Mr. Keegan: Welcome to another edition of the business of government hour.  I'm your host Michael Keegan and managing editor of the business of government magazine.  Combat differs significantly from just a decade ago.  Anticipating the future is key and the US armed forces continue to prepare for future conflicts evolving to meet emerging challenges.  It does this by engaging in rigorous science and technology research.  With us to discuss his efforts in this area is our very special guest Rear Admiral James Shannon, commander of the naval surface warfare center.  Admiral, welcome back to the show.

Adm. Shannon: Michael, it's great to be here.

Mr. Keegan: Also joining us is Kevin Green, IBM's defense industry leader.  Welcome, Kevin.

Mr. Green: Thank you, Michael.  Good to be here.

Mr. Keegan: Admiral, for those unfamiliar with the naval sea system command, would you briefly describe the mission and the evolution of the surface warfare center?

Adm. Shannon: Well, the surface warfare center first is not just one place.  It comprises 10 major commands geographically situated across the United States, and the warfare center does the full spectrum of research, development, test evaluation, engineering, whatever the fleet needs and also supports the Marine Corps.

Mr. Keegan: What can you tell us about your role as the commander?

Adm. Shannon: Well, my job is traditionally, I'm a echelon three commander, report to commander of naval sea systems command, vice admiral Kevin McCoy.  And, my job is to lead people.  I lead 14,000 people.  I'm responsible for the infrastructure for all these warfare centers.  And, I provide a supporting cast role, if you will, to the other admirals in the Navy that are responsible for product.

Mr. Keegan: I was wondering, could you give us a sense of the scale of the operation?  What does the command look like?  Where is it located?  What is the geographical footprint?

Adm. Shannon: Okay.  We are located principally very close here to Washington, DC.  We have five commands within this region.  And, that's right here in Carderock right off the beltway, Dahlgren, Virginia, which many people are familiar with, Indian Head, which was really one of the first proving grounds for the Navy.  There is a explosive warness disposal technology activity in Stump Neck, Maryland, very close Indian Head, and then up the road we go to Philadelphia for ship systems, all mechanical and electrical systems.  We go down the road to Dam Neck, Virginia, for combat direction support activity.  And, then we have a coastal warfare systems site in Panama City.  We do a lot of work in Crane, Indiana.  And, then,  out in California we have Port Hueneme where we do a lot of missile and radar testing.  And, then, also Corona, California, which is in Riverside County, we do a lot of operational analysis on the systems that we have.

Mr. Green: Admiral, that's a wide array of responsibilities.  With that in mind, what have been the top three challenges you face in your position and how have you begun to address those challenges?

Adm. Shannon: Well, I would say the top three really starts first with having a diverse workforce.  That's not just my priority but you hear the CNO talk about that, Admiral McCoy has made that clear that's a top priority in the naval sea systems command.  And, I'll get to back to diversity in a moment.  But, we are also very interested in maximizing total ownership cost.  That, again, is something that's being discussed a lot within the Navy to understand really what our costs are for our ships and to get the most return on investment in whatever we're doing.  And, then, the third thing that I'm certainly a large advocate for is transparency in our product and what we do and open architecture and things like that. 

With diversity really is the priority and  something that were building on right now.  There's a lot of congressional interest in what we're doing to hire our workforce to make sure that our acquisition workforce is robust.  And, that starts with making sure that we have a workforce that represents the people of the United States.  We have a very diverse young workforce, but we don't have a very diverse older workforce.  And, that's because of just the way we hired people over the years.  We really want to bring in more diversity, more cultures, and more innovation.

Mr. Green:.  Well, you have a wide array of responsibilities.  One of your roles is as the surface warfare chief technology officer.  What does that role entail?

Adm. Shannon: That's a great question.  Because, I'll tell you, a year ago, when something called me up and said, surprise, you're now the chief technology officer for the surface warfare enterprise, I had to Google chief technology officer and find out what it is.  Because, it's really nothing that, it's not a term that we typically use within the uniformed force in the military.  And, when I looked up what a CTO was, a chief technology officer, I was happy to learn that there is many different definitions. 

So, that gave me the ability to come up with my own definition of a chief technology officer.  And, what I'm primary responsible is to be the advocate for the surface warfare enterprises, surface warfare community, and work with the chief in naval research who has a large responsibility for science and technology across the entire Navy, not just the surface Navy.  Today, Rear Admiral Nevin Carr is the chief of naval research.  He is a surface warfare officer but he has to look at aviation, he has to look at sub-surface satellite communications - everything. 

So, I'm a fellow flag officer who advocates for the surface Navy, and my role is really to look out way into the future to see that the technologies that are there and try to be a bridge between the operators and the research analysts, the scientists, the technologists, and help a dialog happen about where do we want to take the Navy in the future.

Mr. Green: Sure.  Now, in that role, do you also work closely with folks in industry who might have the same title or have responsibilities in research?

Adm. Shannon: Well, we're not as far along as we should be, is the short answer to that question.  And, one of the things that I found out when I took this job is we did not have that kind of dialogue happening.  A year ago, I spent the first six months probably trying to understand what my role was going to be and making sure the senior leadership in the surface Navy agreed with that.  But, what I've been working on for the past several months is trying to understand where is the Navy putting their money internal to the Navy.  And, then, my plan is in a few months to have an industry day to really be transparent with industry and let industry know, hey, this is where the Navy's putting their money inside the Navy.  It would be a good idea if you were researching things in the same area.  And, then, sharing ideas and sharing technology to really be able to come up with the best solutions.

Mr. Keegan: Could you give us some background about yourself and how your career path led you to become the first chief technology officer for the surface warfare enterprise?

Adm. Shannon: Well, throughout my early career, I was a  below deck engineer who served primarily on destroyers.  Then, as I grew up in the surface warfare community, I got into anti-submarine warfare systems, missile defense systems.  I had the great opportunity to command a couple ships.  Following my command tours, I got into program management where I managed the evolved sea sparrow missile project and took it through its tests and evaluations.  I got involved into the naval integrated FiRe control project and then was lucky enough to be selected to be the program manager for future combat systems open architecture.  And, that all came together to the position I'm in today.

Mr. Keegan: Admiral, you have a robust portfolio, an  import mission.  Could you tell us what makes an effective leader?  And, how has your previous experience formed your leadership style and your management approach?

Adm. Shannon: The biggest thing that you have to do, I think, to lead is to listen.  You have to listen, not just to your people, your subordinates, but you have to listen to your superiors.  And, so, my job is to understand where, what our superiors want.  And, in the position I'm in today that's  primarily listens to the chief of naval operations, and to the secretary of the Navy, and to the Secretary of Defense, and, of course, my own immediate superior, Vice Admiral McCoy.  And, then, I have to go out and listen to the subordinates and understand what their knowledge is and to help focus them and  focus their energy and get them to move in the direction that the superiors told me to move. 

So, as a leader, your job is to lead somebody in a certain direction.  You have to understand the requirement, what is needed, listen to what that need is, and take all those good ideas and point them all in the same direction and get on a path to success.

Mr. Keegan: Is there any particular leaders out there that have informed you?

Adm. Shannon: Well, Vice Admiral McCoy is doing a great job right now of keeping me informed.  But, I would tell you, in this business, probably the person that we often refer back to is Admiral Wayne Meyer, who recently passed away.  He's often referred to as the father of Aegis.  And, it was his idea to build a little, test a little.  And, to really embrace system engineering and to discuss the different trades that you can make to get the best product.  And, to really integrate all your systems so that, that when one system trade is made, that you understood the repercussions to all the following systems.  Admiral Meyer is credited with making the Navy understand that concept, and we still try to build off of that.

Mr. Keegan: Terrific.  What about the Navy's approach to science and technology?  We will ask Rear Admiral James Shannon, commander of the naval surface warfare center, to share with us when our conversation continues on the business of government hour.

Part 2

Mr. Keegan: Welcome back to the business of government hour.  I'm your host Michael Keegan, and our conversation continues with Rear Admiral James Shannon, commander of the naval surface warfare center.  Also joining our conversation from IBM is Kevin Green.  Admiral, could you describe the Navy's approach to science and technology?

Adm. Shannon: Investments in science and technologies are wide ranging, but highly focused on ensuring that the people out there in the fight have the advantage over our enemies in any battle space against all threats.  You'll hear people talking about finding sometimes and saying the term we have to have a fair fight.  When you're really involved with fighting, you don't want a fair fight.  You want that asymmetrical advantage.  And our Navy's comparative advantage to any potential adversary  is our competitive will and our innovative drive.  And, that's where it comes in the science and technology piece.  We continuously operate.  We continuously listen to our operators,  and we try to apply the science and technology that we know well and apply it to whatever systems that we need to improve.

Mr. Keegan: Given the rapidly changing threat our nation faces today in conjunction with the pace of global technological innovation, what are some of the challenges the Navy faces in getting the right technology to our war fighters?

Adm. Shannon: The absolutely biggest challenge is affordability, and I'm sure that's not going to surprise any of the listeners out there.  We are constantly combating the affordability challenge.  And, affordability, though, gets often misunderstood, because sometimes the affordability is driven because the requirement is too great, and the engineers and scientists out there are always going to default to giving you the absolute best solution they can give.  It's not in their intellectual makeup to give you a system that isn't the absolute best.  So, it's imperative that the people that write the requirements and oversee the requirements manage that, such that we can expect exactly what we want.  And, then, at the same time make sure the affordability or the prices come down.  It's, it's a really tough calculus.

Mr. Keegan: Kevin mentioned, in your role as the CTO, collaborating with maybe somebody from industry.  What about collaborating with the other armed services in this regard?  In your approach to science and technology, could you tell us a little bit about that?

Adm. Shannon: We do collaborate with the other services.  And, I would tell you at the working level, it's done much better than at the more senior levels across the warfare centers.  At the deck plate level, as we say in the Navy, we do a very good job collaborating with other services, with academia, with industry.  The tough part gets when you get up to the more senior ranks when money gets involved and people are trying to determine who pays for what.  And, that's been something that I've often try to work on very closely in terms of architecture, and making sure that you have an open architecture and not to worry so much about the cost of it but just to come to agreement on what that architecture is. 

So, in my own role right now, I do a lot with the Kenner IED systems to build, that's to defend against the improvised explosive device threat that is in the current wars that we face today.  I work very closely with all the services, with the Department of Homeland Services, with the FBI, trying to collaborate on the best ideas to meet that threat.

Mr. Green: It's quite clear that the Navy is engaged and deployed globally in pursuit of missions in support of global  stability and the New World order.  What lessons have we learned from the multitude of missions the Navy is supporting today in Iraq, Afghanistan, and even off the coast of Somalia?

Adm. Shannon: Well, we've learned a lot, especially in this era of what we call irregular warfare with this IED threat, the improvised explosive device threat.  You know, that was a threat that was really based off of commercial technology.  And, it's a threat that, it was always out there.  It was right in front of us.  We recently, I think a year ago, celebrated 25 of the cell phone industry.  And, so, it wasn't anything new.  And, I'm sure many of our great scientists and engineers in our  warfare centers knew how that threat could be used against us.  But there was no forum, there was no way to bring that potential threat to our attention until it happened.  So, we were sort of surprised by that.  And, I think in the future, what we have to really learn from the Afghanistan war and from the Iraq war is that we have to understand the commercial technology is out there and how it can be applied. 

Historically, we've already learned these sorts of lessons many years ago.  I always like to refer back to over a hundred years ago the great white fleet was sailing in 1908.  At the same time, you had a couple brothers out there on this thing called a flying machine.  You know, nobody really thought of how to use that really in warfare.  But, by the end of World War I, ten years later, it was definitely clear that you could use it.  But, we never really even understood the power of airplanes until Pearl Harbor was attacked.  So, today, we have the IED.  Twenty years from now, what's the IED going to look like?  We've got to be ready for that.  And, we have to understand the power of that kind of threat and other technologies that are out there.

Mr. Green: Sure enough.  And, you've described the fact that the Navy operates with other services and other partners.  Are there any issues associated with interoperability that your office is engaged with, or your command is working on?

Adm. Shannon: Interoperability is always a very big challenge and we certainly are working on it.  In my specific role as the single manager, one of my additional duties is I am the single manager for the counter radio electronic warfare systems that we use to defeat radio-controlled improvised explosive devices.  I am responsible, regardless of the service  feeling the system, to look at the interoperability and compatibility of those systems with other systems that put out radio waves such as radios, and to make sure that they're compatible and interoperable.  So, we have a process in place to look at that.  And there's a lot of processes in government to make sure we have that sort of thing. 

Recently, the Navy has also reorganized the organization to bring a lot of our electronic systems all underneath one resource sponsor with the new N2N6 organization, which is going to be responsible largely to make sure that the interoperability challenges will be vetted very early in the process and resourced appropriately.

Mr. Green: That sounds like an awfully large endeavor to undertake.  You're describing very significant change across the Navy and, in fact, across the joint technical community.  Are they any other Navy organizations that will be standing up or taking a larger role going forward?

Adm. Shannon: We're still trying to understand what other organizations' responsibilities are going to be in terms of acquisition and requirements.  But, certainly in the new organizational setup, the CNO created something called the Tenth  Fleet.  And, they're going to play a large role in understanding this interoperability challenge.  The reason the Tenth Fleet was chosen, by the way, was back in World War II, we had the submarine threat out there that we were really not very familiar with in how to defeat that challenge.  So, the leadership in the Navy in those days created the Tenth Fleet just to focus on that one threat, and we obviously did well and were able to mature our anti-submarine capability through the decades.  Admiral Ruffet  is doing the same thing in the cyber world and creating the Tenth Fleet to help shape the discussion, shape the requirements, and make sure we require the right things with the new Tenth Fleet he's standing up.

Mr. Keegan: Admiral, you mentioned earlier one of your challenges is the cost calculus.  You also referenced the fact that, you know, anticipating the future.  I was wondering what changes in the acquisition process may be required to facilitate the deployment of advanced technologies in accelerated manner?

Adm. Shannon: Well, that's a really good question.  And, it's... I think this one is right down my alley to answer.  First, really need to cultivate a culture of innovation that's built on collaboration.  That was what the whole open architecture initiative was about.  It wasn't plug and play or getting the standards right, it's like getting people to talk with each other and collaborate on the best ideas.  And, the way we need to do that is to increase transparency in our science and technology investments.  A large portion of our fielded systems have traditionally come from the same DOD laboratories or the same large Department of Defense companies or universities. 

We need to broaden that to bring in many different industries together to make sure we get the right ideas.  We have to protect our investment in basic research.  The numbers I've been looking at show that in terms of research and development investments, basic research has actually gone down where some of our advanced research has gone well.  But, you need to get the basic research and the understanding of the science down for people to be able to mature it to the next level.  And, finally, we really need to develop a more efficient path for technology transition to the fleet.  Some of this acquisition takes way too long, and we don't have the stomach to be able to do that. 

One of the things that we did well, I would say heroically in this current war, is the way we rebounded from the IED threat.  We were able to recognize the threat and then form up very large, both operational communities as well as technical communities, and to be able to come up with systems and field those systems, put the logistics behind them, and really be able to take on that threat.  And, the results were just magnificent, and lots of lives were saved.  So, we were able to do it but it took a lot of commitment and it took some money and it took resources and talent to make that happen.

Mr. Keegan: Speaking of talent, the federal civilian sector of the government is also looking at this acquisition contracting, getting the right people in there, the actual human resources to do this is an issue.  Do you foresee that as a part of the problem in your area?  Do you have a plan to maybe bolster the acquisition workforce?

Adm. Shannon: I don't have a personal plan.  The Navy has a plan to build up that capability.  There's been a tremendous amount of hiring going on to bring in more people as contract specialists.  But, the one thing in contracting.  It takes time and experience, and you just can't come out of school and expect to be a great expert negotiator in contracts.  So, we have to build that force.  We have to maintain that force and not lose these people.  So, we have to make sure we keep them in the Navy and educate them along the way.

Mr. Keegan: How is the Navy fostering a culture of innovation?  We will ask Rear Admiral James Shannon, commander of the naval surface warfare center, to share with us when our conversation continues on the business of government hour.

Part 3

Mr. Keegan: Welcome back to the business of government hour.  I'm your host Michael Keegan, and our conversation continues with Rear Admiral James Shannon, commander of the naval surface warfare center.  Also joining our conversation from IBM is Kevin Green. 

Admiral, you mentioned one of the changes needed in the Navy's approach to science and technology is to build a culture of innovation based on collaboration.  What does the Navy need to do in order to forge this culture of innovation?

Adm. Shannon: Well, first, you know, I think what we always need to remember and remind ourselves every day that the Navy needs to remain flexible and adaptable to change.  Whenever you look at history and you look at navies that didn't succeed and are no longer maybe with us today, it's because they did not remain flexible and adaptable to change.  That's, the good news is that's part of our Navy.  We tend to always come up with innovative ways that are not written in the book, and I think we need to maintain that sort of thing.  But, yesterday's requirements were fairly stable and understood.  We understood the threat.  We knew how to deal with it.  It was a single threat, in many cases monolithic.  There was clear lines of control and accountability.  But, today, those kind of options are relatively few. 

And, I think what really need to understand is watch what's going on with the rest of society.  Because the Navy is a microcosm of society, and we need to, not be so rigid or shouldn't be rigid with our military view of things and really see how the society is working.  And, you see that with social networking.  You know, things like Facebook and blogs, and that type of communication is starting to creep into our workplace.  And, I think it's a very good thing because it's  sharing ideas.  It's a good opportunity to be innovative and to figure out things before you actually have to bring them up for a decision.

One of our commands out in Port Hueneme is actually creating their own internal Facebook kind of page just building off of a good idea.  But, I would tell you all of our warfare centers are trying to figure out the best ways to do that.

Mr. Keegan: If you don't mind me asking, we have  interviewed Admiral Allen, Thad Allen, of the Coast Guard, and he is really a champion of social networking and has the iCommandant blog.  Do you have anything similar to that?

Adm. Shannon: I'll tell you, I am sort of concerned about some of the things that I do, just like any parent that I see on Facebook.  And, before I start applying myself to that technology, I want to make sure I understand it fully.  What I do like, though, is the energy that I see on it.  And, I like the fact that it's fairly open and there's a way that you can control the information.  I would say that Admiral Allen is, you know, he is a great leader and he is leading the way, and guys like me need to follow him.  And I need to figure out how to do it better.

Mr. Keegan: Well, you mentioned earlier that sort of visionary role of a chief technology officer.  Would you tell us what role that part of your responsibility plays in building the  culture of innovation?

Adm. Shannon: As far as the chief technology officer, I think what my main role is to get people out of their comfort zone.  That has been one of the ways I've approached it recently.  We have some great scientists, some great engineers in the warfare center family of commands.  But, they've been fairly comfortable in how they've tried to solve problems.  And, they've always talked to the same people. 

What I'm trying to do is to stretch that a little bit, to get beyond their comfort zone, and to challenge them to share their ideas with other people than they may have, because, when they do that, their ideas are going to be challenged.  And, maybe the things that they think are a great idea are maybe not so great.  But, when you bring all the ideas together and you listen to what people have to say, I really think we will get a better product in the end.  So, I'm pushing that.  I'm pushing people beyond their comfort zone.

Mr. Green: Well, you're clearly very close to your customers who encompass the entire Navy and other partners within the Department of Defense as well.  So, how do you get an organization the size of the Navy, I mean, well beyond the technical community, to change the way that it thinks and behaves to forward or to improve innovation and innovative processes and approaches?

Adm. Shannon: One of the best ways we've been doing, and we've been doing this for a while, is education.  Is, get out there and make sure that we get the information out there that we want people to behave the way we want them to behave.  We have to reward people for doing a good job.  We have to reward  people when they are paving new ways of doing business.  And, those are the ways I think we need to get there. 

Mr. Green: It's often been said that innovation and technology need to move away from the silo model and toward a more collaborative and multiplatform model.  What forms of collaboration need to happen to drive this kind of innovation?

Adm. Shannon: Well, the silo model is a traditional top-down approach.  And, if you want innovation to work, I think  the way you need to do it is you need to work from the bottom up.  Diversity in our workforce is the way we need to do it.  Open architectural implementation is a big part of that.  And, all open architecture means is not being a closed architecture.  It means sharing ideas.  It means allowing people to see what's going on. 

One of the things that we have not done well in the Navy or in government is control the data, though.  We have to make sure that the data that we buy, we share throughout industry, throughout academia, with other services.  And, controlling that data is something we haven't done well.  So, we have to understand the data we have and figure out a way to make sure it's available to everybody out there.  We have to improve the government contractor relationship by making people be more accountable to each other.  So, it's not just a one-way street here.  The government has to be accountable to the industry as much as industry has to be accountable to government. 

When I speak to people in industry, they sometimes feel like it's only the government firing the questions at them and blaming them for whatever product is.  The government has to stand up and be accounted for as well.  I think we just need to share ideas and technologies that in the past were held as proprietary, because it was easy to say they were proprietary.  You know, some things we need to challenge as being whether really proprietary or not. 

Mr. Green: Well, as a defense technology leader, I think it's fair to say that you're one of our leading subject matter experts on open architecture.  In your view, how well has industry responded to your call for more of a technical approach that folds more into the open architecture model?

Adm. Shannon: I think that's a really great question.  And, how you answer it depends on where you sit in this play we call open architecture.  Small businesses have aggressively come out and addressed open architecture, because they are looking at this as an opportunity for them to be able to play without having a larger company suck them in and tell them how to do the business.  Small businesses, by their nature, really want to be independent.  Then, there's also companies that have not traditionally played in defense industry are looking at opportunities to compete and they're looking for fair competition.  The only way that can happen is if they can have the same access to that information that, in the past, may have been shut out to them.  And, then, there's the traditional partners that we have within industry.  I think, to a large measure, I give them credit for listening to us and trying to figure out really how to address this openness.  At the same time, they don't want to lose their proprietary goods because they have a lot of investment in those sorts of things. 

So, we're working really closely with them to try to understand, you know, how we can branch out, how  we can be more collaborative.  At the same time, it's very important, in my point of view, that everybody that's a player   has the ability to make a profit, to be able to stay in the game as long as they want to stay in the game. 

So, not everybody is equally addressing the open architecture initiative.  It depends on the business model for each industry that's involved.  The old way of, if you've got a niche product keep everybody out, still applies if that's your business model.  What we're most interested in in the Navy is getting the best ideas, getting the collaborative approach.  And, the other thing you've got to recognize the billions of dollars of taxpayers have invested in in the products that we buy.  We ought to own some of it.  We ought to be able to claim that we own those, that data because we're the ones putting the money behind it. 

So, that's one of the challenges I have in some of my conversations that I have with industry members.  That's one of the things I like to bring up is we ought to get something out of it.  Now, on the other hand, government has not done a good job controlling that data and controlling that information and making sure that we share it with all vendors who are qualified to do that kind of work.  There's a lot of responsibility to be shared but it takes a lot of energy and it takes everybody participating and not trying to go back to the old way of doing business.

Mr. Green: That's a very powerful statement, and you really seem to believe that collaboration is an important element of innovation.  Within the surface Navy, how is that community moving to address collaboration and innovation as a cultural issue?

Adm. Shannon: Well, we regularly meet on the issue and what my role as a chief technology officer in the surface warfare enterprise is, I'm really working with the resource sponsors, in this case Rear Admiral Frank Pandoff, who is responsible for resources in the surface Navy.  And, he leads what's called a future capabilities team.  And, we meet regularly to talk about the different things that we want to invest in and understand how we can link those investments to the strategy that he's trying to follow that the CNO is putting out.  So, facilitating discussion is really the main thing that we're looking at.  We're really trying to understand the total ownership cost; what's difference between readiness and the actual cost of the systems that were buying.  So, it just is a lot of discussion.

Mr. Keegan: Just stepping back a bit, we talked a lot about technology, science and research, and collaboration, but also innovation.  I was wondering, before you assumed command or as you anticipated assuming command, was there anything you did to kind of look at the idea of innovation and how, are there any lessons learned from different industries, the federal civilian space?  Did anything inform you as you took over your current role?

Adm. Shannon: I think we're living in a great age of innovation today just because of what we're all experiencing with the Internet.  You know, just 10 years ago we didn't have the same power of the Internet, and 15 years ago, a lot of people didn't even know what the Internet is.  So, we're still in the discovery phase, I think, in understanding this kind of innovative power that's out there.  And, if our head was in the sand and we didn't take advantage of it, then shame on us. 

So, what I've learned is what we have all learned is to be open-minded to different ideas.  Ideas that are not typical within your own organization.  Listen to what people's ideas are, and see that there's something behind there and see if you can use them.  What has changed from days gone past is we are more open-minded today.  We used to only have one way of doing business.  Tradition was one of our major core values.  I would tell you today tradition is not a core value.  Tradition is very important, but it's not a core value of our organization.  So, because we have to be adaptable and flexible to that kind of change.

Mr. Keegan: Well, most achievements in government, especially in the armed forces is not a solo act.  Would you elaborate on your approach to empowering your staff, the folks under your command?

Adm. Shannon: Yeah, it's again a great question.  My thing is to always delegate down to the lowest level.  And, just a short anecdote on that.  Recently, I had to go away for six weeks of training to what's called capstone training.  It's training required by law for flag officers and general officers to learn more about what's going on in the military organization.  So, for six weeks I was away.  And, when I came back, I realized nobody missed me.  Okay?  So, the fact is we have a very good organization in the warfare center and everybody knows how to do the job for the person one up and one down.  And, we empower people by trusting people.  And, that's the biggest thing you have to do in any organization is build trust.  We build trust internal to the warfare center, we build trust across the whole naval sea systems command.  And, whenever that trust breaks down, that's when you find we have other problems.  So, you have to always build trust.

Mr. Keegan: What does the future hold for the U.S. Navy science and technology research?  We will ask rear admiral James Shannon, commander of the naval surface warfare center, to share with us when our conversation continues on the business of government hour.

Part 4

Mr. Keegan: Welcome back to the business of government hour.  I'm your host Michael Keegan and our conversation continues with Rear Admiral James Shannon, commander of the naval surface warfare center.  Also joining our conversation from IBM is Kevin Green.

Admiral, let's transition to the future.  What new technologies or trends in information technology do you see the Navy adopting in national security systems to benefit the future?

Adm. Shannon: The trend in technology has a lot to do with computers and the computing base.  And, in terms of national security and defense, the term you're hearing a lot is called cyber war.  We really need to get our hands around that.  And, that was something I alluded to earlier in the radio show when we were talking about Tenth Fleet and what they're trying to do there.  But, we really know, I think, in the future that personal computers are going to become smaller, more people are going to have access to a computer, and then you hear that term cloud computing going on where computers will be less of a tool and that will be more of a portal to the information that's out there.  And, controlling that information and the volume of data and information is something that really nobody fully has their  hands around and being able to control that value will be really important. 

So, what technologies are going to be out there to power those sorts of things and how can we use that technology in warfare systems?  You have to look at power and electricity.  How are you going to make that system work?  Is it going to be used solely with batteries or are we tapped out on batteries and we have to look at other forms of energy, such as the sun, or heat, or just motion?  And, then, when you look at how you can use it to your advantage, how can a potential adversary use that against you?  Such as motion being used to power a system to defeat you.  It's passive all the time and all of a sudden your motion make something happen.  We're going to have to really get our hands around that type of thing. 

And, of course, we have to look at energy in the form of conserving energy.  That's a major initiative in today's Navy.  I referred earlier in the show about great white fleet.  I think we're going to hear something about the great green fleet in the future with Secretary Mabus.  He's really challenged us in our community to come up with ways to conserve fuel and energy, because the cost of fuel and energy is so great that it's hurting our ability to get underway and to train.  As anyone who's gone to sea knows, you have to be at sea to really become experienced at that business.  You can't be good at it if you're always tied up.  So, we have to figure out ways to be efficiently get our fleet underway to do the missions that we want to send them on. 

There's a lot of challenges there.  Autonomous systems.  You see that in today's fight with what's going on with unmanned aerial vehicles.  Other autonomous vehicles, robotic systems.  We're doing a lot in that now but we had to look at nanotechnology.  And those are all the areas that where I'm trying to shape the discussion.

Mr. Keegan: Can I pick up on the green aspect?  Are you folks adding that to your portfolio specifically or is it just something that's understood in the way you operate?  That you're going to go in that direction?

Adm. Shannon: On no, it's definitely in our portfolio.  The big thing going on today up in Philadelphia at our warfare center up there is the electric drive.  We're looking at how to apply electric drive on our ships.  We'll be doing that in the not-too-distant future and it's a way to cut down on fuel.

Mr. Keegan: The evolution of war fighting has undergone historic shifts within the last decade alone.  What other shifts you anticipate in the military in the next decade?  And how do you envision your role in office shifting to adapt?

Adm. Shannon: Well, I think we're in the right place in the warfare centers in adapting to this.  One of the things that we're really looking at is hypersonic technology and directed energy systems such as lasers.  Certainly, there's been a lot in the press over the past 10 years or so with regard to directed  energy and how to use that, but, we need to understand it better.  I think technology has really gone fast and far.  We're seeing where we can actually start applying directed energy in some of our systems.  But, it's all about speed in this business.  One of the acronyms I learned as a young officer was called MATES, and that stood for mission, asset, threat, environment, and speed.  And speed is life in our business.  So, how fast we can come up with this technology, how we can apply to do things faster is really the idea that we need to understand.

Mr. Green: With respect to the people in the Navy who conduct research and development, science and technology, the population has been shrinking since mid-1990s.  Do you see the trend reversing, and, if you do, why?  And, to that end, what steps are being taken to attract and maintain a high-quality technical and professional workforce?

Adm. Shannon: I don't know if the trend has yet reversed.  I think the trend is stabilized, though, in that perhaps we're at that tipping point.  Not quite tipped over yet.  And, I think a lot of it has changed just due to commercial technology and social networks.  More people seem to want to get into the game.  They want to get into the service.  The current young generation sees value in government service, they want to live a life of consequence, they understand that they have a voice in government, they see equal opportunity in our employment and working with us.  So, right now government we have a very aggressive hiring process going on.  Recently, we went up to Detroit to hire some of the engineers out there that were looking at losing work.  We're bringing in a lot of talent from Detroit and at the mid-level because you just can't bring everybody in at the younger level.  You've got to bring some people in at mid level who have experience in other areas that can be applied to our systems. 

We had a major hiring event out in Corona, California, where we brought in lots of people there, over 1000 people attended, and the talent is just simply amazing.  So, I think we're starting to see that tipping point and we're going, the trend's going to reverse itself.

Mr. Keegan: Admiral, for those young system engineers and architects just completing their education who have an interest in the military or in public service in general, what advice would you give them in pursuing a career in public service or the military in science and technology, or, ideally, all three?

Adm. Shannon: Well, first of all, service doesn't apply to the military, and I always like to remind people that you can serve in many different ways.  I've said this before publicly, but I do even tell my own kids this.  It's important to serve because you're giving back.  But, the great thing about government service is when you are in government service, you are living a life of consequence.  The decisions you make will not just only impact the organization that you're in, it will impact everybody in the nation and possibly the world.  And,  even the young people that are making decisions can make decisions that are very consequential and very important to what this nation has to offer. 

So, I always like to tell people that service is not about them.  It's about giving back, and it's being a part of something bigger and feeling or being on a winning team.  And, that's purely an American viewpoint.  But, that's one of the things I feel in the United States of America that we are a winning team and everybody wants to be a part of that.  When you serve in government, you're guaranteed some sense of purpose, some sense of duty, a real sense of honor.  And, you get to follow the path of other great Americans that we've studied in history.  It's a very much exhilarating and it's what Teddy Roosevelt spoke about when he spoke about the man in the arena.  You're in there, you're doing something, you win some battles, you lose some battles, but you're in there  doing the battle, you're not sitting on the sidelines watching what's going on.  So, that's what this kind of service offers you.

Mr. Keegan: That's wonderful advice.  I want to thank you for your time today, but, more importantly,  Kevin and I would like to thank you for your dedicated service to our country.

Adm. Shannon: Thank you very much.  You know, it's really a great opportunity for me to be able to speak to your listening audience and explain what the naval surface warfare center is all about.  We go back a long time.  A lot of people think the warfare center is just one location in Dahlgren, but, as I  mentioned in the earlier part of the broadcast, we're all over the country.  And, we are a legacy of the Navy from back in the 1850s and 1860s when we first created some of our proving grounds in Annapolis and Indian Head and Dahlgren, and then through the two great wars in the last century it kind of got a lot larger and created these laboratories to the early 1990s.  We actually created the warfare centers in 1992. 

And, we've created them to become more efficient and to reduce costs, to get our control around the total ownership cost.  Even back in 1992, that was talked about.  And, when you look at the indicators of what we've accomplished between 1992 and today, our overhead costs in the warfare centers have gone down by 30 percent.  Our productivity has increased by 30 percent.  We have close to 20 percent more scientists and engineers per capita in our work force.  The cost, the hourly cost of labor is less today than it was just a few years ago, because there's so many efficiencies in what we're doing.  We're getting more bang for the buck, or return on investment, less direct labor hours spent on overhead, more spent on actual labor.  And, that's because of the great ideas.

Whoever was leading the Navy in 1982 when they said let's create this warfare center enterprise, it was a good decision.  Because, the total ownership costs have come down as a result of them.  So, I like to be able to tell that story.  We've got a lot more work to do.  We have a lot more efficiencies to find, but we have a very spirited and innovative workforce who are really the intellectual capital of the Navy.  And, they're out there doing their best every day, not just for the Navy today, but building the Navy of tomorrow.

Mr. Keegan: An important mission.  This has been the business of government hour featuring a conversation with Rear Admiral James Shannon, commander of the naval surface warfare center.  My co-host has been Kevin Green, IBM's defense industry leader.  Be sure to join us next week for another informative, insightful, and in-depth conversation on improving government effectiveness.  For the business of government hour, I am Michael Keegan.  Thanks for joining us.

Originally Broadcast September 13, 2008

Washington, D.C.

Announcer: Welcome to The Business of Government Hour, a conversation about management with a government executive who is changing the way government does business. The Business of Government Hour is produced by The IBM Center for The Business of Government, which was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about The Center by visiting us on the web at businessofgovernment.org.

And now, The Business of Government Hour.

Mr. Morales: Good morning. I'm Albert Morales, your host, and managing partner of The IBM Center for The Business of Government.

The U.S. Department of the Treasury acts as steward of the U.S. economic and financial systems, including the role of the U.S. as an influential participant in the international economy. Treasury also performs a critical and far-reaching role in national security, coordinating financial intelligence, targeting and imposing sanctions on supporters of terrorism, and improving the safeguard of our financial system. Managing these complex tasks requires expanded capabilities in the pursuit of an effective resource management and workforce strategy.

With us this morning to discuss her efforts in this area is our very special guest, Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer at the U.S. Department of the Treasury.

Good morning, Rochelle.

Ms. Granat: Good morning.

Mr. Morales: Also joining us in our studio is Solly Thomas, associate partner in IBM's Human Capital Practice.

Good to see you again, Solly.

Mr. Thomas: Good morning, Al. And good to see you again, Rochelle.

Mr. Morales: Rochelle, many of our listeners will be familiar with the Treasury, but let's start by taking a moment to provide them just a quick overview. Could you tell us a bit about Treasury's history and its mission today?

Ms. Granat: Sure. I actually enjoy talking about Treasury's history, because Treasury was one of the first four original departments of the Executive Branch of government. And looking at Treasury's history is really an opportunity to look at how the growth of the domestic functions of government developed over the years, because many of the functions that today are in other agencies actually grew out of Treasury. Treasury's mission has always been around the public purse: managing the money resources in the United States as its primary function. And all of the functions it has today in some way tie to government finances and the economy.

The basic functions of Treasury -- you recited some of them, but it's managing federal financing; collecting the taxes and duties and monies paid to the United States; paying all the bills of the United States; producing currency and coinage; managing the government accounts and the public debt, supervising national banks and thrift institutions; and advising and establishing domestic and international financial policies and economic and trade and tax policy. So that's quite a hefty mission and a varied mission, and involves many different job skills and job sets, from manufacturing to accountants to tax attorneys and attorneys in many different functions.

An interesting point in the history, of course, is fairly recent, and that was that the creation of the Department of Homeland Security in 2003 resulted in Treasury losing four of its enforcement bureaus. Treasury did have four bureaus that originated in Treasury: Customs, Secret Service, ATF, and the Federal Law Enforcement Training Center. There actually is a money resource aspect to all of those that some people forget. The U.S. Secret Service was actually established to deal with counterfeiting and to protect our currency and coinage. And Customs, of course, was collection of duties, as was ATF, was revenue-raising.

But with that change, that was a significant change for Treasury, a new enforcement responsibility grew and developed, and that was around terrorist financing and financial intelligence.

Mr. Morales: So it sounds like the mission continues to broaden at Treasury. So Rochelle, just to put a finer point on the scale of this broad mission, could you provide us some specifics in terms of how Treasury is organized, the size of the budget, and number of full-time employees of the Department?

Ms. Granat: The Department has over 100,000 employees. The bulk of them are the Internal Revenue Service employees. We have among the permanent staff 114,000 employees. And they're working across the United States, and we also have folks posted in 16 countries and in 3 U.S. territories, so we really do have an involvement throughout the world.

The budget is, combined, roughly $16 billion. A major portion of that is the Internal Revenue Service, which is about $11 billion. The $16 billion figure includes our bureaus that are non-appropriated bureaus: the Mint, the Bureau of Engraving and Printing, Office of Thrift Supervision, and the Office of the Comptroller of the Currency fund their operations through revenue-raising. The bureaus of the Treasury operate independently, with Headquarters exercising oversight and policy over the bureaus. And they are organized around their functions. We do have -- a piece of the former ATF is now the Alcohol, Tobacco, Tax, and Trade Bureau. It's one of our smallest bureaus.

We, of course, have the manufacturing bureaus: the Bureau of Engraving and Printing and the Mint. We also have two fiscal service bureaus. The Financial Management Service, they pay our bills, issue our checks. When we get a paper check, it's from the Financial Management Service. When we get an electronic payment or Social Security payments or tax refunds, those are from the Financial Management Service. The Bureau of the Public Debt is the second fiscal service bureau, and they track the public debt, they issue and do transactions in government securities which represent the debt.

We have the two banking regulators: the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

Mr. Thomas: So with that overview of the Department, Rochelle, could you tell us more about your role as the Deputy Assistant Secretary for Human Resources, and as the Chief Human Capital Officer at Treasury? What are your specific responsibilities and duties? And how does your program support the overall mission of the Department?

Ms. Granat: Well, my responsibilities have different aspects. One major aspect is Department-wide policy and oversight around human capital programs, to include EEO and diversity. When I talk about human capital programs, I'm also talking about the EEO and diversity programs as well. Each of our bureaus have human capital offices and EEO offices that operate independently, but through our policy and oversight. There are certain functions that do have to come up to the departmental level, and they would come up to my office.

In addition, I have a responsibility that's a little bit anomalous or unusual, and that's oversight of the D.C. Pensions Program, which administers the Department's responsibilities for certain pension programs of the District of Columbia for teachers, police, firefighters, and judges.

I exercise that responsibility through a collaborative effort with the human capital officers at the bureaus. I chair a Human Capital Advisory Council that involves the leadership of those offices, the EEO office and the HR offices at the bureaus.

Mr. Thomas: Rochelle, regarding your responsibilities and duties, what are the top challenges that you face in your position, and how have you addressed these challenges?

Ms. Granat: Well, I'd say the top challenges are ones that I think most agencies share. Certainly recruiting and retaining the talent we need to accomplish our mission is huge, especially in the face of the changing demographics and the realities of an aging workforce. In that light, succession planning and knowledge transfer are also very significant challenges.

And I'd say the third challenge influences both of those, and that's really a challenge of resource limitations. We are all operating under very tight budget constraints and the challenges are significant, and we really need to be creative in leveraging across the Department our efforts to develop new initiatives to tackle some of these challenges.

Mr. Morales: Now, Rochelle, I understand that your history at Treasury goes back to about 1985. I believe you started at the Bureau of Public Debt. Could you tell us a little bit about your career path? How did you get started in public service?

Ms. Granat: Well, I actually started while I was in law school, and I do have a little less traditional path to a human capital occupation. In law school, I was a law clerk, working part-time. One of the reasons why coming to law school in Washington was attractive to me was that I was interested in public service. I was interested in public policy. And soon after finishing law school, I did move from the Department of Labor to the Bureau of the Public Debt, which is, as I mentioned earlier, a bureau of the Department of the Treasury.

And over time, I developed a concentration, and my work was largely around personnel and labor relations, EEO, all those areas of the law, as well as other sort of mission support, general law functions.

I really developed an interest in not just the legal issues, but really the policy issues. And the nature of the way in which one works as what I would call in-house counsel in an agency is really a collaborative relationship with your clients and working together to resolve problems, to avoid problems.

I actually spent a little bit of time -- 2-1/2 years -- at the creation of the Transportation Security Administration. I went over in the Chief Counsel's Office. And one of the attractions in taking that opportunity was what it stood to offer in terms of starting an organization from the ground up and working to develop a new organization, develop policies.

But I always wanted to look for and did look for an opportunity to step outside of the legal office and work on the management side, in June of '04, when the director of the D.C. Pensions Program was contemplating retirement and encouraged me to come back and become the director of that program. As I was back at Treasury, I was being increasingly brought into things within management but outside of the Office of D.C. Pensions. And when the Chief Human Capital Officer and Deputy Assistant Secretary position was vacant, I was asked to step in in an acting capacity, and did that and realized that I enjoyed it quite a bit.

Mr. Morales: Great, great. So as you sort of reflect on all of these experiences going back to your clerkship, what has shaped your leadership style and perhaps influenced your management approach today?

Ms. Granat: Well, I would say that the role I played in a significant aspect of what I did as counsel was really an advisory, collaborative member of a team with non-attorneys, with the client and with program managers. And I think that really fostered an appreciation and a management style and a leadership style that really was collaborative. And I see that as a strong aspect of my leadership style, that I really believe strongly that we solve problems best when we recognize and respect the expertise that a diversity of people bring, and that we work together to solve problems. I'm very much not a command-and-control leader, and I think that much of what I learned and what I think of being good counsel shaped that leadership style in a different role.

Mr. Morales: Great.

What is Treasury's human resource strategy? We will ask Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer at the U.S. Department of the Treasury.

Also joining us in our conversation from IBM is Solly Thomas.

Rochelle, I want to spend some time talking about Treasury's human capital strategy. Can you tell us a bit about your four human capital strategic goals, and how does this strategy align with and support Treasury's broader mission, goals, and objectives?

Ms. Granat: Well, we're actually at a transition phase. Our human capital strategic plan covers the period 2005 to the end of this year. We actually are in the process of issuing our new human capital strategic plan that is a follow-on to the new department strategic plan, which was issued last year.

And there were four key goals: organizational effectiveness, recruitment and diversity, employee retention and employee satisfaction, and technical skills. And what we're talking about with respect to technical skills is enhancing workforce capabilities to support the use of current, new, and evolving technology. So we're really talking about making sure our organization is aligns its human capital plans with the strategies and systems to achieve organizational effectiveness in the mission of the agency.

And a key aspect of that is obviously being able to recruit the right people at the right time with the right skills, and at the same time, employee retention and employee satisfaction is critical. It's great if we can recruit the people and get them in the door, but if we are not growing and developing them and doing those things to ensure engagement and satisfaction, we're not going to keep them. And that would also make it more difficult for us to recruit new employees, because our best recruiters are our current workforce who say this is a great place to work.

Mr. Morales: Sure.

Ms. Granat: Last year, the Department issued its new departmental strategic plan, and a major goal in that plan is management and organizational excellence. Human capital is a major, major player in that goal. And without fulfilling that goal, we can't accomplish the key aspects of the strategic plan, which are all mission -- those remaining three aspects are mission-driven.

In developing our revised human capital strategic plan, which would run from this year to 2013, goals slightly revised, but not dramatically. One is broaden and diversify the talent pool. And we're talking there about creating effective recruitment strategies and utilizing all available flexibilities to attract a diverse pool of highly qualified candidates. Again, developing and retaining the workforce; it's going to be a constant. Making sure that we're effectively managing and utilizing human capital. Again, that's really focused on organizational effectiveness, through enhanced employee engagement and supporting and leveraging the Department's workforce.

And then the one goal that is new and actually grew out of efforts in the last year around our human capital operating plan, which we will -- as of this fiscal year, our intention is every year to have an annual operating plan that is based on the strategic plan. And in that operating plan for Fiscal Year '08, we had a goal and strategy around it to really transform the human capital occupation. We need to develop our human capital practitioners as strategic business partners. We need to move away from the focus on transactional processing, and you always have to do that. Hopefully, technology is increasingly making that easier, but we're moving to shared services for those types of functions.

And what's really critical if human capital is going to be at the table with the leadership of the agency in ensuring that our human capital strategies are aligned with our mission and our goals, we really need to be business partners and be able to converse and strategize and come up with solutions as real business partners.

Mr. Morales: Great. Now, I also understand that you've defined some human capital and business drivers that will shape the future. Could you tell us a bit about these drivers? And to what extent does cross-bureau coordination play into your plan going forward?

Ms. Granat: Well, the drivers are really probably the drivers that are facing most agencies. One key one is modernization. It's the recognition that we are dealing with increased use of constantly changing and evolving technology, and to really look at revising our business practices and obtain the necessary skill sets to deal with the benefits of this new technology.

Another business driver is the critical importance of customer service expectations and public scrutiny. Thirdly, it's the need for efficiency and accountability. And accountability for results has been a major driver in the last many years, most prominently under the President's Management Agenda. The PART exercises. So it's really driving a focus on results and performance, changing to a performance culture.

And then finally, it's dealing with continuous change. Every day, we face changes in our business requirements because, simply, as we know today, market changes and world events that affect what we need to do and the skill sets we need.

Mr. Morales: So given the complexities of the Treasury Department, which we talked about in the first segment, how does your organization evaluate the HR field performance and drive best practices across the entire HR community? And specifically, what steps are you taking to ensure that policies and procedures are implemented and monitored across such a vast and complex organization?

Ms. Granat: There are several ways in which we evaluate how our human capital programs are operating and how they operate within the bureaus. And as I think I've alluded, each of the bureaus is its own organization and its own culture and have their unique needs given the nature of the particular missions of those bureaus. So there's not a one-size-fits-all answer to a lot of things. But that said, we do evaluate bureau performance and effectiveness in human capital areas in several ways.

We do have a series of metrics that are developed based on the human capital strategic plan, an outgrowth of the President's Management Agenda, as well as our human capital system for accountability that was tied to our human capital strategic plan. And also, the Federal Human Capital Survey. The metrics that are involved there are -- measuring the closing of skills gaps in mission-critical occupations, gaps in leadership positions. We look at closing resource gaps. We look at assessing employee satisfaction through the Federal Human Capital Survey and other tools. We measure the time to hire, et cetera.

In addition, there are any number of ad hoc ways that we get a handle on how well our programs are running at the bureaus. And that's because of the relationship we have on a day-to-day basis with those offices, they look to us for policy guidance. They will call us for help in resolving unusual issues in problem cases. There's certain things that need to come to us for approval, some things that need to come to us before we go to OPM. And that gives us significant insight into how those programs are running.

There are some very formal ways in which we are able to measure the effectiveness of these programs, and one of those is our accountability program. We are now conducting independent audits of the programs at the bureaus, a few each year. We're measuring against the human capital accountability and assessment framework. And there are a series of areas in which we are measuring program effectiveness based on OPM standards in that area. We've completed several of those audits, and we will be expanding those audits in the future to also include the EEO programs.

Mr. Thomas: Now I want to switch gears for a minute to have you talk about workforce planning. Could you tell us about your efforts to enhance and institutionalize workforce planning within Treasury? And could you also elaborate on your workforce plans and how Treasury has addressed closing skills gaps in the mission-critical occupations?

Ms. Granat: Well, workforce planning is an extremely broad term. It can be done in many different ways, and certainly in a combination of ways. It certainly involves an understanding of what the workforce requirements are. It involves assessing your current workforce and where their competency gaps are, where basic resource gaps are. We have a workforce analytics tool that has been able to give us exact numbers on employees in mission-critical occupations, forecast attrition, and that allows us to strategize on how and where to find new employees and how to focus our efforts around which mission-critical occupations at which levels. And also, it focuses us on what internal training or re-training we need to do with our existing workforce.

It also informs what tools we might need in that workforce planning effort, such as strategic use of voluntary early retirement authority and incentive payments, where we see that the workforce restructuring really requires the elimination of certain positions. And we always are looking to avoid a reduction in force, and so we really need to use those authorities strategically and reduce involuntary separation actions.

We also need to, in workforce planning, strategically use some of the flexibilities that are available in recruitment. A lot of those flexibilities involve monetary resources, and they may not necessarily be able to be used across the board.

In closing skills gaps, we've focused significantly on mission-support occupations. Those exist in all of our bureaus. They're the common areas, especially around IT and procurement specialists. But then some of our bureaus have their bureau-unique, mission-critical occupations that have significant challenges. In IRS, we're talking about tax resolution representatives, for example.

Mr. Thomas: Rochelle, a recent global human capital study conducted by IBM showed that over 75 percent of the human resource executives interviewed believed that they are having difficulty developing future leaders. Can you talk about some of the efforts of Treasury to ensure continuity of leadership through succession planning and executive development?

Ms. Granat: Sure. One of the major focuses of our -- as I mentioned, we have an annual human capital operating plan. And one of those goals is developing talent. And a major aspect of that is around leadership skills and leadership development, and ensuring that we have brought up through the organization future leaders. And one of the things we've learned is we don't reach down early enough in employees' careers to develop those leadership skills. It shouldn't be the case that someone's going to their first significant leadership development program when they are in their 25th year of service, especially given the current demographics and the realities of our aging workforce.

So we do have an effort underway to develop a department-wide leadership development model that would have core aspects to it, and then obviously each bureau has its own unique needs that would go around that. A number of the bureaus have candidate development programs. The IRS has a robust leadership development program that has many different levels starting much earlier in folks' careers, and they have a very important candidate development program. And much of that is driven by its size and its critical needs. We really want to use the measuring of leadership skills gaps to drive the development of new efforts around leadership programs to ensure that we're able to close these gaps.

Mr. Morales: Great. What about Treasury's best place to work initiative? We will ask Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer, to share with us when we return to the conversation on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer at the U.S. Department of the Treasury.

Also joining us in our conversation from IBM is Solly Thomas.

Rochelle, as you know, employee feedback can be a very valuable tool for understanding the work environment. Could you elaborate a bit on the Best Places to Work Initiative and the annual employee survey? How have you implemented any of the insights that you've gathered from this survey?

Ms. Granat: It was really driven in part by the recognition that if we are going to attract and retain the talent we need to accomplish our mission, we really need to focus on employee engagement and employee satisfaction. Treasury really needs to be one of the best places to work, and that is a huge selling point for agencies who rank high on the Partnership for Public Service's best places to work rankings.

Based on the 2006 survey, Federal Human Capital Survey upon which the rankings are based, in the 2007 rankings, we were 14 out of 30, and we want to get into the top 10. The Partnership for Public Service was very interested in helping agencies make improvements, and Treasury's quite eager to work with the Partnership. And the Partnership did an analysis of the results of our 2006 survey.

And they assessed where did we score well and continue to score well on, build on those strengths; and where was the area on the survey where if we could improve in our scores in those areas, we would make a significant difference in our overall score. And what they concluded was the area we had some weakness was the area that's referred to as "leadership effectiveness." And that doesn't mean that our leaders aren't effective. But what it means is in those questions around the survey that go to issues around how do employees perceive the way in which their senior leaders -- not their immediate supervisors, but their senior leaders -- communicate with them, share information, value their input, and things like that, we didn't score quite as well as we might. And so we developed a work group that involved folks from across the Department, especially those bureaus that scored perhaps not as well as other bureaus, and engaged this task force in developing a plan around the best places to work, and focusing largely, not exclusively, but largely around those leadership effectiveness issues.

There were some key aspects to the program. One was the workforce needs to know that we take these surveys seriously, and that we learn from the information they provide, and we work to improve in those areas where we need improvement and build on the positive aspects. And each bureau developed action plans around those areas that needed particular work. And we also convened focus groups of managers and focus groups of line employees. And there were facilitated discussions around key questions that sort of drove at the root causes for the perceptions around leadership effectiveness.

One of the areas around leadership effectiveness that's key is that things get communicated to the workforce, that lines of communication throughout the organization, at all levels of the organization, are sound.

So some of what the work groups are doing is developing tools around that, including work on a video, on new orientation materials that really focus on the organization mission. We've done that a lot in our performance management system in ensuring that they understand how what they do supports the mission. It's helpful for them to understand and appreciate what others in the organization are doing.

We also held a Best Places to Work Symposium, which was attended by the senior leadership across the Department. It was also simulcast and videotaped so that employees could see it and they could see it on their desktop computers. Secretary Paulson spoke around employee engagement, employee satisfaction, to share those best practices. And we also brought in senior leadership, largely the Chief Human Capital Officers, of several agencies that scored very well in the Federal Human Capital Survey or had marked improvement, and they shared their best practices.

That was a very well-received symposium that was at the end of March, and I think it reflected senior leadership commitment to these issues.

Mr. Morales: That's great. So I wish you success in getting into the top 10, as you mentioned.

So along similar lines, given the high rate of federal employees who may be eligible for retirement in the upcoming years, this certainly is going to create a loss of a lot of the institutional expertise and memory. And as you mentioned, I believe in our first segment, that becomes a challenge for the organization. Could you tell us how you're mitigating the pending retirement wave within Treasury?

Ms. Granat: Well, I should give you a sense of what we're facing. It's not dramatically different than a lot of other agencies of our size. The average Treasury employee is 48 years old and has over 16 years of experience. Based on recent running of our data, 21 percent of our employees will be eligible to retire this fiscal year. And in 2010, that number will increase to 29 percent, and then increase to 39 percent in Fiscal Year 2012. Now, of course, that's based on our current data, so obviously new folks are going to be coming in, so these are somewhat shifting stats, but it still is a daunting number.

It's especially daunting because there was a period of I'd say significant attrition and little hiring in the '90s, so that we really do have people in the beginning of their careers in somewhat large numbers. We do have a bit of a gap around those midlevel folks who would go into key leadership positions. And that certainly factors into our analysis of our leadership gaps and our succession planning.

One of the key things that we are doing to meet that challenge is, first of all, we're recognizing that we very much need to enhance our ability, the tools we use to recruit talent. That includes a Department-wide marketing strategy to build on the great marketing efforts that come of the bureaus have been able to develop, with the recognition that we really need to be recruiting at all levels. We're not just recruiting entry level.

We've recognized that we really should tap into second career folks, who would come in mid-level and even senior level. And one of the interesting things we're doing in that regard is the Experience Project with IBM and the Partnership for Public Service, where we're tapping into the folks who are retiring from the private sector. And as a pilot, we're focusing on IBM and we're focusing largely on those mission-support occupations, where folks who have had careers in the private sector in skills and areas that are relevant to our work, they want to make a contribution, they want to continue working, and they're looking for new challenges, and we really need to tap that resource.

So we have a series of things we're doing. And of course, one of the things that we need to do in the hiring arena is not just marketing, but it's really improving the way in which we recruit and hire. Simplifying the hiring process. Just simplifying vacancy announcements and having model vacancy announcements that are used across the board around those occupations that are mission-critical occupations for which we are doing recruitment across the Department. So those are just a few examples.

Mr. Thomas: Now, Rochelle, along the lines of potential retirements, what can you tell us about Treasury's knowledge management strategies to retain that knowledge?

Ms. Granat: All the Treasury bureaus have their own internal leadership development programs, which, if done well, are a critical way and an excellent way to ensure that we transfer institutional knowledge. If we use mentoring programs well, if we use developmental assignments well so that as we're developing people, they get experience within their organization and outside their organization, we are doing a good job about transferring institutional knowledge.

We've deployed automated tools around training. And our learning management system is one way in which we do that. That system allows us to do training across the Department in key areas. It allows us to both input our own type of training, but also make accessible to employees very easily other automated online training. And it also allows us to track development programs and track training efforts on an individual level to ensure that employees who we anticipate or want to groom to move to different positions are getting the training and knowledge that they need to move into those positions in the future.

We're ensuring that we're doing that knowledge transfer. Of course, we use what flexibilities we have to incentivize folks not to leave. That has limited success, and some of the constraints there revolve around the current retirement rules and systems. And there are some changes that we are seeking that OPM, the administration has been seeking, but those have not yet been enacted.

Mr. Thomas: Now, Rochelle, given the expanded complexity of your office workload, could you tell us more about Treasury's efforts to analyze workload requirements?

Ms. Granat: Within our office itself, we are constantly struggling with changing workload requirements and significant resource limitations. And one of the ways in which we've tackled that, sort of I would almost say in extremis, is really leveraging the expertise of folks across the Department, and some re-training efforts around our existing staff.

A good example, however, around changing workload requirements really comes from our business areas. And I think the best example is at the Internal Revenue Service, where we've had an evolving and significant shift in some workload demands as a result of the increased effort to encourage taxpayers to file electronically. And it's something that Congress has mandated. It's something that is beneficial to the government to encourage as many taxpayers to file electronically as possible. That, of course, results in a significant reduction in the need for employees to handle the paper processing of tax returns.

Mr. Morales: Rochelle, I want to go back to the topic of retention for a moment. Could you tell us about Treasury's efforts to develop and implement an agency-wide performance management system? Specifically, what have you done to link pay with performance as a means to enhance your ability to compete and retain a highly effective executive group?

Ms. Granat: Why don't I discuss that in two parts, because it's a different experience and implementation on the executive level from the non-executive level.

As you may know, in 2004, a new pay system, a pay-for-performance system, was implemented government-wide for the Senior Executive Service. And at Treasury, like all agencies, we took shifting to that system very seriously, and really changed the way in which our performance management was done department-wide.

Where previously each bureau had its own executive performance plan and system, we developed, through -- again, a collaborative effort across the Department -- a single SES performance plan that had three standard competency-based responsibilities, and provided for five to eight results-based performance commitments which are unique to each executive, which must be tied to organizational performance and the strategic plan. That was a shift in culture, a need to educate executives on what that meant to be measured that way and what that meant to measure their subordinate executives that way, and really developing and enhancing a performance culture that was measured in a way that hadn't quite been measured before.

But that said, it did change the way in which pay decisions were made. They had to be linked to performance. They needed to take into account not only individual performance, but organizational performance, and it was very focused on results. And we developed tools to assess organizational performance. We developed a tool that was used by each bureau that sort of rolled up data from across the fiscal year around performance measures, even including things around the Federal Human Capital Survey, PART scores and things like that, and a bureau head assessment of the bureau as a whole's accomplishments during the course of that fiscal year. And that information is shared with the performance review boards, et cetera.

One of the challenges here to making significant change with respect to incentivizing performance with the pay as a carrot is the reality of pay compression in the SES. You can have the most outstanding performer in your bureau who delivered the most significant results, and the pay increase that you can give is rather insignificant because of pay compression.

And so of course, that then shifts the focus to the bonus system. We have developed a system where we have standards for what ratings drive certain levels of flexibility around performance bonuses. And the performance review boards are very much a part of assessing that across their organizations. And senior leadership at the Department, at the Deputy Secretary level, has a role in ensuring that the ratings and pay adjustments and bonuses are consistent with organizational performance.

We have greater flexibility at the GS level. We do have some bureaus that have exception from the GS scale and do have pay-for-performance systems similar to the SES. But more importantly, even within the GS system, we have really driven a shift at the bureaus to ensure that their performance management systems, which are unique to each bureau but are focused on results and a results-based performance culture, and have systems that are able to tie to the strategic plan so employees understand where they are in helping the agency meet the strategic plan and strategic goals and organizational goals, but also that they understand that their performance rating and performance awards, whether they're cash awards or other types of incentives, time-off awards, that it is very much driven by performance and by delivering results.

Mr. Morales: Great. What does the future hold for the U.S. Department of Treasury?

We will ask Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer, to share with us when we return to the conversation on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to our final segment of The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer at the U.S. Department of the Treasury

Joining us in our studio from IBM is Solly Thomas.

Rochelle, I understand Treasury is trying to create a results-oriented performance culture. Could you tell us a little bit about some of the bureau's success stories in forging this type of a performance culture?

Ms. Granat: I think the model that we created for the SES in developing the assessment tool that integrates a series of program measures into a snapshot of organizational performance and feeds that into the assessment of individual performance was a great vehicle to really communicate how critically important organizational performance is, and therefore, performance culture, is to an executive's performance. If our leadership is effective in communicating the importance of organizational performance, I think that will go a long way in driving that as we improve upon our performance management systems for our non-executive employees.

IRS at the moment is very focused and is working with a contractor to assist them in developing a new and more effective results-focused performance management program for their approximately 92,000 non-supervisory employees. And you can imagine that's a daunting task. So I think that's really the major successes in really ensuring that we filter down that focus on results throughout the workforce.

Mr. Thomas: Now, Rochelle, you also sit on the Chief Human Capital Officer Council, chaired by the Office of Personnel Management director. Can you tell us about your roles on the Council and the subcommittees?

Ms. Granat: Sure. The Council meetings as a whole are really an excellent opportunity to really exchange information and keep the Chief Human Capital Officers informed of where OPM and the administration is on any number of issues.

There's a sort of different level of communication and activity at the subcommittee level. Treasury sits on the Subcommittee on Hiring and Succession Planning and the Subcommittee on Performance Management. Those subcommittees have largely focused on sharing best practices in those two areas, in working with OPM staff as they develop or implement new initiatives, giving them feedback, perhaps challenging them on the design and implementation of moving some initiatives forward. It's really the most direct opportunity we have to influence initiatives that are going to be government-wide.

For example, in the Subcommittee on Performance Management, we had an influence on the SES survey that was sent to all executives in the last fiscal year, and the results came out recently. And we've been working with OPM on the evaluation of the SES performance management system through the assessment tool for the SES. In hiring and succession planning, we've been trying to drive some efforts to improve the hiring process and to advocate for some changes in some of the flexibilities that are available to agencies.

Mr. Thomas: Now, Rochelle, there's much talk about commercial best practices in the federal government, particularly in the service areas, such as human resources. What emerging technologies do you see holding the most promise for improving the federal management of human resources?

Ms. Granat: I alluded just in the last question to the fact that Treasury is actually in the HR line of business through our HR Connect automated personnel system. We are always actively engaged in assessing that system and improving and enhancing that system.

One of the things that's a particularly exciting initiative that we are developing right now is to really harness technology to improve the entrance on duty process, the on-boarding process. We recognize that this is a process which gives new employees, prospective employees entering the agency their first impression of what -- and in some cases, this is their first federal job, their first exposure to federal employment. And we realize that that's really both for our own efficiencies, but also for the experience that the employee has coming on duty, is really critical that we maximize the tools that technology can give us.

We've developed a strategy to develop an on-boarding system that really is a bit of a paradigm shift. It moves from paper-intensive forms to information-based processes -- as we do our electronic filing of our tax returns, we're providing data that gets populated into forms, we're not filling out the form. It looks at reducing our dependency on HR specialists to doing web-based self-service. Moving from disparate points of entry, looking at single points of entry and one-stop shopping.

And most importantly, it moves from what's now a day one paper-intensive processing experience to day one focused on learning about the agency and learning about their new job and having the tools in place when they come to their office. And we think that this will also be the foundation to using that system for agency branding.

Mr. Morales: So, Rochelle, continuing to look towards the future, how do you envision Treasury's human capital needs evolving in the next two to three years? And how do you envision your office will need to evolve over that same period of time?

Ms. Granat: The challenges that I articulated that we face are only going to increase in terms of what's at stake if we are not able to simplify the hiring process and improve our marketing of Treasury as an employer, and ensuring that we're tapping the right resources from which to recruit. We are going to need to do that at an increasingly intensive level. It really means transforming the human capital occupation to be more focused on this business partner strategizer and develop those skills that are needed to do that. So we need to identify those sources and really maximize wherever we can the benefits of technology, but also make sure that that technology is not off-putting to our potential candidates.

I really think it's important that as a new administration comes on board, that they really focus on the fact that in order to accomplish all those mission-related initiatives and address all the challenges, that they also focus on the infrastructure. And I'm not just talking about human capital, but of course, the human capital piece is especially important to me. But we really need to make sure that our institution has the infrastructure that it needs in order to help the new administration accomplish all its goals.

Mr. Morales: That's a great perspective. Now, at the beginning of the hour, you told us just a wonderful story of how you got started in public service. So I'm curious, what advice might you give someone who's out there thinking about coming to public service or perhaps to the federal government?

Ms. Granat: Well, I think the most important message to say to folks is a combination of this is an opportunity to do interesting and challenging work that's important to the public. It should be important to them personally, and it's important to the nation as a whole. I hope that most folks coming into the workforce or thinking about a change in their career are thinking about I want to do something that's making a contribution. I want to do something that's challenging to me, in which I will learn something, that I have an opportunity to have responsibility and do good work. And I think the government really does offer so many different opportunities that you come in the government and you are doing one thing, as in my career, and you wind up evolving over time and, you know, taking opportunities that lead you in another direction or in a complementary direction, I would say.

And I really think that one of the things that government service offers, and sometimes it takes finding the right position or finding the thing that works best for you, but we really do some fascinating things. Many of us pick up the paper in the morning and that tells us what might happen to our day because what we do is on the front page of the paper. And I think that that has got to be -- should be exciting and interesting to folks entering the workforce.

Mr. Morales: That's a great perspective. Thank you

Rochelle, we, unfortunately, have reached the end of our time together. I do want to thank you for fitting us into your schedule, but more importantly, Solly and I would like to thank you for your dedicated service to our country across your many roles at Treasury.

Ms. Granat: Well, thank you. I enjoyed this. And I think the important thing to say is no one, especially no leader, in government does anything by themselves, and what they do is really representative of what their organization does. And I have a great staff. And the human capital professionals across the Department are part of everything we do to make Treasury a best place to work and to move forward to tackle the challenges we have. And I think it's a great team and I want to thank them.

I want to encourage folks to look at the Treasury website and see all the interesting things Treasury does. It's http://treasury.gov, and through that, you can look at Treasury careers, opportunities at all the bureaus, and, of course, there's always the USH Ops website.

Mr. Morales: Great, fantastic. Thank you.

This has been The Business of Government Hour, featuring a conversation with Rochelle Granat, Deputy Assistant Secretary for Human Resources, and Chief Human Capital Officer at the U.S. Department of the Treasury.

My co host has been Solly Thomas, associate partner in IBM's Human Capital Practice.

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 may not be able to 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.

Announcer: This has been The Business of Government Hour. Be sure to join us every Saturday at 9:00 a.m. And visit us on the web at businessofgovernment.org. There you can learn more about our programs, and get a transcript of today's conversation. Until next week, it's businessofgovernment.org.

Originally Broadcast April 12, 2008

Washington, D.C.

Announcer: Welcome to The Business of Government Hour, a conversation about management with a government executive who is changing the way government does business. The Business of Government Hour is produced by The IBM Center for The Business of Government, which was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about The Center by visiting us on the web at businessofgovernment.org.

And now, The Business of Government Hour.

Mr. Morales: Good morning. This is Albert Morales, your host, and managing partner of The IBM Center for The Business of Government.

Today, scientific discoveries are emerging at an accelerating pace in virtually every field, transforming the science and engineering landscape and opening entirely new territory for exploration. As one of the premier federal agencies supporting basic research at the frontiers of discovery across all fields, the National Science Foundation plays a critical role in keeping the U.S. competitive in the sciences. The success of such a vital national mission rests on the pursuit of an effective resource management approach and workforce strategy.

With us this morning to discuss NSF's strategic efforts in these areas is Anthony Arnolie, director of the Office of Information and Resource Management and NSF human capital officer.

Good morning, Anthony.

Mr. Arnolie: Good morning. Thanks for having me.

Mr. Morales: And joining us in our conversation is Solly Thomas, associate partner in IBM's Human Capital Practice.

Good morning, Solly.

Mr. Thomas: Good morning, Al. And good morning, Anthony. Good to see you again.

Mr. Morales: Anthony, let's start by setting some context for our listeners. Could you take a few minutes to provide us a general overview of the National Science Foundation, including its history and its mission today?

Mr. Arnolie: Certainly. The National Science Foundation is an independent federal government agency created by Congress in 1950 to, at that time, promote the progress of science, to advance the national health, prosperity, and welfare, and to secure the national defense. Today, we fund basic research in scientific disciplines such as biology, geosciences, computer sciences, engineering, and education. And we fund researchers in all 50 states through grants to about 1,700 universities. And each year, we receive about 42,000 competitive proposals, and award about 10,000 new funding grants each year.

Mr. Morales: That's a fairly competitive statistic. Could you perhaps share some additional details to give us a perspective on the organization, such as how the Foundation is organized, the size of the overall budget, number of full-time employees and contractors, if you have such a mix?

Mr. Arnolie: The Foundation is run by a director and a deputy director who oversee the staff and management responsible for program creation and administration, merit review, planning, budget, and day-to-day operations. We also have a 24-member National Science Board that establishes the overall policies for the Foundation.

This year, our current budget is about $6 billion. And at present, we have a total workforce of about 1,700. That includes about 1,200 career employees, about 200 scientists from research institutions on temporary duty, and about 300 contract workers. And we're located in Arlington, Virginia.

Each year, NSF supports an average of about 200,000 scientists, engineers, educators, and students at universities, laboratories, and field sites across the country and throughout the world, from Alaska to Alabama and from Africa to Antarctica. You could say that NSF support goes to the ends of the earth to learn more about the planet and its inhabitants and to produce fundamental discoveries.

Mr. Thomas: Anthony, now that you've provided us with a sense of the larger organization, perhaps you could tell us more about your specific program. What are your responsibilities and duties as the director of the Office of Information and Resource Management, and as the National Science Foundation's chief human capital officer? Could you take a moment and tell us about the programs under your purview, how your office is organized, and the size of your staff and your budget?

Mr. Arnolie: Sure. As director of the Office of Information and Resource Management, I'm responsible for ensuring that NSF runs smoothly and efficiently from an operational perspective. Organizationally, I'm responsible for three divisions: the Division of Information Systems, the Division of Administrative Services, and the Division of Human Resource Management. These divisions collectively are responsible for developing and maintaining the technology infrastructure and systems that facilitate business operations, as well as the underlying IT security for managing the day-to-day administrative functions, such as building security, facilities management, proposal processing, conference and events management and visitor services, and also leading the agency's effective recruitment retention, motivation development, and utilization of NSF staff.

I manage about 165 federal employees and well over 200 contractors who work within these three divisions. Approximately 75 percent of the contractors perform information technology services, including application development, data center operations, and help desk support.

From a funding perspective, I'm responsible for a budget of approximately $100 million. And as the chief human capital officer, I serve as the senior strategic advisor for the deputy and the director of the agency on all human capital management issues. I'm accountable for the strategic management of NSF's unique workforce, which includes a large planned turnover of our scientific staff annually.

Mr. Morales: Anthony, if I may, just as a quick follow-up, is your role as director of the Office of Information and Resource Management effectively what people might recognize as a CIO?

Mr. Arnolie: The information technology function falls under my purview, but the CIO function and the Office of the CIO function is a separate function. So my role is a bit broader than just information technology, much like even though I hold the title of chief human capital officer, my role is broader than just human capital management.

Mr. Morales: Okay, thank you.

Mr. Thomas: Anthony, regarding your responsibilities and duties, what are the most significant challenges that you've faced in your position, and how have you addressed these challenges?

Mr. Arnolie: I would say the most significant challenge I've faced since I've been at NSF has been funding constraints and competing priorities, which are not unusual to small agencies in particular. We've been evolving from a small sort of off-the-radar agency to a much more highly visible one, which brings with it greater oversight and increased demands. Until this year, our funding for administrative activities has not kept pace with our needs and those demands, although I am beginning to see that change this year, finally, and I'm really excited about what the future holds as a result.

As a result of that situation, we've had to make some difficult choices among competing priorities. So for example, I oversee information technology as well as human capital management. Both of those are funded traditionally out of the same budget. And so there are often times where a decision has to maybe be made between hiring more people or investing more in technology, and clearly both of those are imperative to our mission, and so it does create some difficult challenges.

What I've done in my position is to aggressively work to educate our senior leadership on the importance of the administrative functions to the execution of our mission. And as I said, I think this year, we are finally starting to make some inroads and those messages are starting to take hold and we're starting to see the benefits in terms of a bigger budget.

Mr. Morales: That's fantastic.

Now, Anthony, I understand that prior to joining NSF, you came from the private sector. Could you describe your career path for our listeners? How did you get started, and what brought you to NSF?

Mr. Arnolie: Well, up until 2003, when I joined NSF, I spent my entire career in the private sector working for a number of accounting and professional services firms. I spent most of my career managing IT organizations, providing internal support to the consultants and accountants.

My most recent position was a partner in charge of technology administration at Arthur Andersen in New York. And it's not unknown to most what happened to Arthur Andersen as a part of the situation that took place with Enron. At the time, my wife and I were both partners at Arthur Andersen. We had met and both worked here in the D.C. area. We decided to move back. She continued in the accounting profession. We thought it wise for us to both not make the same mistake twice, if you will. And so I sought to find a challenging yet somewhat more stable occupation in the interest of our family.

Mr. Thomas: Diversification strategy.

Mr. Arnolie: Absolutely. Absolutely. Too many eggs in the same basket the first time around.

I was fortunate that the opportunity at NSF came up because it was similar from a functional standpoint to roles that I had had in the private sector, albeit obviously in a very different sector, which has been quite an interesting experience for me.

Mr. Morales: So as you sort of reflect on these experiences, how have they prepared you for your current leadership role at NSF and perhaps shaped your management approach and your leadership style today?

Mr. Arnolie: Well, I've had the fortune over my career of having six outstanding bosses, all of whom when perhaps I was maybe too young to trust, trusted me with quite a bit of responsibility. I think that what they did and the themes that I took away from working for them are ones that I apply today. The first being communication is critical. They taught me to speak honestly and frankly and expect the same in return.

The second is you must empower your staff and make sure that they take ownership for the success of whatever they're assigned with. Thirdly, that you must support them when they make mistakes and when they're being treated unfairly. And last but not least, as a leader, you must maintain your poise at all times, especially in the most difficult of situations. And as I said, each of my previous bosses exhibited those qualities, and I've tried to employ those in my management and leadership style.

Mr. Morales: Those are wonderful principles.

What is NSF's human resource strategy? We will ask Anthony Arnolie, director of the Office of Information and Resource Management and chief human capital officer at the National Science Foundation, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Anthony Arnolie, director of the Office of Information and Resource Management and chief human capital officer at the National Science Foundation.

Also joining us in our conversation from IBM is Solly Thomas.

Anthony, let's talk a bit now about the President's Management Agenda and its focus on the improvement of management and accountability. What are some of the efforts within NSF to meet the requirements of the PMA today?

Mr. Arnolie: Well, when we embarked upon the PMA a few years ago, it really helped us as a small agency to institutionalize some of our important human capital functions and activities. And in particular, it helped us to bring some rigor to our evaluation processes.

NSF achieved green in human capital in 2005, and maintained that green for about two years up until this past June. The challenge that we faced, as I've alluded to earlier, had to do with limited funding. And as a result, we reached a point where there was a divergence between the agency priorities and some of the PMA requirements, and that left us in somewhat of a difficult position. Our funding was limited, and over time, we found it difficult to meet some of the ongoing requirements and still do what senior leadership at NSF was asking us to do.

Now, the good news is we had engaged senior leadership to the point where they had given us quite a list of human capital imperatives that they wanted us to carry out. We were working closely with senior management as well as all levels of the organization. And so while we would like to continue to work with OPM to see if we can get credit for some of the great work we're doing as an agency, and I think our director and deputy would support this, we're proud of the progress that we've been making, and we do credit the PMA for really getting us started down this road of a more rigorous approach to human capital management.

Mr. Morales: Anthony, let's probe on this area a bit more. If we focus on the theme of human capital, could you give us an overview of NSF's human capital strategy, and your efforts to develop a strategic human capital plan? How does the strategy align with and support the Foundation's core mission, goals, and organizational objectives?

Mr. Arnolie: Well, we've recently undertaken an effort to update our strategic human capital management plan, and the basis for that was the most recent update to the NSF strategic plan, so there is a very tight linkage between the human capital management plan and the agency's strategic plan. Our human capital vision is to attract, develop, and retain a diverse world-class workforce that is continually learning and expanding its capacity to shape the agency's future.

To that end, NSF senior leadership recognizes the value of strategic human capital planning as a key component of excellence in management. This is shown through the recent enhancement and ongoing implementation of our human capital management plan. And this plan is aligned to the agency's overall strategic plan as well as outlines goals, plans, and evaluation methods. A working group of senior career federal executives representing all of our key scientific disciplines was formed to update the plan and to ensure its relevancy to the agency's strategic goals and the needs of the strategic and scientific workforce.

Mr. Thomas: Anthony, staying on the human capital topic, as you know, the federal human resources community is changing from a transaction-based environment to a more strategic and consultative role. Could you tell the listeners about your efforts to transform the human resources function within the National Science Foundation? Specifically, how are you engaging the program directorates in order to anticipate human capital issues and improve processes while at the same time operating as consultants?

Mr. Arnolie: Well, under my tenure and under the leadership of the deputy CHCO, we've contracted out, over the last two years, many of our traditionally transaction-oriented duties. What that's allowed us to do is it's provided additional time for our permanent staff to serve in a more consultative role.

Additionally, we've recently implemented a service team concept. And what this entails is while we maintain our traditional functional branches, we deploy customer account representatives - CARs, we call them that are directly aligned to our internal customer organizations. These specialists strive to consult, coordinate, and communicate with their assigned organizations in order to improve our understanding of customer needs and to collaborate more closely for better, faster service. And so far, this concept seems to be working and our customers like it.

In addition, we are engaging senior leadership on a regular basis and discussing human capital issues that are of relevance to the strategic mission of the Foundation. On a quarterly basis, if not more often than that, we have a full agenda at our senior management meetings where we talk about a variety of human capital issues. The important point here is we don't spend a lot of time talking about staffing and classification, but really talking more about how we shape or reshape the workforce to respond to the needs of the scientific community.

And in addition, because we are a highly participatory organization, all of our strategic human capital initiatives are done in collaboration with the program directorates. I mentioned the updating of the human capital management plan as one example, but just about every one of our initiatives from a human capital standpoint is overseen by a steering committee or a working group that consists of representation from all parts of our organization.

Mr. Thomas: Anthony, let's talk a little bit about performance management. Could you tell us about the National Science Foundation's efforts to develop and implement an agency-wide performance management system, and in particular, the focus on aligning employee performance expectations with organizational goals and objectives?

Mr. Arnolie: Well, our performance plans for executives have been aligned to the agency mission for quite some time. In 2004, we expanded this to all general workforce performance plans. We held briefings for supervisors and staff. We set up frequently asked questions, and even created an internal web page to provide information and sample performance plans showing linkage to the mission. And within a short period of time, we had full compliance throughout the agency, and have been pleased with this result. As research shows that when employees see how their daily work supports the organization's goals, then their performance improves, and from there, organizational performance improves.

As far as the executive performance plans, we take a very rigorous and we'd like to think transparent approach to both the evaluation of the plans themselves and their linkage to mission, along with an evaluation of the appraisals and how effective the executives have been at carrying out what's documented in the performance plans. We think that this has been very important, both in terms of making sure that activities are aligned to the mission, and also that our executives are held accountable for delivering on those things documented in their plans.

Mr. Thomas: To accomplish its mission, the National Science Foundation invests in the best ideas generated by scientists, engineers, and educators across all fields of research and education. Could you give our listeners an overview of the Foundation's performance assessment framework? What exactly is the framework, and to what extent does it enable continuous improvement and ensure openness to the research and education communities serviced by the Foundation?

Mr. Arnolie: NSF conducts a wide range of internal and external assessment activities to evaluate and report on our strategic investments and how effectively the strategic plan is being implemented. Since we fund basic research in science and engineering and education, it's sometimes not possible to directly link outcomes to annual investments because the results from basic research oftentimes takes years to come to fruition. Consequently, we believe in assessing the true impact of NSF's activities by utilizing the qualitative judgment of outside experts. To that end, we have a few activities.

One is what we call committees of visitors. We rely on these external committees of experts to evaluate long-term outcomes resulting from NSF grants. The COVs, as we call them, meet every three years to review the program reviews and to provide into two areas: the assessment of the quality and integrity of program operations, and how the research results have contributed to the attainment of NSF's mission and strategic outcome goals.

We also utilize directorate and office advisory committees. The judgment of these external experts help NSF to maintain high standards of program management. They also provide advice for continuous improvement and ensure openness to the research and education community served by the Foundation. Each of our directorates has an external advisory committee that meets twice a year to provide a review of program operations, discuss important current issues, and approve recent reports from the relevant COVs.

Last but not least, we have an advisory committee for Government Performance and Results Act. This external advisory committee conducts an assessment of the entire portfolio of NSF investments in science, engineering, and education. Each year, the committee reviews the Foundation's investments to determine if NSF demonstrated significant achievement under these strategic goals. The committee submits a report to the NSF director, which is incorporated into the Foundation's annual report each year.

Mr. Morales: Now, Anthony, you talked a little bit about the connection between the program leadership and your organization. And I'm sure that the increase in multidisciplinary projects, international activities, and major research projects has increased the volume as well as the complexity of the workload over at NSF. But could you tell us a little bit more about the efforts to analyze these workload requirements? And what can you tell us about a pilot program currently underway to test a new organizational structure and operations model?

Mr. Arnolie: For many years, NSF has been a leading federal agency in leveraging technology to support business processes. With rapid increases in e-government solutions to conduct our core business, we discovered that there were resultant changes in employees' job functions and competencies.

In 2007, we developed a weighted workload model that compares NSF's workload indicators to the staffing levels in our directorates and offices. The trend data allows us to track changes in workload by workload type and by scientific discipline for each directorate and for each program. The model shows a significant increase in overall workload in the last seven years, with only a modest increase in our staffing levels. Further, the model projects continued increases in the coming years, and we continue to refine the model as new data becomes available.

In terms of the pilot, about two years ago we undertook what we called an administrative function study in order to understand and address the impact of changing business process and technology on the program support workforce. The goal was to better align the functions assigned to the administrative staff in support of the mission and to increase professional development opportunities for administrative staff by establishing career paths and learning maps.

The program support staff at NSF represents about 30 percent of our permanent workforce. And recommendations from this study have led to the development of new program support positions that have become part of a clearer career paths with extended professional opportunities that did not previously exist at NSF. In addition to the new positions and career paths, we've developed learning maps that help guide employees through their options for individual competency development, and allows them to target professional development opportunities at the Foundation.

The pilot was initiated in 2007 to test the management positions of this new model we created, and a structured learning and development plan is in place for each of the pilot positions for the duration in order to address the competency gaps assessed prior to the beginning of the pilot. Additional competency gap analysis will be conducted during the pilot. And at the end of the pilot, we will perform a formal evaluation in addition to the rolling evaluations to assess the validity of the pilot and to determine future plans for the new management positions.

Mr. Morales: That's great. It sounds like it's going very well.

Let me switch gears for a moment here, Anthony, and talk a little bit about the NSF Academy. Could you elaborate on how the Academy provides learning opportunities which support the agency's vision and mission? And since we do like to talk about technologies here, can you tell us a little bit about something called "Academy Learn?"

Mr. Arnolie: The NSF Academy serves as the catalyst for the creation of a continuous learning organization at the National Science Foundation. We have a highly educated workforce, and sometimes convincing them that further development and enrichment is necessary. But what we've tried to do with the Academy is, as I said, to simply serve as a catalyst for stimulating discussion and dialogue that might lead to that enrichment.

The Academy promotes organizational excellence through the advancement of human capital by proactively identifying and implementing programs necessary for the development of all of our employees. One unique offering that supports our mission-critical occupations is the Program Management Seminar. This seminar is NSF's orientation for new program officers, many of whom have never worked for the federal government before. In addition to introducing them to federal government requirements, the seminar examines our agency's culture and values centered around NSF's merit review of submitted proposals, and it also raises the new program officer's awareness of the diverse composition of NSF's workforce.

We also offer division director retreats twice a year and division director roundtables on a quarterly basis that are structured around topics of interest to our division directors and our deputy division directors. As an example of how NSF is a highly participatory organization, the planning committees who determine the agendas, the topics, the guests, are all the division directors and deputy division directors, with some assistance from my staff. In addition, the Academy is consistently evaluating and redesigning these programs to better meet the needs of our internal customers.

The NSF Academy is also embarking upon a blended approach to learning that enhances employee learning by allowing individuals to select the learning medium that best fits their individual needs. For example, the Academy provides standard classroom education, but it also provides e-business courses that can be accessed online 24/7 from home or work or while on travel.

We're currently implementing Academy Learn, a learning management system that contains a course catalogue of over 2,000 online courses, has an online technical library, and also has an individual learning plan built in that can communicate the employee's training needs and wants to their supervisor, so that supervisors can more fully support the learning process for our employees.

Mr. Morales: That's fantastic.

How does NSF manage a blended workforce? We will ask Anthony Arnolie, director of the Office of Information and Resource Management and chief human capital officer at NSF, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Anthony Arnolie, director of the Office of Information and Resource Management and chief human capital officer at the National Science Foundation.

Also joining us in our conversation from IBM is Solly Thomas.

Anthony, like most organizations, workforce planning must be critical in helping your agency's leadership draw a clearer picture of the nature of the current and future human capital decisions. Could you tell us a bit about your efforts to enhance and institutionalize, perhaps, workforce planning within the Foundation?

Mr. Arnolie: Certainly. There's been quite a lot of activity around this in the last two years. As I mentioned before, our human capital strategic plan also includes a workforce plan as well as a succession plan, and those were recently updated to more closely align with the NSF's strategic plan. We assembled a group of senior executives from across the Foundation who led that effort and drafted a plan that was distributed to all NSF staff for comment, another example of the highly participatory nature even after the plan was developed. And we did this with the strategic plan as well. It was posted for comment for about three weeks for each and every one of the employees to provide feedback, and we did make changes as a result of that. That's somewhat of an aside.

But in any case, the workforce plan itself identifies the steps to align our workforce with our current and projected work requirements. Each year, the Division of Human Resource Management facilitates a workforce planning process with NSF senior management that results in an updated set of goals, priorities, and action strategies for workforce and staffing planning across the Foundation. This structured process has focused management efforts on strategic workforce planning, and I would say that's for the first time in many years at the Foundation.

At the same time, we've implemented a biannual staffing planning process with each directorate and office that focuses specifically on developing work unit staffing plans. The staffing planning process encourages directorates and offices to align their staffing strategies to the overall workforce plan.

Mr. Morales: Anthony, you mentioned succession planning. What are some of the efforts at NSF to ensure continuity of leadership through succession planning and executive development? Specifically, what changes are you perhaps making to the recruitment process that enable you to use flexible compensation strategies to attract and retain employees in some of the mission-critical areas?

Mr. Arnolie: The goal of our succession planning activities is to ensure a seamless transition in all of our executive leadership positions. We strive to enable continuity of business operations and to preserve critical organizational knowledge. Finally, we want to develop and nurture a cadre of executives that can lead the agency into the future. Some of our implementation strategies aim to broaden and deepen NSF's leadership pipeline through the implementation of a comprehensive leadership development program, to prepare leadership transition plans for all executive positions, and last but not least, to establish a comprehensive knowledge management and transfer strategy for all of our executive leadership positions.

Regarding our recruiting strategies, we use two principal avenues to hire staff. The first is the National Science Foundation Act of 1950, that authorized the creation of the agency and also authorizes us to appoint scientists and engineers without competition under the accepted service authority unique to our agency. This appointing authority provides us with the necessary flexibility to fill these mission-critical occupations. Compensation for these scientists and engineers is set within pay bands, and the use of additional incentives can also be authorized. Our administrative staff is hired using the same appointing and compensation rules as other agencies in the Executive Branch.

There are similarities in the recruiting processes for both of these groups and we've made substantial efforts to simplify the process, to leverage technology, and to look for ways to streamline the process. For example, we post our job information on both nsf.gov and USA Jobs. To the extent that there are individuals who are specifically looking for NSF opportunities, they would obviously find those on our website. And there are other individuals who may be seeking opportunities from NSF along with many other alternatives.

We've also adapted our recruiting processes to the needs and expectations of our key target applicant groups. For our professional scientific and engineering community, we use a streamlined application process. And these applicants may submit resumes that are much more in line with the types of CVs typically used in those professional communities. We also have extensive outreach efforts to the various scientific communities through what we call "Dear Colleague" letters, which solicit interest in our vacancies by contacting presidents of universities and chancellors who might know of worthy candidates who would be interested in an opportunity at NSF.

Last but not least, word of mouth is an extremely important tool in filling these positions. We turn over about 30 percent of our scientific workforce each year by design. And it's key for us for those individuals when they return to their home institutions to have had a positive experience, and therefore, be in a great position to recommend the next wave of individuals to serve the country by working at NSF.

Mr. Morales: That's great. It sounds like you're making it easier not only for the applicant, but as well as the managers within the organization who are seeking these candidates.

Mr. Thomas: Anthony, given NSF's mission, you seem to rely on a continual and transparent exchange between the broader science community and the Foundation itself. Could you tell us how federal managers can effectively manage an ever-increasing blended workforce composed of contractors and federal workers? And what are some of the key differences intrinsic to these core groups?

Mr. Arnolie: Our success in engaging the science community is in large part because we interact with them regularly and rely on them heavily to perform many key business functions of the Foundation. We not only recruit them for key leadership and program management positions, but we utilize them for merit review of competitive proposals as well as our performance assessment activities.

Now, while this enables fresh ideas regarding scientific research and the management of the agency, it does bring with it some challenges in terms of managing a blended workforce. When you factor in the increased reliance on contractors to perform many administrative functions, managing the NSF workforce can be challenging.

The good news is we have a very collegial culture, and the career federal employees at NSF provide mentoring support, and most importantly, stability to the agency's operations. One of the things that we try to do is we both try and engage the contractors and temporary staff as part of the NSF family. At the same time, we work closely to establish a strong core among the career executives and staff, because it's important for the contractors and temporary workers to hear and for the messages to be reinforced as to what's important to the Foundation.

And so we find that it's the permanent staff that allow us to do that. We have a very dedicated and committed staff, and they really make it possible for this rotation of temporary workers to come in and out and still allow the business of the Foundation to continue.

Mr. Thomas: As you know, Anthony, the younger employees have different attitudes, behaviors, and expectations for their careers and the workplace. In general, they tend to be more flexible and more mobile, and therefore, we expect them to change employers and jobs several times. They also typically look for more flexibility from their employers and greater support at the workplace.

Could you tell our listeners about the National Science Foundation's efforts to meet the challenge of this changing workforce?

Mr. Arnolie: In part, I think we're meeting the needs of this group by expanding our use of the Federal Career Intern Program as well as the Presidential Management Fellows Program. In addition, as you know, we're widely recognized as one of the great places to work in the federal government, and we offer many amenities, such as an on-site fitness center, an on-site child care center, on-site health services, on-site caf�, library services, and proximity to a shopping mall.

We also offer detailed assignments that offer interesting developmental opportunities for our employees. For the last six years, the number of telework agreements on file at the Foundation have increased, and telework is clearly one of those areas that's appealing to employees of all ages. That said, NSF is in a somewhat unique position because for many of the positions we try and fill, the requirements greatly limit our pool and our opportunities to go after some of the younger employees, in that a Ph.D. with six years of experience after attaining it is often a requirement for many of our program management positions. And so we look to leverage as best we can the opportunities to attract younger employees for those positions that they would qualify for.

Mr. Thomas: The NSF is also co-managing partner and a consortium leader for the grants management line of business. And you recently launched a web portal called research.gov. Could you tell us about this specific effort, and to what extent does your office support systems necessary to manage the Foundation's grant-making process?

Mr. Arnolie: Certainly. NSF is a single-mission agency that fulfills that mission by issuing grants, so it's critical that our IT investments support and enable those business processes. Research.gov is a new initiative that supports the grant-making process by providing a menu of services tailored to the needs of the research community, and enables NSF to comply with recent government-wide mandates and guidelines.

We were selected by OMB to lead the research focus grants management consortium because of our successful track record with our existing grants management system, FastLane, our leadership position in the research community, and our high standards and performance for our customers. Research.gov allows us to leverage FastLane's capabilities to deliver common grants management services, and allows us to serve as a lead partner for federal research-oriented, grant-making agencies with a shared vision of increasing customer service for the research community while streamlining and standardizing the business process among the partner agencies. Research.gov provides public-facing services for the broader research community, and business services for institutions that apply for and receive grants from participating federal research agencies.

The first of many business services that we offer is grants application status, and we recently released this in a beta mode. It will allow applicants to check the status of grant applications submitted to NSF and any of its research.gov partners in one single location. As this initiative matures, research.gov will continue to develop and implement additional services in support of the science, engineering, research, and education mission.

Mr. Morales: Anthony, in the past year, we've seen a surge of federal agencies and a variety of communities launching their own version of a Wikipedia or a blog. Could you talk about efforts within NSF to leverage these new social networking ideas and technologies such as blogs and wikis? And specifically from perhaps your vantage point, how can such tools enhance NSF's ability to collaborate and communicate?

Mr. Arnolie: NSF has several methods by which we interact with our communities, both internal and external. There's active interest among our scientists and engineers to explore and use various collaboration tools, and our connection with the academic community keeps us on the constant lookout for the latest technologies.

Regarding wiki technology, we launched the first NSF wiki in 2005, and it has been in agency-wide use for over the last two or three years. Currently, we have about 20 distinct groups that use the NSF wiki for a variety of purposes, such as project updates, meeting minutes, notices of interest, and posting and updating standard operating procedures. Right now, we're exploring the development of a wiki that can be used for both internal staff and their external communities for collaboration. All these tools can help NSF to better communicate and collaborate. We also have the luxury internally of being located in one location, which facilitates a lot more face-to-face collaboration, which is not always an option for some other organizations.

Mr. Morales: Let me switch subjects here for a moment. A major cyber security concern with the federal government these days is employees perhaps not thinking about the risks and being careless about personal information and data security. What steps have you taken to create or cultivate a culture of accountability and protection for sensitive personal information?

Mr. Arnolie: We strive to balance security and privacy considerations, such as the protection of personal information and data, with the open and collaborative environment that's central to the scientific research and discovery. User education we think is the critical success factor in maintaining this appropriate balance.

Our key message establishes accountability. Each employee is responsible for recognizing personal information and avoiding inappropriate access, use, or disclosure. We hold annual security awareness training, which is required or all employees and other on-site staff. We also hold ongoing outreach activities to remind employees of their responsibilities with respect to protection of personal information.

Keeping users informed is just one component of NSF's security and privacy strategy. NSF's information systems are designed to facilitate work processes while providing appropriate levels of protection for security information, which is not a trivial task given that we receive 42,000 proposals each year for research, education, and training projects, and we receive several thousand applications annually for graduate and postdoctoral fellowships.

One of the things that we've done recently, in 2007, we stopped collecting Social Security numbers from individuals that conduct business with the Foundation, and assigned unique NSF IDs to replace those SSNs for all individual accounts in our grants management system, and this constituted over 350,000 records. We also implemented other technical controls, such as data encryption and secure access mechanisms that are employed where appropriate to provide additional layers of protection for sensitive personal information.

Finally, our security and privacy program could not be successful without the involvement and dedication of senior management, particularly the director and the deputy director. When senior leadership makes it clear that security and privacy are priorities, then the Foundation listens.

Mr. Morales: That's great.

What does the future hold for the National Science Foundation? We will ask Anthony Arnolie, director of the Office of Information and Resource Management and chief human capital officer at the Foundation, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Anthony Arnolie, director of the Office of Information and Resource Management and chief human capital officer at the NSF.

Also joining us in our conversation from IBM is Solly Thomas.

Anthony, in addition to your role at NSF, I understand that you're also the chairman of the Small Agency Council. Could you tell us more about the Council and its charter? Specifically, what kinds of agencies are represented on the Council and what are the goals of the Council?

Mr. Arnolie: Sure. The Small Agency Council is a voluntary management association of sub-cabinet independent federal agencies. It was established in 1986 with the purpose of achieving three major goals: the first, to ensure that federal policy oversight agencies consider implications to small agencies when developing management policies; the second, to exchange approaches for improving management and productivity at small agencies; and the third, to share management resources so as to strengthen the internal management practices of small agencies.

Now, the loose definition of a small agency is an agency with less than 6,000 employees. Currently, the Small Agency Council has over 80 member agencies representing about 50,000 federal employees, and each of those agencies is represented by a principal management official who generally oversees agency management functions such as personnel, budget, procurement, finance, and information resources management. The full Council meets at least two times a year to discuss a variety of management issues of concern to small agencies.

The Council also has a number of committees that represent small agencies on specialized issues, including information technology, finance, procurement, training, and administrative services. Personnel from these agencies who work in these functional areas sit on these committees and help to widen the overall scope and effectiveness of the Council. In addition, we're also represented on many federal policy oversight organizations such as the Chief Human Capital Officers Council, the Federal CFO Council, and the Federal CIO Council.

Small agencies that have joined the Council are responsible for managing a wide array of federal programs and implementing various statutes. Members have diverse program responsibilities, including private and public sector employment, commerce and trade, energy and science, transportation, national defense, finance, and cultural issues. Almost half of the Council is divided among regulatory and enforcement agencies, and the remaining half is divided among grant-making, advisory, and uniquely chartered organizations. There are many sized agencies represented, including several so-called micro agencies with less than 100 employees.

During my tenure as chair, I believe the Council has further advanced the cause and unique issue of small agencies through the power of its collective voice and membership, which is really the main charter of the Council. For those who are interested in learning more about the Small Agency Council, please visit www.sac.gov.

Mr. Morales: Great.

Now, as a follow-up, could you tell us more about the efforts on the part of the Council to establish a human resources training academy? What is this training academy, and how might it operate?

Mr. Arnolie: Actually it's not the Small Agency Council, but the Small Agency Human Resource Council that has created the human resources training academy for small agencies. The "SAHR C," as they're called, operates independently from the Small Agency Council. However, because my deputy division director for human resource management is a co-chair of this training committee, I can actually tell you a little bit more about it.

Two courses have recently been held, and both were well-attended. And at this time, instructors are being sought among the different small agencies to train on a wide variety of topics within the HR arena, such as workforce planning, labor relations, and benefits. I should also mention that the Small Agency Council administers a training program each year through voluntary contributions from member agencies. This program allows us to pool and leverage funding from across the government agencies to make training opportunities available to small agency personnel. This is particularly beneficial to some of the micro agencies and other really small agencies that would otherwise not have the opportunity in some cases to provide their personnel with required training.

Mr. Thomas: Anthony, let's come back to your role at the National Science Foundation. In transitioning to the future, how do you envision NSF's human capital needs evolving in the next two to three years? And how do you envision your office evolving over that same period of time to support this transition?

Mr. Arnolie: I think what we'll do is we will continue our aggressive push to hire more staff. We're in desperate need, and we'll continue to focus on that. We plan to continue our efforts to redefine the NSF workforce and equip them with the skills and competencies that they need to be successful and to carry out the agency's mission. We'll continue to look for ways to leverage technology solutions to improve our work processes. And we'll also continue to implement work-life programs that improve both the quality of work and the quality of life for our staff.

My office will continue to strategically align itself with our customers, listen intently to their needs, and work closely with them to create and customize our service offerings and deliver the services and solutions that help the agency carry out its mission.

Mr. Thomas: Now, there has been much discussion about the pending retirement wave in government and what type of impact it will have on agencies. What are you seeing within NSF, and what plans are in place to mitigate its effect?

Mr. Arnolie: Well, as it turns out, our retirement projections aren't as grim as the federal government overall. The Bureau of Labor Statistics projects 50 percent of all federal employees and 70 percent of all federal senior managers will be eligible to retire by 2010. At NSF, by contrast, only about 20 percent are eligible today, and 39 percent will be eligible in 2011. In addition, and maybe more importantly, NSF staff tend to work longer into their retirement eligibility years.

With the recent adoption of the updated NSF strategic plan and the importance of aligning the agency's human capital management with the Foundation's strategic goals and priorities, a succession planning working group was tasked to update key elements of the human capital management strategy, including leadership succession planning, goals, and strategies.

Some specific succession planning concepts being implemented include identifying best practices in leadership transition and knowledge transfer, providing hands-on learning and mentoring for potential leaders, and appraising senior leadership on their succession planning efforts. And we believe that focusing on those particular areas will put us in the best position to handle any retirement wave that we might face in the years to come.

Mr. Morales: Anthony, you previously talked about how NSF has received the honors as one of the agencies titled as the best places to work. And in fact, you've obviously ranked consistently near the top on that list. So other than some of the things that you've mentioned, what do you think are some of the keys to your success as a best place to work?

Mr. Arnolie: Well, I'd like to take a lot of credit for that since it's the Federal Human Capital Survey that yields those results, but the truth is it's the NSF staff that make NSF a great place to work. It's very participatory, as I said before. Every individual believes that they have a voice and that what they have to say can influence the agency's priorities and the agency's strategic direction. I think that that is an important factor in people coming to the Foundation and wanting to stay at the Foundation.

In addition, I think that we have a very unique and very important mission in terms of funding basic research. We promote science and innovation through all types of science disciplines, and I think it's critically important. Two items that might not directly be connected to NSF in the public's eyes would be the initial investments we made to lead to the creation of the Internet, or the investments that we made in a small group of principal investigators who later went on to found Google. So those are two of the things that as an employee of NSF, you recognize that the work we do really in the near and the longer term future promote incredible innovations in science, engineering, research, and education that are critically important to the country.

As I said earlier, one of the other reasons I think we are considered one of the best places to work is we do all that we can to provide a variety of work-life programs that are meaningful and beneficial to our staff. I mentioned the on-site child care center, the on-site fitness center, the on-site health services, along with retirement counseling and tuition assistance. We continue to try and add to our portfolio work-life programs to the fullest extent possible.

Mr. Morales: That's great.

On that same note, Anthony, we have a number of listeners who may be thinking about a career in public service. Now, given your own federal experience and the transition from the private sector, what advice might you give someone out there who's perhaps considering a role in government?

Mr. Arnolie: Well, there are a number of agencies with different missions who serve this country in different ways. I would suggest that you explore a bit to find a fit between what you value and what you're interested in and what your strengths are and what those agencies do. I know that agencies are working hard to be more flexible in terms of work schedules and work assignments, so don't assume there isn't a good fit for you. Finally, understand that there's nothing more important than service to your country, so lend us your talents and you might find a rewarding, challenging, and personally enriching opportunity awaits you. That was certainly the case for me, and continues to be the case for me at NSF.

Mr. Morales: That's wonderful advice.

Unfortunately, we have reached the end of our time. I do want to thank you for fitting us into your busy schedule, but more importantly, Solly and I would like to thank you for your dedicated service to our country in your roles at NSF.

Mr. Arnolie: Thank you. And I guess I'd like to finish by saying a recent study said that there was a very positive impression of who NSF was, but by that same audience, not a clear understanding of exactly what we do. So what I would encourage you to do is to go to www.nsf.gov and learn more about what the Foundation is all about, the areas that we provide funding for, and the types of activities that might be of interest to those of you seeking employment in the federal government.

Mr. Morales: That's great.

This has been The Business of Government Hour, featuring a conversation with Anthony Arnolie, director of the Office of Information and Resource Management and chief human capital officer at the National Science Foundation.

My co host has been Solly Thomas, associate partner in IBM's Human Capital Practice.

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 may not be able to 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.

Announcer: This has been The Business of Government Hour.

Be sure to join us every Saturday at 9:00 a.m., and visit us on the web at businessofgovernment.org. There, you can learn more about our programs and get a transcript of today's conversation.

Until next week, it's businessofgovernment.org.

Full Radio Interview Transcript

Dr. Jeff Pon
Chief Human Capital Officer
Department of Energy

Originally Broadcast Saturday, June 30, 2007

Washington, D.C.

Welcome to The Business of Government Hour, a conversation about management with a government executive who is changing the way government does business. The Business of Government Hour is produced by The IBM Center for The Business of Government, which was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness.

You can find out more about the Center by visiting us on the web at businessofgovernment.org.

And now, The Business of Government Hour.

Mr. Morales: Good morning. This is Albert Morales, your host, and managing partner of The IBM Center for The Business of Government.

The U.S. Department of Energy has a rich and diverse history, with the lineage tracing back to the Manhattan Project. Today, DOE stands at the forefront of helping this nation meet its energy, scientific, environmental, and national security goal of developing and deploying new energy technologies and reducing our dependence on foreign energy sources.

The success of such a critical mission rests on DOE's pursuit of an effective workforce strategy.

With us this morning to discuss the Department of Energy's strategic human capital efforts is Dr. Jeff Pon, Chief Human Capital Officer at the U.S. Department of Energy.

Good morning, Jeff.

Dr. Pon: Good morning, Albert.

Mr. Morales: And joining us in our conversation is Solly Thomas, associate partner in IBM's human capital practice.

Good morning, Solly.

Mr. Thomas: Good morning, Al, and good morning, Jeff.

Dr. Pon: Good morning, Solly.

Mr. Morales: Jeff, let's start off by learning more about your department. Many of our listeners are generally familiar with the U.S. Department of Energy. But can you give us an overview of the history and the mission of the Department?

Dr. Pon: Absolutely. It's probably one of the richest histories in our nation. As you take a look at the Department of Energy, I'd like to hearken it back to the three isms. We've combated three isms: one, fascism, Manhattan Project yielding the atomic bomb ending World War II; communism, the Cold War era, where we had to basically give a lot of resources to the nuclear complex to combat the rise and fall of the former U.S.S.R; and now terrorism. We're developing bomb technology, different types of detection technology. We are tasked as a mission for non-nuclear proliferation across the world, and we also maintain the nuclear stockpile.

Those are three great missions that the U.S. Department of Energy has had in its history. But truth be known about this, as I was prepping for this interview, many people always hearken back to the Manhattan Project and Oppenheimer and how he built the team with contractors.

But I had this factoid actually run across my desk. On August 2, 1939, Albert Einstein actually wrote President Franklin Delano Roosevelt about research in developing a powerful bomb, and that Einstein noted that Germans had stopped the sales of uranium, and German physicists were engaging in uranium research. That was probably one of the pivotal points where a scientist actually interacted with one of our chiefs of state. And I think from that interaction kind of grew a lot of the notion of a patriotic scientist.

Mr. Morales: Well, Jeff, that's certainly a very rich history and a very broad mission that you've described for the Department. To help give us a sense of scale, could you tell us how the Department is organized? Can you tell us a little bit about the size, the budget? You referenced the mix between federal employees and contractors. And also, can you describe the geographic footprint of the Department?

Dr. Pon: Sure, absolutely. Well, first, I forgot to mention that in 1977, President Carter actually formalized the Department of Energy, and our first Energy Secretary was Jim Schlesinger. About 200 employees actually took over Building 5 at DoD, which is now known as the Forrestal Building.

But in 1977, we kind of came together kind of like DHS. I sometimes describe the Energy Department as being a myriad of different types of agencies. Those agencies were the Federal Energy Administration, Energy Research and Development Administration, Federal Power Commissions. We run Bonneville Power Administration, which has a lot of different dams, utilities, transmission lines all the way from the Columbia River system, Washington, Oregon, and also California, and it runs the gamut. So we do a lot of different things and a lot of different missions.

Really, I think it's important to note that the Department Of Energy's footprint is a domestic agenda. We have about 14,000 federal people across the whole entire complex. We run 27 national laboratories, some of which you probably know of: Lawrence Berkeley, Sandia National Laboratories, Argonne, Fermi, too many to list in this conversation. But we pride ourselves as being on the forefront of scientific discovery. Where else in the whole entire world can you actually claim that you work for an organization that's trying to discover the meaning of the universe, mapping the human genome, making little stars at the NIF program? NIF stands for National Ignition Facility, where we actually fuse materials together to create different types of materials.

One of my first experiences as a person that was growing up in the Bay Area was actually taking a tour at Lawrence Livermore Laboratory. And it was so inspirational, after 20-30 years growing up in the Bay Area and going over Interstate 280 and looking at, very quickly, on Sand Hill Road, the Stanford Linear Accelerator, that big two-mile stretch that goes right underneath 280, and actually knowing that you're a part of that complex and knowing that you're a part of a rich history of science and technology, 85 Nobel laureates that are associated with our DOE complex. That's just something that I take great pride in representing. And I hope that we're great stewards of the future of scientists and technologists in the Department of Energy.

Mr. Morales: Absolutely fascinating.

Mr. Thomas: Jeff, now that you've provided us with the scope of the Department, and certainly a very fascinating description of the Department, could you tell us more about your specific role? What are your responsibilities and duties as Energy's Chief Human Capital Officer? And could you tell us about the areas under your purview, how your office is organized, the size of your staff, as well as the budget?

Dr. Pon: Solly, I'll address that in a couple of different ways. I'll give you the standard one, which is the CHCO Act, or the Chief Human Capital Officers Act of 2002. We're supposed to be the principal advisors to the head of the agencies. I do act as the principal advisor to the Secretary and Deputy Secretary in all matters concerning our workforce, the development, retention, and recruitment of our workforce.

But moreover, I think in the private sector, you have this thing called "duties as assigned." That's very much emphasized here. We're not only working as human resources people, but really as strategic business partners to our most-senior leadership here. We're in a business model. We run a $24 billion business. We're the largest funder of the physical sciences, so we have a large responsibility to do what's critical for workforce planning in alignment with the mission. That is my primary mission and goal, to make sure that we have the right talent at the right time at the right place.

Mr. Thomas: And regarding those responsibilities and duties, what are the most significant challenges that you face in your position, and how have you addressed these challenges?

Dr. Pon: My responsibility is to make sure that each and every one of our managers has the right information to make some critical decisions. We make sure while we are recruiting, selecting, and retaining people that our workforce strategies are effective, in alignment with our priorities as an organization.

If you take a look at the history of DOE, one of the chief challenges that we have is working together. Each and every one of our sites has a rich history, has their Nobel Prize winners. These different types of confluences around our whole entire complex makes it very difficult to align to a whole entire strategic mission and be one Energy Department.

But when you come down to it, I think if you were to explain the Department of Energy, we're really in the business of managing science, technology for energy security, national security, and American competitiveness in an environmentally responsible way. That's a huge portfolio.

I asked the Secretary of Energy, are we a one company, one corporation, with a leadership philosophy that's integrated across our organization, where the golden mean or the bar is set at a certain level and everybody follows it, or are we a holding company with 24 or 27 different LLCs? He answered it by saying, "I believe that we are the latter, but striving to be the former."

And that's my job here, it's to make sure that we're aligning people practices, financial practices with the CFO acquisition practices, because at the end of the day, if you're talking about functional things, and I know that The Business of Government program has not only human capital officers on but CFO, COOs, and other different types, the bottom line is making sure your organization effectively is managed across the organization. So that's what we're trying to do.

And in my office, we're tasked with doing some pretty interesting things that aren't just human resources-related, but human capital-related. running in human resources, too.

Mr. Morales: Well, I do want to get into some of the details of how you do keep the trains running in such a complex organization. But I'd like to learn a little bit more about you first, Jeff.

You referenced the private sector, and you're relatively new to the government, so I'm curious. Can you tell us a little bit about your private sector career and what brought you to the federal government?

Dr. Pon: Sure. I came here to the federal government as a Presidential appointee this time. I came here to serve this country and give back. That's one of the more important things that myself and my family wanted to do. It's really unplugged from the private sector. My wife and I were working in some great companies. I ran a couple of companies then at the time. I was experienced in doing a large-scale change at a big technology company, a Fortune 250 company, repositioning them, going from 57 general ledgers to three.

So is that human capital? I would say it is because it has to do with the management of human resources and how people make decisions.

Mr. Morales: Jeff, that's obviously a very broad background, so I'm curious. How have those experiences shaped your current leadership style and how you manage today?

Dr. Pon: I think I'm blessed to having this job come here, because it's really at the intersection of where my sweet spot is. I'm an industrial organizational psychologist, an organizational change management expert.

And I take a look at the government as being the most challenging organization, the most important company to run -- 1.8 billion people. So I take a look at the complexity of our human resources function here in the federal government, and I take a look at it as an opportunity to improve an existing working system, and taking the evolutionary approach of doing things in the government that's very meaningful for managers.

Some of the policies and personnel procedures that we have were designed in the 1940s and '50s, and continue to be managed and run that way. We have certain market pressures that we face as a federal government, and we're addressing those things in a concerted effort. So what brings me here is really a sense of challenge. It's really to make sure that it's a collaborative -- as the President says -- citizen-centered, market-driven, results-oriented government. And I think that's what the taxpayer expects. They want to make sure that the federal government is working in an effective and efficient manner.

Mr. Morales: That's great.

So what is the Department of Energy's human resource strategy? We will ask Dr. Jeff Pon, Chief Human Capital Officer at the U.S. Department of Energy, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Dr. Jeff Pon, Chief Human Capital Officer at the U.S. Department of Energy.

Also joining us in our conversation is Solly Thomas, associate partner in IBM's human capital practice.

Jeff, let's take a moment to discuss the President's Management Agenda, or the PMA. The Department of Energy continues to maintain its Green status in human capital management under the PMA. Could you elaborate on your efforts in getting to Green? What challenges did DOE have in overcoming its own internal workings to get to this level? And what does the Department need to do to sustain the status going forward?

Dr. Pon: Just to qualify, I've been at the Department of Energy for about 14, 15 months. We were Green when I entered; hopefully it'll stay that way. So that was largely with my partner over there, Deputy Chief Human Capital Officer, Claudia Cross, and the staff that she built.

The areas that we've achieved to get to Green is making sure that we have a strategic plan for the whole entire organization -- a five-year strategic human capital plan that's integrated across our whole entire organization. It's making sure that we're closing the gaps in mission critical occupations, in IT, in program management, in project management, HR. There's a lot of different good work that has been done in the last five years, six years, in getting us to Green. And I think we're going to maintain that if we do our work in making sure that performance management is central to that.

One of the key challenges in getting to Green and staying Green is not just being Green. It's really related to how do we operate our business? And I think that's the core essence of the President's Management Agenda. And that has been one of the highlights in his presidency, and hopefully, the work will continue in its institutionalized form with the scorecards, and many of the practices that come from a President that is an MBA. I think it's very important to understand what we're trying to do here in human capital in the Department of Energy. We're making sure that our human capital processes are in support of the program mission.

We're getting back into the nuclear energy business. We're making sure that there's a global nuclear energy partnership, making sure that as our science and technology people that average the age of 50 in our complex, while they're going out, we have knowledge management and learning development-type of strategies. Those are what's important to me and captured in our scorecard.

It helps keep transparency and accountability across our whole entire organization, but bottom-line is, are you doing the right thing? I'm going to be emphasizing really a lot of alignment between performance accountability -- we've aligned our mission goals all the way down to the individual, so each individual knows their individual role and responsibility to the mission.

That's a large accomplishment in and of itself, but now we have to really justify how we keep track of the "what do you do" and "how do you do it." So "what do you do" is the accomplishments, but "how do you do it" is just as important, which is a cultural element of it.

So I think we're one of the leaders in the government in trying to change the culture and operationalizing the culture through the human capital plan, and through what work we do with the Office of Personnel Management and OMB. And as a result, it's not just about checking the boxes. We want to make sure that these priorities are meaningful so that we have the right people, right place, right time. We're training and developing the best of the best, because we are the best of the best, and we want to remain that way as a nation in this global competitive environment.

Mr. Morales: So it's really about institutionalizing the changes that you set forth in your strategy.

You referenced the strategy, and you talked about its linkage to the mission of the Department. Jeff, I was hoping you could elaborate a little bit more on that. Can you give us perhaps a more-detailed overview of the DOE's human capital strategy, and some examples of how you're aligning that with the mission goals of the larger department?

Dr. Pon: Sure, absolutely. Actually, the President and Secretary of Energy have 10 priorities, one of which is the strategic management of human capital. That was a great surprise to me, a great endorsement of what the Secretary actually believes where human capital should play. It's at the mission level of the Department. Why is it so important to do that? It's because human capital is something that has to be on the forefront of the conversation as opposed to human resources, as in the transactional nature of those things.

I would think that the strategic management of human capital is a wide brush of how we do things in the Department in terms of what do we find important in terms of knowledge skills, abilities, and experiences of our employees, but moreover, from there, you can actually define your recruitment strategies, hiring strategies, your development strategy and retention strategies. Sometimes I go into other organizations and talk this language in the private sector -- the make, rent, or buy type of strategy.

Well, many of us in the government don't really talk that way. Well, you make, which is develop people; you want to rent contractors, or you want to buy, which is recruiting people from outside the government or outside other agencies in doing that. That is central to running an effective organization, and the strategic plan actually reflects that: where are the hiring priorities, where are the development priorities, and actually managing it as one organization.

Our organization has many silos within -- you have power marketing administrations, utilities, you have the national Nuclear Security Administration dealing with national security, the nuclear complex, and then you have the different types of technologies dealing with renewable energy. That's a wide portfolio, and the different types of people that we're recruiting can be different types of strategies. So we're rolling all that up and actually saying hey, there are many different ways of engaging with these strategies, but here are our priorities.

As a chief human capital officer and the principal advisor to the Secretary, he expects me to understand how we're pulling that all together, how we are recruiting for the next generation of our scientists, technologists, or anything like that. We're integrating these internship programs, so we have one face to the public.

We're going to be developing a web that actually integrates all of the different internship programs, and we're going to on a voluntary basis profile a lot of our candidates so that we can place them directly on a goodness-of-fit type of way in matching the candidate pool with the jobs that we have across our whole entire department, as opposed to the public going on one site, different site, different manager and all those things. And that's one example of what we're trying to do that's operationalized in our strategic plan.

Mr. Morales: That's fantastic. Jeff, we understand that you are establishing a Human Capital Coalition. Would you give us a sense of the new and innovative human capital management activities that this group will be developing for DOE?

Dr. Pon: Absolutely. This is a little bit different than what is known in our complex called functional accountability. Human Capital Coalition preceded the notion of functional accountability. Human Capital Coalition is a coalition of human resources professionals across our whole entire department, and also the administrative officers that actually interact with the organization. It is a very important key aspect of how do you run an organization through governance.

The Human Capital Coalition, what it's done is it's formed the relationship basis of teeing up what the human capital needs are -- requirements -- what types of things we're doing about it -- initiatives -- and how we programmatically track these things.

I think it's a really good way of establishing a governance that's not really in the law. It's actually volunteering to get on a conference call and say what are we doing about integrating internships? What are we doing to develop people or prevent cyber security-type of breaches? Those types of things, we address in this Human Capital Coalition. And it's much better to I think run an organization where the ideas come from the why perspective as opposed to just the top-down.

The policy stick is something that I know is within the purview of the Human Capital Office, but at the same time, when I first came to government, my approach was to make sure we identify what everybody is doing, what we should all be going towards -- so specifications, standards in the IT world, and policy is what we have to do all of the time. So by establishing that type of governance, I get to explore the ideas, explore the current practices, and identify some of the practices and best-in-class practices, and actually address some of the issues that we have across the complex with my partners.

We do not have dotted-line or cross-line type of relationships if you're talking about the personnel world. But we are forming these dotted-line types of relationships informally to get the job done. And that's what matters the most, getting the job done.

Mr. Thomas: Jeff, you had talked a little earlier about the functional accountability initiative, and let's talk a little bit more about it in detail. I understand that the initiative's in place as a way of improving the financial, human capital, IT, and some other operational functions. Why don't you describe to our listeners a little bit more about this initiative, and also perhaps how it looks to enhance oversight and accountability?

Dr. Pon: I think it was really important for the Secretary to initiate this activity across the organization. We in the Department are working towards being much more integrated. In the areas of functional accountability, we have HR, or human capital, as I call it, general counsel, information technology, or the CIO office, the financial organization, and also the procurement organization. We have dotted-line relationships now across the Department based upon the Secretary's delegation of certain types of authorities. There are seven authorities.

It's concurrence with existing management to establish positions, including grade level or appointment type; concurrence on new hires -- of the head of the site office in HR, for instance; concurrence on making sure that the workforce shaping authorities like VSIPs or voluntary early retirement and VERAs -- that's the VERA part, but the VSIPs, the voluntary separation incentive package -- are concurred on. Moreover, there are a lot of different authorities that the Secretary actually granted us, like active participation in employee development performance standards for the people that are "dotted line" to us now.

Why is that all important? Well, the whole entire motivation from my point of view on this was making sure that we as chief information or human capital people had knowledge, knew what the budgets were, knew people, time, and resources, what the efforts are, and really take a look at it as a whole and manage it.

And that's a very, very tough thing to do in any organization, whether private of public. It's really taking a look at matricizing an organization. So on the one hand, you have the people that have the direct line of authority in the programs, and they have a human capital person actually working for them. But it's actually given me input in on what their performance goals are, who they are, how we're selecting and developing the whole entire function of human capital. So that has been a monumental thing for this Secretary, and for a lot of our functional heads, to tackle.

As one of our site managers said in implementing this -- he said to me, "Jeff, you know, this is all good. We want to make sure that we're working together as one, branding the Department of Energy as one so we have the same entrée as a NASA is to the public than Department of Energy is to the public right now." However, the biggest challenge that we have is change. And what he said -- going back to what he said was, "Jeff, we're all for this stuff, but we're so good at not changing."

And that's what we're trying to do here. It's not just about dotted-line relationships. It's really about coordinating how we run the Department of Energy.

The last responsibility or authority that the Secretary gave of note is active participation in what's called our corporate performance review. I don't know if any other agency does this, but what we do internally is all of the Assistant Secretaries and the Under Secretaries and the functional managers such as myself actually get into a room on a day-to-day basis for about three or four weeks and review each and every one of our budgets. So it's a shared knowledge of here's what I am doing, here's what you're doing, where's the overlap, where are the priorities in preparing a budget? As a part of this process, guess what? Human capital is now on the crosscut basis, so I get to understand what everybody is spending in people development. That's unheard of. It's usually buried in somebody's budget and they're doing X, Y, and Z, and the people from headquarters, the bad old headquarters, never know about it.

But this is a way in which we're working together as an organization to pulling the whole entire organization in a much more effective way. Efficiency will come, but the effectiveness of our organization in decision-making is happening not only at the top, but actually at the field managers level, and also our contractor environment. I'm really delighted working for Secretary Bodman, because it's so easy for me to, as a person formerly from the private sector, to understand what he's doing.

He's trying to make sure that we have a consistency across our organization in our management practices, in our execution, holding people accountable. And I get to be a champion of that. It's so important to understand that the Department of Energy is not just about the deliverables and goals that we have in our Energy Policy Act of 2005, it's really how do we do it, how do we coordinate science and technology.

If you take a look at one of the major challenges as a nation, it is how do we as a government improve the life cycle development of technologies? Because in a global competitiveness perspective, we've gone through manufacturing, we've gone through agriculture; we've been leaders in that. But really the engine of the nation has to be science and technology. And as a principal sponsor for the physical sciences, we play a vital role. So we have the basic science of R&D looking out 10, 15, 20 years, and taking a look at the fabrication of those things has been a missing link within the government.

It's really understanding where we are in terms of proof of concept and demonstrating of the principles. But there is a large gap between how do we get that to the commercial sector and where we are in terms of fabrication in the tooling, in the manufacturing capability, of that type of technology. So that's one of the things that we're trying to concentrate on. It's really managing the portfolio of different things. And I'll give you one short example of this. I've mentioned that we have four of the fastest supercomputers in the world.

Why? Well, it's because of the multidisciplinary focus of our laboratories that is needed to accelerate the growth of technology. Why is that important? Well, Human Genome Project. Could you imagine the processing that it takes on a DNA level that we need to have in modeling these things? It wasn't available five, ten years ago. And with the computer science, and also biological and organic chemistry-type of science that's coming out of our labs, they're actually working together in cross-functional, cross-disciplinary teams, and accelerating the pace of science and technology.

Not many people know about that. And that's so exciting to be at the forefront of scientific discovery and technology, but at the same time understanding what the Department of Energy's role is. You can't just focus on basic science. You have to make sure that the sciences are being promulgated across the commercial sector. And we play a very important role in working together with our private sector partners in developing certain initiatives such as the corn ethanol or cellulosic ethanol, such as nuclear power plants, certain things like that.

Government is not going to be getting into the business of building nuclear power plants, but many of the private sector will. And we need to encourage the bedrock of how the foundational aspects of getting into that type of businesses is.

Mr. Thomas: Jeff, prior to assuming your current role, you served as the Office of Personnel Management's e-Government Deputy Director, and in that role, leading the government-wide effort to implement the five e-Government initiatives as well as the HR -- the Human Resources Line of Business. Could you elaborate on Energy's plans to transition to an HR Line of Business, and other government initiatives that relate to human resources?

Dr. Pon: The Human Resources Line of Business is a very, very important effort across the government. It really is having to do with what is the business of HR. It's really defining what the business is, what the different types of services HR provides, how do we keep track of this performance, what's the information that we track, and what's the technology.

But aside from that, it's really taking a look at the shape of HR and what we do now. I would say that as a characterization of human resources across the federal government, we're still in the age of doing a lot of transactional administrative work. We're still chasing the paper. And HRLOB along with the e-Government initiatives is really taking a look at how do we go from a paper-based human resources function to a digital function. And I think that's a very important aspect, because it's the on-demand data that you have that I don't have right now.

If you talk about what's happening in the private sector or even some parts in our government, the ready use of data is so important to making critical timely decisions. It's a matter of -- when you talk about a report being generated from your official personnel files, it takes months and months to roll all that information up and ship it to Office of Personnel Management, and they'll take a couple of months to decipher it and issue a official report. But in this digital age, you should have access to all of that information, gathering that information and synthesizing it. Technology offers that to us.

And the Human Resources Line of Business is really taking a look at some core functions of human resources such as personnel processing, such as time and attendance, certain things like that, and taking a look at how better to out-task that assignment -- and I'll be very careful with these words, because they've been such hotbed issues for this whole entire -- you know, people say, oh, you're going to outsource HR. No, we're out-tasking certain things that we all do, and some agencies do it better.

E-payroll is an example. As a government, we had 26 separate payroll systems, now we have four. Economies of scale actually speak to that. You don't really change too many things in terms of personnel processing or even payroll for that aspect. So certain organizations have been tasked with that; same with the Human Resources Line of Business. We are trying to make sure we know what are the core transactional things, and get the agencies out of that business, get them out of the business of transactional administration, and get them into the more strategic role.

Mr. Morales: So it's really focusing on the high-value-added activities?

Dr. Pon: Absolutely.

Mr. Morales: Great.

How is Energy managing its blended workforce?

We will ask Dr. Jeff Pon, Chief Human Capital Officer at the U.S. Department of Energy, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Dr. Jeff Pon, Chief Human Capital Officer at the U.S. Department of Energy.

Also joining us on our conversation is Solly Thomas, associate partner in IBM's human capital practice.

Jeff, workforce planning is vital in helping your leadership draw a clear picture of the nature of the current and future human resource decisions. Could you describe your efforts to enhance and institutionalize workforce planning within DOE? And to what extent does DOE's technical qualification program assist in these efforts?

Dr. Pon: Well, workforce planning is central to human capital management, first of all. It's a contract between the programmatic manager and human resources. With a workforce plan, you actually have a forecast and model on what their priorities are, who they're going to be recruiting, what their next 100 hires are going to be, who they're developing. Those are things that are so important to our organization in identifying, and each and every manager needs to have that.

I'm sitting down with each and every one of our Assistant Secretaries and going through their workforce plans. I expect them to actually understand what is their workforce, what is it composed of, where does it need to be in one, three, and five years, and how are we going to be closing the gap through that make, rent or buy type of strategy, which is how do we recruit them, how do we develop them, how do we supplement them from a contractor workforce perspective.

So that's a very important aspect of our human capital strategy; it's effective workforce plans and how we roll those things up and integrate that into our strategic workforce planning process. In terms of the DOE technical qualifications program, obviously, human capital, one thing that we aren't experts in is in the technical aspects of our technical workforce. I mean, we have nuclear engineers, physicists, tooling and manufacturing-type of vocations. We can't know it all, so what these forms do, actually, they set certain types of criteria or standards, maybe towards certifications, just like we've done in our contracting workforce and in our programmatic workforce.

So there are a lot of more certifications coming out of that, but then it really balances out the understanding of what it is that you do from a technical aspect, what it is that you do from a leadership perspective and a management perspective. And that is really the competency profile that we have as the Department of Energy, and we operationalize that through our competency management approach. We're not there yet, but we're developing that and pulling it all together. These last several years, it's been the effort to pulling it all together so that everybody's at the table in deciding what is a corporate model for the competency management and workforce planning.

Mr. Morales: Jeff, along similar lines, you described earlier for us the composition or the mix between contractors and federal employees at the Department of Energy. Could you tell us how federal managers can effectively manage this ever-increasing blended workforce composed of the two, and what are some of the key differences intrinsic to these two core groups of federal employees and contractors?

Dr. Pon: That's one of the chief challenges that I have here in the Department. I view my role as not just caring for the federal workforce; it's really taking a look at our whole entire workforce. Probably one of the more unique organizations in its profile, because 90 percent of our workforce are contractors, and our contractors work on some engineering feats that are simply amazing, like the National Ignition Facility, where fusion technology is happening; Stanford Linear Accelerator; the International Hadron Colliders.

A lot of these things are engineering marvels and feats, but what's important to understand is where does our workforce need to have its greatest talent and what are we doing about it? My approach to this is making sure that the knitting is done for the federal workforce first, so we have our strategic plan. We have our workforce, integrated workforce plan as a whole entire organization. I'm making that public to our contractors, because there are certain things that the Department of Energy is not very well-equipped on doing.

Nuclear engineers -- for instance, out of college, they're getting offers, 10 to 15 offers for about $100,000 to $120,000, and as you know on our GS or general schedule, we can pay a college grad at the General Schedule 7, Step 10, about $46,000 to $47,000. There's a huge disparity on that. I realize, as an effective manager, that I can't compete on a compensation basis, but our contractors can. So when we identify that skills gap, hopefully they're doing something about it.

So we're mapping out for our workforce plan for each and every one of our sites. So as people ebb and flow on the federal workforce or on the contracting workforce, the institutionalization of the process of workforce planning will be something that is comprehensive across our organization.

That's what we're doing in managing a multi-sector workforce. I think many government agencies will have that challenge as we go from a smaller workforce, larger workforce, contractor expertise or not. Federal government really does have a vested interest on understanding and working with their contractor workforce, too, because at the end of the day, there's only a certain amount of scientists, technology, engineering and mathematicians around the world.

Mr. Morales: Great. It sounds like you're driving a certain level of collaboration also with your contractor community.

Dr. Pon: Absolutely. To within the laws of the FAR, but making sure that we're voluntarily giving them information and telling them that it's not "you must do" in their contract, but it's here's what we're doing, does it make sense for you to participate in on these things on a voluntary basis? And quite frankly, from a strategic point of view, they understand the importance of participating in on this cross-collaboration and being effective competitors within their own fields, too.

Mr. Thomas: Jeff, staying on the theme of competing for talent, can you talk a little bit about what changes you're making to the recruitment process at Energy, and on the same wave, does the agency use flexible compensation strategies to attract and retain quality employees?

Dr. Pon: Solly, I think we're doing everything we can within the law from exercising the three Rs, and really taking a look at how we manage the workforce is a very difficult thing when you have certain types of capabilities within your own HR organization. I'll be frank; we don't do enough in recruiting as a government. I know that there's job fairs that we go to from time to time, but I take a look at the private sector and who we're directly competing with. One technology organization that has about 13,000 people has a workforce of 400 recruiters working in that one part of their business.

In my part of my business, I can count my recruiters on 10 fingers, so just from a number standpoint, we are encumbered upon how much resource we have in doing recruiting, active recruiting. We should be taking a look at our perspectives on that, but what we're doing about it, despite the resource challenge that we have, is really taking a look at a long-term perspective. And many, I guess, administrations really don't focus on the 10-year-type thing, but we have to as a nation in my role.

We're looking at high schools and colleges. We sponsored the National Science Bowl that just concluded. While we do direct recruiting, and post our jobs on the website, we're going with the Department of Labor and Education, along with the Department of Energy, with this thing called the American Competitiveness Initiative, and it's really reinvesting in our education structure, in our key markets in our labor force, and also in science and technology. And we're making concerted efforts and working together towards recruiting, enabling scholarships, grants to internships, to federal service or contractor organizations.

We have internship programs that come and go. But what we're trying to do right now is really wire the process where we're getting them excited about science and technology, taking the pre-algebra, algebra, because if they don't, it's over already. And really encouraging them to take internships in our complex, whether it's in our contractor workforce or on our federal side, and mapping out where they want to go and keeping them there, because I can't sell them on the dollars associated with it.

Sure you're compensated in a fair and equitable way in the federal government, but just taking a look at our science mission and taking a look at the importance of our mission as a nation -- you take a look at what's happening in the Generation Y or millennials, they are not there to hop from job to job to job. They're really trying to take a grasp of what can I do, and how can I have continuity, how can I make a meaningful contribution in this nation?

Mr. Thomas: Jeff, I'd like you to talk a little bit about the Department of Energy's learning management system. Maybe you could talk a little about how it enables Energy to more closely link training to competencies and also to employees' career plans. And on a related note, what plans does Energy have to develop an enterprise e-learning strategy as a way of shifting from a classroom-based to a more technology-enabled learning environment?

Dr. Pon: We have a long ways to go here. I used to be the e-training acting project manager. I was tasked with implementing learning management systems across the federal government. Here at the Department of Energy, we have a very good learning management system that is more on the forefront of integrating a lot of the point solutions that we have. So you can't really talk about learning management solutions without the content, without the competency management type of tools, which invariably are separate. And I think the software space right now is trying to integrate that.

And the companies that I think are doing very well are the organizations that conceptually get it, understanding that competency management is the basis of identifying your skill sets. And having that gap actually linked to your recruitment and assessment tools, linked towards your development and training things: IDPs, individual development planning. And the companies that I think will survive and be the leaders in this space will be the organizations that actually integrate a lot of the point solutions that we all love but are poorly integrated right now.

So in the Department of Energy, we have these tools, but we have a challenge in integrating these things. We come from a very strong training instructor-led type of culture, so either you're training or you're working, as opposed to a blended learning where you can take a class and then actually study on your own, an asynchronous type of learning, e-learning, or even just the e-learning type of courses with the different types of libraries and resources.

Now, in this day, it's what version do you want it in, you know? How many different citations do you have to have? So the way in which we're trying to adapt to technology is very much a bifurcated strategy, because we have on the one hand an exiting population that is used to doing certain things a certain way, and at the same time, you have an on-demand type of generation that expect nothing but the best graphics, the best type of simulation and interactiveness, or else you lose their attention. So there is a big challenge between balancing the two, but we're doing both, and blending those, and making sure that the options are there. But the challenge is the utilization of a learning management system, and using that as an effective strategy for cost avoidance and the learning experience.

Mr. Morales: Jeff, we spent a fair amount of time talking about the workforce within the Department. I want to transition a little bit now to the leadership portion of the organization. What are some of the efforts at DOE to ensure continuity of leadership through succession planning and executive development?

Dr. Pon: I like to define my terms first. Succession planning is something different than what I was accustomed to -- when you talk about succession planning on a best practice basis, you hearken to the GE Session C-type of models or different things like that where you put your high performance people and your high potential people on a 2x2 grid. And you might have nine different squares and see what you do with the northeast quadrant, which we all know about, and the bottom quadrant, which is a really easy thing to do, too. But it's the middle part that you need to figure out what to do with.

In the federal government, I don't know of many agencies that actually do really succession planning. We do replacement charting. If Bob leaves, who are we going to replace him with? And that's what we're doing. We have replacement charting, a comprehensive plan to make sure that we know who's going to be coming in and coming out while the changes of administration happen, where's your career staff that's going to be the bedrock and foundation for the next one, three, five years?

It's impressive to know that the Deputy Secretary of Energy wants to ensure that the career people are solid and intact, and he prides himself in making sure that those critical decisions are made on a consistent basis. He chairs our Executive Resources Board, and we make sure that we're identifying the future leaders so that the Department of Energy actually has some continuity going forward.

That's a very important aspect of taking a long-term view of management and succession. Our government does not identify leaders across. That's what the SCS was designed for first. We don't rotate across very readily or anything like that. So we need to do a better job at that.

We're doing a lot, but we're not doing enough.

Mr. Morales: What does the future hold for the Department of Energy's human capital efforts?

We will ask Dr. Jeff Pon, Chief Human Capital Officer at the U.S. Department of Energy, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Dr. Jeff Pon, Chief Human Capital Officer at the U.S. Department of Energy.

Also joining us in our conversation is Solly Thomas, associate partner in IBM's human capital practice.

Jeff, given the evolution of global energy markets, how do you envision DOE's human capital needs evolving in, say, the next three or five years? And how do you envision your human resources office will need to evolve to support this change?

Dr. Pon: I think our challenge is to get out of transactional administration and go towards more strategic. It's really working with the businesses directly. Instead of just processing the blue paper or the 52s and the 50s -- that's HRspeak for the process paper -- we really need to get in front of that, which is taking a look at what is the mission of an organization; how are they meeting the challenges of the next one, three, five years; what are their areas of growth or decline; how are you going to identify the right vocations within that skill set in the next one, three, and five years. That should all be teed up by a human capital professional.

How are we going to be identifying that from a workforce planning standpoint, and what are the resources that we have? It makes it much clearer as a role to serve as opposed to processing the paper on who just came onboard; how are we recruiting; did you position classify. It's the operations elements. That's our bread and butter right now. Hopefully, our bread and butter will be a business partner that identifies how do you design an organization; what are your chief strategies for your learning, your recruitment and your retention?

Mr. Thomas: Jeff, you chair the Subcommittee on Human Resources Workforce of the Chief Human Capital Officers Council. Can you tell us a bit about the Subcommittee role and responsibilities as well as its initiatives underway to address the federal workforce challenges?

Dr. Pon: As the Subcommittee chair, it's an interesting group to chair, because human resources people working on human resources people is really the Subcommittee, so it's like the consultant taking the consultant's advice. We try to make sure we identify what is currently available in terms of competencies. OPM, Office of Personnel Management, had all of the agencies actually take a competency assessment across agencies, so we really know what's there right now, but really, it's how do you get to the strategic role; what is the competency of the future? And we're identifying that with the Office of Personnel Management. And then we're going to be migrating our whole entire population to that plan.

It's identifying what skills they don't have right now, and making sure that there is a road map for getting them there, or hiring people to supplement that. So that's really the big thrust of the Human Capital Workforce Subcommittee. We're also doing innovative efforts such as inviting public and private people that are of note to share best practices with. We're taking field trips to some of our local private industry counterparts that are really deep into human resources information technology that actually have automated systems, so we know when we get to the other side, this is how it's going to look, and it's not going to be all sugar and honey; it's warts and all, and this is what they had to do.

So there's a logical progression to getting us to a human capital type of skill, and I think we have a long ways to go, but we're making sure that we know what the best practices are. So we're setting the bar, we know where we are, and we're coming up with the strategies to close the gaps.

Mr. Thomas: Jeff, you're a previous recipient of the Federal 100 Award, which goes to individuals who've made a difference in government technology in any given year.

First of all, congratulations on receiving such a significant award.

But given such a perspective, could you tell us what emerging technologies you see that hold the most promise for improving the federal management of human resources?

Dr. Pon: I think before we get into a digital economy for HR, we really need to know what it is that we're trying to answer; why do we want to do things? I always ask the first question, why do you do the things that you do to my managers, and they go through their programmatic accomplishments -- I went to this meeting, had this conversation. I said but why do you do that? And the question on why do you want to utilize technology in human resources is pretty simple. It's we need to be much more effective in delivering the data so we have knowledge. Knowledge to behave, behave to perform and have the performance, quite simply. And that's what technology does.

In our generation, I think what's different about any other generation that has preceded us are two things: one is the way in which we work as teams; and technology. And those are the two enablers that have shaped the way in which we work right now. For the federal government to be slow on adapting technologies creates completely complex systems. If you take a look at the proliferation of technology, as a government, we actually bought on the personal computer basis, then the LANs, the local area networks, and then the WANs, and so on, and so forth, and we collected all those things up. And guess what, it didn't all connect together. Surprisingly so. Why? It's because it was locally brought up.

Same with human resources. A lot of our practices were brought up in a localized environment, and what we're trying to do is come up with standardization in all those things, and at the same time institute technology. Technology can be an enabler for standardizing these different types of practices, so there is employee self-service, management self-service, and reporting self-service. It's frustrating as a citizen when you can't look up your tax returns for the last seven or eight or nine years, but they're working on that. You can actually file your taxes now to the IRS via e-mail. Wouldn't it be nice if we could actually submit our resumes online?

Yes, we can now. So we've made some pretty significant strides in adapting towards technology, but we're at the tip of the iceberg in terms of how we utilize technology in the management of human capital.

Mr. Morales: Jeff, you've obviously had a very successful career within the public service, and you have a tremendous amount of passion for the job that you have over at DOE. I'm curious, what advice would you give to a person who perhaps is thinking about a career in public service?

Dr. Pon: I came here to serve the federal government, and I think for my career counterparts, there's no higher calling than serving as a civil servant. We sometimes recognize the good men and women of our military, but from a management standpoint, from the bread and butter of how our government works, the Executive branch civil service is where it all meets. And I think it's an honor to work with our career civil service people, and encourage at every single conversation that I have with our young people that federal service is not something that should be considered; it should be something that you do in your life.

I encourage the young people to make sure that they're not only on the job market, but they're citizens. To be a citizen of the United States -- in my family history, it's being a citizen of choice. We came to this nation generations back, but it's just like every other story that we hear. We come here in search of hope, of liberty, and the pursuit of happiness. And I think there's no other higher calling than actually serving that institution for some time in your lifetime. Maybe as a whole entire career, maybe as two or three years, but that's the draw there.

You're doing good for the rest of your whole entire citizenship, and that's something -- at times, a very -- gulp in the back of your throat and saying, gosh, I'm glad I'm serving my time here in that capacity and giving back as opposed to -- you know, I love building companies and certain things like that. But this has been such a delight to give back to the federal government.

Mr. Morales: Jeff, that's just a wonderful perspective. Thank you.

Unfortunately, we have reached the top of our hour, so we've run out of time.

I want to thank you for fitting us into your busy schedule today, but more importantly, Solly and I would like to thank you for your dedicated service to our country at the Department of Energy.

Dr. Pon: Albert, thank you so much. And Solly, thank you for the questions, too.

I appreciate the time that you've spent with me in discussing some of the important efforts in the Department of Energy. The Department of Energy is a vast and broad organization that can't really be covered in one hour, but I would encourage some of your listeners to really take a look at the Department of Energy's website, www.doe.gov. It talks about the rich history, about the interactions of Enrico Fermi, of Oppenheimer, of Einstein, of our 85 Nobel Prize winners, and how they've actually combated the three things that I talked about -- the three isms -- the communism, the fascism, and terrorism right now.

There's no more important issue that we have in energy security, national security and also American competitiveness, and I'm glad to serve at the pleasure of the President and the Secretary and this nation, as a taxpayer and also as a civil servant.

Mr. Morales: Great. Thank you very much.

This has been The Business of Government Hour, featuring a conversation with Dr. Jeff Pon, Chief Human Capital Officer at the U.S. Department of Energy.

My co-host has been Solly Thomas, associate partner in IBM's human capital practice.

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.

This has been The Business of Government Hour. Be sure to join us every Saturday at 9:00 a.m., and visit us on the web at businessofgovernment.org. There, you can learn more about our programs and get a transcript of today's conversation.

Until next week, it's businessofgovernment.org.

Originally Broadcast Saturday, September 9, 2006

Arlington, Virginia

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

The Business of Government Radio Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is Captain James Shannon, Major Program Manager for Future Combat Systems Open Architecture of the United States Navy. Good morning, Captain.

Captain Shannon: Good morning. How are you doing?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(Intermission)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(Intermission)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(Intermission)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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