Rear Admiral James J. Shannon interview

Friday, December 22nd, 2006 - 19:00
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

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.


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.


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 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.


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 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 There you can learn more about our programs and get a transcript of today's conversation. Once again, that's

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 - 19:00
"[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
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

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.


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.


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.


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,, 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 There, you can learn more about our programs, and get a transcript of today's conversation.

Once again, that's

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 - 19:00
"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

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.


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.


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.


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 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 There you can learn more about our programs and get a transcript of today's fascinating conversation. Once again, that's

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 - 19:00
Chief Financial Officer U.S. Small Business Administration
Radio show date: 
Sat, 08/19/2006
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

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.


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.


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.


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, 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 There you can learn more about our programs, and get a transcript of today's conversation. Once again, that's

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 - 19:00
"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
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 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.


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, regardless of which government agency requires them. Grant applications will find both the common and unique forms required to apply for grants at 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 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.


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.


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 There you can learn more about our programs and get a transcript of today's fascinating conversation. Once again, that's

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 - 19:00
"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
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

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.


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.


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 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.


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, 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 There you can learn more about our programs and get a transcript of today's fascinating conversation. Once again, that's

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

Norman Enger interview

Wednesday, January 25th, 2006 - 19:00
"The goal of the HR line of business is essentially to free HR professionals in the government from routine back-office type work so they can focus on recruiting, motivating, training and rewarding the people in the federal workforce."
Radio show date: 
Thu, 01/26/2006
Intro text: 
Enger discusses the HR Line of Business program, its relationship to the e-government initiative in the President's Management Agenda, and its alignment with the Federal Enterprise Architecture. Enger also describes some of the programs that have arisen...
Enger discusses the HR Line of Business program, its relationship to the e-government initiative in the President's Management Agenda, and its alignment with the Federal Enterprise Architecture. Enger also describes some of the programs that have arisen from the HR Line of Business and OPM e-government initiatives, such as the USAJOBS web site, the improved security clearance system, and improved employee training programs.
Complete transcript: 

Thursday, January 26, 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 at the web at

The Business of Government Radio Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is Mr. Norm Enger, director of the Office of Human Resource Line of Business at the Office of Personnel Management. Good morning, Norm.

Mr. Enger: Good morning.

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

Mr. Shaw: Good morning, Al.

Mr. Morales: Norm, can you tell us about the mission and the history of the Office of Personnel Management, otherwise known as OPM?

Mr. Enger: OPM was created by the Civil Service Reform Act of 1978. It has a number of different responsibilities, one of which is to build a high-quality and diverse federal workforce based on merit-system principles. Essentially, it's the guardian of the integrity of the federal merit system. The director of OPM is the HR consultant for the executive branch. She's the President's principal advisor on matters that relate to the civilian workforce.

In addition to this responsibility, the OPM also has responsibility, for example, for the employee benefits systems, and in effect operates and administers the Civil Service Retirement Systems, the Federal Employee Retirement System, and the Civil Service Retirement System, which is servicing millions of retired federal employees. It also administers the Federal Employee Health Benefit System, which, again, services millions of both employed and retired civilian employees.

In addition, a very large responsibility that OPM now has is the processing of personnel background investigations. OPM now performs 90 percent of all the federal government's personnel background investigations, which covers both the civilian workforce, DoD, and also includes contractor personnel.

Mr. Morales: You've been with the Office of Personnel Management now for, I believe, about four years, Norm. Is that correct?

Mr. Enger: That's correct, yes.

Mr. Morales: And you came on board to lead the implementation of the e-government initiatives. Could you describe the various roles at OPM that you've had in these past four years?

Mr. Enger: My background has been private sector. I spent my life in the private sector and what happened, I then was asked by the federal government to help out the federal government. I met with the director of OPM and the chief of staff back in 2000. They asked me would I consider doing some public service. Essentially, at that time, the OPM had five of the original 24 e-government initiatives. These were initiatives that really had three primary mandates, if you will. First one was to make transformational change -- really change a business process in the federal government. Number two, do it in a relatively short space of time -- say, two to three or four years. And also the third mandate was to prove you've been successful. Show us by numbers, metrics, or whatever that you really have achieved that goal. The five that we had really framed the employee life cycle from recruitment to retirement. Essentially, the five we had were what I call point solutions.

For example, one of them dealt with the website where someone goes to find a federal job. That's called, and we, in effect, transformed that website. What happened is in last three to four years, we've moved those five to a point where they're ready to graduate into the regular business of OPM. They've been successful and met all of their milestones. However, what you're looking at is fixing a piece of the overall HR business process. Namely, you fix the website, but you don't fix the entire hiring process.

What happened is that OMB recognized that perhaps it was wise to expand upon the original concept of improving federal HR systems, and what they did in March of 2004, they announced something called Lines of Business. They announced at that time five lines of business, and one of those five was the Human Resources Line of Business. Essentially, the difference between the original five e-gov I had and the new Line of Business is that this is much broader in scope. They're looking at everything you do in terms of the business process from hiring a person to retiring a person and saying, let's look at the entire scope of this, the entire business process and all the sub-functions and really try and change as much as possible, and where possible use technology.

Mr. Shaw: Norm, you are now the director of the Human Resources Line of Business. Could you tell us about the mission of your office? You've spoken briefly about it, but could you provide some more detail?

Mr. Enger: The mission of my office is really to implement the vision of, now, the Human Resources Line of Business and also to complete the final graduation, if you will, of the original e-gov initiatives. Essentially, we are following the President's Management Agenda, the PMA, which sets forth as one of the five major components, e-government. We're following the goals and desires specified in the PMA -- the part, of course that deals with e-government. We also are following the E-Gov Act of 2002, which, again, has visions to improve federal IT systems. And finally, there's also something now called the Federal Enterprise Architecture, which is a big picture of the government from a business point of view, whereby it's looking at the government as one organization, saying, what does this one organization, this one government do? So we're responsible for, in effect, giving detail and giving the structure to the Human Resources part of the Federal Enterprise Architecture.

In terms of my mission, I have a staff of approximately 37 people working for me. With contractors, we have approximately 60 people working to implement both the HR Line of Business, but also to finish off or complete the earlier 5 e-gov initiatives.

Mr. Shaw: Norm, some of our listeners may have difficulty understanding what the federal government means by "human resources." Could you share your understanding of this term?

Mr. Enger: Human resources really means the 1.8 million people in the civilian workforce. What we are trying to do is we're trying to, in effect, improve how we recruit, how we motivate, how we reward the people in the federal workforce. So human resources means people. Another term that's come into popularity is "human capital." Essentially, this is also the people, but it wants to give the flavor, if you will, of the people in terms of a real asset to the organization. So when you say "human capital," you mean: Think about these people you have and think of them as an asset, like any other asset you have in a large corporation.

Now, the goal of the HR Line of Business is essentially to implement modern and cost-effective HR solutions to support the strategic management of human capital. A goal here is to, in effect, free up the HR professionals in the government from routine back-office type of work and move a lot of that work to federal processing centers -- I should say federal and also private processing centers. So in effect, you free them up to focus on the mission of recruiting, motivating, training, rewarding the people in the federal workforce, the move to a more strategic use of our HR professionals to build a better work force. And of course, a secondary consideration here is the fact that by doing this you also achieve many, many operational efficiencies, you save a lot of money, and you become much more efficient.

Mr. Shaw: As you mentioned earlier, you came to OPM after working in the private sector, including a successful launch of your own technology company. How have you translated your private sector experiences to your work now at OPM?

Mr. Enger: Well, I spent most of my professional life running my own company. It was a consulting, professional services, IT system integration type of company, and then what happened is the company was bought in 2000 by a large multibillion-dollar company called Computer Associates. I spent two years with that company as a vice president. So I really had the experience of both working at my own company and also working for a very successful large corporation.

Now, to answer your question specifically, what has happened is the federal government has moved toward trying to follow the best practices in the private sector. I was surprised when I joined the government in 2002 that I was seeing the government actually turning more and more to the private sector for help, answers, and solutions. Essentially, if you look at how the federal government rates their senior executives, they have several criteria that you have to really try and meet. One is leading change. A second one is leading people. A third one is being results-driven -- give us some results or some tangible evidence you're successful. A fourth one is having business acumen -- namely, you can intelligently operate a business-type function. And the fifth one is building coalitions and communications.

Well, all of these elements, these five, are very, very critical in the private sector. When I ran my own company and when I worked for Computer Associates, these were the criteria by which you judged the successful executives. And now, what I see is that that structure has now moved over into the federal sector, and we find the federal government trying to follow the same model, if you will, that we have in the private sector.

I might also add that a very key element here is results-driven. You see now a very, very keen desire in the federal government to tie performance to results, and that is very much a private sector orientation.

Mr. Morales: What role did OPM play in changing government recruiting? We will ask HR Line of Business director Norm Enger to share with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with OPM director Norm Enger. Also joining us in our conversation is Don Shaw.

Norm, you were a guest on our radio show in March 2004, and our listeners would be interested in an update on the progress of the e-government initiatives under your purview over the past few years. Let's start with the recruitment one-stop initiative and the usajobs website. Can you give us some background on this initiative? How's it helped with recruiting qualified candidates, and how many visitors do you now have, and how many online r�sum�s have been posted?

Mr. Enger: Well, this is one of the original five e-gov initiatives. It was called Recruitment One Stop; it's really focused on usajobs, our website. What happened is, when I joined the government, there was an old legacy system, which was definitely in need of replacement, renovation, or whatever. So what happened is in August of 2003, we actually brought up a brand new replacement site. Now, let me mention that this is the primary site where a person goes to locate, search for, and apply for a federal job. All competitive federal jobs must be posted by law on this website.

What happened is that in August of 2003, we shut down the old website on a Friday evening, and we were averaging 20,000 visits a day to that old website. We came live on a Monday morning, and fortunately, there were no glitches with the operation, but what did surprise me is on day one, we had 200,000 people on the site. We increased tenfold when people knew there was a new site. The new site is complete -- it's a modern site, the site appearance, the search engines, the r�sum� builder, the guidance on the site, how to locate a job that meets your desires or qualifications -- this has all been totally redone. It's now a modern, very robust site. So what's happened is that we're now averaging over 300,000 visits on the site per day, and that comes down to over 70 million people a year are actually going to this website. By every rating that we know -- and we actually have third parties evaluate the site -- 91 percent of the people that go to the site say they would return to the site and recommend the site to other people looking for a federal job.

At this point in time, we have over one million r�sum�s on the site. The site, I think, has met the earlier mandate I mentioned of e-government -- namely, you transformed a business operation, you've done it in a relatively short space of time, and you can prove that it's been successful by the number of visitors and outside surveys judging how well the site services the U. S. public.

The site is still evolving. Now, we are trying to give the applicants more feedback as to the status of their application or r�sum� to actually have it so they will know who's looking at their r�sum�, and what the next step in the hiring process is. This is a significant step forward into fixing the hiring process, which is a very high priority with the U. S. government and the director of the Office of Personnel Management. Where we are now is we're trying to have the site integrated more fully with what I call back-end systems in the agencies. Namely, they have systems that asses the applicant r�sum�, and the more we integrate their assessment systems with the r�sum�s produced by usajobs, the more you'll speed up the time it takes to hire somebody and the more you'll improve the federal hiring process.

Mr. Morales: That's a very impressive transformation. Two years ago, we also discussed your efforts to improve the federal government's security clearance process. Could you describe how the E-Clearance Initiative has transformed this approach to granting security clearances in the federal government?

Mr. Enger: This is a very, very major area -- topic area -- especially after 9/11, when the awareness of security really intensified across the country. There are several aspects to e-clearances, the initiative which we're talking about now. It's one of the original five. The first thing that we did is we built a system called the Clearance Verification System. This system -- it's the first time this was ever established -- this system holds 98 percent of all active security clearances. This covers all of the civilian workforce, the DoD workforce, and also all contractors. So one of our major accomplishments here is to build a central database or a central system whereby authorized people can put a name in and rapidly find out their clearance status and who granted that security clearance.

Also under this initiative we have moved forward to automate the forms people use to apply for a security clearance. One of the more common forms is called the SF-86; there are several other forms. What we have done is we have built electronic versions of all of these forms whereby it simplifies the process of filling out the application and also transferring the information to the appropriate investigative agencies.

The third element to this is to develop the specifications, to image background investigation information, the paper files that are produced by the investigators to do the background investigation. So the three pieces of this were the Clearance Verification System, the automation of the forms -- it's called E-hyphen-Q-I-P or e-QIP -- and also the imaging standards to image background investigations.

So in effect, what we've done here is we have moved from a paper-driven security clearance process to an electronic process. A very significant act was the 2004 Intelligence Reform and Terrorism Prevention Act. Based upon the mandate of this very important act, and based upon the progress in e-government, we are now looking that 80 percent of all background checks will be finished within 90 days by the end of 2006. As I said earlier, at this point in time, OPM is doing 90 percent of all the federal government's personnel background investigations. At the present time, we're conducting over one million investigations a year.

Mr. Shaw: Norm, one aspect of the Human Resources Line of Business is skill development, employee skill development. Could you share an update on the E-Training Initiative and the website?

Mr. Enger: Essentially what this was to accomplish was to build a web-based learning site where people could obtain from the Internet, from a website, courses, books, mentoring, the various things required to develop competencies and skills. We launched, in July of 2002, a very, very simple site. It was extremely basic; at that time, Mark Forman was in charge of e-gov -- now it's Karen Evans. Mark Forman was there, and in effect, we launched the site. We had a handful of courses, maybe 30 or 40 courses; we had a handful of books. It was a very, very humble beginning.

Since July of 2002, it's really grown very, very rapidly. We now have four providers of web-based training services under the E-Training Initiative. We have, which is operated by OPM, which is the site that I mentioned that we brought up in July 2002. We have FasTrac, F-A-S-T-R-A-C, a site operated by NSA. We have a site operated by Department of Commerce, NTIS. And our newest web provider is Department of State, the Federal Service Institute. They all are working with us under the E-Training Initiative, and we have, in effect, an advisory council that works with all of these providers.

And what's happened is now we have 1.3 million registered federal people using the courses and materials under the E-Training websites. These courses -- we now have thousands of courses, not 30 courses, but thousands -- we have hundreds of books, we have collaboration on the site, we have mentoring. The site keeps on getting richer and richer, and it's become a primary vehicle to educate and help the federal workforce build knowledge, skills, and also competencies. The site keeps on expanding in terms of what it's offering.

A very significant aspect now is we're moving into career planning or pathing on the site. We worked with the Chief Information Officer Council and we developed, basically, a career path for people in information technology. We mapped out what they should know from an entry-level position in IT to becoming a chief information officer. A person can go into this site and see at every step in their career in IT what they should know in terms of knowledge areas, skills, abilities, and they're able to, in effect, plan a curriculum and using our USALearning, they're able to, in effect, start taking courses, and the site will help them to track their training and their curriculum. So, in effect, you've moved now from just having courses and materials to actually helping people move forward in a well-defined career. This really is improving competencies. We plan to follow this model of building competencies. We're now working with the HR community, the acquisition community, and the financial community to, in effect, add to this web-based training, career pathing, or planning facilities similar to what we did with the IT community.

Let me also add that we have established a council. It's called the Learning and Development Advisory Council. Now, we have 23 agencies, and we have these four service providers all working with us on this council, which, in effect, as a government, is looking together, saying, how can we better use web-based training to improve and help the federal workforce. This ties very, very much into the whole move to pay-for-performance because you have to have people properly trained to do their job in order to be able to have them able to give the results you want, which ties to their performance on the job.

Mr. Morales: How is OPM supporting electronic payroll? We will ask HR Line of Business director Norm Enger to explain this to us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with HR Line of Business director Norm Enger. And joining us in our conversation is Don Shaw.

Norm, another e-government initiative that you've led is the E-Payroll Initiative. Could you provide some background for our listeners on this program and what's the current status of the payroll provider consolidation and agency migrations?

Mr. Enger: When I joined the government in 2002, I learned that there were 26 agencies paying the 1.8 million federal employees. Coming from the private sector, where efficiency is very important, I was wondering why do you have 26 places paying the federal workforce. It turns out that the same question was asked many, many times by OMB and other parts of the federal government, and in effect, this initiative was to consolidate and standardize civilian payroll processing. What happened is, starting in 2002, we've moved forward, and what we have done is we have gone through a process in establishing 4 of the 26 agencies to be payroll providers, and we are finishing now the consolidation of civilian payroll into those four providers' sites. The four are the National Finance Center, which is part of Agriculture. It's based in New Orleans. You have the National Business Center, which is part of Interior, based in Denver. You have GSA, which is based in Kansas City. And you have, of course, you have DoD, something called Defense Finance Accounting System of services, payroll also.

Now, where we are in this process is we now are 85 percent complete. We now have 1.5 million of the 1.8 million people in the workforce being serviced by these four payroll providers. I think this is a very, very great success in e-government. We've done this in a relatively short space of time, and we've had no significant problems in terms of somebody getting the wrong paycheck or whatever.

Let me also add that one of our sites, the National Finance Center in New Orleans, they actually were shut down, essentially, during Katrina. They were able, through their planning, to be able to operate at other locations. They were able to continue processing pay for roughly 600,000 federal employees, which I think is a real tribute to how robust and how well this E-Payroll Initiative has progressed. From my point of view, the great success of E-Payroll, which has saved large sums of money and led to a more standard and more coherent civilian payroll system, really was one of the main reasons why the government thought of the Lines of Business. A major part of the Lines of Business is moving away from stovepipe installations, moving to more sharing and, in effect, offering modern, robust solutions at these service centers.

Mr. Morales: We know that OPM, GAO, and the OMB are encouraging the link between employee performance, organizational outcome, and pay. How is your office supporting the development of performance-based organizations?

Mr. Enger: Part of the Human Resources Line of Business, we have a task force of 24 agencies that meets every month to talk about direction, progress, for the Line of Business. But in addition to which, we've established something called the requirements board. This requirements board consists of OPM management, but also we have on the board, for example, we have Defense, Homeland Security, and other parts of the civilian workforce. They are looking at the legislation and requirements that drive information systems.

One of the main areas here is compensation management, which deals with payroll and also the various HR systems. What's happening is that they are developing the requirements which, in effect, become the IT structures, if you will, that will be running at the Federal Service Centers. What I'm saying here is that we now are, through the HR Line of Business, we're putting in place the infrastructure, we're putting in place the data centers or the service centers, and also we're putting in place the requirements for the new personnel payroll systems that'll run at those centers. And all of that supports the new pay-for-performance systems, which are now being implemented at DoD, the National Security Personnel System, and you have a new system at DHS -- Homeland Security -- MAX HR, and they're also talking about a new system for the rest of the civilian workforce in the Working for America Act.

In addition, I said earlier that many aspects of my early initiatives, like the E-Training and such, are really key to building competencies necessary for the workforce to perform properly.

Mr. Shaw: Norm, we've been discussing the coming wave of Lines of Business: Human Resources, Financial Management and Grants, and Information Security. We understand that agencies are planning centralized service providers for these functions. What role does your office have in supporting Human Resources shared service centers?

Mr. Enger: When the business case for the HR Line of Business was finished by our task force in 2004 and delivered to OMB, there were essentially two main recommendations in the business case, one of which was the government should move toward establishing shared service centers that would offer quality modern systems to support HR professionals that manage the civilian workforce.

The second major thrust was there should be more standardization -- where it makes sense -- in the HR business processes. What happened is that in roughly September of 2004, OMB asked agencies who would like to volunteer to be a federal shared service center, as we call it in the HR Line of Business -- namely a provider of these services. At that time, five federal agencies submitted proposals to be these centers. There was a proposal from Defense, a proposal from Agriculture -- the National Finance Center, a proposal from Interior -- the National Business Center, a proposal from Health and Human Services, and a proposal from Treasury. OMB reviewed these five proposals and in February of last year, they announced that from their point of view, from a budgetary and managerial point of view, they passed the OMB review. They were called candidates.

At that point in time, the proposals were turned over to OPM and the HR Line of Business, and we formed a number of panels, a technical and also an advisory board, and we spent many months analyzing these five proposals. We asked for more information from these five proposed providers, we met with them, et cetera. In September of 2005, the director of OPM, Linda Springer, and OMB announced that these had also passed the criteria, if you will, to be certified by OPM. So, in effect, as of September of 2005, you had five established, certified, federal shared service centers. And right now, these centers are in business to, in effect, offer agencies solutions, and they're following all the guidelines of the HR Line of Business, and they're also taking and looking at and moving toward meeting the requirements that we're publishing all the time relative to what they should be offering in terms of modernizing the IT systems that support the federal government.

Let me also add that beyond the IT services, they can offer other services also, but essentially, we're looking at moving routine, back-office type of work from the agencies to these centers.

Mr. Shaw: We understand the Human Resources Line of Business is a significant collaborative effort across multiple agencies. How would you characterize this collaboration, and what lessons learned can you share with us?

Mr. Enger: Well, we established the HRLOB task force in March of 2004, and it meets every month. And the task force is very, very active. We have very, very strong participation. The task force, of course, developed the business case for the line of business, the task force reviews all of the requirements we're putting out in terms of what should be offered at our shared service centers. And what we have now, we have established -- I think there are four poles to the HR Line of Business. One is we have the governance structure, which is the task force of 24 agencies with many, many sub-working groups. We also have established a shared service center advisory council, which consists of the four new HR service providers. And on the same council we also have the earlier four payroll providers, so there are nine components there. Then we also have as part of the task force, we have a group of 11 agencies that represent the voice of the customer.

So we have now the governance structure. We have the voice of the customer, which is a part of my task force, to speak for what the customers want, and they'll develop service-level agreements and performance metrics whereby they'll say what they want from the service centers. Then we have the voice of the service centers, or providers, which is this advisory council I mentioned before. And the last piece, the fourth piece, is we're publishing and making available to both the private sector and the federal government what we want in terms of the modern business systems. We're defining exactly what those systems should do and how they should operate and what their functionality should be. So we're actually telling the private sector and these centers, here's what those systems should do in terms of responsiveness, functionality, and also, you know, various performance criteria. So those are the four poles, if you will, of the HRLOB.

Now, to answer your question, though, what I've learned from this is that you can never do too much communication. You really have to outreach as much as possible to, in effect, make people understand what you're doing and why you're doing it. I've learned, if you will -- it's reinforced what I guess I understood earlier -- that you've got to make an effort, go out to meet whoever wants to meet with you in Congress or an agency, who wants to know more about what you're doing and why you're doing it, and make the presentations. And in that way you build the support which is really critical to moving ahead with these initiatives.

Mr. Shaw: Norm, can you briefly describe the technology that will support the HR Line of Business solution? Are you planning COTS software, or will custom software development be required?

Mr. Enger: Well, essentially, the federal government very much wants to learn and use the private sector as much as possible. There's a real movement away from the federal government building its own systems. So a major thrust here will be to, as much as possible, use commercial off-the-shelf software. Wherever possible, turn to the private sector, bring in their commercial software, and contract with them to, in effect, use that software and benefit from all the evolving technology they've put into that software. A major thrust also is to use the private sector wherever it makes sense, and contract out where it makes sense, and then, in terms of technology, it's really no different from what the private sector is facing in moving toward XML, Java, moving more and more toward Internet-based systems, moving away from the client server toward the Internet-hosted and -based systems. In terms of technology, it's really the exact same technology any large American corporation would be looking at and assessing at this point in time.

Mr. Morales: What does the future hold for the HR Line of Business? We will ask OPM director Norm Enger to discuss this with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Norm Enger, HR Line of Business director at OPM. Also joining us in our conversation is Don Shaw.

Norm, what are the specific plans for the HR Line of Business in fiscal year '06? How many agencies do you anticipate will migrate to the HR Line of Business Shared Services Center?

Mr. Enger: I mentioned earlier that we now have in place five federal HR service centers. We anticipate that in fiscal '06 three agencies at least will migrate major HR functions to these Shared Service Centers. I anticipate that the numbers will accelerate in the next fiscal year, so we'll see over the course of the next year more and more of the back-office work moving from the agencies to these service providers. In the course of this year, we'll continue our meetings with the task force, we'll meet every month with these five providers -- we have a council of five providers -- we also will continue the work we're doing to, in effect, define the solutions that we want to run at these service centers.

I think that the work we've done in defining solutions is really key to the future because for the first time, the government is defining what do we want these federal HR systems to do, and these are coming out in published specifications available to the private sector so they can build systems that meet those requirements.

So we have a lot of activity this year to, in effect, move forward defining solutions, and I might add also in defining solutions, that we anticipate that at some point in time, we'll actually be able to certify solutions. So if a vendor says, I have a new HR system that does this and this, we'd be able to take that and match it to our requirements, and then if it passes the requirements testing, we could certify that as a certified federal HR system. And that, of course, would wind up running at one of our shared service centers.

Mr. Morales: Norm, we spent a fair amount of time talking about commercial best practices, and certainly, you have a perspective coming from the private sector. What emerging technologies hold the most promise for improving the federal management of human resources?

Mr. Enger: Well, from a technology point of view, I think we're looking at knowledge management being one broad area. I think open architectures being another one. Web-based services, XML -- I mentioned this before. I think that the technologies that let us integrate systems more and pass information more easily and seamlessly between systems, all of this -- which is really the keynote of the open architecture -- will let us have more flexibility in how these service centers operate, how they communicate with each other, and how they're able to add new functionality, in terms of new vendor software becomes available, and they can plug this in, if you will, and offer this to the federal agencies.

Mr. Shaw: Norm, if we can ask you to look into the future now, what types of human resources concerns will face the federal government in 10 years and then even further out in 25 years?

Mr. Enger: Well, the federal government, as Linda Springer, our director, has said several times now, we're facing the fact that roughly 60 percent of the federal workforce can retire within five years. So you're looking at a very large potential for retirement from a 1.8 million civilian workforce. This puts great pressure on the federal government to do succession planning -- namely to be training people, hiring people to replace these people who leave. Because they leave with many years of knowledge about certain activities and functions, so you have to have in place people who are able to understand that functionality and replace these people.

So we're looking at that, which ties into the very important task of attracting talented young people into the federal workforce. It's very key that we have the ability to attract these young people. One step forward has been this usajobs site that I mentioned. We have to make the federal government more attractive to young college graduates and people looking for long-term careers. The federal government right now has an aging population and in effect, we now really need some new blood and quality -- talented young blood to enter our federal workforce.

Looking forward, we're looking at a more diverse population, a more diverse federal workforce which reflects the American population. The federal government tries to, in effect, represent the U.S. population, which is becoming more diverse. I think we're talking about what I call a blended federal workforce. We find that, in reality, most of your major operations or programs are a blend of both federal people and contractor. We're looking at a realization that we can't just look at a federal workforce, but we have to realize that it's a federal workforce totally supported by a competent private-sector workforce. So you really have to look at the whole picture -- the blended workforce is what I call it. I think this requires a little bit of assessment as to the best way to deal with the blended workforce.

The other issues, I think, are more general, like globalization. You know, there are jobs going overseas, software is being built in India and elsewhere. This does have some impact upon the long-term view we have as to what we're doing in the federal sector.

Mr. Shaw: How will OPM need to evolve to respond to these significant challenges in the future, Norm?

Mr. Enger: Well, the OPM, as I mentioned earlier, is really the guardian of the civilian workforce. Essentially, OPM has as a goal to have agencies adopt human resource systems that allow them to build a competent workforce. A second goal of OPM is to create a work environment so that people want to stay with the federal government or join the federal government. So OPM puts in place the policies, the guidance, to agencies that lets them establish this positive work environment so people can, in effect, do their job properly and, in effect, be results-oriented.

And the third part of OPM's goal here is to deliver services that are both efficient and quality. OPM has major, major roles in benefits, retirement systems, health benefit systems, and also investigative service systems. So OPM wants to deliver its services to the U. S. public very effectively and efficiently and cost-effectively. And also to pass on this view to the agencies that in turn have to service or are servicing both U.S. public and the civilian workforce.

Mr. Morales: Norm, on this theme of guidance, you spent most of your career in the private sector. But you've obviously successfully transferred to public service. What advice could you give a person who's interested in a career in public service?

Mr. Enger: Well, I think we have a significant situation now in terms of the federal government wants to be more like the private sector where it makes sense. The whole idea of pay-for-performance whereby every year you put in place a plan which specifies your goals for the year and ways to measure your achievement of those goals, this is very much a private-sector mentality. I think this will attract many young people who are looking for challenges, who are looking for accomplishments. The federal government offers individuals a chance to work on systems and projects that are much larger than most private companies can offer. I mean, you're talking about systems that affect millions of people, that involve billions of dollars in many cases, and the scale here is quite attractive, I think, to many young professionals coming out of college.

This is a good time for a person to join the federal government. Hopefully our usajobs website has been able to show people some of the benefits of working for agencies and working for the federal government. We have, on usajobs, numerous aids to help people who might have interest in the environment, interest in law enforcement, intelligence, military, whatever -- there are numerous guides on the site that let a person put in their desires, what they'd like to see in the job that'll guide them to what jobs are available in the federal sector. I encourage young people to go to this site and explore the site.

We also have on the site a special area for student jobs. In effect, someone who wants to work part time for the government can go to Student Jobs and find these part-time jobs. We also have something called a Presidential Management Fellows Program, designed to attract young people into the federal service, a special program to motivate and incentivize these young people.

So in summary, I think that this is a very, very good time for a young person looking for a positive career to consider federal service.

Mr. Morales: That's great advice. Norm, we've unfortunately run out of time, and that'll have to be our last question. First, I want to thank you for fitting us into your busy schedule today. Second, Don 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 Office of Personnel Management and in the information technology industry.

Mr. Enger: Yeah, I would suggest that people go to the website. There's much more information about the Line of Business at the site. And also I mentioned the website where a person can locate and apply for a federal job. Thank you very much.

Mr. Morales: This has been The Business of Government Hour featuring a conversation with Norm Enger, director of the Office of HR Line of Business at the Office of Personnel Management. Be sure to visit us on the web at There you can learn more about our programs and get a transcript of today's conversation. Once again, that's

As you enjoy the rest of your day, please take the 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.

Bert DuMars interview

Friday, January 13th, 2006 - 19:00
"There’s huge demand on e-filing and e-services that we hardly knew about. All of a sudden customers are using the information we put on the web all the time. So, electronic services are something we're really going to focus on in the future."
Radio show date: 
Sat, 01/14/2006
Intro text: 
Missions and Programs...
Missions and Programs
Complete transcript: 

Thursday, June 9, 2005

Arlington, Virginia

Mr. Kamensky: Good morning and welcome to The Business of Government Hour. I'm John Kamensky, a senior fellow with 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 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 Bert DuMars, director of the Electronic Tax Administration at the Internal Revenue Service, which is in the Department of Treasury. Good morning, Bert.

Mr. DuMars: Good morning.

Mr. Kamensky: And joining us in our conversation also from IBM is Jeff Smith. Good morning, Jeff.

Mr. Smith: Good morning.

Mr. Kamensky: We all have heard of the IRS when it comes to the April 15th deadline as individual taxpayers but can you tell us more about the overall mission and the vision of the IRS?

Mr. DuMars: Our overall mission and vision are really focused around people, processes, and technologies and how we actually administer the tax code as handed to us by Congress. So what we're trying to do is make sure it's as fair as possible and administer it in that way and then also driving from a paper process, it's been a traditional paper process, to an electronic process, which we think actually benefits the taxpayers both going from individuals all the way up to major corporations. So those are the types of things we're trying to work on in that area.

Mr. Kamensky: Can you tell us a little bit about the Electronic Tax Administration and its e-file programs?

Mr. DuMars: It's interesting. Electronic Tax Administration is broken up into three parts. One part is our strategy, policy, and marketing group, another part is our development services area, and our development services area focuses on things like our next generation of e-file or what we call modernized e-file and also our electronic services, and then our third group is our Internet development services group, which focuses on our portals, portal strategies, and then also and where we're going to go with that.

And then, going back to our strategy, policy, and marketing group, it's really interesting that no matter what you do if you change a policy you end up having to change technology to support the policy. If you change technology you have to do the other thing. You have to make sure the policies support the technology change. So it's things that we think of that are fairly simple or easy to do in a technology world when it gets to the policy side become very complex and sometimes things that we think on the policy side are very simple when we get to the technology side become very complex. So there's this balancing act that we always have to play and that's why that third part of ETA or Electronic Tax Administration is so important in our group. So that's how we break up the focus areas that we have.

Mr. Kamensky: In the case of the e-filing what are the benefits of doing that for both the taxpayers as well as for the IRS?

Mr. DuMars: A couple things. For the taxpayers, especially the individual taxpayers, if you have a refund it is the fastest way to get your refund and the majority of all individual taxpayers actually do get a refund. It's well over three- quarters of them. So they will do it and they'll get their refund quicker, in as little as eight days, but more than likely between about a week to three weeks and that's if there's no problems.

The other thing that they get is they actually get an acknowledgement, which is really critical. I can't tell you how many times I've run across people who've said I mailed it in and I never hear back from you in the first place but then all of a sudden I get a notice and it never showed up. And they don't know why and the Postal Service doesn't know why, just something happened.

And then a lot of people also will do certified mail thinking well, that'll guarantee it, right. All certified mail does for us is it really guarantees the envelope showed up. So we'll get stacks of envelopes show up. They got ripped somehow, just something happened along the way. So those are some of the benefits you get. The refunds are faster and then you get the acknowledgement.

And the acknowledgement also becomes critical for the people who actually owe and that are actually our fastest growing segment. That's growing faster than e-file. E-file overall is growing at about 10.7 percent a year. The people who actually owe are growing at 38-plus percent per year. And what they like is they like getting an acknowledgement because then they can come back to us and say yeah, I got it to you, I paid what I owed, so I shouldn't have to owe any penalties and I shouldn't have to pay any additional interest. So it's really important to that group, too.

Mr. Kamensky: Well, what are your roles and responsibilities as the director of the Electronic Tax Administration?

Mr. DuMars: One of my key roles is actually being the spokesperson for the IRS regarding electronic filing so that's a key role. Actually I meet with the press. I work with industry partners, software industry. I also work with the tax professionals. So it's this outbound role. And then on the inward side, facing into the IRS, it's really to help promote and push processes that we can automate, so one of the things that we've been looking at is how does it all work. How does it all work? What's the life cycle from end to end? And one of the key things we keep finding is sure, we could add another form, make another form available, electronically and sure, we could add another electronic service on But oftentimes what really causes most problems of all is some policy that says you have all these electronic policies and there's some policy sitting there right in the middle that says but you have to sign a document and keep that piece of paper. And that will slow down electronic file growth faster than anything else.

Another thing we're looking at is we're looking at the back end. Where does the whole process start for most taxpayers, when they get their W-2 or their 1099 or their 1098? Today those come mostly in paper. And they wait for those to show up and that's when they start their tax return process.

So what is that hurdle of I'm collecting paper and either I'm going to buy a software package and do my return or I'm going to go to my tax preparer, CPA, and do my return or I'm going to go online and do it and I'm starting with paper. Now I'm going from paper to electronic and it's like there's this hurdle that they have to cross over. Now, a lot of people have successfully done that but a lot of other people go if I'm starting with paper I'll just do it on paper, just finish it up. And so I think those are some of the challenges we have going forward and some things I'm trying to work on and fix and that's a big part of my role.

Mr. Kamensky: Well, that raises the question of what's your prior experience before you took this job in April 2004?

Mr. DuMars: I have a rather eclectic background and the reason I say that is because I was a history major undergrad who went to work at a nuclear power plant, actually the Southern California Edison San Onofre Nuclear Generating Station. I started my first year in the management training program in contracts administration and purchasing and then got hooked on computers. Now, that probably should have been natural. As my mom would tell me, she said when you were in college you used to tell us how much you hated computers. But actually all my roommates ended up getting their masters in computer science. That's like, three of my best friends. But I didn't. I was a history major.

And then all of a sudden I become the computer guy at the nuclear power plant and learned it really well just by reading lots of books and on the job training. And then I applied for a position in network engineering with the nuclear power plant and joined a group of people that ended up being leaders in Novell NetWare networking. In fact the guy I ended up working for wrote seven books on it. His name is Bill Lawrence and he wrote multiple books during the eighties and early nineties.

So I worked there for 10 years, gained a lot of experience. I got so good at computer networking I actually ended up teaching for Learning Tree International for a couple years part-time. And then I decided you know what, I've done what I needed to do here and I've had a great career. I want to get my master's degree. I always had this dream of getting my master's degree and my MBA.

And so I applied to several schools and got into the University of Michigan and went there for a couple of years and then I was a customer so I knew a lot of people at Intel and I went to Intel Corporation after my graduate degree and moved into product management marketing. And it was that network engineering piece that fit with what Intel was trying to do in the systems management space.

And then from there I had an opportunity to go to Dell and take it up from systems management for individual products and move to systems management marketing across the entire corporation. And then, of course, this was the late nineties and the dot-com boom and well, I got hooked, too. So I went and did a startup and yes, I succeeded and yes, I failed so I did both.

And then I went back to Intel and went into a division. They were trying to do a big startup called Intel Alliance Services and that was managed web hosting services and was part of that effort. I think Intel invested almost a billion dollars, had data centers all around the world. I was doing the operating support systems and then also services marketing. And then the person I worked for who I'd worked for before at Intel moved to become the chief marketing officer at a company called Trend Micro and was anti-virus and content security and I went there with him and was the global director for the e-business group.

We got to the websites and we implemented new content management systems and so on and was doing online marketing, e-commerce, e-business. It was funny. Things there just started not working out after a while for a variety of reasons and this job at IRS came at the exact same time. And what ended up happening was I read this position. I read all the points. I kept going that's me, that's me, that's me. They were looking for all these different skills that I had and other jobs I had looked at and applied for were always looking for one part of what I was able to bring. And this job allowed me to bring a lot so it was fun. It was interesting.

Mr. Smith: Certainly an eclectic background, like you said.

Mr. DuMars: Yes, my background is very eclectic. But in this role you need that because in the ETA role you go from policy strategy marketing to development services where you're looking at XML technologies and how you would actually change an industry to Internet development technologies where you're looking at well, how would you run websites better and so on and so forth. So it spans all the things I've worked on in my career.

Mr. Smith: Well, I know when you came on board to the IRS the IRS Commissioner Mark Everson said that you bring a variety of talents from the private sector to help lead us through the next stage of our e-file strategy so, hearing that background, how do you apply those experiences to what the commissioner just said there?

Mr. DuMars: Well, it's interesting. I mean, I can take some simple things. Like when I came in, for instance,, we know that is heavily used. Already this year we've had over a billion page views, just this year. That is more than we had all of last year. So, I mean, it's just grown dramatically. I think we're up over almost 70 percent in growth, which is incredible for websites in this day and age. They usually don't grow this fast any more. I mean, we've been around for a long time. But I have people come up to me and they go your website is great. I am really good at using your website. And that's exactly the wrong thing I want to hear them say. I want them to say your website is so easy to use it makes my life easier, I can find the information I need, and I can do what I need to do.

And so what we're trying to do now is change it from where it's very popular and there's lots and lots of information to it's very popular and it's easy to find the information you need. At one point on April 15th this year we had 80 searches a second. And some people might say well, 80 searches a second, wow, you can really handle the capacity. But on the other side you might say why are people doing that many searches? I mean, is it because our navigation is weak? Are they having a hard time finding things? So those are the types of questions and I bring that background to look at that and help that out.

The other thing, too, is just trying to really understand the customer life cycle and in essence IRS has a channel to the taxpayer because we have the tax professional community. So really understanding how they work, what they need from us, how the software industry works, what they need, and then the taxpayer, what they need, what services, how we can help make this all a much smoother process.

Mr. Kamensky: That's really fascinating. It's a terrific background that you've got that you bring to this to make the IRS e-filing popular and easy to use. What are the factors contributing to the high rate of e-file usage? We'll ask Electronic Tax Administration Director Bert DuMars to explain this to us when the conversation about management continues on The Business of Government Hour.


Mr. Kamensky: Welcome back to The Business of Government Hour. I'm John Kamensky and this morning's conversation is with Bert DuMars, Director of the Electronic Tax Administration at the IRS. Joining us in our conversation is Jeff Smith.

This tax season the IRS received approximately 50 percent of its 2004 tax returns through e-filing and it's been reputed to be the smoothest tax season ever. Can you tell us about the factors that contributed to this high rate of e-filing usage and why this tax season was the smoothest ever?

Mr. DuMars: Well, that's a really interesting question because I always get asked that, what was the one thing, and I can tell you there was no one thing. There were lots of things that contributed to why this is growing. There are lots of people, too, that I should probably mention along the way. I mean, one person that really made this go for years was Terry Lutes and is actually the person I work for today, and he's the associate CIO in the IRS information technology services group.

And another thing is all the other IT people surrounding this and make it actually flow and then work on the processes. That's what helped make it smooth. Ad actually I've heard this from several of the software vendors as well that this was the smoothest filing season they've experienced in a long time. So a lot of credit needs to go to that side.

Another thing that we looked at is there's been a lot of marketing efforts over the years. We've had TV advertising, we've had online advertising. That has helped contribute to the knowledge and building up the education. The brand e-file is a well-known brand. It's been going on for several years now it's been available.

Another thing that helped contribute was our Free File program and our Free File alliance members. There are 20 software companies involved with that. They contributed more than 5 million returns this year to the federal program. They also helped promote it and helped us promote that program so that helped e-file grow as well.

And then overall the tax professional community, I mean, the tax professional community actually handles at least 60 percent of the tax returns and they have a big part in contributing to the overall growth of e-file. And finally the one thing that we don't talk about as much but it actually has a big impact are the mandates that the states have put in place on the tax professional community. So we had several mandates this past year. They've built up over a couple years. We have at least one or two more that are going to come on next year and that's also helping the growth of e-file. So it's a whole bunch of different things that actually make it come together and grow fast.

Mr. Smith: That's great. I understand that the IRS has a goal of 80 percent of electronic filing for taxpayers by 2007. So what are your additional plans to reach that 80 percent goal now that you've just crossed 50? Are there any incentives that you're providing taxpayers in that regard or the practitioner community?

Mr. DuMars: With regard to the 80 percent goal we've got two years left and we've just crossed 50 percent. And we can tell you it's very difficult. But we're using the model that Tim Allen used in one of his movies never give up, never surrender. We're going to keep trying until the bitter end.

From an incentives point of view there really isn't a lot the IRS can do to incentivize this. It's been discussed in the past to give them an additional credit or to extend the filing date. These things Congress would have to pass a law to do that so we can't do that unless they decide to do that.

But the one thing that is happening, and I go back to what we talked about in the first segment, is getting those refunds faster, getting their acknowledgements on time, getting those acknowledgements, know they have them, and people who owe needing those acknowledgements all come together are driving it.

And the other thing that's really increasing e-file, another piece that we haven't talked about as much, is just the word of mouth. If your neighbor's e-filing it's like oh, well, this is what my neighbor does, this is what a friend of mine does, it becomes just the common thing to do. So that's helping us as well. For us to grow beyond the 10-11 percent that we've been growing in the last couple years is going to be difficult but we're going to do everything we can.

Mr. Smith: Switching gears a little bit, let me ask how are you addressing some of the taxpayers' fears that credit card or bank account information would be used for data collection or for some other purpose by the IRS? I mean, I know that may have a part in some of that goal that you're trying to achieve.

Mr. DuMars: This year's been a tough year and not necessarily that we've had a tough time this year but it's been a tough year in the overall data collection or financial services industry. There have been a lot of disclosure issues this year. Surprisingly enough, most of those disclosure issues were not around someone hacking into someone's database. They were around really more social engineering where someone said they were someone else and then got the information or information was lost in transit from one place to the other.

What we're trying to do is we're focusing on working with the industry to make sure that disclosures don't happen. We actually have a Regulation 7216 that if a disclosure does happen we actually have teeth behind that. But we think working in a partnership is really going to work better. So we actually had what we called a protecting and securing taxpayer electronic data summit last fall. We met with industry partners, we met with the states and other government agencies, and we talked about what things could happen, what issues could occur, and how we'd work together to solve those problems.

The one fear that we have most of all is that a perceived problem happens and the press takes it and there's a headline. And all of a sudden whether it was real or not or whether the impact was large or small we've got fear and mistrust in the taxpaying community. So we're working on what types of communication strategies we need to put together to help maintain that trust because that's the one thing with e-file we can't lose is the trust of the taxpayer.

And this is another thing that we do looking back at our own systems internally. How do we make sure that our systems are safe and secure? We have to be vigilant about it. The person who comes out in the security area and says I win hasn't won anything. The battle is never-ending, the battle never stops. The people who want to break in are constantly evolving and we have to be vigilant about protecting data no matter where it is either within our systems or in transit to our systems. We have to keep looking at that and make sure that we protect it and work with the industries so they protect it too. So those are the things we're working on together.

Mr. Smith: You mentioned a second ago the role of tax practitioners and they clearly play an important role in making sure that returns are filed electronically. How are you partnering with this community to increase this rate of e-filing?

Mr. DuMars: One of the things we do there is we actually run tax fora through the summer and we invite them in and it's a way for them to get continuing education credits but it's also a way for us to talk to them and hear about their issues. So we want to make sure we're listening to them as well and then coming back with solutions to their problems.

We also meet with them on a regular basis. We have our different groups within IRS. Our national public liaison group actually brings them together into different fora and groups to meet and talk with us and give us feedback. And then for the Electronic Tax Administration we have the Electronic Tax Administration Advisory Council, which consists of tax professional associations, it consists of reporting agents or payroll companies as well, and the software industry with us and states. And we all talk together about what types of issues are going on, what types of things do we need to work on together to make this much easier to do.

The biggest thing that we've had to overcome is showing them that it actually is good for their business. Telling someone e-file is not the same as saying hey, if you e-file and make your total office electronic you actually are going to win in this business space. And what we do, we actually give out awards during the tax fora to those who have actually gone to all-electronic and have done it very successfully with high quality and good customer service. And they actually end up being examples to all the other tax professionals.

People have told us once they cross and they get over and they do all e-file they make money and it actually helps their business and they grow their business. So we know there are a lot of positives for them. It's really educating them and helping them get there.

Mr. Smith: Well, we've talking a lot about the e-filing as it relates to individual filers. Switching to the business community, I know in January the IRS requires now that certain large corporations and tax-exempt corporations have to file either their annual income tax or annual information returns beginning in 2006. So what is the IRS doing to address the other community in the business which is the small businesses? What are you doing to target that population to increase their filings since they're not mandatory at this point?

Mr. DuMars: It's actually pretty amazing what comes from the small business space. There's pent-up demand there. So until the last year when we actually brought out our next generation of e-file or what we've been calling our modernized electronic filing they couldn't e-file. There wasn't really a solution there for them. And now it's available and the biggest problem we have now is actually making sure all the software companies make sure it's available. Now that we have it available and about half the software companies that sell into the space have it available we're already exceeding all expectations for e-filing from the small business community.

What we're expecting next year as all of the software companies come across the finish line is that we're going to see it probably triple in growth again and we saw triple what we thought we'd see out of the small business community. But it's still in the thousands and we have a long way to go because the number of small businesses is actually in the millions. So we'll have a long way to go but I think because they were waiting for it whereas in the individual space it's actually been going since the mid- to late eighties electronic filing has been available. So I think this is a good opportunity for us to really grow in that space and educate. And the other interesting thing there is we have to focus on the tax professional community again because in the individual space it's 60 percent of them use a tax professional. In the business space it's 87 percent. So it's a much higher percentage and really we have to, again, win.

The interesting thing about it is that many tax professionals will do an individual return, they'll do a nonprofit, they'll do a small business, and they may even be doing some medium-sized businesses. So a lot of times you'll run into a professional who's doing an across the board and if we get him in one it's a lot easier to convert them in the others.

Mr. Kamensky: Well, that's interesting because earlier you were mentioning that you are really trying to move forward in reaching the 80 percent goal. What are some of the strategies or approaches that you've got in place over the next couple years to try to get there to increase the usage of e-filing?

Mr. DuMars: One of the things that really became clear to us this past year was that we'd probably run through the cycle of what television and radio ads were going to help us to in the space. We have high awareness; that's not the issue any more. The issue is really more around educating them when they're interested in learning about it.

And the other thing we found and as I was saying with, as its growth has dramatically gone up, I mean, it's going faster than it did for the past two prior years, is we've got them coming to us. So that's why this year we're looking at redesigning and actually focusing in on its opportunity. The opportunity's there to touch them when they want to be touched.

So that's always your best thing when it comes to marketing. If you can touch them when they want to be touched that's a great way to get them to come across. If we're trying just to reach them when they're not ready to be reached or they're not sure that they want to be reached that's a little more difficult. But we're now getting millions of people coming to our website and we're going to take full advantage of that and really help to guide them to why this is the best solution. So that's one thing, really focusing in the online space. And we're going to continue working with the tax professional communities and we're going to continue working actually more with the tax software communities because if you think about it what is the user interface that a taxpayer or tax professional sees? They go to to get information but the user interface that they're doing the preparation is their software package, the one they chose, and they chose it for whatever reasons it makes sense to them, it works for them, it's the usability model that they've chosen.

That's what we want to focus in on is working with them because that's where they're going to either be able to touch the professional or the taxpayer directly. So we're keeping our partnerships and our agreements with them going and working hard to whenever they talk get them to say e-file too just like when we talk with them or we talk by ourselves. So those are some of the tactics we're trying to use.

Mr. Kamensky: That's interesting because it sounds like you're beginning to take the things that you developed when you were in the private sector and bringing those strategies into the public sector space for my guess is the first time.

Mr. DuMars: And the one interesting thing is that everyone thinks you're in the private sector, you have all this money to market. In reality you may have less or you may have none. And in the government because we do have budget deficits and we're trying to be more frugal in the way we spend money we don't have as much money to spend on advertising as we've had in the past. So what do you do? You just take what's worked in the private sector when you don't have a lot of money and you use the same thing in the government and it does work. I mean, there are certain rules that we have in the government that we have to make sure we stay within but besides that sometimes this guerilla marketing effort actually works better than even full-blown advertising.

Mr. Kamensky: For encouraging a greater use of e-filing. How is IRS improving the performance of its programs? We'll ask Bert DuMars, Director of the Electronic Tax Administration at the IRS, to explain this to us when our conversation about management continues on The Business of Government Hour.


Mr. Kamensky: Welcome back to The Business of Government Hour. I'm John Kamensky and this morning's conversation is with Bert DuMars, Director of the Electronic Tax Administration at the IRS. Joining us in our conversation is Jeff Smith. So, Bert, what role do you see electronic filing and e-solutions playing in helping taxpayers?

Mr. DuMars: I think the next steps that we're going to start seeing you actually started seeing in our electronic services which just launched last year. And what this allowed was is really electronic transactions to occur directly between the tax professional or the person representing a taxpayer and the IRS and it speeds the process.

So, for instance, we have electronic account resolution, we have transcript delivery systems, we have the way to check Social Security numbers to validate the Social Security number's accurate. And what it does is instead of them having to send us a letter and we send a letter back and forth and there's paper going back and forth which can take days, weeks, months they can do a process that takes minutes, hours, maybe a day to do. And we see that actually expanding. So as we add more services in the future the tax professional and then the taxpayer will get full benefits of that where they can come directly to us get quick access to services.

A very simple example is our service called "Where's My Refund?" We launched that a couple years ago and everyone thought well, maybe a million people would use it and just check on their refund and we ended up getting 20-plus million. And then this past year we even got more. Tens of millions of people use it and want to see where their refund is, want to see when it's going to show up. I mean, there's a lot of interest there.

And so there was this huge pent-up demand that we hardly even knew about. We just knew people were calling in for the information. We put it on the web and all of a sudden they're using it all the time. So there's obviously a place there for more of these electronic services and this is something we're really going to focus on in the future.

Mr. Smith: So the success of the e-filing is certainly helping the IRS meet its goals and measures. Can you describe how electronic filing has helped the federal government in its overall E-Gov program?

Mr. DuMars: Well, I think when you look at E-Gov with regard to the IRS one of the things with electronic filing, the big benefit, is the cost savings. There's a big cost savings between what a paper return costs to process and what an electronic-filed return costs to process and we've actually over the years have closed down service centers where we process paper and consolidated those down to a couple majors. And that's a good thing because if you think about it from a taxpayer's perspective you don't want us wasting dollars on the least efficient processing method. You want us spending our money most efficiently because that's your tax dollars at work. And that's where electronic filing really pays off in a big benefit.

And also again with the paper process your refunds are going to take much longer to get back to you. If you owe you won't get an acknowledgement. So there's a lot of downsides to the paper process versus the electronic process. So there are really benefits on both sides.

Mr. Smith: Switching a little bit to performance metrics, IRS must track a number of performance metrics for e-filing. Which do you track to see if your goals are being met and then what role do third parties or other stakeholders whether it's agencies with the government help in defining what those metrics are?

Mr. DuMars: What I look at are a couple different things and I focus in on a few. One area is I look at the total, how many electronic returns, and so far this year, we've gotten 66.7 million returns. It's a huge number and that's out of about 133 million returns that we expect. So we're already above 50 percent and growing. And we still have two extensions to go through which will probably give us at least another million, million and a half returns, maybe even more.

A couple other metrics we look at are how are the tax professionals doing, how is their growth, and this past year they grew at 10.7 percent. And then also the online, the self-prepared, the people who are coming across and doing it on their own, that grew at 17 percent. So we're seeing a lot of growth in that space. And then, of course, we keep a close eye on Free File because Free File is a program that it's aimed at a variety of different groups including the poor and underprivileged but also other people that need access and are underserved. And it grew dramatically this year, almost 46 percent. So there are some key metrics in there that we keep an eye on.

The other thing that we've been focusing on quite a bit is our modernized e-file and its growth and that's because we had really underestimated what was going to happen there and it far exceeded our expectations. And so we have several thousand returns that we've gotten in through that process and we're expecting a lot more next year as all the software companies come on. So those are several of the different metrics that we look at. I mean, as you guys can see, I've got tons more but we don't have all day.

Mr. Smith: Well, we've talked today a lot about the strategic relationships IRS has with tax practitioners, with software developers, I know electronic returns organizations, agencies, state governments as well as, of course, the taxpayer and I've heard you refer to this as somewhat of an ecosystem. What are the challenges that you face dealing with this ecosystem or partnership with these?

Mr. DuMars: Let me describe what this ecosystem looks like. When I came into the IRS, and this is the one thing coming from the private sector and most people don't realize this, when you come into the Service it's like getting the fire hose effect. There is so much going on, there's so much new information, and having to deal with Treasury, Congress, the commissioner's needs, your own executives, and the public it's just a lot coming at you all at once. What I was trying to figure out is how does this whole thing work?

I mean, we've got all these different players. We've got software developers, we've got other government agencies, we've got states, and so on and so forth and, as my staff would say, I just started drawing pictures because I'm a visual guy so I'm trying to see how it works instead of just trying to read about how it works. So I was drawing pictures about how the pieces all fit together and that's when I started coming to the realization that there are so many different pieces and parts and so many different pieces work together or work in tandem or work in parallel or cross each other's paths that I thought well, this is some sort of an ecosystem where one group lives off another group and so on and so forth.

So payroll is a big key player and tax software is a big key player. On our end we have vendors that actually help build all the applications behind the scenes like IBM helps us with the modernized e-file and we have a whole bunch of other prime contractors that help us. We have vendors that help us with and so on. So all these things come together and make it so the process works.

And the ecosystem has been there for a long time. It was there when the paper process was the primary and it'll be there when it's all electronic some day in the future. And so by understanding that, understanding the ecosystem and that life cycle of how the information flows through, we can start pinpointing what are the problems. Is it a policy issue that's preventing e-file from growing? Is it we're missing a form? Is it we're missing something else? Is it we're missing the fact that 1.4 billion information returns all come in paper to the taxpayers mostly and half of them come in paper to us which is a huge problem. We call it the final frontier because it's the next place we need to fix.

So looking at that we're trying to think about what kind of ideas could we put in place that would help grow e-file more? One of those we keep looking at is a clearinghouse concept for information returns and we're trying to figure out what would that be and how would that work so we're looking at other examples that are out there today. There are examples in the health medical records space, there are examples in student data and transcript space, and there are also examples in transportation and licensing space. So we're trying to understand how they work today and a lot of those have been going for many years and see what we could possibly do in our space.

Is something we want to do a clearinghouse, a nonprofit? Is it something we want to build in the IRS? Is it something the industry would want to build? Don't know what the answer is but we're trying to understand this and by understanding it it will set the direction for where we go in the future.

Mr. Smith: We talked earlier this morning about security as it relates to the data and some of the issues that are surrounding that. But as we bring it back to the ecosystem what is the IRS doing to work with this tax industry community around protecting their critical infrastructure, things that are outside of the IRS's direct control, and what measures are you taking to help them with that?

Mr. DuMars: That was one of the key things when we came to the summit and we all came together. And we sat there on day one and we looked at each other and we said IRS, we're doing a lot of work in security and disaster recovery. Then you talk to another big player like H&R Block and they go we're doing a lot of work in disaster recovery, and Intuit would say the same thing. And we had some smaller vendors there and they say yep, I'm doing a lot of work in protecting myself.

And then we all came to the realization but no one's working to protect the whole thing. We're all looking at each other and we're saying we're all going to protect ourselves but there's a lot of pieces in the middle. And then there's also the taxpayer and the small business owner who's at the end of this line of the ecosystem and how are they protecting themselves and do they fully realize what's going on? And there's been lots of statistics and studies done and 40 to 50 percent of small businesses don't keep their anti-virus software up to date. They don't have personal firewalls on their computers. And if a tax professional is a small business, which a lot of them are, they probably fit in that category. They just forget out it. Oh, I forgot to pay my $19 a year or whatever their cost is for their software.

So how do we educate and outreach in that space? And what things do we do in the event something happens? Four hurricanes in Florida… who would have thought? It happened. It was a statistical anomaly but it occurred. And there are data centers that line up under where those hurricanes were. They could have been impacted. There could have been tax returns floating through there. What would we have to have done as a group, as an industry, to protect ourselves? Because the thing we also came to realize, if one of us has a problem, all of us are having a problem. It's not just one of us has a problem and the rest of the industry gets to skate away from it. We don't get to any more. We don't get a free ride.

Mr. Smith: You're very connected, right.

Mr. DuMars: We're all extremely connected and we all need to work together. So we're actually working right now on different plans for how we would do an industry-wide business recovery plan and what types of communication efforts we work on, how would we keep in touch with each other. Take away the fact that there are terrorist attacks or other types of disasters or cyber attacks it may not be anything associated with it. It could be something completely that we don't expect and it's something we'd work have together on to resolve and fix and, as I say, the thing we can't lose is trust.

Mr. Kamensky: That's really fascinating. It's really interesting to hear your description of a tax ecosystem. What are some of the lessons learned on customer service? We'll ask Bert DuMars, Director of Electronic Tax Administration at the IRS, to explain this to us when our conversation about management continues on The Business of Government Hour.


Mr. Kamensky: Welcome back to The Business of Government Hour. I'm John Kamensky and this morning's conversation is with Bert DuMars, Director of the Electronic Tax Administration at the IRS. Joining us in our conversation is Jeff Smith. Well, what are some of the lessons learned from your experience as Director of Electronic Tax Administration and what advice would you share to government leaders and executives who work on customer service issues?

Mr. DuMars: Well, I think some of the lessons learned in this space have been making sure you've got everyone at the table you need to have at the table if you're going to talk about something, if you're going to talk about, for instance, security in the industry, if you're going to talk about a policy change. Some of the things that we're working on, we're working on some major regulations this summer that we're hoping to go public in the fall so they can comment on it.

We've needed to get feedback and the feedback's been coming in actually even before I got in but it's bringing everyone together and making sure that you can get some consensus. Another thing when I came up with this ecosystem concept a lot of it was based on a reporting agent summit we had when I first arrived at the IRS. And we actually had, again, states and payroll and credit unions and banks and financial services firms all in the room.

And the way I came up with this clearinghouse concept wasn't because I was brilliant and had this great idea. It was because we sent them off in four groups and they all came back and said boy, wouldn't it be cool if we had something like this, a data warehouse somewhere that we could use that would be available to the taxpayer, would be available to us to give data to you, and then they could give data to the government and do that in a safe and secure manner protecting privacy and everything else. So it's really working with them and listening to the industry. And the same thing would go with customer service, listening to their issue, listening to the problems they're having. Sometimes, as I told you earlier, they say boy, I'm really good at using your website. Well, okay, that person's really good at using my website. Well, the other person who maybe just started in the tax industry or has been there for a while is having difficulty using my website. So that says hey, sure, we're meeting the needs of a good group of people but we also need to meet the needs of other people and how do we improve our service that way.

So it's really how do we all work together in bringing the right people together at the table to talk about these things. And that's the interesting thing with the Electronic Tax Administration Advisory Council. We get that opportunity. And they don't always agree. In fact it's hard to get consensus but we get to drive in a very similar direction.

Mr. Smith: Well, technology has certainly also played a part in how the IRS is progressing and how you've dealt with customer service. How do you see information technology as we move forward helping the IRS and helping your office, the Electronic Tax Administration?

Mr. DuMars: I think the real key thing with all the technology direction is, number one, providing more services through the Internet to taxpayers, tax professionals, and businesses that are actually doing their own, they're going to manage their own tax preparation process, and then also providing more automation internally to the IRS itself. How do we make sure our employees are more efficient? At both ends of that scale you see where the taxpayer dollars are being used more efficiently both for internal and external processes. And anywhere where we can do process innovation in those two spaces will make our overall operational excellence improve dramatically.

So how do we make sure that even our customer service agents are much faster, they can answer the phones quicker, they can get the information to the taxpayer quicker? And then how can we make it so the taxpayer can just get it themselves? I think we're going to always have to have multiple channels but the more we can put more automation in and more technology in its place to make those channels faster and more efficient the better off the public is going to be in the long run.

Mr. Smith: So aside from managing this challenge you have with serving varied customers because you have a variety of customers you deal with can you describe other challenges that the IRS faces now that you're dealing with a lot of electronic interaction with taxpayers?

Mr. DuMars: I really think because of all the issues that we had this past year in Chief Security Officer magazine they called it March Madness with all the disclosure issues in the different financial services firms that happened. That is going to be our big issue going forward, how do we maintain that trust? The one key thing about e-file which I haven't mentioned yet is that e-file is a voluntary process. There's nothing that says a taxpayer, a tax professional, a small business, has to e-file their return and if we lose that trust we can't afford for them to go back to paper. So that's a real key point. So we have to make sure we keep that trust and we keep those benefits that they're getting out of the program now and keep those going into the future. And one thing that we're hopeful to have in a few years down the road is the ability for the taxpayer or the tax professional to really go in and have more of an account with the IRS where they can look at their information and they know what they've done in the past and what they need to do for the next filing season. So that's really one of the goals we're trying to strive for as well.

Mr. Smith: So looking forward 5 to 10 years from now, where do you see your office, Electronic Tax Administration, in the IRS overall?

Mr. DuMars: Well, it's funny. Electronic Tax Administration has a role of really pushing the IRS, pushing it along, looking for new opportunities to move our processes in the electronic space. A good example is this information return area. There's a good opportunity there to do more in that space. There's a good opportunity to advance in more of our electronic services.

I'm hopeful that someday instead of having 50, 60, 70, even 80 percent of e-file returns hopefully we're banging closer into the mid-90s and maybe even higher. Who knows? We'll see where things are in 5 to 10 years from now. But if we have an all-electronic process from end to end starting with think about you're getting your paycheck and money's being distributed to the state and federal governments, Social Security, and then when you get at the end it's an all- electronic, you get all your information in an account format and you start your preparation process either yourself or with a tax professional and then it's all done electronically. You get your refund or you make your payment electronically. It's this total electronic process and you know it's done, it's all secure, it's all safe, and that's really where we want to be. We want to see that whole process end to end all electronic, all secure, and all safe.

And I think that by doing that and making it easier and safer and securer that it'll actually allow the taxpayer to pay their fair amount and know that they've done that and know that their neighbor's doing that as well so that they won't feel like hey, someone's getting away with something. It'll all just work. It'll be seamless.

Mr. Kamensky: One last question we always ask our interviewees, what advice can you give to a person who's interested in a career in public service given that you've come here for the first time from the private sector?

Mr. DuMars: Well, I'll tell you coming from the private sector the one thing you have to be is patient. The process is a long process. If you want to go into the IRS or any of the agencies you have to go through a lot of background investigation. You have to give them time to go through the interview process and go through the approval process to hire you. So one piece of advice is if you want to go for a federal government position give yourself six months to make it happen because it's going to take at least that long. That's one thing.

And don't get frustrated. The people that are trying to get you in, they're working hard but there are processes in place and they're in place for a good reason, to make sure that they're getting the right employees. The other thing to consider is when you're in there you will never get more exposure than inside the federal government because if you're working on a high profile or a low profile there's a lot of oversight. There's more oversight than there is in the private sector. So you need to understand that going in.

And it's not that people are going to be beating you up or they're looking to take down your program or anything. It's just part of the process of the checks and balances. It's the oversight from one agency to the other. It's the oversight from Congress over the agencies or even within the Treasury over the IRS and OMB over IRS. So those are the things you just have to be aware of when you come in. Not get too frustrated, understand the processes, and understand how to communicate within those boundaries.

Mr. Kamensky: That's really fascinating. Jeff and I want to thank you for fitting us in your busy schedule and joining us this morning.

Mr. DuMars: Oh, well, thank you and thanks for having me. And if anyone wants to get more information about our programs in the IRS please do go to

Mr. Kamensky: This has been The Business of Government Hour featuring a conversation with Bert DuMars, Director of the Electronic Tax Administration at the IRS. Be sure to visit us on the web at

There you can learn more about our programs and get a transcript of today's fascinating conversation. Once again, that's For The Business of Government Hour I'm John Kamensky. Thank you for listening.

Nuala O'Conner Kelly interview

Friday, September 23rd, 2005 - 19:00
"Our operation is to include privacy in all major decisions and to make sure that privacy is considered and is codified. It is built into programs, taught, and brought to our personnel in meaningful ways."
Radio show date: 
Sat, 09/24/2005
Intro text: 
Nuala O'Conner Kelly
Complete transcript: 

Monday, August 29, 2005

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

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 Nuala O'Connor Kelly, chief privacy officer at the Department of Homeland Security. Good morning, Nuala.

Ms. Kelly: Good morning, Al. Pleasure to be here.

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

Mr. Hempstead: Morning.

Mr. Morales: Nuala, please tell us about the mission of the Department of Homeland Security and the mission of your office within DHS.

Ms. Kelly: I think many people -- although not everyone in the country -- knows right now that the Department of Homeland Security is largely a protective agency. I think -- obviously, we were created in the aftermath of September 11th and the tragedy that occurred around the country, and people think of us as an antiterrorism agency, but that's -- I would consider it a part of the larger mission of the department, which includes everyone from FEMA, as well as the Secret Service and the Coast Guard and the border protection services, and all of the parts of our former immigration services.

So we are a service agency, we are about protecting the homeland, but we are also about making an accessible and protective and safe space for citizens and visitors to this country. And I think that recent events that -- and recent changes Secretary Chertoff has made to the department really reflect that, with the appointment of chief medical officer, for example, to counteract medical threats, bioterrorist threats, and also to look for biohazards across the country, patterns and emerging trends. We're dealing, you know, with everything from local outbreaks of the flu, really, to kind of national and international epidemics that might be a threat to our homeland as well. So it's not just the terror cells that we -- you know, we think about and we hear about on television, but it's man-made and natural disasters, it is medical threats, it's bio threats, it's every kind of imaginable thing that we want to prepare for and be aware of and hopefully both act to prevent but also act to mitigate. So it's a very -- it's a wonderful mission, and I'm incredibly honored to be a part of it. I've been here since, really, almost day one. I was appointed two weeks after the department opened its doors under Secretary Ridge and the team that was in place at that point, and I've just been incredibly honored to be a part of that team and the current team as well.

The mission of the Privacy Office within the department is a unique one. Again, I'm honored to have been chosen to be the first statutorily required and appointed chief privacy officer for any federal agency. And that's not to say there aren't incredibly talented and excellent privacy and Freedom of Information Act specialists and personnel and leaders across the federal service because they already are. This is just a unique amalgamation of those responsibilities and those requirements in one office, and I can just tell you a few minutes about the office and what it does. First, our statute has five main components, and they include everything from overseeing all Privacy Act -- privacy impact assessment requirements, the Freedom of Information Act compliance across the entire department, legislative and regulatory proposals that might impact personal privacy, and interestingly enough, a reporting relationship, which is fairly clear, that we must report on complaints and concerns to Congress and to the public, which gives us a little bit of an outside kind of ombudsman feel to the office. But it is really largely -- and obviously it is intended to be a helpmate of the department. I hear people define us as what we are not. We're not the general counsel. We're not the inspector general. We're not a number of things. And all those things are true -- we don't pretend to be any of those things.

We are operational, and our operation is to include privacy in all major decisions and to make sure that privacy is considered and is codified, is built into programs, and is educated, is brought to our personnel in meaningful ways. We have done everything from videotaped learning modules to on-site classes for all of our new employees at headquarters. You know, any way we can reach our employees, we'll do it. And privacy, of course, means a lot of things to a lot of people. It means not just personal data -- what information the government knows about you and when and why, but also what kind of pat-downs are you getting at the airport and who's looking through your baggage and all the different ways that the department comes into contact with people. So we try to instill a sense of respect, a sense of dignity for the individual. So our role is a little bit of everything; it's policy, it's technology, it's legal, but every person -- including me -- that works in our office wants to be at the Department of Homeland Security to help our overall mission, which is to keep our country safe.

Mr. Hempstead: Nuala, that is certainly a broad set of issues. Could you provide some context for our listeners and describe the size and budget of your office?

Ms. Kelly: Our headquarters office right now numbers probably around 30 professionals, and we have a headquarters budget that's somewhere in the neighborhood of 5 or $6 million. We also oversee and have kind of a dotted-line reporting relationship -- or policy oversight over an additional 400-some personnel who practice Privacy Act, privacy impact assessment, and the Freedom of Information Act work across the department with a combined budget there of -- I want to say over 35 million. So those sound like big numbers, of course; when you think about the context of homeland security, that's actually a fairly small office. But I think we have a big impact considering our size. Not only, obviously, do I report directly to the secretary, but we're involved in management and decision-making and policy and program decision-making at all levels, at the very lowest level right on the front lines of what Homeland does, at the border and at airports and the like, and at the highest levels as well, about where we're going to put our resources and what directions we're taking major programs.

Mr. Hempstead: We understand your appointment was announced in April of 2003. You've been over there for over two years. You say you have a staff of 30. Do you do any investigative kind of work? And as being Congressionally mandated, do you also report to Congress from time and again?

Ms. Kelly: Thanks for that question. I know people at the department shudder when the word "investigation" is used in association with my office. I would say we review programs. We've certainly said publicly we had some concerns about a number of programs and have worked successfully with those programs to talk about what the right of privacy frameworks are and what the best practices are for personal information. So yes, we do review when the public raises concerns or when Congress raises concerns, or when, you know, concerns are raised even within the department. We'll go to various programs, and we'll say, listen, we're going to sit with you side-by-side. And it probably feels from the receiving end a little bit like an inspector general audit, although we like to be a little friendlier and a little more in-house. And we do report the results publicly; we've issued a number of public reports on the status of, say, for example, the use of personal information in the airline context, which is of great concern publicly, but also has a great validity in our homeland security work.

We are -- I think in the Fall, you'll see reports on the Matrix program, which, again, was incredibly worthwhile program about law enforcement sharing of information across state lines. Again, I think most people think that happens already, so -- but there were concerns about who was going to have access to the information, for what purposes, where it was going to be housed, and most importantly, the security of information. Something you've seen over and over again in the private sector in the last year, people are, I think, going to be increasingly concerned about their government having and being able to secure their personal information as well. We've got to demonstrate that we respect personal information; if we're going to require it for use for -- even the most valid purposes in the government space -- which I think are for homeland security -- let's just show that we can do this right, we can do this thoughtfully.

We do report to Congress at least annually and we've actually been asked to report more frequently than that through specific legislative direction and through coming in for hearings and testimony and the like. So again, this was a Congressionally mandated and created office, and a number of our godfathers and godmothers are still in Congress; a number actually have left and are still looking over us with great pride from the private sector as well. But we do go up to meet with both members and staff frequently, and we've been very grateful for their support. You know, I probably sound like an incredibly na�ve Washingtonian, but I really do believe that the support is very bipartisan. There isn't anyone I can think of walking down the street who'd say I don't really like privacy. You know, I think that's something everyone can get behind, and it's just a question of doing it right and thoughtfully and again, not impeding the mission of the Department of Homeland Security, but really strengthening it.

Mr. Hempstead: You described your role as being partly within, partly without or outside the department. Given this duality of roles, how do you ensure collaboration with your colleagues across DHS?

Ms. Kelly: I think by showing, first of all, a fundamental respect for what the mission is. You know, I was just -- I was doing some research online for a personal trip this weekend, and I came across some of the coverage of some of the folks on airplanes on 9/11 -- and I have a little girl named Nora, and one of the women who died had a one-year-old daughter named Nora. And these stories, again -- I mean, even four years later, still resonated with me, and I actually had family members and friends -- I'm from New York, I had just moved down a couple weeks before 9/11 -- who were in the World Trade Center, some of whom were injured and lost their lives. And so, you know, we all at this department support this mission and remember why it is we came and what it is we're about doing. I'm sure there are people at the department who sometimes think we're making their lives harder -- and that's probably true, we are probably making a few more steps to their getting their program out the door -- but again, it's with the thought that we are doing the tough scrub inside the department to make sure we have made the right choices about the use of personal information and about the impact on the individual because, you know, what we're about, again, is not only preserving our safety and our security, but preserving our way of life with a minimal intrusion by our government. And so when I say I'm partly within-without, I mean within, we are a helpmate, we are an educator, we are, again, assisting the operations; outside the department, we're a listener, we're there to hear the concerns of the public, we're there to bring them in and again, to operationalize them, to make them real, to make them hearable to departmental leadership. I think so many times the discourse in this country becomes so intolerant of the other side, and I really see our role as a translator, someone to say, you know, we have respect, we are privacy professionals. Every person I've hired, they are profoundly someone who cares about personal privacy and is educated in fair information and principles, not only domestically, but internationally as well.

So we come from that framework, but we're also Americans, and we also care about this country, and we also care about this department. So I think we sit on the fence, we sit on the line between, you know, those who would criticize the department and those who would defend it at all -- you know, with no ability to hear criticism. So I hope we've done that, and I think we've done it to greater and lesser, you know, success depending on the day.

Mr. Morales: How is DHS building Privacy Office? We will ask DHS Chief Privacy Officer Nuala O'Connor Kelly to share with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales and this morning's conversation is with Nuala O'Connor Kelly, chief privacy officer at the Department of Homeland Security. Also joining us in our conversation is Paul Hempstead.

Nuala, we understand that you file an annual report directly to Congress. Can you tell us more about this reporting relationship?

Ms. Kelly: It's an unusually drafted provision, our statutory authority, in that most reports issued by the department, obviously, are issued by the secretary. So it's a little quirk of drafting, but I think it was intended to be, frankly, actually, much more than that, and I've talked to some of the staffers, and they intended for this office to have, as I was saying a little earlier, kind of an ombudsman-like quality and ability to report in a kind of an unconstrained manner about concerns and about their -- the response of the department to public concern and outcry about privacy invasion or privacy complaints. We've reported a number of times, not just in our annual report, but in specific instances, we've been asked to investigate or analyze, really, the use of the no-fly list in the airline context. We've been asked to review the use of commercial data by the department to make sure that it's meeting public expectations. And we see these, really, as constructive ways to tell the public what the department's doing, but also to tell folks at the department here's the right way to be doing these things, and you know, here's the way to succeed with our programs, but also keeping privacy in mind at all times. And so we've been lucky to have just a really good relationship with the members of Congress who oversee our office and who've expressed concerns about these issues at the department. And again, they fall on both sides of the aisle. I think privacy is a universal issue, really, more than a Republican or Democrat one.

Mr. Morales: Nuala, many of the organizations within DHS have very long histories and well-formed cultures. How is your office contributing to the culture at DHS?

Ms. Kelly: I am fascinated -- absolutely fascinated -- by organization culture because I came from a high-tech company that was five years old, and it was run by -- I think at the time, a 37-year-old billionaire, and at 32, I was probably the second-oldest person in the company, so you know, it was really a fun, fun job, and a great place to work and a great entrepreneurial environment. That's a very different culture from any government organization, almost. There are parts of the Department of Homeland Security that date back to several centuries ago. It is hard to make change in cultures that are that old and that well-established. And we have other parts of the department that are brand new, that were created in the department's enabling statutes, so we've got two-year-old departments and 200-year-old departments within the Department of Homeland Security.

I think the challenge for all of us is to create a unified culture, and I'm so incredibly impressed by some of the language that Deputy Secretary Michael Jackson has used about creating one DHS where employees understand that their career trajectory is tied to the department, that they can succeed, you know, as a Coast Guard agent who does a -- or a member who goes to do a detail in the Secret Service or in the Customs and Border section, or in enforcement agencies, that there is respect for professionalism and growth and opportunity across the department that isn't tied to any one subset of the department. I have a lot of respect for the organizations like the Customs Service, for example, that date back, I think to the Constitution. I think people have mentioned that a number of times. But they have developed a career personnel track that is among the most professional, I would say, in the federal service. It attracts a terrifically high caliber of employee and promotes employees for their best work. I think we want to look across the department and build on what's already working and build those structures out and then also take this opportunity as a brand new two-year-old agency to be a little entrepreneurial, to be a little more open to new ways of doing things.

You know, I think people have been talking about -- for decades now -- bringing a private-sector kind of ethos into the government space. There are terrifically talented people; I think I've been more than impressed by the folks I've been able to hire and that I work with at DHS and across the service. Let's train and manage and promote them in a way and with the speed and with the benefits that you can see in the private sector. There are certainly benefits to being a government employee, but there are downsides in some of the inflexibilities as well, so let's kind of clean those weeds out of the way of the good folks who are trying to get work done.

Mr. Morales: Nuala, you touched a little bit upon collaboration. What are some of the other critical success factors or challenges in working across an organization the size of DHS?

Ms. Kelly: I think translating, making sure that our mission is explained within the department in a way that people understand that it's part of supporting the overall DHS mission. You know, we're not just there to put a rubber stamp on a program, to say, yeah, it's great, it's super, it's a terrific idea. We are going to ask the hard questions, but in asking the hard question, it's to get to the endgame, which is to get a worthwhile valid idea out the door and in a manageable timeframe and in a manageable way that respects the individual, respects the citizen. Often, folks are so focused -- and sometimes, I'm sure that the same criticism could be levied of my office -- we're so focused on our own mission, we can't necessarily conceive of how important others' missions are as well. And so just making sure we all understand it's really -- it really is one team, one fight, as Husband said, that we all have our part to play in the larger drama of DHS, but that it's about getting to the finish line.

Mr. Hempstead: Nuala, DHS interfaces with several different federal agencies. Many of them do not have chief privacy officers. How do you ensure that privacy issues are handled according to DHS standards and other applicable laws to people like the intelligence community and other civil agencies?

Ms. Kelly: Well, thanks for making me sound so important that I get to tell everybody else what to do, but that's not exactly the case. But in fact, there are more and more chief privacy officers that are statutorily required. We've had statutory mandates for a number of other federal agencies that have exactly followed our statutory language and in fact, enhanced it and expanded on it. We've got a great new person over at the National Intelligence Director, a privacy and civil liberties officer. We've got statutory language that encourages or, in fact, requires every federal agency to name a senior government official who is the overseeing person for privacy policy for each federal agency. I think you're seeing federal agencies come to that view that you need a senior person with a lens on privacy, and you know, I'm joking when I say that it was because of our office. It's really largely mirroring or imitating the private sector, which has had great success. Really, one of the leading chief privacy officers in the country is Harriet Pearson at IBM, who I think actually has a much bigger title, but she was one of the early leaders of the viewpoint that you can have a successful privacy practice within an organization.

I don't know if you guys want to get into international, but our way of looking at privacy is a little different in structure, but not necessarily in principle, to the rest of the world in that we have embedded privacy officers within our federal agencies and within our companies. You know, other parts of the world have free-standing offices that are separate and apart from their federal agencies -- you know, there are different ways to do it, but I think the proof is in the pudding -- you know, what's the outcome, do we see good and thoughtful programs and policies and new business products coming out of these institutions, and I think the answer is yes. I think you've seen great success with privacy officers in the private sector, and I think that the federal government is really following that lead and realizing, also, that the use of personal information has become one of the most compelling concerns about any organization that has information and that needs information to do its job, whether it's a bank, a hospital, or a federal agency.

Mr. Hempstead: Well, you mentioned international partner agencies. What about other partnerships? What are critical to the privacy office where you are? Perhaps private sector, advocacy groups, individual citizens?

Ms. Kelly: Absolutely. And let me run down the list with -- starting with our own agency first, actually. We work every single day with our Office of General Counsel and our various other leadership offices, our policy office, our international shop, you know, the program officers across the department. So partnering with the leadership, but also partnering at kind of a mid and lower and all throughout the levels of our agencies are the right way to do the job and to make sure the job's getting done across the federal service, obviously, with privacy offices, but also with our partner agencies, Justice and Defense and the intelligence community as kind of one, you know, operational force. And I think the idea, really, after 9/11 is to break down the walls, make sure that the information is going where it's supposed to be going and not where it's not supposed to be going. Our mission is to make sure that information is used legitimately and thoughtfully and in a limited fashion, but not that no information is used because information really is one of the lifebloods of our War on Terror.

I think we're forgetting our state and local partners here in this conversation, that they are our crucial -- and you see that again in any number of front-line activities, any kind of natural or man-made disaster is going to require our state and local, our first responders, and they are, you know, the people who are on the front lines of this, and we need to make sure that they have timely information in a manner that can save lives. So, you know, good and thoughtful and fast and effective information-flow is going to be essential to making sure people are moved to the right parts of the country or deployed in a way that's going to be helpful. So we are very much in favor of technologies that can both assist, but also constrain the flow of information. With good thoughtful rules at the outset, we can do that.

Mr. Morales: Nuala, you mentioned earlier that education is core to the mission of your office. Can you describe the steps that the Privacy Office is taking to educate others on the privacy concerns?

Ms. Kelly: Within the department, we have education programs, really, almost in every part of the federal service already. There are requirements under the Privacy Act and FSMA and a number of other laws to make sure our employees have been trained in Privacy Act requirements and, really, privacy policy. We've undertaken a particularly robust training program at headquarters, where we sit, to make sure that every new employee has gotten a class from a member of the Privacy Office. We're really looking at what's being done already. Again, Customs has a terrific online privacy training program, INS has some terrific technologies about limiting information flow and access to certain kinds of information, and what we're trying to do from our standpoint is really be the champion of the programs that are working well and to say, hey, here's a really good idea, you guys might want to copy that. Or if a division comes to us and says, you know, we really want to implement this, we say we don't necessarily need to reinvent the wheel, although you're welcome to go out an look at what's being offered in the private sector and get people to compete for, you know, terrific resources, but let's build on what's already there, let's not be reinventing the wheel.

So within the department, we're both the champion, but also the actual teacher. And then outside the department, again -- you know, I didn't talk enough about our relationship not only domestically and internationally, but also with the advocacy community and the public. I mean, we really see ourselves as bringing in and making real the concerns of individuals and of organized advocacy groups and being ourselves educated and then turning around and educating others in the department about these concerns and why they're valid, and in a way that can be heard.

Mr. Morales: How are privacy concerns impacting investigative technology? We will ask DHS Chief Privacy Officer Nuala O'Connor Kelly to explain this to us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales and this morning's conversation is with Nuala O'Connor Kelly, chief privacy officer at the Department of Homeland Security. Also joining us in our conversation is Paul Hempstead.

Nuala, you've described yourself -- and please take this term lightly - as a geek at heart. What is the promise of technology in the privacy arena?

Ms. Kelly: Oh, no worries. I'm the one that said it, and I remember distinctly having said it. I came from a high-tech company, so I am a geek to a certain extent, and I do believe that there is tremendous potential in a number of the technologies the Department is considering using and is already using, both to strengthen identification and identity management, but also to put limits on the use of personal information by this department and other parts of the federal service. The promise of technology, I think, is greater accuracy. For example, many of the watch lists really seem to run off name and date of birth, and our airline tickets obviously are named, and so everyone who's got that name is going to match that individual. So, you know, that's just one kind of data management tool that people are considering is, what's the limited amount of information that's necessary to prevent those kind of mismatches and misidentifications?

But in a more robust way, the use of technology like biometrics and RFID and other kinds of identity management tools, I know they strike fear in the hearts of many who say, oh, I don't want my picture taken, I don't want my fingerprint taken -- and I understand the cultural concerns not only in this country, but in many other parts of the world. We do want to be sensitive and thoughtful about not only the concerns of our own citizens, but really the impact we're having internationally as well in programs like, for example, US-VISIT that is engaging in and meeting visitors to this country at the border. But we also do want a greater strengthening at our border of who's coming in and out, and I think the VISIT program, for example, is a tremendous success story in not only the use of technology, but in building in privacy principles and privacy practices into its foundation.

So I think the answer, really, is there are ways to do the things we need to do to make our country safer, but in a way that is thoughtful and respectful of individual privacy, and that technology can be one of the tools. I think the promise of technology, particularly biometrics, is greater accuracy and therefore cutting down on mismatches and misidentifications at the airport, at the border, wherever, but also through that, allowing our employees to focus on the issues that are really of concern, the people who really might be a correct match with a watch list or some other law enforcement activity, and really focus those resources. And again, I go back to VISIT just because it's a great real-life case study, but they've been able to arrest felons and folks who are wanted domestically and internationally on very, very serious violent crimes, as well as visa and border infractions. And so, you know, I think this is a powerful example of technology done right and our ability to protect ourselves and to create a strong border.

Mr. Morales: We understand that your office drafted a policy notice that covers access and redress opportunities for all persons, regardless of their country of origin. Can you tell us more about this notice and how your office is implementing this policy?

Ms. Kelly: As a principle, we in our office have very much tried to model our thinking on really universal fair information principles. And when you look at privacy law elsewhere in the world, you'll see that those privacy laws cover you when you're visiting that country or having any interaction with the Italian government or the French government or the like. And so to the extent that we have many international agreements that are reciprocal, we have tried very hard where we can to encourage the department to allow for and create access and redress programs that allow any individual, regardless of their citizenship or country of origin to access their information and correct it.

Now, let me be perfectly candid that I'm not inventing something new here. Our CIS -- our Citizen Immigration Service -- has had a fairly similar policy for some time, and that is really because the Freedom of Information Act allows for a person of any country of origin to see their own data through a FOIA request and access it and see what is known about them. This is really a practical principle because so many of our files of citizens and non-citizens become commingled in the process of folks becoming citizens that it just makes sense, it's more practical, it's more doable to cover the systems as they're known by -- systems of records notice under the Privacy Act or through FOIA protections. And we've just tried to encourage the department to think about those protections as really linked.

In a recent negotiation we had with the European Union on release of passenger name records, again, we relied heavily on the strength of our Freedom of Information Act, which I will argue is really second to none internationally. I think folks don't realize that we're constantly getting calls in our office from privacy and information commissioners from other countries saying, how do you do it and what do you do and, you know, what are the principles that you engage on. And I think you're seeing a growing trend of accountability and concern, and it's a way that citizens can -- in our country can petition our own government for correction and in the most minute sense, a correction of their own record. So it is a policy that combines the strength of Privacy Act and FOIA and really just says there's not practical difference between what we're doing for our own citizens and what we're doing for citizens of other worlds -- other countries. It's something we haven't gotten credit for enough internationally, and we should.

Mr. Hempstead: Let's see: you mentioned before your interaction with -- and, in fact, your impact upon -- the US-VISIT program. I did want to ask you about another program because we understand that your office recently completed a privacy assessment review of TSA's registered traveler pilot program. Could you tell us about the review process and some of the privacy issues that you evaluated?

Ms. Kelly: Certainly. And, of course, the review process for RT -- or registered travelers -- no different than the same PIA -- Privacy Impact Assessment -- process that every major program -- really, every program that has personal information in the department goes through very routinely now, and I give, you know, all the credit in the world to our staff that works on PIAs in our office, led by Becky Richards, our chief compliance officer in the Privacy Office, who came from a terrific organization called TRUSTe, the online seal program that really did compliance and auditing and training of online companies, and I'm just tremendously delighted that we're able to bring that kind of lens of operational efficiency and really just routine analysis of privacy and fair information principles to the DHS framework. Any program -- RT and any other program that's a new idea, a new pilot, has to do a PIA by law, and the idea behind a PIA is simply -- like an environmental impact assessment or any other paperwork reduction notice -- to consider what the impact is of this new program on the individual and on that individual's personal information. The PIAs -- we've really drilled down on the program folks that they are responsible for drafting the initial PIA and that's because they understand better than anyone else what the program does, and it makes sense for the program folks who take ownership of privacy as a principle and a practice for their own program. It's not something that we from headquarters, down from above, say you must do it this way; it's got to be something that's really learned and lived by the program personnel.

Now, that's not to say that the first year, we weren't sitting there side-by-side helping them write every single word because we sure were, but it's the old adage, teach a man to fish -- you know, I think this year we've had a smoother program, and next year, again, you're going to see more completed and more fully fleshed-out PIAs coming into our office at a later time in the evolution because the folks writing them will have done them before and be more comfortable doing them. So it's really a bottom-up division of labor, really, where the folks running the program, this is part of their tool kit, it's part of their to-do list, really, they're -- the PIAs are scrubbed by the CIOs for the various divisions because, obviously, it's a technology-heavy requirement. The E-gov Act requirement is particular to the new uses of technology or new technologies that impact personal information. The DHS-wide PIA requirement's a little bit broader for new programs, generally, and new use of personal information.

You know, in a perfect world, they come to our office a little further baked, you know, and closer to being done, and are reviewed by our office. And what we're looking for, really, is have you considered what the impact is on the individual. When you're asking for, you know, name and date of birth, do you really need it? Is that all you need? Do you need more, are you going to come back to us six months from now and ask for more? You know, if you're asking for 16 different things, is that all really, really necessary, or could you do with less? And sometimes the answer is, we really need all 16 things, and that's okay if you can really show a demonstrable law-enforcement or counterterrorism reason. Or, you know, have you considered other technologies that might work better.

A perfect case -- and we get a lot of press about the use of various technologies for screening at the airports or for screening for drugs or contraband or weapons, and what we're asking in those cases -- and again, I have not personally looked at that technology in a little while -- but the analysis I went through with both CBP -- Customs and Border -- and TSA when they first started looking at them was, what is the functionality you need, what do you need to look for, metal or plastics or explosives or -- you know, what are you looking for, and then what's the least invasive version of that that you can look for. And you know, by simply asking those questions, I think we've seen a great evolution both because of the great ingenuity in the private sector responding to those concerns, but also because of our folks saying, you know, guys, we really need to go back to the drawing board and look at something that's not going to show people's personal parts when they're walking through some screening, you know, program at the airport, but really just finds the bad stuff. And we've -- you know, we've seen great movement in the technology sector to say, okay, there are ways to look at this technology that will find the metal or the explosives or the this or the that but not be so kind of personally revealing about someone's physique. You know, just by asking the questions, I think we've started a very good conversation, a very good dialogue that's been very much responded to by the private sector as well as our employees.

Mr. Hempstead: Many of these programs use biometrics. Perhaps you take a minute to explain what biometric technology is, how it's playing a role at DHS, and what are the privacy concerns, and how DHS is approaching those concerns.

Ms. Kelly: Biometrics is a big word that people use to mean a lot of things, but kind of in a nutshell, it's any unique identifier that is kind of attached to your person. Whether it would be a picture or a fingerprint or a retinal scan or iris scan or even -- some people have seen the hand geometry access controls to various buildings which will measure the shape or the size of your hands or your relationship of your various body parts. There are facial geometry as well that shows the relationship of your various kind of -- you know your cheekbone to your chin, that sort of thing. So there are lots of different biometrics. And I know, again, they really -- to use a technical term -- they creep people out, and so we need to really dial down the dialogue, is what I keep saying. Let's talk practically what are we talking about, what are people's fears, and how do we resolve them. And -- case in point -- and we're not the lead agency on this, obviously, the State Department is -- but the use of biometrics in passports really has increased not only in this country, but elsewhere as well, and I'd like to say, you know, guys, listen, we have two biometrics already on your passport. You've got a photograph, and you got your signature. So we've had biometrics in this country for a long, long time.

Now, this is not to be na�ve or, you know, or disingenuous about the fact that the ability to store, to transmit, to translate, and to amalgamate biometrics has certainly changed profoundly. You know, your signature and your photograph were not heretofore storable in some, you, know, distant computer somewhere that you didn't know about. And so we need to be concerned and vigilant about those changes, but the reality is biometrics have historically always been used to identify you. I mean, signatures have been around for I don't know how many centuries now, but you know, before that, it was mark your X here. So this is not unusual and nor should it be considered a terrible, terrible development; if anything, it can be a very, very positive development, as I was saying before, and a way to correctly identify that you're you, that somebody else hasn't stolen your identity, that someone else hasn't appropriated your passport, and that you are the legitimate holder of these travel documents, and you have the right to move about this country or some other country. You know, I think this is a great strengthening of our -- not only our ability to have our own border, but to allow people across it for legitimate means, which is every country's right, really, but also to facilitate travel, to make things faster and easier and better at the airport, and I think we're all in favor of shorter lines. But part of what my office is concerned about is not only saying when things are going wrong, but also when things are going right. Let's talk about the good technologies and the good uses of them. Let's not jump on every bandwagon for every brilliant new idea, but you know, let's evaluate and be thoughtful about them. But we can be a champion, I think, for good and responsible use of technologies in the private sector and the government space as well.

We do need to be vigilant, as I was saying, about the amalgamation and the creation of the -- you know, what people call the big brother databases and these kinds of things. By creating good rules -- and you know, the Privacy Act, I think, is one of the most overlooked statutes in the federal government. It requires every federal agency to say upfront what it's going to do with information, where it's going to store it, and how it's going to secure it, and all sorts of things that I think the federal -- the government should be explaining to its citizens. And by having those conversations again early on, by simply enforcing the law as it's written, we are able to really have the dialogue at the front end about, okay, we've got now a fairly good-sized database, US-VISIT, with finger scans and biometric -- digital photographs. How are we planning on using these, what are the legitimate public policy purposes for which we are using them, and thinking very seriously about -- you know, there are concerns and issues always about once you've got the data, you're going to turn around and use it for something else, and I think we -- our office needs to be vigilant, as does the public, about those concerns. But it is not, again, the technology itself that is the concern, it is the public policy and the forces driving change that we need to, you know, have the dialogue with. No technology by itself is good or bad, but many of them can be very, very helpful to strengthening our identity management and our ability to know who's crossing our borders and who's coming in and out of the country.

Mr. Morales: What does the future hold for the DHS Privacy Office? We will ask Chief Privacy Officer Nuala O'Connor Kelly to explain this to us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales and this morning's conversation is with Nuala O'Connor Kelly, chief privacy officer of the Department of Homeland Security. Also joining us in our conversation is Paul Hempstead.

Nuala, what are some of the biggest challenges for privacy that you will face in the near future, and how do you plan on overcoming these challenges?

Ms. Kelly: I think that the increased need and the increased speed of information flow. The increased need, again, very legitimate for our information-sharing efforts with not only the private sector, but within the intelligence community and with our state and local partners. With that, I think, comes an increasing need for rules and frameworks to constrain that data and to make sure it's only used for legitimate purposes. And again, I think there are good rules we can build on already; for example, some of our agencies have auditing mechanisms where they can see what employees have accessed what data and who's gotten into what database -- incredibly important and strong. But we've got to create, I think, a level playing field where everybody kind of knows what the rules are, that -- and there are agencies have done this already -- IRS has a great culture, they've had a privacy advocate for a long time. Folks know that, you know, your IRS files are sacred, and they shouldn't be looked at by anyone but the agents working on those cases. We've got to make sure we've got that same kind of environment and culture at DHS.

Mr. Hempstead: Nuala, we are focusing on the future here, so we can't let you get away without talking some about Secretary Chertoff's reorganization, what the impacts are, the Chief Privacy Office, and any good or bad points that you want to say about him.

Ms. Kelly: Everyone at the department -- at least, you know, the folks that I've worked with closely and have talked to about this -- are really delighted and all the major developments are very positive, including the new personnel that have come into the department. We are delighted with the support that we've gotten from Secretary Chertoff and Deputy Secretary Jackson. We also have a great working relationship with Stewart Baker, who's the new assistant secretary for Policy Designate, who I think we will be working incredibly closely with in the coming years and have in the past already. So from my office's standpoint, we're delighted by the support, we're delighted by, you know, all the public and private statements we've gotten from our leadership on the privacy office, but also speaking, you know, on a more global basis, all of the changes that were made, I think, largely were incredibly welcomed, not only by folks in the department, but members of Congress who were supportive -- you know, I thought, gosh, if there's anyone who's going to be offended, it might be members of Congress because they created the department and the structure that it was. But it was incredibly appropriate after two years to take a look, take a step back, and say, what's working, what can we do better. You know, nothing had been too set in stone, so two years into it was a good time to take on that review and say what might work a little better, what might streamline some, you know, reporting relationships and make this department achieve its mission even more fully. I am thrilled with the time I've spent at the department, and, you know, I don't know what the future holds, I don't know if more change is in the works, but we've been very grateful so far for the support we've gotten.

Mr. Hempstead: And what are some of the lessons learned from your first two years as chief privacy officer? What would you share with a new counterpart in another agency?

Ms. Kelly: Hire the best people -- of course, you can't have any of mine -- but go out and find some really stellar people because they will A, make you look really good, but also the work is hard, but it's incredibly enriching, incredibly rewarding. And I wake up in the morning, and I'm astounded by the quality of people and the caliber of people I've been able to attract to this office, and it has nothing to do with me and everything to do with the work and the mission of the overall department. We have begged, borrowed, and stolen the best people from the federal service -- I mean, just name a -- I shouldn't name a few names because I will not be able to name all 30 of them, but my chief of staff, the number two person in our office, Maureen Cooney, who came from the Federal Trade Commission, who was really one of the number one international privacy specialists in the federal service. And Toby Levine, who followed her, our senior policy advisor from FTC. As I mentioned, Becky came from TRUSTe. Peter Sand from a state agency in technology and privacy -- this list could go on and on.

That was just a few examples of folks from other federal agencies, folks from the private sector, and folks from state and local agencies, and folks from within the department who we've lifted up and brought to headquarters as well. So we've looked to where the talent is and brought together a team that I think really works, and then everybody's got their slice of the pie, and they are in charge of it, and that has worked really tremendously well. It's not all lawyers, it's not all technologists, it's not all government people, it's people who bring a variety of different viewpoints, but who are willing to, you know, to do the hard work and to also sell internally. I think -- and the number one -- the number two issue is really don't underestimate how many times you're going to have to explain what a privacy officer is and does because I still seem to be doing it even today, two years later, and that's just because it's something new, and we need to -- you know, the onus is on us to demonstrate that we have some added value for the department. And I think we have demonstrated that.

Mr. Morales: Nuala, you've had just a fantastic career, and I'd love to hear a little bit more about it and also what advice could you give a person who's interested in a career in public service?

Ms. Kelly: I was lucky to get into public service, as I mentioned, right around 9/11, and that really has shaped my career as a New Yorker, and, you know, as someone who really believes in creating a safe space. But I can't underestimate the opportunity that I think public service, particularly DHS, holds. You know, it really gets you up in the morning to know that you're helping and that you're helping make the country safer and that you're helping make the department better in its treatment of privacy and the protection of the individual. So, you know, that can take you a long way in your energy level.

I think it's hard to break into the government. I think -- you know, I see people trying to apply from the outside, and it's an onerous process, but it's well worth getting into. You know, I've kind of accidentally found my niche, but finding something you love to do and -- whether it's public or private sector -- has been lucky for me and hopefully will work for others as well.

Mr. Morales: Well, Nuala, your energy and enthusiasm certainly shows.

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 today. Second, Paul and I would like to thank you for your dedicated service to the public and our country, starting with your work at the Department of Commerce and now at the Department of Homeland Security.

Ms. Kelly: Well, thank you both so very much for your time. I'm delighted to be here. And if people have other questions for me or want to learn more about the office, we do have our own little slice of the DHS website; it's

Mr. Morales: This has been The Business of Government Hour featuring a conversation with Nuala O'Connor Kelly, chief privacy officer of the Department of Homeland Security. Be sure and visit us on the web at There you can learn more about our programs and get a transcript of today's fascinating conversation. Once again, that's

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. Linda M. Combs interview

Thursday, August 25th, 2005 - 19:00
"In the financial management line of business, one of the things I've learned is whether you're using procurement vehicles, systems implementation, or schedules, make it clear, make it consistent, keep it simple."
Radio show date: 
Fri, 08/26/2005
Intro text: 
Dr. Linda M. Combs
Complete transcript: 

Friday, August 26, 2005

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

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 Linda Combs, controller of the Office of Federal Finance Management at the U.S. Office of Management and Budget. Good morning, Linda.

Ms. Combs: Good morning.

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

Ms. Cammer: Good morning, Al.

Mr. Morales: Linda, please begin by telling us about the history and mission of the Office of Management and Budget.

Ms. Combs: The Budget and Accounting Act of 1921 actually created the Bureau of the Budget in the Department of the Treasury. The Bureau of the Budget later moved to the Executive Office of the President in 1939. And the Bureau of the Budget was actually reorganized into OMB in 1970. It serves, actually, a couple of primary roles, Al: the budget itself and management. The budget responsibility of OMB is to assist the president in overseeing the preparation of the federal budget and actually to supervise its administration in the executive branch agencies. And the "M," or the management part, of OMB, is responsible for helping to improve administrative management, such as coordinating many of the administration's procurement, financial management, information systems, and various regulatory policies.

Mr. Morales: Linda, would you tell us about your office within OMB, specifically the Office of Federal Finance Management?

Ms. Combs: The Office of Federal Financial Management, as we call it, OFFM, was created by the Chief Financial Officers Act of 1990. We are responsible for implementing the financial management improvement priorities of the President, carrying out financial management functions of the CFO Act, and overseeing federal financial management policies such as taxpayer dollars not being wasted, making sure that the government books are in order, and making sure that our government decision-makers have access to accurate financial information.

Ms. Cammer: And Linda, you were recently appointed controller. Congratulations.

Ms. Combs: Thank you, Debra.

Ms. Cammer: What are you responsibilities as controller at OMB?

Ms. Combs: I'm actually head of the Office of Federal Financial Management, and the responsibilities entail providing government-wide leadership for strengthening financial management in the federal agencies and programs government-wide. In December of '04, for example, we issued some revised internal control financial reporting requirements relating to the Circular A-123. Now, those are requirements that are similar to requirements of internal controls that many of us have heard about that private or publicly traded companies are required to do through the Sarbanes-Oxley requirements. We also require management to implement a strengthened process for assessing the effectiveness of their own internal controls throughout government over financial reporting. And these are based on widely recognized internal control standards. We also lead the improved financial performance criteria. We have, as our responsibility, an initiative for eliminating improper payments, and a federal real property initiative that's part of the President's management agenda as well.

Now, these specific initiatives set out to improve financial management practices across government, and we're trying to ensure that managers have all the accurate and timely information they need for appropriate decision making. We're setting out to see if we can't reduce the number of improper payments. We actually have $45 billion a year that the federal government makes in improper payments. We hope that we can reduce that by more than half -- by $25 billion -- by 2009. And the real property initiative -- we're trying to see if we can't dispose of excess property that's no longer needed and that would be, of course, costly to maintain. Our projections indicate currently that the size of the federal real property inventory could certainly be decreased by 5 percent, or $15 billion by 2009, so you can see we have some long-term goals that we're shooting for that we believe are very realistic and very doable.

Ms. Cammer: What were your previous positions before becoming a controller?

Ms. Combs: Immediately before becoming controller, I was the assistant secretary for budget and programs, and chief financial officer, at the U.S. Department of Transportation. Prior to that, from 2001 to 2003, I was the chief financial officer at the Environmental Protection Agency. During the first Bush administration, I was the assistant secretary for management at the Department of the Treasury, and in the Reagan administration, I was deputy undersecretary for management at the Department of Education. Before I actually came to the federal government, I was manager of the National Direct Student Loan Division for Wachovia Corporation. Before coming back into government in 2001, my husband and I owned our own company, and I served on some corporate boards and have actually been an elected official back in Winston-Salem, North Carolina, which has been our home for about 30 years.

Mr. Morales: Linda, I noticed in your background that you spent approximately 10 years working at the Winston-Salem/Forsyth County School District. Can you share with us your experiences in that role with what you currently do today?

Ms. Combs: You know, I think in every single position that I've been involved in, somehow financial management in one shape or form has come to play in those various positions. And in the school system, while I was beginning as a teacher, when I moved into the administrative roles of assistant principal in the various schools in which I served, it seemed to me that budgets seemed to come my way, or helping to streamline things seemed to fall into my bailiwick. And I truly enjoyed my experience with the school system. And even though that was a very long time ago, I think one of the things that I learned from that experience was that if you can manage a classroom with 26 students, you probably can manage just about any other management role anybody throws at you.

Mr. Morales: Do you find yourself still using some of the techniques from back then?

Ms. Combs: Oh, absolutely. They come in quite handy.

Mr. Morales: That's great. How are shared services changing government operations? We will ask OMB Controller Linda Combs to share with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Linda Combs, controller of the Office of Federal Financial Management at OMB. Also joining us in our conversation is Debra Cammer.

Linda, in March 2004, OMB initiated a government-wide analysis of the five lines of business supporting the president's management agenda to expand e-government. Can you give us an overview of the five lines of business and the reasons for undertaking this analysis?

Ms. Combs: I think that the Lines of Business Initiative is a perfect complement to the president's management agenda. This administration certainly sees cost savings in standardization and consolidation of government business processes, and that is the way we feel like it's the most productive way to conduct the people's business. And it's similar to creating a draftsman's blueprint, as I would say, in the way that we are adjusting the blueprint right now to reflect these particular improvements. But the line of business concept is basically built around three premises: all agencies will use common solutions; the solutions focus not just on standardizing business processes -- although that's a huge part of it -- but in making them more efficient, more effective, and of course, more cost-effective as well; and that all of these solutions, the business processes, and the systems, will be developed using common architectural tools. The five distinct lines of business are: human resource management, grants management, federal health architecture, case management, and the one that I'm directly responsible for, financial management.

Mr. Morales: With respect to financial management line of business, what are the specific goals for this LOB?

Ms. Combs: The primary goal is, of course, to assist the agencies in getting to green on the President's management agenda, and of course, what that really means is that the financial management line of business is going to help come into the agencies the standardizing processes, improving those internal controls so that there won't be any negative findings as a result of the annual financial statement audit. I think the other goals would be things like reducing the likelihood that internal control weaknesses exist, because when we start consolidating and using common systems, that makes everybody more sure of what they're doing and being in more control. It also -- one of the goals is making sure that we can compare data across agencies, you know, common business processes, solutions, and common systems. Certainly creating cost savings opportunities for agencies is a primary goal for making it easier for agencies to take advantage of specific common solutions in financial management. We also think a goal is simplifying the procurement process. That, too, reduces the risk that agencies have and allows for greater contractor oversight. But the one primary goal that I think we will also see is the momentum that we're going to create as we continue to standardize and consolidate.

Ms. Cammer: Linda, you often hear people talk about shared services in the same breath with the financial management line of business. Would you define what you think shared services is for our listeners, and then also describe the concept and the history and the benefits of it?

Ms. Combs: You know, I think shared service, to me, means exactly what we've been talking about, where agencies share common systems and common business processes. The ones that we have found to be most effective in the financial management community are based on the concept of economies of scale. I think you go back to the model that's been demonstrated in industry over and over again of gaining process efficiencies through either mass production or through common procedures. That's a proven concept; it's one we need to continue to embrace in the federal government. If that means consolidating services, consolidating productions, and the kinds of work we do -- applying often a heavy dose of technology is important, but a business process that can be done faster and cheaper, regardless of whether it includes hardware, software, or supporting infrastructure, or whether it merely is just a tweaking of a process that somebody has found to be effective from one agency to another -- I think those are the very important things that we have to look forward to. We intend to gain many similar process efficiencies by this standardizing that we're embarking upon in our financial business processes.

Ms. Cammer: Do you reference this coming from private industry as a best practice? In private industry, you understand, the shareholders are motivating it, so for you, what's the big driver in government improving their financial management in this way?

Ms. Combs: Just as the private sector is interested in the motivators, we, too, are interested in getting the best we can for our shareholders, who are the taxpayers -- you and I -- as well as our audience today. We think they deserve these economies of scale. They deserve a situation where, in essence, we can buy once and use many times over, in federal government. Whether we were in our previous private sector enterprises, or whether we're here doing the work that needs to be done for our taxpayer-shareholders, the interests are the same: economies of scale, business processes changes that are productive for the entire enterprise, and our entire enterprise happens to be the entire federal government. We intend to gain these process efficiencies and standardizations for our shareholders as well.

Ms. Cammer: Now, I've also heard about this COE, or centers of excellence, concept in relationship to the financial management line of business. Can you describe that and how it relates, for our listeners?

Ms. Combs: The center of excellence concept allows our government agencies to meet some of the goals that we've set forward in the financial management line of business concept that we've put out. It emphasizes these common business practices, it emphasizes common systems solutions, and it emphasizes what I think is becoming somewhat of a term called "economies of skills" as opposed to, and in conjunction with, I should say, economies of scales. We have some very well trained experience systems accountants, for example, software and hardware technicians, and program managers in specific places in the federal government, but they may not be in the place that we need them to be at all times. So if we look at this shared service concept, we can take better advantage, I believe, of where these skills, these economies of skills, are located. I think we've often looked at hardware service centers or software in terms of economies of scale, we continue to look at the specialization of running one of the CFO council-approved financial systems, and how that is going to work for other departments. But it allows agencies not only to outsource, when they need to, their hardware and software, but I think it opens an opportunity for the centers of excellence to perform agencies' accounting operations. If they do a very, very good job of that, and they're approved as a center of excellence, we need to take full advantage of that and take the competition aspect into each and every department that needs to embark upon changes in their financial management systems.

For example, we have over 50 of our smaller non-CFO -- non-Chief Financial Officer -- Act agencies, of which there are 24 of the largest departments and agencies. But there are 50 smaller non-CFO Act agencies that are currently using centers of excellence. There are four government-managed centers of excellence currently within the CFO Act agencies, and that's the Department of Transportation, General Services Administration, Department of Interior's National Business Center, and the Department of Treasury's Bureau of Public Debt.

Mr. Morales: Linda, you made reference to the CFO council. Can you describe what this is and what the goals of the council are?

Ms. Combs: Well, I'm happy to talk about the CFO council because that gives me a great opportunity to brag on my fellow CFOs and deputy CFOs of the council, which are really the largest 24 federal agencies; they're actually named in the CFO Act of 1990, which I talked about earlier. But these are the senior officials of the financial community throughout the federal government and the career deputies who are very, very instrumental in working collaboratively with their fellow CFOs and with those of us in the Office of Management and Budget. And we're looking at improving financial management across the federal U.S. government enterprise. And the council has several committees, and these committees are led by chief financial officers or sometimes deputy chief financial officers. And the priorities that we currently have reflected in our subcommittees of the CFO council are a Best Practices Committee, an Erroneous Payments Committee, Financial Management Policies and Practices Committee, Financial Statement Acceleration Committee, Grants Governance, Performance Management, and Financial Systems Integration.

Mr. Morales: Linda, you mentioned Best Practices Committee. Is that best practices within government or do you also look to the private sector?

Ms. Combs: We actually do both. We have made it a point at all of our chief financial officer meetings, which we have probably seven or eight of those a year. We don't meet every single month, but we make it a point to share best practices, whether it's a dashboard, for example, that one agency has had good success with, or whether it's a best practice that people have embarked upon in internal controls or a best practice of looking at ways to improve our erroneous payments. It could be anything. We actually looked at some best practices early in -- when I was actually a sitting CFO in terms of whether or not we could have economies of scale and economies of skill. We've done a lot of searching within the CFO community to determine which CFOs have good best practices in many areas that they're working on. And we bring those to the council, and it's a good chance for the CFOs to showcase what many of their opportunities have been, and how they've successfully implemented good business practices.

Mr. Morales: What are the challenges of implementing government-wide financial systems? We will ask OMB Controller Linda Combs to explain this to us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I am your host, Albert Morales, and this morning's conversation is with Linda Combs, controller of the Office of Federal Finance Management at OMB. Also joining us in our conversation is Debra Cammer.

Linda, what are the concerns of agencies while converting to government-wide financial systems from previous agency-wide applications, and how is OMB addressing those concerns?

Ms. Combs: There are some concerns about changing the way agencies do business. I think there're also some concerns about continuing to have a flow of reliable and timely financial data that is needed to carry on day-to-day operations. One of the things we're doing at OMB to help ensure the flow of reliable data is that we are actually requiring the use of only those financial systems that are hosted by a government Center of Excellence or a private sector Center of Excellence that have been approved by the CFO council. Placing a larger share of implementation responsibility on contractors has also been a must, as we've implemented new systems, and we've increased the use of fixed-price and cost-sharing contracts as well. I think the real key here, though, is that we have continually tried and will continually make it our approach to work very, very closely with each and every agency and department as it moves through the entire implementation process by reviewing these strategies that are so important and ensuring adequate communication between us and all of the stakeholders that are involved in making these significant changes.

Mr. Morales: Linda, implementing government-wide financial systems across all agencies sounds like a monumental task. How do you address the competing priorities and agendas to achieve true collaboration towards a common goal?

Ms. Combs: You know, I think one of the things that we talked about earlier in terms of the CFO community coming together to address government-wide issues -- we've been able to create a number of partnerships between the CFO agencies in the CFO community. I think it's been important that we've involved other functional communities as well, such as the CIO community, the acquisition community, property managers, supply and inventory managers. It's been important for us to address the issues that the Hill has seen fit to be involved in, and these functional communities and their leaders are extremely important to all of our efforts. I think the processes that we have used and have been created throughout the CFO community to support the President's management agenda addresses a number of issues, and many of these issues overlap, and particularly in the areas of e-gov and financial management. We will continue to use our greater community to bring the necessary measures into focus that we need to focus on, that we need to address, and that we need to make sure not only we have collaboration in, but that we also have success in.

Ms. Cammer: Now, as you move more towards a shared services approach in the federal government, there's likely to be a lot of concern amongst the agencies, and I'm wondering what steps OMB is taking to address change management?

Ms. Combs: You know, I think those of us who've been in change management for a number of years have one word to say about change management, and that's communication, communication, communication. I don't think we can over-communicate, and we're constantly looking for ways to communicate, not only our vision, but our actual strategy in moving this forward. We work through a number of forums from time to time to ensure that government mangers can understand everyone's role and everyone's responsibility. And I can't say enough about our partners in the CIO and the acquisition communities, the meetings, the briefings, and the other discussion forums that many of our private sector partners bring to play, bring us all to the table, and serve a most useful purpose, along with things like what we're doing right now is a great way to communicate with our federal partners and people who are involved in our federal CFO community.

The president's management agenda, because it incorporates systems and business process initiatives -- we have various requirements of the PMA, but our policies and our guidance that modify and support and consolidate these standardized approaches probably have an awfully lot to do with making these changes happen, and making them happen in a positive way. But we do need to always continue to find forums, find better ways to communicate what kind of changes are expected, but we also need to find ways to make sure that people understand our vision, and where we're going to be when we finish. And we will finish some of these things during our tenure, and I want us to be able to look back and say, here's where we were in 2005, here's what we've accomplished by 2009, and say we've made a tremendous difference because we were all willing to embrace this change.

Ms. Cammer: That's great. You can obviously see that this work requires a great deal of partnership with shared services providers and customers and agency heads and the private sector and -- what are these types of partnerships important and how are you encouraging the federal government agencies to build them?

Ms. Combs: Because financial management touches almost every business and every business process in the federal government and outside the federal government, it is extremely important to get this right. And financial data, I think that is used by our outside accounting organizations, whether it's a human resource, property management, supply inventory management, or whether it's used by managers on a day-to-day basis to make better financial decisions -- all of those things are so important because I think the small amount of actual financial data that is used in the financial community is small compared to the huge amounts that mission area managers need in order to effectively manage their program. And I think it's really important to help mission managers understand that their mission is part financial management as well; it's just as much a part of their mission, and I know they want to embrace it that way. I think it's up to us as federal financial managers to help these mission managers accomplish their missions in a more productive way.

Ms. Cammer: We've talked about the challenges of transition leading to new systems and the change management involved in the challenges of a partnership. Could you talk about what other major challenges that agencies could encounter as they integrate their financial systems, and what are they doing to overcome those challenges?

Ms. Combs: I think some of the tenets that we're advocating to reduce implementation risk actually address significant challenges that agencies encounter when they're implementing new systems. And having done this as a sitting CFO myself, I know how important it is to develop the right simple strategy, and a strategy that actually supports and fits in well with the department's or the agency's overall approach to financial management. I think it's important to minimize the changes to the business process that is already certified; in fact, I would say don't change it. I think it's important to use phasing of projects; in other words, don't try to do too much too quickly. Implement one functionality at a time. If you're going to implement multiple functionalities, such as core financials, procurement, and asset management, I'm not sure I could have done all of those at one time myself, so we tended to concentrate first on the core financials. But using a simple contractual vehicle, introducing competition when you're selecting the right host -- agencies, I think, continue to have to take implementation risk, but we need to be very, very careful that we are simplifying our approach as much as possible, both from a technical and a procurement perspective, and we need to work very, very closely up front and all the way through with the end users of the data in our agencies and departments. It's really, really important to find out what managers actually need, but to focus them on the fact that we've got to have standardized business processes, and we have to change our processes rather than changing the product. That's where I think we have, in the past, had some difficulties, and I hope that my mantra of change the process, not the product, will become a standard throughout government.

Mr. Morales: Linda, we talked a lot about change management and collaboration, but I would imagine that another major component of these types of transitions is employee training and retraining. What can you tell us about the plans or implementation of training for government-wide systems implementations?

Ms. Combs: Training is extremely important. Hiring and retention of specific skill sets is extremely important, as well. And I think, as I talked earlier about the advantages of these economies of skills as we've embarked on the Centers of Excellence approach, that will continue to become an even more important element within our financial management component. Training cannot be overemphasized any more than communication can be overemphasized when you are changing processes particularly. That's why I think it's so important to optimize the skills we have within the Centers of Excellence because these are people who have not only gone through this already, they have the right skills in place, and we just need to be able to replicate and duplicate what has gone on there to take advantage of the skill sets that are already there with these specific communities.

Mr. Morales: What does the future hold for the OMB's Office of Federal Finance Management? We will ask Controller Linda Combs to explain this to us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Linda Combs, controller of the Office of Federal Financial Management at OMB. Also joining us in our conversation is Debra Cammer.

Linda, what are some of the lessons learned in the government-wide analysis of the five lines of business?

Ms. Combs: You know, particularly in the financial management line of business, one of the things I've learned from personal experience that I hope to continue to pass on to my fellow CFOs and people in the CFO community is start simple and keep things simple. Whether you're using procurement vehicles, systems implementation, schedules and timeframes, make it clear, make it consistent, keep it simple. And the huge systems implementations that have been attempted, particularly in the financial line of business, I think a lot of people have learned some very valuable lessons from those, and it goes back to keep it simple and don't attempt to do too much at one time. Also, I think it's important for timing to be considered. If you're implementing a new financial line of business or a new financial system, you have to continue to keep control of your financial systems all during the year, regardless of whether you're changing systems or not. So developing a very good, viable, long-term strategy, and shorter tactical methods to know when you succeed, is an extremely important thing to keep in mind. I think you have to constantly reevaluate your strategy as you go along and make sure it's still being relevant to the community you're doing this for, communicate with the various leaders that touch your area, and certainly involving these end users in the design, the testing, and the awareness of making sure when we finish an implementation that we're going to be giving people what they feel like they need to manage better on a day-to-day basis.

Mr. Morales: Keeping it simple is certainly a well-learned lesson and often one of the most difficult ones for all of us to keep in mind. But specifically, what advice would you give a government executive today who will be implementing government-wide financial systems?

Ms. Combs: I think one of the things that I just talked about -- avoiding mid-year financial conversions -- is pretty important. We would hope that we could have our long-term strategy and even our short-term strategies to the point that we would be able to bring up financial systems early in the year rather than waiting longer and later in the year. We talked about simplicity already and developing a long term strategy and -- not just developing a long-term strategy, but keeping in mind what are we going to have when we finish, making sure that this design and the strategy that we've embarked upon is not just a simple strategy, but it's also a strategy that's going to help us to implement all of the financial management systems later on that we will need to add to that. I would say start with your core financial system and make sure that's tweaked to the point you want it and operating well, make sure you've got the processes worked out -- make sure you change the processes, not the products.

Ms. Cammer: How do you envision the use of shared services and its implementation in five to ten years?

Ms. Combs: I think if we look out five to ten years from now, we'll be closer to the end of the journey, whereas now we're probably closer to the beginning of this journey. I think that the shared services concept is being embraced. It's being embraced in the corporate world, and it continues to be embraced in the federal sector as well. But the applicability of the economies of scale and the economies of skill will drive us and help to drive us through technology, through training, and toward becoming as practical as we possibly can in the world of the service industry, as we are in heavy industry. We have a lot of guidance out there; we have a lot of best practices to look at in the private sector, and my hope is, as we go through this journey, continue to use the best practices that we possibly can and optimize utilizing the skills of our good federal employees to make these come about.

Ms. Cammer: We've been talking a lot about shared services as an operational change. Could you talk about how you see the future of government financial management and their statements being generated different in the future?

Ms. Combs: You know, one of the things that continues to drive people to better financial management is the indicators that we have, and our financial statements are really indicators of our ability to show that we have things under control. So achieving a clean opinion on our financial statements and using them fruitfully depends, in large part, I believe, on using common accounting standards throughout government, standardizing our business processes, and consolidating the systems that we need to help us bring this about. I think those are the things that we need to continue to look at, we need to continue to do anything we can to improve our processes, our internal controls, and all those things will help us build and publish our financial statements in a more timely and effective way.

Ms. Cammer: How do you plan to further expand the PMA's e-government initiative for the future?

Ms. Combs: You know, the federal financial e-gov proposal -- our financial line of business -- is very important in our CFO council work. The CFO council is committed to making positive experiences work for each one of our federal partners. Our agencies talk to one another, we continue to figure out ways to help agencies talk to one another even better, and I think working together with our CIO partners, working together with many of our other partners, is a very, very important element to bringing this about. I think we're definitely aware of what agencies have done and are doing. Having been a sitting CFO, even a couple of times already in this administration, I know what my fellow CFOs are going through, and having been through many of the things that some of them are just now going through and setting up a financial management system, it's very, very important to make sure that we now in OMB are great partners. Hopefully, we can be even better helpers in making agencies aware of what has been done and what other agencies and departments are doing to support the financial management line of business. We look for any and all ways that we can actively participate across the financial management community to generally and specifically support agencies as they go through changing their financial management systems.

Mr. Morales: Linda, you've had a fantastic career, and I wish we had another hour to talk about all the different jobs that you've held in government and the experiences we've had. But what advice could you give a person who's interested in a career in public service, especially in financial management?

Ms. Combs: I would say to anyone who's interested in public service to consider it strongly. It's an avenue that you cannot find anywhere else. The scope and responsibility of the decisions that are made on a day-to-day basis, whether you're in a department, or whether you're in OMB, are significant. And so significant that one would never have the opportunity to do that in any other place except in public service. Public service is definitely a public trust and added to the overall scope of responsibility, the public trust aspect of what we all do in public service is a leadership role that one can have and embark upon and have a wonderful career if they choose to stay there their entire career. But I would say to any person who's interested in a career in public service that they should prepare themselves and prepare themselves well for a leadership role, prepare themselves in financial skills in any way they possibly can because whether they're going to be working in a program area or in a financial area, these financial skills are going to become more and more important as we move through the next few years. But I would say work hard, be bold, and think big.

Mr. Morales: Linda, that's great advice.

We've reached the end of our time. That'll have to be our last question. First, I want to thank you for fitting us into your busy schedule this morning. Second, Debra and I would like to thank you for your dedicated service to the public and our country with your experiences at the county school district, at EPA, and now at the Office of Management and Budget, and all of the other organizations you've served at in between.

Ms. Combs: Thank you so much. It's been a great pleasure to be with you today. We appreciate this opportunity to get our message out there. And if people would like to know more about the things we've talked about today, I invite you to go to or to another website called and learn more about financial management in the federal sector.

Mr. Morales: Linda, thank you.

This has been The Business of Government Hour featuring a conversation with Linda Combs, controller of the Office of Federal Financial Management at OMB. Be sure to visit us on the web at There you can learn more about our programs and get a transcript of today's fascinating conversation. Once again, that's

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.