from 24 major investments to 66 over five years, nearly a 200 percent increase. And at the same time the number of small and generally agency-specific investments has declined significantly from 605 down to 330.

Mr. Morales: What is the directives system, how did the system evolve, and what can you share with us about the results that this office has seen in making directives centrally available and electronic?

Mr. Combs: The USDA directives system is basically an online repository of all USDA departmental regulations and notices, manuals, and secretarial memoranda. The old process was paper intensive, and a great deal of time and effort was put into copying and storing those paper forms. Well, that process was transformed basically into a print-on-demand function, online, and our customers now have access to the information they need without having to go through any other organization, pretty simple.

Mr. Morales: David, earlier you mentioned the programs you have to support the development of project management skills among your technical staff. I think you mentioned you had somewhere on the order of about 500 folks going through these programs. How have your efforts improved technical outcomes?

Mr. Combs: The USDA IT investment project management training program provides participants with the tools and techniques needed to manage IT projects effectively with an emphasis on the issues encountered in managing within the capital planning investment control process and other federal guidance.

This training program was initiated in response to the results of a survey of USDA IT executives which indicated the need for more training in project management. And the Federal CIO council as well as industry leaders considers project management to be a critical competency for IT managers. As I mentioned before, USDA has graduated over 500 students from this five-week course, and over 200 now have their project management professional certification. And our multimillion dollar IT development projects demand professional, experienced, and effective project managers.

Mr. Morales: What does the future hold for the Department of Agriculture? We will ask Chief Information Officer David Combs to discuss this with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I am your host Albert Morales, and this morning's conversation is with David Combs, chief information officer at the Department of Agriculture. Also joining us in our conversation is Mike Wasson.

Dave, we talk a great deal with government leaders about the pending retirement wave. Can you tell us about the steps that your office has taken to manage the retirement wave within the USDA, and what lessons learned could you share with other leaders in government?

Mr. Combs: In an effort to address an increasing shortage of skilled information technology workers at USDA, OCIO and our Office of Human Resources Management work closely together to provide USDA managers with recommendations and solutions on how to continually improve their IT work force.

The increased focus on the strategic management of human capital dates back to the Clinger-Cohen Act of 1996. And one of the requirements of this act is the mandate for all federal agencies to perform an IT workforce assessment. The act requires the federal chief information officers to implement a professional development strategy to ensure that IT staff possess the knowledge, competencies, and skills necessary to meet agency requirements as they relate to information resource management.

In partnership with our Office of Human Resources Management, we've established a USDA IT HR working group. This working group closely works with every other team within the OCIO to achieve the goal of recruiting, retaining, and training the most qualified team of IT professionals. In addition, this group meets monthly with representatives from numerous agencies, IT, and HR specialists within the department. The working group is focused on developing, implementing, and promoting recruitment and retention strategies to ensure that USDA maintains a quality IT job force capable of leading the department to meet its mission objectives.

Working group members are briefed regularly on all activities occurring at the federal level in the area of IT workforce improvement. They're responsible for achieving USDA's IT and HR leadership, in planning for and implementing effective recruitment, retention, and training strategies. The USDA IT HR working group is the department's only forum for active IT HR collaboration in the area of IT workforce planning.

Mr. Morales: Dave, you touched on this a little bit, but is your office also working on recruitment and retention activities, and how does this fit into the overall HR strategy for OCIO?

Mr. Combs: Yes, this ties directly to the overall HR strategy I just mentioned. We clearly recognize the issue of recruitment and retention. And we've been working very hard over the last year to recruit strong talent to fill these critical vacancies at all levels.

Mr. Morales: Dave, how do you envision the operations of the OCIO in five to ten years? Is the OCIO considering expanding its customer base through shared services or other methods?

Mr. Combs: Well, absolutely. We've already begun to move in that direction. Just last December USDA's executive board granted my office permission to move forward with three major initiatives, a single electronic mail system, a consolidated network with centralized support, and a consolidated data center and disaster recovery infrastructure.

Mr. Morales: Earlier, Dave, we talked a little about enterprise architecture, but can you discuss what impacts will the enterprise architecture planning have on the long term capabilities of the department?

Mr. Combs: The USDA-wide enterprise architecture supports and reinforces the goals of the President's management agenda. The USDA-wide EA repository and EA program is a catalyst for creating easy to find, single points of access to government services. It encourages automating internal processes to reduce the costs. It enables reducing cost by disseminating best practices and coordinating approaches across USDA agencies and staff offices, and it results in reducing duplication of efforts to build similar software systems. The USDA EA program supports the coordination of USDA's participation in the E-Government presidential initiatives.

This year, in its first year of use, the USDA EA repository and program will support initiatives such as FirstGov portal, Recreation One-Stop, e-authentication, e-loans, and e-grants initiatives. This support is in the form of the development of standards, the development of common data sets and structures, identification of common processes, and identification of common technologies. The EA repository also supports the federal architectures being developed for finance, human resources grants, and federal health.

And finally, the EA repository and EA program closely align the E-Government initiatives defined in USDA's E-Government strategic plan leveraging e-authentication, enterprise shared services, web-based supply chain management, and other initiatives. This alignment advances USDA's EA goal of using common enterprise-wide and intergovernmental systems when possible.

The EA repository directly supports the achievement of USDA's EA vision. The information it provides will help the Office of the Chief Information Officer and the executive board to make informed IT investment decisions based on a clear understanding of the department's existing and planned architectures at both the agency level and the federal level. Further, it will help agency and staff office personnel to identify opportunities to leverage existing systems or contracts already in use elsewhere in the department, helping to avoid redundant IT investments.

Mr. Morales: Dave, you've had a highly successful career starting in the private sector. You've turned a passion into a business, and now you're in public service. What advice can you give to a person who is interested in a career in public service, especially in information technology?

Mr. Combs: Well, if you're looking for a rewarding and challenging opportunity, you need to look no further. It's truly an honor and a privilege to be in public service, and the demand for information and the technology to create it, organize it intelligently, and communicate it efficiently and effectively is growing exponentially. The future for informational professionals is bright. Unlike my generation, children today are exposed to information technologies before they can even walk.

IT has become engrained in their everyday routine. From the time they enter kindergarten, sometimes sooner, children are exposed to computers and electronic knowledge. These experiences translate into capabilities that can be applied to future careers in information technology. But you don't have to major in computer science to have a career in IT. The federal IT organizations are always looking for smart, energetic people who are good thinkers and good leaders and not afraid to tackle large and difficult problems. If that description fits you, then there are several people in the federal CIO community that want to talk to you.

Mr. Morales: That's great advice. We've reached the end of our time, and that will have to be our last question. First, I want to thank you for fitting us into your busy schedule. Second, Mike and I would like to thank you for your dedicated service to the public and our country in the various roles you've held at the Department of Agriculture.

Mr. Combs: Thank you Al and Mike; it's been a pleasure and an honor for me to be here this morning, and I welcome the opportunity to discuss our many missions and areas of -- that we are working on at USDA and it's a big department with a wonderful service mission to the rural parts of United States of America, and actually to all of it, when you consider the food safety protection and everything. So there's hardly an area of American life that we aren't intimately involved with, and it's a real honor and a privilege to work in that department.

Mr. Morales: This has been The Business of Government Hour featuring a conversation with David Combs, chief information officer at the Department of Agriculture. Be sure to visit us on the web at www.businessofgovernment.org. There you can learn more about our programs and get a transcript of today's fascinating conversation. Once again, that's www.businessofgovernment.org.

As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad who can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support.

For The Business of Government Hour, I'm Albert Morales; thank you for listening.

 

Thomas Cooley interview

Friday, January 27th, 2006 - 20:00
Phrase: 
"Our system enables program managers to tick down their funds throughout the year. Every morning you can log on, see how much money you’ve got. Then, if you’ve made some award recommendations and commitments, you can see how much you have left."
Radio show date: 
Sat, 01/28/2006
Guest: 
Intro text: 
Cooley discusses the process of managing grants and research priorities across the NSF and working to support and nurture the future scientists and engineers of America. He discusses the NSF’s efforts to understand the impact of technology, especially...
Cooley discusses the process of managing grants and research priorities across the NSF and working to support and nurture the future scientists and engineers of America. He discusses the NSF’s efforts to understand the impact of technology, especially nanocomputer technology, on American lives.
Complete transcript: 

Wednesday, August 3, 2005

Arlington, Virginia

Mr. Morales: Good morning and welcome to The Business of Government Hour. I'm Albert Morales, managing partner 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 by visiting us on the web at www.businessofgovernment.org.

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 Thomas Cooley, Chief Financial Officer and Director of the Office of Budget Finance and Award Management at the National Science Foundation. Good morning, Tom.

Mr. Cooley: Good morning, Al.

Mr. Morales: And joining us in our conversation, also from IBM, is Steve Watson. Good morning Steve.

Mr. Watson: Good morning Al and good morning Tom. Thank you for joining us.

Mr. Cooley: Thank you Steve.

Mr. Morales: Tom, can you begin by telling us the history and the mission of the National Science Foundation, and more specifically, the Office of Budget Finance and Award Management.

Mr. Cooley: Sure, but I don't want to take a whole lot of time. I could spend an hour just talking about that. The National Science Foundation is a branch and arm of the federal government. It was created in 1950 after World War II, after they found out how important science was -- research and development was to the mission of carrying out that war effort. Our fundamental mission is to support basic science and engineering research and education, primarily through colleges and universities, but we also have activities that are engaging the profits and non-profits as well. We currently have a budget of about $5.8 billion each year. We are waiting to get our fiscal year 2006 budget through Congress right now. What that translates to is roughly thirty-five thousand active awards every year. We get about forty-four thousand proposals from principal investigators at universities and colleges throughout the country. We put them through a rigorous external merit review process. Each year we make about eleven or twelve thousand awards. The typical duration of an award is about three years. Hence we have an active award portfolio in the neighborhood of thirty-four to thirty-six thousand awards each year.

Mr. Morales: Can you tell us about some of NSF's research priority areas?

Mr. Cooley: Well, fundamentally you have to understand that research covers everything from anthropology through zoology, and fundamentally, that is our role, that is our mission, and we do do that. So we have a directorate for biological sciences, we have a director for math and physical science, there's a director for engineering sciences, for example. But there are priorities in any era, and right now some of those priorities are in areas such as nanoscale science and engineering. The public tends to think of that as nanotechnology, and how that may help manufacturing processes in the future, how it may help the healthcare industry in the future, for example. We also have a very interesting research priority in social and dynamic behavior of people and organizations. How do we get things done? How do we get them done more effectively? How do people interact with technology, and what impact is technology having on our lives? There's also a very -- there are some broad national kinds of things going on right now, we call them administration priorities. One is in the National Information Technology Research and Development Program called NITRD. One is in the Nanoscale Science Initiative, that's called NNI. There is also a very broad research program across the federal government in global climate change supported by the administration. It's important for policy to be set by the best science that we can get, and so in order to understand what is really happening with global climate change, it's important to get the research done. These are integrated government-wide programs where the National Science Foundation, NOAA, NASA, Department of Energy, the United States Department of Agriculture, they all collaborate and coordinate and carve out a unique piece that fits their mission and then put an integrated program together.

Mr. Morales: Tom you mentioned some of these other organizations, how does the research in science supported by NSF complement the research supported by organizations such as NASA or NOAA and the National Institutes of Health, and how does NSF work together with these science organizations?

Mr. Cooley: I think the answer is actually a fairly simple one. When one thinks of NASA or NOAA, one thinks of the mission that they have. NASA, space, to put it very distinctly, NOAA is oceans and atmospheres. So in carrying out their missions, they have specific things that they're interested in looking in to. Our mission is about basic research, so we don't have a mission that's directed to a particular component of the environment, the world, the population. What we try to do, and a very fundamental part of our mantra, so to speak, is the training of the future generation of scientists and engineers, so that we're not only helping to fulfill other agency's missions by training people that are going to be the scientists or engineers that work for those agencies, but we also do the kind of basic research that those mission agencies draw upon in order to carry out their own missions. So, for example, one of our partnerships is at the National Center for Atmospheric Research in Boulder, Colorado. We collaborate with them. We are interested in generally, you know, what is causing climates to change, how do you map weather, how can you use super computers to model weather changes and predict and forecast weather at a microscale, which is going to be very difficult, but that's ultimately where people want to go. And so, when storms are coming up, I'm not interested in what's happening in the general D.C. area, I want to know exactly what's going on in Columbia, Maryland where I live, and I think a lot of people feel like that. So many of the National Weather Service activities that are carried out and for which NCAR in part participates -- NCAR, as I said, is the National Center for Atmospheric Research is through a collaborative set of activities that we have working with this center out in Boulder, and with the National Weather Service, with NOAA, whatever.

Mr. Morales: Tom, thank you. That's a fascinating and certainly a broad set of issues, and I would certainly be interested in understanding the weather patterns just around my block. You talked about the budget of $5.8 billion dollars, can you describe a little bit just the overall size of NSF and the skill set of the employees there?

Mr. Cooley: Sure. I think the audience would be surprised to find out how small we actually are. We're about twelve hundred federal employees with about three hundred fifty contractors who help us. Those contractors assist us in classification for our position descriptions. The bulk of our contractors actually assist us in the development of our hardware, software, and maintain those electronics systems for us, and then they do other things, such as the mailroom, delivery into buildings, support services of various kinds. So, within the building over there at 4201 Wilson Boulevard in Arlington, we've got roughly fifteen hundred people, about 75 to 80 percent are full-time federal government employees. The mix of that staff, you know, you've got it all the way down from a GS-4, 5, 6, 7 kind of secretary, program assistant. Usually, traditionally, there are people who are born raised right in this area here. And then at the top end of the system, you have got PhDs, scientists, and engineers working in NSF from Harvard, Yale, MIT, Cornell, the University of Maryland of College Park, Wisconsin, Madison, Charlottesville, University of Virginia, we draw them in from all over. We have a mix right now of about 50 percent full-time program managers and about 50 percent rotaters, and that ensures that about every two to three years those rotaters turn over. These are people who are actually bench scientists. They are out there at the universities, they're on the cutting edge, and they really know what's going on. So that when we get proposals in from the principal investigators, the people who are looking at those proposals, evaluating them and trying to find people to review them, other scientists and engineers in the community. Our staff is really plugged into that community, they know what the hot topics are, and they who are the best and most highly qualified reviewers are. From my perspective as the chief financial officer, that means I can tell the American public the proposals that we fund have undergone the most rigorous external merit review process that we can envision. Many people on the hill refer to it as the gold standard. So that when we make an award with American taxpayer's dollars, my confidence that this is going for something that's really cutting edge, that could really impact our lives, ten, twenty, thirty years from now is really great. I mean, when we look at the fact that research on transistors was done fifty years before transistors were ever used. Sometimes the concept doesn't lead to a product for a very long period of time. And some concepts don't lead to any products at all. They're dead ends. I mean there's value in finding out that there's a dead end out there. It saves other people time and effort from pursuing what ultimately would be a dead end, and then go in a different direction.

Mr. Watson: Tom, you're the chief financial officer, and also the Director of the Office of Budget Finance and Award Management. Can you tell us a little bit about the roles and responsibilities of that position?

Mr. Cooley: Sure, Steve. First of all, I think it's important to understand what it means to be the Director of the Office of Budget Finance and Award Management. I have five divisions that report to me. One is the budget division, so we work with the administration and the Congress to propose a budget and then implement a budget once the Congress has passed it. We have the Division of Financial Management that oversees the internal controls and the financial practices that we use to ensure that every dollar that goes out the door goes to the right person for the right reason. The third division is the Division of Grants and Agreements. They're the division that does the bulk of the business at NSF because we are predominantly a grant making entity. The fourth division is our Acquisition Procurement Division, the division of contracts, and they have the very complex agreements, things where we have a much more hands on relationship with the entity that we've made the award to. And then, the fifth and the newest division is the Division of Institution in Awards Support, and its focus primarily is on audit resolution where we have issues that have been raised through the audit process and we have to find out how much money does the government get back because you didn't spend it all appropriately, or maybe even misused it. And then our largest and newest activity, which is post-award monitoring and oversight. The focus of that is to ensure that if you get an award to do X, that you've actually done X, and that the money that you spent on X was relevant to X. It's important for the accountability of the taxpayer's dollars. I think it's also important to the accountability of the Merit Review System.

Mr. Watson: Tom, that's a lot in one position. What was your experience and what path did you take to prepare yourself for that?

Mr. Cooley: Well, there is a long story. When I was a young man, many years ago, I read a couple of books by some fairly famous authors who were doctors and physicians at the time. It got me very interested in a field called microbiology. And I was more interested at that time on potential for microbiology to help me understand how I might help humankind. As I got older, I discovered that microbiology touched all fields, plants, animals, human beings, soils, et cetera, so I majored in microbiology at the University of Maryland, College Park, came out, went into a job and told myself, oh my goodness, what have I done to myself. I didn't enjoy the work experience. I really did not. I was very fortunate, as I have been at three or four critical times in my career, to have a mentor at that time. He was not my immediate boss, but he was a partner with my boss. And my mentor came to me and said, you know, there's something that's not gelling here for you, I can tell. And he encouraged me to go back to graduate school, which I did. I pursued the field of botany. I got married. Things change when you get married. We had a little girl. And I had an opportunity presented to me, it was a career choice. I had one path or another. I could go to a post-doc at the University of Montana, or work part-time for the summer at a place called the National Science Foundation in 1979 to write an environmental impact statement for what at that time was envisioned as the Ocean Margin Drilling Program. My family is here, my wife's family is here, and our daughter was six months old, and the pay here was twice as much as the pay in Bozeman, Montana. So I thought, well let me go with this and see where it goes. They extended it two more times for a year and a half, after which they hired me full time as a GS-11. I worked for some great people. I worked for Sandra Toy, Al Shin, Joe Cull, all of whom had great influences on my career development, basically gave me some advice, pointed me in a direction, and then left me alone to see if I could really do it or not. And a couple of years ago, the Director of the National Science Foundation, at that time Dr. Rita Colwell, turned to me and said, how would you like to be the CFO, and I said, only if I can dot, dot, dot. And she said, fine. So I've been there for five years in this role. There are days when it's a lot of fun, and there are days when I'm glad to get home. But I think all of our jobs are like that.

Mr. Morales: Tom, that's just a fascinating start to just a wonderful career. How is NSF working on the President's management agenda's five government-wide initiatives? We'll ask NSF CFO Tom Cooley to explain this to us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Tom Cooley, Chief Financial Officer of the National Science Foundation. Also joining us in our conversation is Steve Watson. Tom, can you give us a brief overview as to how NSF is working on the President's management agenda's five government-wide initiatives?

Mr. Cooley: This is not an easy question, and may actually end up being probably one of the most difficult questions you will ask me. First of all, I have answer with a very honest and straightforward one that my staff will recognize, and that is a lot of very hard work. This is not easy. It's one thing when you set your own agenda, it's one thing when someone else sets it for me, and then continually raises the bar so that you do better and better and better. I buy into that philosophy, it's basically a philosophy of continuous feedback, you do something, you do it well, you get feedback for improvement, and then you go off and make improvements based on that feedback. And then I think it's fundamentally the tenant that underlies the President's management agenda. We were very fortunate in that the President's management agenda had two key areas where we had already invested a lot of time and effort -- financial management and e-gov. And it was actually division of my predecessors and now I have to go back to the 1980s to talk about this. My predecessors had thought that it would be good if as many of our paper systems were electronic as is possible. And there were two key vision statements back in the '80s. One by Al Muellbower, who was the Division Director for Financial Management, and he wanted a financial management system that was totally electronic, where on a day to day basis, he knew exactly how much money was left in the bank. On the other hand, Connie -- oh, and I can't think of her name, she was the head of the Division of Information Systems, and her vision was one of how to enable our PIs, or principal investigators, to submit proposals to the foundation electronically rather than in paper copies. When you used to send a paper copy proposal, each proposal was about a half inch thick, and you were required to send twenty of them. So we had stacks of paper in the mailroom. The vision was, if you do this electronically, you can flip them out to your reviewers electronically, you can handle the paperwork electronically, and make your awards electronically. Those visions were put in place in the 1980s, and we were totally electronic by the end of the 1990s. So when the President's management agenda came along, in these two particular areas, it was very natural for us to go over and talk with the President's people in the White House and say we think we're green in financial management because, and we think we're green in e-government because. So when the very first scorecard came out, we in fact were green in financial management. They gave us a yellow in e-gov, because they had some questions for us that we needed to resolve and finish answering. So the next quarter, I believe it was, we did go to green in e-gov. The very interesting thing about the process though, is that they're -- those two do tend to be integrated, and the key integrating function is the other third PMA initiative, the integration of budget and performance. If you're going to integrate your financial system's data with your budget request, your justifications, what we call the budget execution plan, and you want to be able to tell the American public exactly what we are doing with that money and how you're doing, i.e., performance, then these three initiatives are all integrated. What we had not had a vision for was the integration of budget and performance. This agenda item caused us to really think in terms of a vision, we got working on that. My Division Director, Marty Rubenstein, really pulled a great vision together and pulled it off and we've got green and BPI, I believe, three cycles ago, something like that. The other two though were the more difficult ones. We at the National Science Foundation, frankly did not have a vision for human capital. We bought into the system that existed. It seemed to work very well for us. When you look at human capital as the fourth item and competitive sourcing as the fifth item, we were able to take advantage of a concern that we had had about four years ago that we really didn't have a vision for human capital, and we didn't have a vision for how all of the processes of the foundation needed to be integrated to get the most bank for the buck. And we had hired a contractor at that time to do an in depth, integrated assessment of absolutely everything that we do, and everything that we touch at the National Science Foundation, including this very critical piece. The staging of that meant that we needed to understand our human capital needs before we went down the road of trying to figure out what we needed to competitively source. Now part of the background here is that things that the other agencies are competitively sourcing today, we outsourced in the 1980s. I was around, we outsourced mailroom functions, we outsourced all of our IT support functions, we outsourced many, many different things. So where agencies today are looking to outsource those things, we've done other things. So we're on the cutting edge of what do you do after you've done that. Having just gotten to green -- yay, on human capital this last quarter, it allowed us to also integrate our vision for getting to green in human capital with the first steps of competitive sourcing. So we have our first competitive sourcing out on the street. Now we've moved from red to yellow in progress, not in status, so that we now have four greens and a yellow on the progress report card. We're very pleased with that, and I think that in general, while the PMA does take a lot of hard work, if you don't integrate your team across your agency, and you can't be successful if you buy in and set your own vision for yourself, because doing that means that you've got that community integrated within your agency. They see it as part of their vision, and therefore, it's the right thing to do.

Mr. Morales: In the fiscal year 2002, the National Science Foundation established the advisory committee or GPRA performance assessment that is structured internally to report PMA activities to the director of NSF. Who is part of this committee, and how does the committee evaluate NSF's progress on the PMA initiatives?

Mr. Cooley: Well, let me go to ground zero on this question. I think the audience that may by listening in could not necessarily know that the Government Performance and Results Act requires every agency to do its own self-assessment. There's a bit of a conflict of interest in my view with that self-assessment. It means, you know, if I think I'm doing a good job and my staff who work for me tell me that, because they're afraid to tell me otherwise, you know, for whatever reasons, you don't have some independent benchmark. So, a couple of years ago, the foundation agreed, you know, reporting performance was important to the community at large, whether it's a taxpayer, whether it's our principal investigators, whether it's the reviewers that are out there, whether it's the scientific community at large. In order for us to satisfy ourselves, because we have this independent review process that we rely upon to tell us how good a proposal is. The vision that I had was we need an independent group to come in and tell us how good we really think we are. We'll give them all the data, all the information, we won't preload it, we won't prejudge it, or prejudice it. And when they look at that, they have to give us feedback. If they think that we've prejudiced something, or have been lacking and providing them with information in a particular area, then the next time around we'll do better there. So, we came up with this advisory committee for GPRA performance assessment. They do want you here because they review our programs on an annual basis. What we do is we bring in experts in all the fields that we support, they all sit on this, they look at the portfolio of awards that we make, they look at annual reports, they look at collections of reports, they look at our Committee of Visitors reports, they look at National Academy of Science's reports, workshop reports, they look at everything, and they write a report to us and say this is good, or they say this is not so good. We've been very fortunate the last -- at least the last three years that I can remember, they have said that everything that they have seen indicates that the investments that we make to support our mission have been very good and satisfactory, we're making satisfactory progress, they support the mission of the agency, they support the strategic vision and the strategic plan and more importantly, in each annual plan, they support each annual plan in trying to get from point A to point B.

Mr. Watson: Tom, you mentioned you're green already in four of the five key PMA areas. What is your plan for staying there? Is it as difficult to stay there as it is to get there, or do you have processes in place that carry it to this point forward?

Mr. Cooley: The answer is yes, it's as difficult to stay there, and as I had mentioned earlier, it is as difficult to stay there because once you pass a bar, what the government is saying to itself is we need to move that bar higher. If we really want to be an effective and efficient organization, and I think most organizations buy into this concept, you need to do everything that you can through some process of continuous feedback loops, to figure out where you can still improve. It does take a lot of hard work, it does take a lot of effort, and people do pull their hair out, I'll be the first to admit that. But fundamentally, the only way that I, as the CFO of the agency can do it, is to set up a system of trust and integrity, and I think most of us in the government have tried to do that, let your people who are in charge with these activities run with them, get reports periodically on how they're doing, hold them accountable, but fundamentally trust them to do their jobs. Once in a while I find that I have to set a due date to make sure something continues to move along and it doesn't languish. But I think that if you trust your staff, and realizing that they trust you, whatever job you're asking them to do, they'll do their darndest to accomplish for you. And I have seen that time and time again. I've got a -- oh, I guess it's about one hundred twenty-eight or one hundred thirty people that work for me right now, small by most departmental standards, but nonetheless, I know most all of them by their first name. I know something about their history, their family, what their interests are. When I pass them in the hall, I always say hello to them. They always say hello to me. There's a sense of camaraderie, but I think fundamentally underlying that, we each share core values. For the Office of Budget Finance and Award Management, and that's posted on our BFA website. We talk about it at all of retreats to make sure that it's still the appropriate kind of core value and vision for us. And the last phrase in there is have fun. And as long as we don't lose our sense of humor, and we try to find ways to have fun in doing our job, then I think everybody has that little blowout patch available to them on a daily basis.

Mr. Morales: I think I'd certainly like to see that as one of the new initiatives on the PMA having fun. How has NSF successfully linked financial data and performance data? We will ask NSF CFO, Tom Cooley to explain this to us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Tom Cooley, Chief Financial Officer of the National Science Foundation. Also joining us in our conversation is Steve Watson. Tom, I understand that NSF is one of the agencies that excel in the performance assessment report, which links financial data to program performance. What are some of the factors that have lead NSF to successfully articulate and link financial data to performance data.

Mr. Cooley: Well, I think that one of the most fundamental successful factors is the integrity of the science process itself. It starts with the person, man or woman, who has an idea, wants to put it forward, and hopes to get it funded by the federal government. What they want is an excelling research project that is going to make into the scientific literature because after all, these people are -- have the ability to become a tenured faculty member at a university or college, and I think that's part of their own career path. In establishing their research record, while at the same time they're establishing the fact that they teach well at a university or college. That helps them move up the ranks from an assistant to an associate professor, ultimately to a fully tenured faculty member. They have a vested interest themselves in making sure that the results of their research, their education project -- we fund things in informal science education at museums, for example, is known nationally. It's name recognition. You know, they want to become a recognized name in the field. So they want to publish their results. That's an effective way of measuring their performance out there with the taxpayer's funds. If they've got a successful project and it's been successfully published, then taxpayer funded information is now in the public domain for other scientists, engineers, and educators to use around the country to influence not only their own teaching and what information they impart to their undergraduate and graduate students, but their own personal venues of research. Then there's the internal piece of performance, how are we, as members of the federal government, performing with the taxpayer's funds. And in that regard, I think we do a very, very good job. We have one of those systems that, at the beginning of the fiscal year on October 1, you fundamentally load up whatever your appropriation is, and then we start ticking it down. Our system enables every program manager who has a slice of that pie, they can start ticking down from whatever their amount is throughout the fiscal year. Every morning you can log on, you see how much you've got at the beginning of the day, and at the end of day, if you've made some award recommendations, those funds get committed, and you see how much money you have left at the end of the day. The other thing that we have, are online progress reports. PIs are required to submit an annual progress report so you can review it and see how it's doing. They tell us how many graduates students they've got, how many they've trained, did any of them get their Master's, did any of them get their PHD, have they submitted any publications, what's going on in your lab, have you had any kids in, did you talk to them, all of that kind of information is embedded in these so that you get a real picture on an annual basis of what's actually happening out there in the lab. That helps you as the program manager assess whether this project is performing well, and the person who writes it up, generally speaking, the principal investigator at the other end, goes through this thought process once a year. Yeah, I'm doing this and this and this and this and this and stop some things, but I'm not doing so good over here. I need to reach out more to let people know what I'm doing, and you know, some of the area high schools maybe reach out to them, offer field trips for people to come in where you can talk to them about your research and a lot of these PIs do that kind of thing, they tend to get really plugged in to the community around the university.

Mr. Morales: Tom, to dabble a little bit more into the secret sauce over at NSF, how is NSF moving to adopt new technologies in business processes and maintain financial integrity in internal controls?

Mr. Cooley: Well, I would like to think of it as driving business processes rather than moving business processes. We are a homegrown e-system, so what we have are legacy systems that are our contractors built and maintained for us. That comes with a heavy cost in terms of maintenance and operations and upgrades. And I think in the area of financial management there are commercially off the shelf software technologies that are getting better to address the federal needs, but they were built to address private sector needs, and they need some refinement, quite frankly, but I can see those refinements coming. So, where the federal agencies are beginning to go into cuts packages and work with those providers, the providers are learning how to improve the cuts packages. That's fine from my perspective. But in the grant making world, there are no such cuts packages. In order for us to do electronic grants administration, we had to build our own legacy system, that's what we've got. In terms of driving the future, what I would like to see is the government through this new grants management line of business, send a signal to the private sector that if we're really going to do this, we're going to need cuts packages. The grants business alone is something like $560 billion a year that go out in grants. So if the private sector starts building some of those cuts packages and offering them up to the government agencies, then there should become a point in time when we don't have to worry about legacy systems, where we can have integrated systems for grants management across the federal government, some of which may be a legacy system at a huge agency, such as HHS, might be. Or they may have cuts packages that are shared by multiple agencies. So I would like to see the government act a little bit more like the private sector in terms of trying to drive improvement by laying it out there to the private sector, you know, $560 billion a year is a big chunk of change, and if we really want to see if we can do some cost savings government wide by using cuts packages, you guys need to start building those and offering them to us.

Mr. Watson: Tom, you touched on the line of business concept, which is a current push in government and a number of areas. How is that impacting the National Science Foundation?

Mr. Cooley: It's really impacting all government agencies, not just NSF. But if I use NSF as the example, it's forcing us to make key decisions about, do we provide a service or do we go find a service provider? I think it's a key fundamental issue for the government. In the old days, one used to think -- and I'm talking fifty, eighty years ago, the Office of Personnel Management provided all of the personnel functions for the federal government, and everything you did went through OPM. That was disbursed -- probably for very good reasons at that point in time. What they're looking at now is rather than every single agency, and within major departments, every separate bureau having its own system, you name it, classification system for personnel, financial management system, procurement, contracts. Rather than having everybody have to duplicate that everywhere, you can get economy of scale and efficiency of operations by offering that service at a key few touch points. So that ultimately, like we did with the payroll, NSF had its own separate payroll system. The government went from something like twenty-six major providers for payroll to four. And the intent eventually is to get down to two. That created some streamlining, and there were good benefits that came out of that. Were there bumps along the way? Of course, there were bumps along the way. You don't bring any system up without bumps along the way, nothing goes absolutely smoothly. But in terms of trying to turn the government into a much more efficient and streamlined operation, there are shared operations across federal government, grants is one of them, where we need to start thinking strategically about how to do the front end, which we're already out in the front on with the grants.gov find and mechanisms, and how to do the back end, which is, you know, grants management within the federal government, and how to streamline that, make it more effective, make it more useful. One of the criticisms that we hear from -- well, let's say the governor's office. There is a lot of federal money funneling into the states, but there isn't any single portal where anybody in that state can figure out, well, how much is coming in on an annual basis and where is it going. How much is going to our Department of Transportation, how much is going to our public universities and colleges that we support in the state, and for what reasons? So, what's lacking and what is the value added here is the possibility that in the future that information allows you as the governor or as the state legislator, or as a single PI in the university to start to begin to integrate those efforts to get even greater value added our of the integration of those efforts. I've got an award over here and this guy over in the Department of Transportation has an award over here, I got to talk to him about what he's doing and let him know what I'm doing because maybe we have great information to share that may be of value to both of us.

Mr. Watson: Tom, you have mentioned using some of these lines of business, payroll for example. Any areas where you envision the National Science Foundation becoming a center of excellence providing a line of business?

Mr. Cooley: I would like to see us be able to do it for the grants management line of business, but we have a legacy system. It was not built with the intention of having a lot of capacity to it. We're not stretched right now in receiving forty-five thousand proposals a year, but on the other hand, we certainly couldn't handle the volume of proposals that comes in to the National Institutes of Health. If we did want to pursue becoming a center of excellence for the grants management line of business, we would have to bite off a discreet chunk that we felt that we could handle appropriately. Small bureaus, small departments, people in the federal government that already operate similarly to us, so if a portion of USDA, maybe EPA, maybe the National Endowment of the Humanities -- if I were to just take three random organizations, my guess is those three just about fill up our capacity. So then our concern would be what do we do if all of a sudden state funding dries up, and even more proposals -- say our proposal load goes from forty-five thousand per year to sixty thousand per year, that would saturate our capacity, we wouldn't be able to provide the service that we're supposed to be providing to the other agencies and the whole system could come crashing down. So, you know, we still got some homework to do, but I think that there would be value in pursuing that. The government is right now asking agencies to consider if they want to be a service provider, do a business case for yourself, and at the end of the business case, make a decision. So what I'd like to do is do the business case and see what it tells me.

Mr. Morales: Certainly a challenge, but an opportunity. What does the future hold for NSF? We will ask NSF CFO, Tom Cooley to explain this to us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Tom Cooley, Chief Financial Officer of the National Science Foundation. Also joining us in our conversation is Steve Watson. Tom, how is NSF promoting partnership with academia, government industry, and international stakeholders?

Mr. Cooley: That's an easy one. Person to person contact. Without that personal contact, things just aren't going to get done. This is one area that I would say NSF has excelled in the past fifty-five years of our existence. The very nature of research is global in scope. That caused the agency when it was first forming itself to worry about how do you touch all the bases, how do we touch the Office of Naval Research, how do we touch the United States Department of Agriculture and their research programs? So many of our program managers that reside at the National Science Foundation know the other program managers that work at the Office of Naval Research, or the Defense Advance Research Agency, DARPA, or the USDA. So there's that inside the government natural connection that already exists, and we frequently invite them to be reviewers on our panels and they invite us to be reviewers on their panels. In terms of working with academia, that is the fundamental tenant of the Principle of Operation at the National Science Foundation. The relationship between the foundation as an arm of the federal government and academia is one of partnership. We expect them to put something in, you know, they turn on the lights everyday for the PIs, and they make sure the water is running. The PIs give something back to the institution, sure they're being paid a salary, but they're expected to teach and do research, find time to mentor students, graduate students, post-docs, find time to talk with undergraduates, bring undergraduate students into the laboratory and have an undergraduate research experience those students who are thinking about a science or engineering career, reach out to the community, visit high schools, that is just a nature of our business. Even our own program managers in NSF do science fairs, participate in research at nearby universities, keep their ongoing research programs going. Industry has been a bit more of a sticky wicket, and I think that our real outreach to industry started about in the 1970s, but really solidified under our director for six years from -- I think it was about '84 to '90, Dr. Erich Bloch promoted a lot more partnerships. He envisioned a couple of very key programs that required industrial participation. That has. We have some centers -- I remember one that's up in Rochester, New York, where for a long time, I believe it's still in existence, Kodak was a partner because it was research on -- in the whole field of photography. And then international, well, we have several ways to do that. First of all, government-wide, you've got the State Department. So you'll always need to be concerned with working through the State Department, particularly in some sensitive countries, but we have our own Office of International Science and Engineering, and they have their own connections to their counterparts in -- out in the other countries. So, for example, my boss at the time who was the Chief Operating Officer, Joe Bordogna and I were invited to go to Beijing about a year and a half ago because the National Science Foundation's counterpart in the Chinese government located in Beijing was undergoing a strategic planning and envisioning exercise, and they wanted to know how NSF did it, and how NSF implemented it, and sold it to their own administration. Well, we found out about that because there was a very natural relationship between the people in those -- in that office in Beijing, and our people, here at NSF and the Office of International Science and Engineering who are always going back and forth and touching base and finding out what's going on in each other's countries, so we do that with virtually every country on every continent, and of course with cell phones now, it's instantaneous, call up, dial up, email, whatever. Then there are some research communities which by their very nature are international in scope. The astronomy community comes to mind, the ocean sciences community comes to mind. But you see more and more of this internationalization of research, biosciences is probably the hottest topic right now, and that's the sharing of information across borders about what's going on with the human genome and plant genomes, and how to worry about getting better crops that are drought resistant, or other kinds of things, that's very important on a world-wide basis.

Mr. Watson: Tom, looking into the future, what are the major challenges you see for the National Science Foundation, generally, and then more specifically, for your office?

Mr. Cooley: Making sure that people can actually go home at the end of a very busy, hard day. We all work more than eight hours, we know that now. Email has made it -- you work virtually twenty-four/seven. I get home, I take off my tie, and in the summer time put on shorts and go around in flip-flips because of the heat, but after dinner I logon. Do I have any important messages, did somebody need to give me a heads up about things the next day, is there something I didn't get to today because I had meetings all day long and I didn't have time to actually sit back and think? I think that in my own opinion right now, the biggest problem that we, as a nation are facing is that there is so little time left to be proactive or reacting to everything because it's information coming at you twenty-four/seven, whether it's TV, radio, email, people in the halls, and having that quiet time to stop and think strategically about where you should go right now is lacking. So, I guess the answer to the question is, the biggest significant challenge is carving out a piece of time to yourself, and letting your employees carve out a similar piece of time to themselves. One of the ways I do that, I refuse to have an iPod or a Blackberry or a cell phone. If you want to reach me, I log on to email, you can leave me a message. If it's really that important, you have that venue, but I don't want you calling me on my cell phone at 11 p.m. at night, nothing's that urgent, I'll deal with it in the morning when I get in. And I think that as long as people wherever they work feel like they still have that little safe spot they can go to, you know, you can keep pushing yourself along, you can bring home the paycheck, you can do what you need to do for the family, but we all need that little safe spot.

Mr. Watson: Tom, earlier in the program you told us a wonderful story about how you got started. What advice can you give a person who is interested in a career in public service?

Mr. Cooley: Understand what you're getting into. I think that was the real wakeup call for me when I got into my first real job. Like many of us, we had part-time jobs in high school and college. I worked my way through college. But, you know, you see multiple career paths, and sometimes you have to actually get on that path and find out for yourself whether you're going to be happy or not. In terms of the basics, I think most people who are worried about any kind of future career need to be thinking about to what extent am I going to be happy, and to what extent is my earning power going to support my family if I'm the kind of person that wants to have a family, big or small. So, good high school education, certainly go to college, because I think having a college degree opens up your earning potential as you get older. If you really love college, stay in college, get a Master's, get an MBA, go on for a PhD if you're interested in pursuing education, if you're interested in pursuing science or engineering. I'll tell you one thing about having a well-rounded, educated background, whether it's just a Bachelor's or a Master's, is I do think it prepares you to take advantage of the opportunities. As we all know in life, doors close and it's up to you to find out where that window is open, and trust me, based on my own personal experience, when a door closes somewhere, there's always a window open somewhere, but you've got to find it. And then when you find it, you have to have confidence in yourself that your background, your education, your experience, your training allows you to leap through that window. And frankly, if you're not sure, leap anyway, take the chance. You can always go to the supervisor and say, you know, I thought I really understood this, I need some more training in this area. And if you've got a good supervisor, they're going to say, absolutely, go do it. I'll pay for it.

Mr. Morales: Tom, that is just great advice. Unfortunately, that will have to be our last question. Steve and I want to thank you for fitting us into your busy schedule and joining us this morning. And we also want to especially thank you for your service to our country, both first at the Department of Agriculture, and now at the National Science Foundation.

Mr. Cooley: Well, that's great. I really do appreciate that. I'm third generation in service to this country, so over the past one hundred years, I've loved living in Washington, D.C., all of my life. If anybody wants to find anything else about the National Science Foundation, a very simple website, www.nsf.gov. Thank you.

Mr. Morales: This has been The Business of Government Hour featuring a conversation with Tom Cooley, Chief Financial Officer of the National Science Foundation. Be sure to visit us on the web at www.businessofgovernment.org. There you can learn more about our programs and get a transcript of today's fascinating conversation. Once again, that's www.businessofgovernment.org.

For The Business of Government Hour, I am Albert Morales. Thank you for listening.

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