Originally Broadcast December 1st, 2007

New York , New York

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. As we continue our effort to engage government executives who are changing the way government does business, we are here on location this morning in New York City.

All across America, small towns and large cities are facing the social realities of homelessness, and the steady increase in demand for homeless services. While providing shelter and services to those in need is critical, the national conversation is shifting from managing to ending homelessness, especially chronic homelessness. New York City has embraced such a goal, and has begun to reshape and expand its services to prevent homelessness in a more comprehensive and coordinated way than ever before. From a system that did little more than provide cots and meals to single adults and families, it is now recognized nationally and internationally for providing quality shelter and related services in humane settings, with a client-centered philosophy.

With us this morning to discuss his agency's efforts in this area is our special guest, Robert Hess, commissioner of the New York City Department of Homeless Services.

Good morning, Rob.

Mr. Hess: Good morning.

Mr. Morales: Also joining us in our conversation from IBM is Shelley Mills-Brinkley, partner in IBM's public sector social services practice.

Good morning, Shelley.

Ms. Mills-Brinkley: Good morning.

Mr. Morales: Rob, let's start off by learning a bit more about your department. Perhaps you could give us an overview of the mission and history of the New York City Department of Homeless Services.

Mr. Hess: Sure. The Department of Homeless Services in New York was created in the early '90s. Before that, we were part of the Human Resources Administration in the city. And the mission is to support individuals and families that are experiencing homelessness in our city, and to help them move from the experience of homelessness back into the community with whatever supports they may need to support them in the community.

Mr. Morales: Rob, can you give us a sense of the scale of this operation? How is the New York City Department of Homeless Services organized? What's the size of its budget, and how many full-time employees do you have?

Mr. Hess: Sure. The Department of Homeless Services has a budget of just under $1 billion a year. We have over 2,300 employees within the Department, and we contract out for services that include about another 20,000 employees that we pay for through contracts across the city in order to support people experiencing homelessness.

Ms. Mills-Brinkley: With that big operation, can you give us an idea of your role as commissioner? And what are your official responsibilities?

Mr. Hess: We are very, very focused in the Bloomberg administration on the mayor's vision. And with respect to homelessness and the reduction thereof, it's the vision of the mayor that we reduce the number of people sleeping on our streets, and we reduce the number of people living in our shelters by two-thirds or more before midnight on December 31, 2009, so we're very clear in our mission and our vision. And everything we do in the Department is geared toward not managing homelessness, but ending it, and so we're very focused on those objectives.

Ms. Mills-Brinkley: So with such a big vision and mission, what are the top three challenges that you see in your position in getting those goals met?

Mr. Hess: I think the biggest challenge is to figure out the strategies that we need to actually get to the kinds of reductions we're talking about. So with respect to people living on our streets that are experiencing chronic homelessness, we've had to develop a whole new set of strategies on the street, to include much better access to housing directly from the streets, and the supportive services that supports people in that housing. With respect to the shelters, we've had to develop a whole new set of rental subsidy programs to help people move quickly out of the shelter system and back into the community with the support that they need. And so the strategies are a little bit different based upon the population, or where people are starting from, but the biggest challenges are really understanding what it will take to help create the reductions in homelessness that we're trying to achieve.

Mr. Morales: Rob, I understand that you've come to New York City via Baltimore in sort of your most recent role. Could you describe your career path for our listeners? How did you even get started in this field?

Mr. Hess: Sure. I spent five years in the Army, and then after that went to work for the Disabled American Veterans in Baltimore; ran one of the largest thrift stores in Baltimore in one of the toughest neighborhoods in Baltimore and did that for 16 years, and really had a thorough understanding and primer, if you will, on poverty and people who live in poverty, and how they're just so resourceful in so many ways, and we really were one of the largest employers of low-income people in Baltimore City, and we were very, very successful. And so went from that to looking at the issue of homeless veterans in Baltimore. And then created a program in Baltimore called the Maryland Center for Veterans Education and Training that actually became I think the national model for how you could support veterans that were on the streets. And, you know, isn't that tragic that so many of our veterans serve our country and protect us and then end up on our streets? We really have to do better as a nation with respect to that. So we had some success with that.

And then I didn't like what I saw with respect to public policy in this country of managing homelessness, and so ran an organization in Maryland called Action for the Homeless, ultimately led an organization called the Center for Poverty Solutions in Maryland, and then moved to Philadelphia when Mayor John Street asked me to join his administration. And we had a lot of success there in reducing the number of people in the streets over a five-year period of time, at which point Mayor Bloomberg asked me to join his administration here in New York, and I've just been honored to do that.

Mr. Morales: Rob, tell me, how have these previous experiences prepared you for your current role here in New York City, and how did they shape your management approach and your leadership style?

Mr. Hess: Well, I think the number one thing it taught me is you really -- in order to understand a problem, in order to understand what's really going on with somebody living on the streets or living in a shelter, you can do all your research, you can look at all the data, but at the end of the day, you really got to sit down and talk to people that are experiencing that situation and better understand what their wants and needs and desires are, and then shape programs to support them and where they want to go, and there's just a lot of examples of that. So that I think has influenced my management style, my leadership style, my thought process in creating programs and policy.

Beyond that, I think in any organization, no matter how small or large, there are some things that are very clear. You know, the idea of empowering the experts, the professionals, within any organization, to be able to move toward a common vision and help them succeed by giving them a lot of support, a lot of communication, a lot of access. And the freedom to take risks is very, very important. Now, we try to take calculated, well-measured risks, but we're very clear that many, many people worked very hard over a long period of time to end homelessness and they haven't been able to do it. We've got to be able to think very differently, very creatively, take some risks, figure out what's working and keep doing what's working, figure out what's not and stop what's not working.

That stopping what's not working is not always easy, especially when you talk about people that have organizations, very good organizations, that may have contracts to do things that aren't working as well. Very often, we're hesitant to say we ought to stop funding that. Well, here in New York and in Philadelphia, we did that, and focused on strategies that worked, and it made a big difference over time.

And so I think it's a combination of all those things. I think at the end of the day, probably the biggest thing is support our staff, be very clear on our vision, our objectives, our timelines, and do everything we can to communicate that over and over and over again, and stay focused on where we're going.

Mr. Morales: You know, many times in government it's easy to take a safe position, but it sounds like you're really driving towards a culture of innovation and of risk-taking.

Mr. Hess: Absolutely right. The thing that comes with that, of course, is change. And any time you're driving change, you can't do that without creating a certain amount of stress or tension, and so you have to be willing to accept that. And then you have to kind of manage the change and the stress that it's creating in a way that it's productive stress and doesn't become counterproductive. And so that's a little bit of the management balancing act that we try to obtain as we move toward our vision.

Mr. Morales: Great.

What about Mayor Bloomberg's plan to end chronic homelessness in New York City?

We will ask Robert Hess, commissioner of the New York City Department of Homeless Services, 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 Robert Hess, commissioner of the New York City Department of Homeless Services.

Also joining us in our conversation from IBM is Shelley Mills-Brinkley.

Rob, a typical perception about homelessness is that a homeless person is predominantly male, perhaps mentally ill, and living on the street. Perhaps you could shed some light and clarify some of these misperceptions by telling us what population represents the majority that your agency serves. Who's most at risk, and what events precipitate or cause individuals or families to become homeless?

Mr. Hess: There's no question that the largest majority of people experiencing homelessness we see are women and children, families with children. The second fastest-growing group are adult families, or what we call "couples." Actually, the smallest group, and the group that we're having the most success in eliminating homelessness, is single adults that you described.

Since we announced -- the mayor announced the five-year plan, we've seen a 19 percent decrease in single adults. And we're actually at the lowest level with single adults in our system that we've been since 2002, and we're continuing to go down. And so we feel very, very good about that. We've seen a 15 percent decrease in the number of individuals, primarily single males, living on our streets. But at the same time, we've seen a little bit of growth in families with children and adult couples, and so they are by far the fastest-growing and the majority of people that we see.

Mr. Morales: That's interesting. It must take much different strategies to address those three groups that you described.

Mr. Hess: It really does. And the other thing that you see is more and more young moms with a couple of children entering the shelter system. Part of that you can attribute to a tougher rental market, and part of that you can attribute to the really low-wage jobs that are available at an entry level. But the gap between what people need to earn in order to pay the rent has really gotten very, very large.

Mr. Morales: Could you give us a brief overview of Mayor Bloomberg's five-year plan to end chronic homelessness? Specifically, give us some background on its development, and a high-level outline of the nine-point action plan that seeks to reshape the city's approach to assisting homeless and those at risk.

Mr. Hess: Yeah, the mayor and Commissioner Linda Gibbs, who's now deputy mayor, really spent a lot of time engaging leaders across New York in order to bring them together on a very high level and think through the kinds of strategies we need to move from managing homelessness to ending it, and set some very aggressive targets. And in fact, the group came back and developed a plan that would get the 2/3 reductions, both the number of people in the streets and in our shelter system, within 10 years. And the mayor reviewed that plan and said the plan is great, it's exactly what we should be doing, but I don't have 10 years. We have term limits here in New York. I've got five years left.

So in the space of just a few very quick minutes, the plan went from a 10-year plan to a 5-year plan because the mayor said we need to make ourselves accountable for this and not leave this important work to any future administrations. And so all the points that were raised kind of accelerated in importance, and the timelines accelerated very quickly.

And so what we have learned with the support of all those high-level folks is that this plan needs to be dynamic. The strategies are changing by the month. I don't think that there's many of the initial strategies that we have not replaced with new-and-improved versions of those strategies or just very new and creative ideas that weren't even thought of by the initial group.

Let me give you an example. I was surprised to learn very early on in my tenure here that we had 800 individuals in the shelter system that had been in the shelter system in New York City for between 8 and 20 years. Can you imagine living in a shelter system in any city in this country for the better part of a generation? And yet many people were. And so once we recognized that, we then went to work in an aggressive way -- a 100-day initiative to place all of those individuals into permanent or permanent-supportive housing. And we did it. We then found that we had 46 families that had been in our shelter system for more than five years. In that same 100 days, we moved those 46 families into permanent housing.

And so we made a lot of progress, but that particular strategy could not have been foreseen by those developing the plan. It was only digging deep and drilling deep into the data to understand who was in our system that allowed us to identify those populations, develop strategies very quickly, enact those strategies, and then get that job done. The beauty of this kind of technique, however, is that we then learned a lot of things that we can apply to other families that are in our system.

Mr. Morales: That's just fantastic, and you've alluded to some of the great successes that your agency has had. So what are some of the big-ticket items that still remain to be done to meet the 2009 goal?

Mr. Hess: Well, I think most of them are in place. We recently created four new housing subsidies. We don't have a one-size-fits-all population, and so we've got four new strategies. We call them the "Advantage New York" suite of housing subsidies. We'll spend $129 million this year on those housing subsidies alone. But they will allow people to move out of shelters more quickly, move back into the community, get the support that they need to become self-sufficient or move towards self-sufficiency, and we think that's very important.

We have added a lot of money to community-based prevention sites. And so we'll soon be spending about $20 million a year to develop these community-based sites. And we'll be attaching Section 8 subsidies and other subsidies to those sites, that we'll be spending well in excess of another $100 million a year on community-based prevention. And so those are some of the kinds of big-ticket items that we've put into place to help move us toward our objective.

Ms. Mills-Brinkley: Can you tell us a little bit more about your new homeless outreach strategy? How does it represent a redesign of the street outreach services? And I understand that you've implemented a new point -- a single point of contact, if you will, in all five boroughs.

Mr. Hess: Yes. I mean, this is very exciting. I mean, one of the first things I did upon arriving in New York some year and a half ago was to spend a night a week for the first couple of months on the streets across the five boroughs of the city with various outreach teams, see what's going on, talk to people living on our streets, watch our outreach teams in action. And what I concluded is that we had a lot of well-meaning outreach teams doing the best they could with limited resources, without any ability to collect or share data in a meaningful way, without access to the kind of housing resources that they needed to help people move off the streets. And so it was clear to me that we weren't going to get from where we were to our target of reducing the people in the streets by two-thirds or more using the strategies that were in place. And I'll spend a minute just telling you what we did about that, because I think it's instructive of how we do business.

So I couldn't even figure out, because these contracts were across various city departments, how many outreach teams we had. So I decided to hold a meeting one morning and invite every outreach team to the meeting. The only ticket to admittance to the meeting was you were a line outreach worker, you worked on the streets. No supervisors, no managers, no executive directors. And I just went to see who was going to show up. It turns out 160 outreach workers showed up.

And so I said to them, look, our vision's very straightforward. There's 4,200 people living on the streets today. Before midnight on December 31, 2009, we need to get down below 1,429 people living on the streets. Tell me how to do it. Tell me what works, what doesn't work. What would you need to accomplish that lofty objective?

And we spent the next couple of hours listening to outreach workers tell us what worked, what didn't work, and what they would need; captured it all on flipcharts; sent all the outreach teams to lunch; reorganized all of those charts in priority order. And then when they came back from lunch, we did what everybody's had done to them: We gave them each three or four sticky-colored circles and said go vote for the things you think we should -- or the highest priority. They did that.

And then in the afternoon, we invited the outreach workers back in with all their bosses: the supervisors, the directors, the executive directors. And I said to the group this is what I heard this morning. In order to get from 4,200 to 1,400, we'll never get there doing what we're doing for these reasons that we heard, and so here's what we're going to do. I'm going to terminate all your contracts and we're going to put out a new concept paper and then a new RFP and have organizations apply. And we're going to have one single point of accountability in each borough with a plan. It can be a multidisciplinary plan. You can have as many subcontractors as you want. But we're going to fund a plan that will get us to the target by the specified time in each borough in this city.

And as you can imagine, there was a little bit of grumbling to start with. And once we got beyond that, a remarkable thing happened. Providers started talking together and working together to develop these plans to respond to the RFP, and many of these providers had not worked together before. And what came out of it was an amazing competition. And it took the better part of a year, but currently today in place in this city on the streets are very innovative, very cooperative, resource-rich efforts with absolute plans, with absolute targets in every borough, one single point of accountability. And so now we're organized in a way to get the job done.

While we went through that process, though, we couldn't lose any time, and so we did two additional things. The first thing we did is we began work on a handheld wireless device that every outreach worker can now have that collects and shares data in real time, so that nobody had to worry about when the last time somebody was contacted or tried to ask questions, you know, of somebody on the street for the thirtieth time. Can do it once, get that data in, and share it.

The other thing we did during that year was we looked around the city and we said we've got encampments in this city that are just a disgrace. We went around and took pictures of all 72 encampments. We found 72 across the 5 boroughs, went to the mayor and said, Mayor, this is the city today. And he said that's not good. What are we going to do about these encampments?

We said, well, we want to get all city departments working together that are necessary, and outreach teams, and go out and end the need for anybody to sleep in these unhealthy encampments. The mayor said do it; gave us a year to do it. We did it in six months. So there's no encampments left in the city of New York at the moment. Every now and then, one will spring up and we'll go address it very quickly. But we used that learning in how to kind of end these horrible encampments and house people in those encampments as lessons learned that now inform the new strategies that are occurring on our streets. And so that whole process really informs how we are creating the strategies to move toward our target.

Ms. Mills-Brinkley: And of course, preventive care is part of the whole strategy as well, because you have to prevent the whole incident of homelessness from continuing. The old adage, "An ounce of prevention may be worth a pound of cure." What are you doing in the prevention area, if you will?

Mr. Hess: You know, that's just really very exciting. What we did in prevention is we looked across the city and we said we've got six community districts where a very high percentage of people in our shelter system come from. And so we put what we call "home-based" or "community-based" prevention centers in each of those six community districts, and that was about two years ago. And we gave those providers wide range in how they would use the money we gave them to prevent people from having to enter the shelter system and help people stay in their home stably. And here's what happened: in those six community districts, the percentage of people entering the shelter system went down, while at the same time, the community districts that did not have prevention services available to them, sadly, went up.

And so what did we learn from that? We ought to have prevention all over the city. And so now, as we speak, we're ready to award contracts all across the city of New York to put home-based, community-based prevention in all of those locations across the city, so we can support anybody that needs it, and try to bring down the number of people entering a shelter from across the city. Much better outcome to intervene on the front end and help people stay in their housing.

Now, the other thing we decided to do with our prevention sites is attach our Section 8 priority certificates, our federal housing subsidies, to those sites. So historically, people, sadly, have entered the shelter system, in some cases, in New York City in order to try to get a housing subsidy, because they need it. We don't want them to have to go through that. So we've attached about 3,000 Section 8 certificates for access only by our home-based providers. And so I think that's making a big difference as well.

Mr. Morales: That's fantastic, Rob, and I love the enthusiasm here. Now, you mentioned earlier a little bit about Advantage New York. So what are the benefits of this program, and how does it differ from the city's previously rental subsidy program called "Housing Stability Plus?"

Mr. Hess: Well, I don't talk about Housing Stability Plus anymore. But if I did, I would tell you that that was a program that was well-intentioned, served our needs for a period of time, but had some unintended consequences associated with it. So if I was to talk about it, which of course I don't anymore, I would probably tell you that you had to be on public assistance in order to receive the rental subsidy. And so if you were out and in an apartment and you had any disruption to your public assistance, the rent didn't get paid that month. And that, of course, made landlords crabby when they don't get paid. And so that was one disincentive.

A second disincentive was, in order to stay on public assistance, you couldn't earn over $8.50 an hour. Well, that's a problem. We need people out working and earning, and we don't want to disrupt their rent because they're earning too much. And so there were some things in there that just didn't work as well as we'd like, and so we moved from that to our suite of Advantage New York housing subsidies, which we think are much stronger.

Now, the first premise we used -- and people told me this as I visited shelters all over the city and said what's working with HSP and what do you need that you're not getting and what would be the perfect housing subsidy and all the rest, what people told me overwhelmingly was they wanted to work. People want to work. They want to be able to pay their own bills. But they need jobs that pay enough for them to be able to pay their own bills, or they need a combination of being at work and a little bit of a housing subsidy to get that done.

And so the first Advantage New York program we created is called "Work Advantage." And here's how it works: you're in the shelter system for 90 days, you're working for 30 days, at least 30 days, at at least 20 hours a week at a minimum wage or higher job. Once you've accomplished just those basic criteria, we give you a letter that says you're eligible for Work Advantage. At that point, that family goes out and finds an apartment, tells us where that apartment is. We go out and inspect that apartment to Section 8 standards, the HUD standards, because we want to be sure people are moving into a quality apartment.

Once that happens, the family moves out into the apartment. We're going to pay the rent for at least a year and maybe two, but we're going to ask that family to do three things. Keep working, try to expand their hours and expand their earnings the best they can.

Second, open a checking account. We're paying the rent, so we want them to put some money in a checking account and write a check to the landlord every month for $50. Not much, but the experts tell us we're much better off if that family gets in the habit of making a rent payment every month. So even though it's 50 bucks, it's important to get into that habit.

The third thing we ask them to do is open a savings account. And into that savings account, again, because we're paying the rent, we ask folks to put the value of between 10 and 20 percent of that rent into a savings account every month. So if the rent's $1,000, put between $100 and $200 a month into a savings account. Why? Because there's going to be rainy day, and when that rainy day happens, we don't want people to have to run back to the shelter system. We want people to be able to weather that storm and stay in stable housing. And so those three things are very important.

Now, if toward the end of the year that family says to us thank you very much, this was great, we're fine on our own from here on, we don't leave it at that. We do two more things, and this has never been done in this country before, I don't believe.

The first thing we do is say to that family, okay, you paid $50 a month to the landlord. That's $600. We're going to write you a check for $600 so you can add to your savings account. We're going to reimburse you that money you paid your landlord.

The second thing, if you put $200 a month into your savings account, 20 percent of the value of your rent, and you've got $2,400 in savings, we're going to write you a check and match that. So at the end of that year, when you're ready to make it on your own, you're going to have you could have as much as $5,000 in the bank. We think that's very exciting. We think that will help many families. It gives them the hand-up that they need and supports the work that they've put into that first year, even at low-pay wage paying jobs in order to be moved towards self-sufficiency in a real way. Real hope.

Now, not every family's going to make it over a year. And so for families that are playing by the rules but still can't make ends meet, maybe there's been some fits and starts in the job market, maybe hours go up and down, who knows? We'll extend them for a second year, same deal. So at the end of two years, they could have up to $10,000 in the bank. And we think most families will be fine after that.

But there'll still be a small segment of families that'll need some additional help. And for them, we tie them into what? Home-based, community-based prevention sites to work with them, to move them to another program if, despite their best efforts and ours, they couldn't get to self-sufficiency after two years. We think this is very exciting. We don't want to see those families come back to the shelter system, because that's not a highest and best outcome for anybody. That's Work Advantage.

And you say, okay, so that's good, but what if you can't work? If you can't work, we have what we call "Fixed Income Advantage." If you're on SSI, SSDI, fixed income, can't work, never be able to pay the rent in New York City on that little bit of income, we're going to give you a letter and move you out. You go find an apartment; we're going to inspect it. You move out, we'll pay your rent for up to a year. But the day you move out of shelter, we give you a home-based after-care worker to work with you to get a Section 8 certificate with our priority, the top priority. The idea being you move out immediately, don't have to stay in shelter, we get a Section 8 for you. We flip the funding in place over the course of the year, even language in the lease so it can flip from our funding, local funding through Advantage, to Section 8 funding, so the family doesn't have to move. And they ultimately end up with a long-term subsidy because they need that. That's Fixed Income Advantage.

Two more. This is very exciting. One is Children's Advantage. We take the list of our families and give all that information to the child welfare system. In some families, the child welfare system comes back and says to us you know what? You know, some of these have got kids in foster care, there's other issues going on here. This family really doesn't need to be focused on work just yet. We need to focus on giving them the support they need to bring their family back together. So for that family, we give them a Children's Advantage letter. They move out, like Fixed Advantage; find an apartment; we inspect it; they move out. Child welfare system works with them to reunite their family, and we get them a Section 8 in place because they're going to need some long-term support.

Fourth group, Short-Term Advantage. Now, this is interesting and it's very sad in many ways. We have a significant number of families in our shelter system that have -- their income level's fine, but they ran into a little bit of a pothole in the road, maybe got evicted, have short-term problems, but they're still working, they still have good income. To those families we say go out and find an apartment. An apartment can be in New York City or it can be outside of New York City, but find an apartment with a rent level that you can afford to pay given your income, and bring us back a copy of the lease. And there, we recognize they need a little bit of a hand-up to make it. And so when they bring us back a copy of that lease, we'll pay the landlord the first four months' rent, we'll pay the security deposit, we'll pay the broker's fees, and we'll give that family a furniture allowance.

Now, we've moved over 300 families out of the shelter system in New York City using Short-Term Advantage when we started the pilot last summer, and not one of those families has returned to the shelter system. Not one. It's very exciting.

And, you know, you talk about the numbers and you say that's great, but when it's Mrs. Jones, who was living in a shelter system with two kids and now has her own keys and is out there doing so well in the community because of this, and was working all along, she just ran into a little pothole, we gave her a little bit of a hand-up. And she's just so appreciative, and that family is so much better off, it really makes a big difference.

Mr. Morales: That's fantastic. I mean clearly, this is a model of teaching and providing people the tools to help themselves, and you've tailored this to the individual needs as opposed to a cookie-cutter approach to your programs. That's fantastic.

What about delivering homeless and social services in the wake of a natural or manmade disaster?

We will ask Rob Hess, commissioner of the New York City Department of Homeless Services, 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 Robert Hess, commissioner of the New York City Department of Homeless Services.

Also joining us in our conversation from IBM is Shelley Mills-Brinkley.

Rob, New York City has become synonymous with emergency response and the lessons learned from the 9/11 disaster. Could you elaborate on your efforts to plan and prepare for future emergency situations? Specifically, how is New York City preparing to deliver homeless and social services in the event of a natural or a manmade disaster? And what are some of the key lessons learned from previous experiences that are being brought to bear in your planning?

Mr. Hess: You know, that's really a loaded question in so many ways. I think in the post-Katrina era -- especially in the post-9/11 era, but more so the post-Katrina era, local jurisdictions have realized that we may not always be able to rely for initial response as quickly as we might like from, say, the federal government. And I don't mean that as a criticism of any federal agency.

Having said that, the mayor here, Mayor Bloomberg, has tasked us to be able to provide initial support to New Yorkers in the event of any natural or other disaster that might occur. And so our department has worked very closely with the Office of Emergency Management and other city departments, especially social service departments, to craft a plan whereby we could house in the worst-case emergency -- which frankly, I hope we never have to unveil -- but we could house up to 600,000 New Yorkers after an event. And we would do that by opening up to 65 evacuation centers, up to 511 shelters, and providing meals and support safely to over 600,000 New Yorkers. And I think if we did that, our shelter system would be the sixteenth or seventeenth largest city in America. And so again, we certainly hope that we never have to do that, but we are training city employees to be able to meet that mission should it ever become necessary.

And so what does that mean? That means we have to train about 70,000 New York employees. We would need 17,000 employees on every shift, and we would have 12-hour shifts for as long as an event were to last. We've had to begin stockpiling supplies, work very closely with the Department of Education to figure out what schools we could use, and with the police for security and all the rest. And so it is a huge, huge planning and logistical undertaking that the mayor has tasked us to do. And again, working with OEM and other city agencies, we're well on the way to getting there. We've trained thousands of city staff just in the last three or four months. And so we view it as a coastal storm planned response, but it could be rolled out for any emergency.

One of the interesting things that I learned in this process is that New York City is one of the three most likely targets to a major Category 3 or 4 storm. Who knew? I certainly didn't. After I guess Florida and New Orleans, New York City is the most likely place that such a storm could hit. And so we're preparing for that, but we also understand that we have responsibility in any other event, and so we're training now all the time. In fact, we'll be sending a contingent from DHS along with other New York City contingents to California to work on the sheltering system there around the -- on the wildfire that occurred there. And so we will continue to look for other training opportunities around the country, and benefit from that knowledge as well to inform how we will meet the mayor's goal of being able to house New Yorkers here in the event of a catastrophe.

Mr. Morales: Let's hope that we never need to activate that plan.

An independent research organization called Public Agenda recently released a report entitled, "Compassion, Concern, and Conflicted Feelings: New Yorkers on Homelessness and Housing." First, what are some of the key findings in this report? And second, to what extent does this independent research firm confirm that you're on the right track or need to go in a different direction?

Mr. Hess: Well, this is a very interesting report. I mean, largely what they found was that New Yorkers are with us. New Yorkers support the resources, the work that we're doing to help end homelessness. They think ending homelessness is the right approach. And they also think that people that are experiencing homelessness have to take some personal responsibility as well. And so if we create guidelines for coming in to apply for shelter and other things, the public supports that. But at the end of the day, the public, based upon this report sort of confirms, they're willing to put extra resources, extra time, extra energy into their neighbors that are less fortunate and provide great services that end homelessness, but there also has to be a balance, and the balance is on the side of some personal responsibility being accepted by those that are receiving those benefits.

Ms. Mills-Brinkley: Speaking about compassion and concern, I'd like to turn our attention here for a minute to the veterans, and I know you spoke earlier about what you did previously in working with the veterans population in Maryland. According to the National Coalition of Homeless Veterans, NCHV, veterans returning from active duty often face an array of problems during the transition from military to civilian life, which places them at risk for homelessness. Would you elaborate on the programs you have in place here in the city to address the homeless veterans?

Mr. Hess: Look, I am just so proud of our mayor and then-VA Sec. Nicholson, who came together last December and said we're going to end the need for any veteran in New York City to need to sleep on our streets or to enter our shelter system. The mayor asked me to co-chair a task force on this issue with Jim Farsetta, who is our VA regional director. And I have to say that Jim and his staff are just great partners; worked together with us very closely. We'll before long begin rolling out the strategies that we believe before the end of this mayor's administration will eliminate the need for any veteran to sleep on our streets, or any veteran to sleep in our shelter system. We can do better than that and we should. We owe it to those veterans. And I know the Veterans Administration is committed to that. I know the mayor is committed to that. And so this administration will work with the VA to get that done, and we're just very proud of those efforts.

What a tragedy that any veteran who serves this nation would now walk our streets. We just have to do better than that. We will in this city.

Ms. Mills-Brinkley: Thank you. When you're talking about any of these populations, a lot of times they need multiple types of services in order to end their homeless situation. Would you elaborate on your working relationship with other city social services agencies, such as the city's Human Resource Administration and Department of Social Services? You talked earlier about working with Child Welfare. That would be under the Administration of Children's Services. Can you talk about the collaboration and coordination of services?

Mr. Hess: Yeah, let me do that in kind of two ways. First, let me take you back to the encampment discussion we had earlier. What I didn't spend much time on was talking about I talked about the six months it took us to eliminate the encampments. What I didn't talk about is the three months prior to that, it took us to get 12 city and state departments working together to figure out how we were going to go deal with these encampments in a humane, social service-oriented way. But we did that: brought city and state departments as diverse as the Department of Transportation, Department of Sanitation, police, fire, parks, and others together in a coordinated way, and that effort continues to this day. And so we can be very proud of that in this city, and it's an example of how these really are intergovernmental efforts.

With respect to social services, we're very fortunate in this city to have a deputy mayor for social services, Linda Gibbs, who, under her leadership, all the social service commissioners report to. And we work very closely with each other as a result. And so there's really no issue that can't be talked about or dealt with or strategies created across departments.

For example, when we created our new Advantage subsidy programs, not only do our clients benefit from that, but the Human Resources Administration clients that are in domestic violence facilities can benefit from that. There are some families that are identified by ACS that benefit from that. And so we try to do things collaboratively across agencies in a way that you don't always see. And I really would say that the mayor creating a deputy mayor position for that purpose has really made a big difference in the city.

Ms. Mills-Brinkley: Wonderful. So talk to me a little bit about the McKinney-Vento Homeless Assistance Act. Is that a tool that you use as well in ending homelessness?

Mr. Hess: It's a very important tool. Now, as you know, that's one of the primary funding sources for homelessness services across this nation, and so we use it well. I mean here, we use it to renew programs that are working in our community, but we also use any additional dollars we're able to scrape together out of that competition to fund supportive services for all of our supportive housing programs.

You know, the mayor here committed to adding 12,000 units of supportive housing across the city over a 10-year period. Well, the bricks and mortar is one piece to that, but then you need the service side. You need to be able to provide the service dollars to support all the families and individuals that'll be in that supportive housing. And we use the Shelter Plus Care portions of the McKinney funding in order to do that. And so it's a very important funding source for us.

Mr. Morales: Now, Rob, you're obviously engaged in solving a very complex and multidimensional issue, and you spoke earlier about coordinating multiple city agencies and organizations, but perhaps you could elaborate on the kinds of public-private partnerships that you engage to improve outcomes. And in what areas would you like to perhaps either enhance or expand these types of public-private collaborations?

Mr. Hess: That's such a broad question. There are so many areas we could take that down, but let me to say to begin with that much of what we do, we do through contracts with nonprofit providers. And in New York City, we have some of the best nonprofit providers in the country, I think. That makes our job much easier, when you can reach out and contract with a provider you know is going to get the job done.

Those providers also have boards of directors that have high-level leaders from across our city, and so they're being informed through their membership on boards of directors of nonprofits. And that education is very important to us, because then as we reach out to the business community and others, they have a much keener understanding of what we're trying to accomplish and how they might be able to help us in a variety of ways. And so I think that's very important.

You know, in this city, the mayor has created a Commission on Poverty to be able to reduce the level of poverty across the city, and do some very creative things with respect to cash incentives. And so the foundation and the private sector has stepped up in a very big way to support this particular initiative of the mayor so that we can try some new and innovative things that have worked in Mexico and other places in order to reduce the poverty rate in our city. And so all of that helps us. And so there's just so many of these relationships.

I mean, government, the best of governments, can't do very much by itself. We really need the public support. We really need the nonprofit community working closely with us in support of our goals. We really need the business community, the foundation community, the academic community, all working toward common visions when you have visions that are as bold and aggressive as we have in this city.

Mr. Morales: That's fantastic.

What does the future hold for the New York City Department of Homeless Services?

We will ask Robert Hess, commissioner of the New York City Department of Homeless Services, 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 Rob Hess, commissioner of the New York City Department of Homeless Services.

Also joining us in our conversation from IBM is Shelley Mills-Brinkley.

Rob, maintaining a highly skilled results-oriented workforce has got to be key to the success of any organization, especially yours. Can you give us an overview of your agency's human capital strategy? What are some of the steps being taken to attract and maintain a high-quality technical and professional workforce?

Mr. Hess: Well, we do a number of things. First, we are so fortunate to be in New York City, that when we have senior-level positions, we typically attract applications from around the country, and in some cases, around the world. And so the level of talent we're able to attract is just remarkable. And part of that is I think we're probably the largest department of our kind, certainly in our country and perhaps in the world, and so that helps us.

But we do do some other things as well. I mean, we have a summer intern program where we'll have we'll invite around 50 or 60 grad students and undergrad students from around the country to join us for the summer. And so we look for obviously the best and the brightest. I think this past summer, we had folks from 15 or 20 different states that came in and spent the summer with us in everything from my office through our law department, through policy and planning, to the operational divisions. And so we really have just a remarkable group of young people that are extraordinarily talented with us every summer. And not surprisingly, some of those folks actually come back as our staff. We recruit folks out of that pool on occasion.

We also have a variety of other programs that come to us from a variety of ways. So we'll have interns throughout the regular school year as well. And so we really have been able to attract a very high level of talent.

Mr. Morales: That's fantastic. It must be a wonderful experience for those students that come over for three months of their break.

Mr. Hess: You know, not just for them. It's a wonderful experience for us to have fresh eyes come in and kind of look at things and question what we're doing, and we give them every opportunity to do that. The only rule at DHS is don't come in there to punch a timecard and do your eight hours. We want your mind. You know, if you're not contributing by providing some intellectual capital, you're in the wrong place.

Mr. Morales: That's great.

I'd like to sort of transition now and look towards the future. What are some of the major opportunities and challenges that your organization will encounter in the future? And how do you envision your agency will evolve over, say, the next three to five years?

Mr. Hess: Well, I think the challenges are not unique to New York City. I think the challenges are the kind of challenges that we need to grapple with as a nation. You know, there is a growing divide between kind of the haves and the have-nots, and I think we just need to be honest about that. I think we have seen a shrinking pool of affordable housing across this country, and I think we need to be honest about that. I think we've seen a much greater gap between entry-level wages and housing costs in almost every city, if not every city, in this country, and we need to be honest about that. And I would hope that we will begin to see some real discussion on the federal level, a real national dialogue on some of these issues that will help us figure this out, because we can.

I mean, if we look back just over the last 40 years, we've seen things like the G.I. Bill. Well, when I left the Army, I didn't have much money, right, didn't get a high-paying job, did not have a college education. But because of my military service and the G.I. Bill, I could go to school at night while I worked during the day and get my degree. When I got married, I think using the VA benefits through the G.I. Bill, I actually put $500 down to buy our first house. Those opportunities aren't there in quite the same way they were for me a few years ago, and so I think we need to think about that as a country.

Things like the CETA program and other kinds of big-work programs that allowed employers to take a chance and bring employees in to see how good they could be just aren't as readily available. And so I think there's things that we could do with respect to federal and national policy that would make it much less likely that people would experience homelessness, and I think we ought to have that dialogue. And I'm not sure that we had enough of that dialogue over the last 10 or 15 or 20 years.

Ms. Mills-Brinkley: So earlier, you were talking about giving staff handheld devices to use in the field in order to bridge the conversation gap that may have happened if you don't have those. To what extent has technology advances enabled your agency to be more effective and efficient in meeting your noble goal? And what technology do you see as the most promising going forward?

Mr. Hess: Well, you mentioned the handheld, so let me stick with that for a minute, because this is very exciting. You know, it's an absolute tragedy to me when someone living on the streets dies in view, in public view, because of very cold weather, for example. I've always felt that we could do better than that, and we have to do better than that as a city. And so the handheld devices, in addition to doing the great data collection that we talked about, also now take advantage of GPS. So if you're an outreach worker and you see me sleeping on the streets and it's very cold weather and you check me to make sure I'm okay, I'm not a threat to myself in terms of the weather and what could happen to me, you automatically are pinpointing my location and date and time stamping your contact with me. And that then, by technology, can be transmitted to a command dispatch map and date and time stamped.

And so maybe it's green right after you contact me. Maybe our medical professional will say given the weather outside, we'd have to check on me again within two hours to make sure I'm still okay. Right? Maybe in an hour and a half that green dot turns yellow and a dispatcher knows he needs to get somebody back to me. And maybe if it's two hours, it turns red, and we know we got to get somebody back there quickly to make sure that I'm okay.

So my point is that utilizing the technology that we're developing, we will save lives on the streets of this city during bad weather conditions, and other times as well.

Mr. Morales: That's very exciting.

So given all the efforts that are underway, I have to ask, what can ordinary citizens of New York do to help contribute to your efforts within the agency? And perhaps you could tell us just very simply, what are three ways in which the average citizen could help overcome this issue of homelessness?

Mr. Hess: Well, I think there's a couple things that folks can do. I mean, first and foremost, if you see somebody on the street that looks like they need help and you're in New York City, dial 311. You know, take the time to let us know and we will dispatch an outreach team or other appropriate professionals and make sure that individual is okay and give him -- offer him support, offer him the ability to move indoors. That's number one.

I think number two, acknowledge people experiencing homelessness as human beings. Too often, you sit and watch and people just walk by and never even make eye contact with somebody that may be living on the streets, so make eye contact. If you're in the habit of saying good morning or good evening to folks, do that. That's a big step.

If you want to help with the issue generally, you can visit a shelter nearby, take a tour. If you feel comfortable, talk to people. Figure out what your own comfort level is and then push that a little bit. Maybe you go in once a week and sit down and read a book to a child that's experiencing homelessness living in a shelter. But somehow get engaged and better understand the issue and figure out what you can do and what you want to do to help become part of the solution. And if people would do that, I think it would make a huge, huge difference.

Mr. Morales: That's great advice.

Now, Rob, your career in public service has been marked by passion, which is clearly coming through in this interview, and your dedication to a very, very critical national issue. What advice would you give perhaps a person who was thinking about a career in public service, and in particular, someone who may be interested in ending chronic homelessness and working with those who are most at risk?

Mr. Hess: I guess the advice I would give is, first of all, find a career path that you can be passionate about. If you're not passionate about it and it's just a job to collect a paycheck, it seems to me that would be a terrible way to spend a career, so find something you can be passionate about. And then try to leave your preconceived notions to the side and learn as much as you can. And you're always better off listening than talking. If you can start there, even things that you hear that you may absolutely disagree with at first blush, give them a chance. Let it sink in and try to understand why that individual is saying whatever they're saying to you. Why are they saying that? Why do they believe that? What's going on with them that makes that real to them? And if you can do that, you can really then understand issues in a very different way, and figure out how to move towards solutions over time to complicated problems.

Mr. Morales: That certainly goes back to the story you told us when you allowed the 160 outreach workers to sit and just talk to you as opposed to having all their supervisors there and getting a different perspective.

Mr. Hess: Look, they're the experts. We just want to take the best experts we can get, bring them together, figure out the right strategies, and then we want to support them in those strategies.

Mr. Morales: That's great.

Robert, that's obviously great advice. Unfortunately, we have reached the end of our time. I want to thank you for fitting us into your busy schedule, but more importantly, Shelley and I would like to thank you for your dedicated service to the great city of New York in helping to alleviate the plight of homelessness.

Mr. Hess: Thank you so much. And I just want to assure your listening public that we're going to do everything we can in the city of New York, under the leadership of Mayor Michael Bloomberg, to move towards eliminating the need for people to sleep on our streets and our shelters. And we're going to drive toward that two-thirds reduction that we talked about, and we're going to work every day and every hour between now and midnight on December 31, 2009 to get this job done. We owe it to the citizens of New York, we owe it to those experiencing homelessness, and we're not going to waste a minute along the way.

Mr. Morales: Fantastic.

This has been The Business of Government Hour, featuring a conversation with Robert Hess, commissioner of the New York City Department of Homeless Services.

My co-host has been Shelley Mills-Brinkley, partner in IBM's public sector social services 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.

Voice-Over: 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 July 21, 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. I'm Albert Morales, your host, and managing partner of The IBM Center for The Business of Government.

The Department of Defense is transforming to become a netcentric force. This transformation hinges on the recognition that information is one of its greatest sources of power. Information is a strategic component of situational awareness which enables decisionmakers at all levels to make better decisions faster and act sooner.

Transforming to a networkcentric force requires fundamental change in processes, policy, and culture. Changing these areas will provide the necessary speed, accuracy, and quality of decisionmaking critical to future success.

With us this morning to discuss this critical transformation and the role of IT is our special guest, David Wennergren, Deputy Assistant Secretary of Defense for Information, Management, Technology, and Deputy CIO.

Good morning, Dave.

Mr. Wennergren: Good morning, Al. It's great to be here with you.

Mr. Morales: Also joining us in our conversation is Linda Marshall, partner in IBM's defense industry practice.

Good morning, Linda.

Ms. Marshall: Good morning, Al.

Mr. Morales: Dave, perhaps you could begin by describing the mission of your office and how it supports the overall mission of the Department of Defense.

Mr. Wennergren: Absolutely. So the Department of Defense Chief Information Officer is responsible for all of the information management and information technology initiatives across the entire Department of Defense -- Army, Navy, Air Force, Marine Corps, defense agencies, a rather broad set of responsibilities. Three and a half million people deployed in rather austere conditions around the world, millions of computers, thousands and thousands of systems, hundreds of networks, about $30 billion a year IT budget. Probably about 170,000 of those 3-1/2 million people as IT professionals working in the organization.

And it's kind of fascinating to watch what's been going on, because for decades the Department of Defense, like all large organizations, has functioned very effectively as a very decentralized organization: lots of chains of commands with the thought about local organizations develop local solutions to meet local needs. But the Internet Age happened, and so now we're in a world where it makes much more sense to band together to develop enterprisewide solutions. So as the CIO team, you're in a sense responsible for charting the course, to do what we call our transformation to networkcentric operations. It's the idea about together, we could share knowledge instantaneously around the world to be more effective in our role as the national defense for our nation.

Ms. Marshall: Dave, could you please describe your specific responsibilities and duties as the Deputy Assistant Secretary of Defense for Information, Management, and Technology, and as the Deputy CIO?

Mr. Wennergren: Yeah, it's rather a long job title, isn't it? So I work for John Grimes, who is the Assistant Secretary of Defense and the Department of Defense CIO, and I'm his deputy. So my team is responsible for the CIO portfolio. John is responsible for all of the command and control and communication systems for the Department of Defense, in addition to having the responsibilities of the Chief Information Officer. So my team, and my job as the Deputy CIO, is to take care of the CIO portfolio for DOD.

Ms. Marshall: So regarding those duties and responsibilities that you have, what are the top three challenges that you face in your position, and how have you addressed these challenges?

Mr. Wennergren: Well, front and center I think on everybody's plate is this idea about information sharing; that is, the world moved away from a world of decentralized organizations, local people making local solutions for local needs. There wasn't a lot of knowledge sharing going on. But the power of netcentricity is that the right person can get the right information wherever they are. So if you're a Naval Reservist stationed with Marines in Fallujah and you need to reach back to get to an Army system to get the knowledge that you need, you'll be able to do it in a networkcentric world.

Second, and probably front and center on everybody's plate, too, no matter whether you work in government or in industry, is the information security portfolio. The threats and attacks on our networks grow by the day, and people's privacies are in jeopardy, and information that the nation needs to defend itself is at risk. And so all of us are spending a lot of time focusing on security of our network and information assurance. And what it means to take care about information security changes as again you move away from a world of local networks where security tended to focus on defending the perimeter of your local network, to a world where everything's available on the web. And so now it's about sustainability and survivability of the internet, and the global networks, and being about to find the knowledge you need, when you need it to get your job done.

And third, and a little bit more challenging because it's a little bit more esoteric, is this idea about enterprise alignment. The very big organizations in this Information Age have to learn to work together. And so there's a lot of success stories, but there still are a lot of changes that have to be worked through as we learn to work together as a single DOD team across all of the services, and with our allies and coalition partners, with the rest of the federal government, with industry and with academia. So as you adopt to enterprisewide solutions that will service everyone, you have to behave like an enterprise, you have to be willing to use somebody else' solution, to take the test results of another organization, to use a system developed by another organization, and that gets into a lot of cultural chain stuff.

Mr. Morales: Absolutely. Now Dave, you've been in the information technology business within government for some time now. Could you describe for our listeners your career path, and how did you get started?

Mr. Wennergren: I probably have a non-traditional path for a CIO kind of guy, because I didn't grow up as an IT professional. I came to work for the Department of the Navy as a civilian employee directly out of college, and had a number of different jobs. At one point in my career, I did the public-private competitions of the OMB A-76 program. I did the base closure rounds of the '90s for the Navy. I was involved after the base closure rounds with installation, management, and logistics work, where one of my jobs was to go and reorganize the bases that didn't close.

Some people say that's like running from one program of hate and discontent to another, but I am a hopeless optimist, so I like to think that they're all programs that help people deal with change. And so I think I ended up then as the Deputy CIO because I had had a career of dealing with large-scale change management issues. And I became the Deputy CIO in 1998, so it was at the time when everybody was getting pumped up about Y2K. And I was the Deputy CIO for the Navy for about four years, and then became the CIO for the Department of the Navy for four years. And then six months ago, after 26 years, I left the Department of the Navy and came to work in the Office of the Secretary of Defense as the Deputy CIO for DOD.

Mr. Morales: So you've obviously had a broad set of experiences, both on the technology side and on the business side. So I'm curious, how have these experiences prepared you for your current leadership role, and how have they informed your management approach and your current leadership style?

Mr. Wennergren: Well, the good news, I guess, is that in assessing the world from my Department of Defense perch, we're working on the right side of stuff in the Department of the Navy. Our priorities then are still my priorities now, and I think I learned a lot. In the Department of the Navy, there are two services: the United States Navy and the United States Marine Corps, so there were a number of cultural change management issues in getting those organizations to work together, of which I was a big proponent, and so now I'm getting to put my money where my mouth was, because now I'm going to help the Navy and the Marine Corps and the Army and the Air Force all work together.

In a large organization that's very decentralized, as ours is, there becomes great power in the idea of team, and so a lot of the work that I've done over the course of my career is to help organizations function as effective teams. And I think that the IT workers, probably before anybody else recognized that every problem that they faced crossed traditional organizational boundaries, and so the only way to be successful is to get the right sets of people from the right sets of disciplines to work together, and even if they had disparate views to begin with, could become engaged in a common solution to get to the future.

And so oftentimes, you have to use a lot of tools -- you beg, plead, borrow, cajole -- whatever it takes to get people to begin to function outside of the comfort zone that they had to become part of a new team. The other thing I guess I would notice that having worked in the Navy for a long time for some really great leaders, is that it's really apparent to me that there is a covenant relationship, that leadership really is a covenant responsibility between you and the organization. You're here to serve the organization and the people of the organization.

When you realize that, then you understand the obligation that a manager has to create the environment where people are supported, encouraged, and challenged. And so if you get the right people in the right jobs, then great things can happen.

And that's really what being a CIO team is all about, I think.

Mr. Morales: Excellent.

What is the DOD's netcentric vision? We will ask David Wennergren, Deputy Assistant Secretary of Defense for Information, Management, and Technology, and Deputy CIO, 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 David Wennergren, Deputy Assistant Secretary of Defense for Information, Management, and Technology, and Deputy CIO.

Also joining us in our conversation is Linda Marshall, partner in IBM's defense industry practice.

David, DoD is transforming from platformcentric to networkcentric operations. And the CIO is providing key leadership to meet this netcentric vision. Could you elaborate on DoD's netcentric vision? What are the goals of netcentric operations that are driving this transformation, and how does the recent acquisition of netcentric enterprise services fit into this overall construct?

Mr. Wennergren: Sure, absolutely. Netcentric operations, or netcentricity, is the buzzword de jure for the Department of Defense, and sometimes I think for people, it can sound a little bit jargony. I'm a relatively simple-minded guy. I like to tell the story about tinkertoys and plasma balls, because I think it gets to the heart of the matter.

In the old days, people developed point-to-point solutions, communications systems and networks, and it was much like building with tinkertoys. And I'd build one and then I'd have to connect to you, and Linda would have one and I'd connect to her, and you can begin to see that as you grow and grow in terms of nodes on the network, that interconnections become unwieldy. And so much like a tinkertoy tower that's been built too tall, it begins to crumble.

The idea of netcentricity is much more like the plasma balls that we've all seen, where energy -- or in this case, knowledge -- is in the center of the plasma ball, and wherever I touch the outside of the globe, the energy gets to me. So no matter where I am in the organization, I can plug into the global information grid, which is basically our network and data structure, and get the knowledge that I need. It's really all about the flow of knowledge and enhancing the flow of knowledge across the organization.

There was a Gartner statistic from a few years ago about how, in any large organization, public or private, about 70 percent of the knowledge of that organization lived on people's hard drives, which of course mean it wasn't really actually knowledge that you could share.

So this netcentric idea is really all about the flow of data, sharing of knowledge, and once again, knowledge management being a relatively new discipline, it begins to take on this academic aura of tacit knowledge capture and a lot of other jargons, and so we can actually simply that too, if you want. Because I'm a firm believer in the John Wayne School of Knowledge management theorem. There's a great movie clip where John Wayne's a Marine sergeant, he's talking to the young Marine and he says, "Son, life is tough. It's tougher if you're stupid."

And if you think about it, that's what knowledge management's all about. It's about the power that happens when people that work together learn together, it's what happens in the ward room or in the chief's mess on a ship when people who deploy together train together, that together we can be much smarter, much more agile, much more creative than we might be individually.

So netcentricity is really about making that happen. So it's not the sexiest thing around, but it really is all about the data. Making data visible, because the three problems I often face is I can't find it. And if I can find it, I can't access it. And if I can access it, I can't understand it. So working on those three sets of things are sort of crucial.

And you mentioned netcentric enterprise services, which is a series of core enterprise services. If you move to a netcentric world, there are some things that need to be provided by the corporation or the enterprise for the benefit of everybody, and that's what the NCES program is all about. There's no need for people to buy separate collaboration tools, federated search and discovery. We could have global directory services, we could have an enterprise portal. And so all these things that will be provided by the enterprise for the rest of the organization are what comprise the NCES program.

Mr. Morales: Now, this is likely related, but you've been quoted as saying that the world is not about separate networks. Could you elaborate a little more on what you meant by this statement?

Mr. Wennergren: That was probably a little bit more philosophical than practical, because it clearly does involve different networks now, but I think it is that idea about what does the word "enterprise" mean to you? Because different components of the Department of Defense are very big. In my Navy life, the Naval Sea Systems Command is a $30 billion a year organization. If I yank them out of the Navy and put them in the Fortune 100, they'd be way up the list. But if they're only building things that work for the Naval Sea Systems Command and the people that buy and maintain ships, they're missing the point, because the Naval Air Systems Command buys and maintains airplanes, and they're part of a broader Navy-Marine Corps team, they're part of a broader DoD team. They're part of a team with our allies and coalition partners, and on and on the list goes.

And so you have to have your mind firmly focused on -- you may be part of an individual organization, but you better be buying and building for the broader team. As a classic example, when a aircraft carrier leaves San Diego on its way to the Persian Gulf, it's got equipment and training to go do the job of being part of a carrier strike group. But halfway through the journey, they're diverted to do humanitarian relief because of a tsunami. Completely different partners, non-governmental organizations, different types of collaboration tools -- what we would call the unanticipated users. If you're not thinking about how to be connected to the rest of the world, you won't be able to be part of the network solution.

Ms. Marshall: What is the Department of Defense's data and information strategy for delivering timely, relevant, critical information to the warfighter in this new digital era, and how does this strategy seek to make data identifiable, accessible, and understandable throughout the entire enterprise?

Mr. Wennergren: It's a really exciting thing that's going on. We have a lot of folks that are working on this. Mike Krieger is one of my directors, and he's just been a true champion for change in this space. We have a netcentric data strategy, and then the corresponding directors and guides that tell you how to do it, and it focuses on what we were just talking about, about if you could make data visible, accessible and understandable, then you could share knowledge quickly.

And the way that it gets manifested is in what we call Communities of Interest, COIs. Communities of Interest are formed when people from different organizations that have a common problem or common issue get together to create a solution. There are lots of great examples of COIs. The one I thought I'd talk with you about for a moment is maritime domain awareness. So what kind of commercial vessels are out at sea? What are their crews, what are their cargos?

Interestingly, that kind of knowledge exists in databases that of course in the old days were stovepiped and owned by different organizations. So Community of Interest forums involves the Navy, the intelligence community, the Coast Guard, Department of Homeland Security, Department of Transportation. And in a matter of months and a few hundred thousand dollars, instead of what we would have done in the past, when we had a penchant for saying, I've got existing legacy systems, they're not quite fitting the bill, so let's go buy the multi-gazillion dollar new system that takes year to deploy. So instead of doing that, they got together, they found the data, they used the commercial state of the art technologies like XML to make the data available to be served up, and in a few short months, everybody is able to see this information.

So whether you are the captain of the Coast Guard cutter or the Navy vessel, you're able to see the information that you need on the commercial vessels. It's fabulous and it happens really fast, and there's lots of these COIs going on. There are COIs about blue force tracking, keeping track in the battlefield of all the people that are on your team, strike missions, which are all about planning targeting but use the basic issues of what, when, and where that are equally applicable whether or not you're planning a Tomahawk missile strike or you're trying to do disaster relief at FEMA, and the list goes on and on and on.

And it's a wonderful thing because it brings together people quickly to find the solution and deliver results in a few short months. I'm just so excited about it, because it's changing the way we do business. It's much like the model of weather. Everybody contributes local weather data because they'd like to know what weather is like in the rest of the world. So everybody's publisher serves up the stuff that they have for the benefit of being able to use the information that the others have too.

Mr. Morales: So it's really about a collaboration. That's sort of the key component to all this.

Mr. Wennergren: Yeah, absolutely. You know, we focus on the technical side of it at this point, but there are other aspects there, too. And so the technology exists to make data strategies happen, but there are other parts of it, too, because of course, there are process changes and policy changes and educational opportunities. So hand in hand with our netcentric data strategy, we have an information sharing strategy, and now we're working on the corresponding implementation plan that actually lays out the other kinds of changes that need to take place in order to break down the impediments to sharing of the paths.

Ms. Marshall: So Dave, what role does service-oriented architecture play in making your data strategy, as well as your overall netcentric vision, a reality?

Mr. Wennergren: Yeah, SOA is at the heart of the matter. There's a fascinating philosophical change that's going on right now. For years, we've had this systems view of the world. It's the way programs are designed, it's the way architectures are built, but the world really is now all about services, and this idea that you could develop a service and serve it up, I could do it as a self-service transaction. I could be standing, waiting for the bus, go to the enterprise portal from my little wireless device, and do a transaction because it's service-oriented, rather than standalone monolithic systems of the past. And so the document that we'll be publishing is called our netcentric services strategy, and it's the companion document to the data strategy that tells how SOA will be used to make this vision a reality.

Mr. Morales: David, how do you balance the need to procure best-of-breed technology with the security of DoD's information technology infrastructure? So for example, how do you deal with the reality that almost all commercial off the shelf software has at least some components of it that were developed in other countries?

Mr. Wennergren: Yes. I would say that the top two issues for me are information sharing on the one hand and information security on the other. And the challenge that we have is people often refer to them as a balancing act. How do you balance information sharing and information security, which is not the analogy that I like, because I think it pits one against the other. And it implies that advances in information security come at the expense of the ability to share, which are of course the simplest kinds of information security solutions.

And so one thing that's happening is the information security professional is viewed as the knucklehead that just wants to shut down access. The information sharing zealot is viewed as the crazy person that doesn't understand that it's a dangerous world out there and they shouldn't just be opening the door. And so it really has to be something that we focus on together, and so using a nautical analogy about the high tide rises all boats, we need to be extremely successful at both information sharing and information security.

And if you think about it that way, then you will choose for a different set of information security solutions, because the easy information security solutions are always about isolation, right? The more I wall myself away, the less bad things can get in, but of course, the less collaboration can go out. And so this idea about we must be extremely successful about sharing and security, that's what's driving the set of security solutions and secure collaboration solutions that we're looking at now.

It is a challenging time. Globalization happened, and things are built around the world, and so it is really important that people understand what they're buying and what they're using it for, and the pedigrees and the security of the different solutions, and one size never fits all. What's important for speed in an unclassified environment might be different than what's needed in a highly classified environment. So software assurance, what's made where, and the pedigree of it and the security of it are all things that people need to take into consideration, but there is a continuum about using this kind of technology for this sort of answer, different kind of technology for a more secure solution.

Mr. Morales: So let me expand on this theme, if you will. You've called for innovative partnerships with industry. Could you elaborate on what kinds of partnerships you are currently developing to improve operations or outcomes, and in what areas would you like to enhance or expand this public-private collaboration?

Mr. Wennergren: Absolutely. Gone are the days where people can go their own way. The government shouldn't be in the business of building their own stuff. There are wonderful commercial solutions that are out there, and government needs to leverage those. Gone also have to be the days where the government person built this really detailed spec and threw over the transom and expected a vendor to just deliver on it. It would seem to me in this information world that it's the height of arrogance to imagine that you as the government person trying to get a solution know all the answers.

And so what I'm a big fan of is performance-based contracting and managed service, and this idea that my relationship with industry ought to be one about a strategic partnership, where I talk about the results that I need to obtain and I talk about the service levels that I expect, and perhaps I have some kind of fixed price contract vehicle with incentive payments so that if you can exceed my expectations, you'll be rewarded for your innovation and performance, and then all of the great minds at your company are able to be brought to bear.

In my Navy life, when we did the Navy/Marine Corps Intranet, which was a large seed management contract, it was done as a performance based contract, we didn't tell the winning contractor that he had to buy Dell computers and use Windows 2000. We told him about latency and refresh rates and security and customer satisfaction, and then gave the company the freedom to pick the right products to deliver it for our behalf, and that's the future. You can't do this alone, and you need to leverage the fact that industry has this huge set of great brains that can help you find the path to the future together.

Mr. Morales: Great.

What about the DoD's IT innovation? We'll ask David Wennergren, Deputy Assistant Secretary of Defense for Information, Management and Technology, and Deputy CIO, 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 David Wennergren, Deputy Assistant Secretary of Defense for Information, Management, and Technology, and Deputy CIO.

Also joining is in our conversation is Linda Marshall, partner in IBM's defense industry practice.

David, in your previous role as the Department of the Navy's Chief Information Officer, you led the Identity Protection and Management Senior Coordinating Group. Could you tell us about your efforts to oversee and coordinate DoD's biometrics, Smart Card and PKI initiatives? And what is the Department doing to better its performance on the Security Scorecard in accordance with the Federal Information Security Management Act, otherwise known as FISMA?

Mr. Wennergren: Yeah, I'm really fortunate that as I change jobs, I continue to get to chair of the Identity Protection and Management Senior Coordinating Group. That's a long acronym, IPM-SCG. It's been a wonderful adventure. I think we often underestimate the success of the Department of Defense's Smart Card and PKI, Public Key Infrastructure initiatives. Over the course of the years, we've issued 12 million Smart Cards with PKI credentials on it.

We have a workforce of 3-1/2 million people walking around with the Common Access Card with their PKI credentials on it. It's one of the largest smart card PKI implementations in the world, and certainly one of the most successful. And you know, 10 years ago, we would have been on a path for 50 or 60 different PKI solutions, where everybody that wanted to do something via the web and needed to do SSL or something like that would have gone out and bought its PKI solution and none of them would have worked together. And to have one card that's your military ID card, that's your physical access badge -- well, let me tell you a little bit about how it works.

So I have my Department of Defense Common Access Card, I can use it to do physical access to get on to the base. I can use it when I get into my office to do cryptographic log on onto my computer network, which is much more secure than doing user IDs and passwords. I can use the PKI credentials on the card to launch myself to secure websites. So once again, rather than having to remember 40 or 50 different passwords for different secure websites, I can use my PKI credentials to get to secure websites.

Passwords really need to go away. Passwords are not a secure way of doing business, user IDs and passwords. It's easy to crack passwords, and so that's why people keep wanting to make them more complex. They tell you they have to be longer, special characters, capital letters, and they're still easy to break, so they want you to change them. And so how many passwords do each of you need to remember? You probably write them on a yellow sticky, put them on your computer -- security professionals go crazy when I say that because of course I don't do that, but people do, right? And so this idea about being able to use the Smart Card with its PKI credentials has been a huge improvement to our security.

The number one attack vector against our networks a year or so ago was people cracking passwords, which we have dramatically reduced by having everybody in the Department of Defense use their card for cryptographic log on, but it doesn't just stop there because it's not just about physical security, physical access, and it's not just about cyber-security. So it actually is a key, forgive the pun, to doing e-business. So now I have a Defense Travel System, I put my card in, the hardware token, the card itself with the PKI credentials allows me to do a digital signature. So rather than having to do paper processes with wet ink signatures, I can do digital processes and speed up transactions, improve customer service, get paid in a couple of days now on my travel claim rather than the weeks it took to process the paperwork. So it's been a real accelerator for the transformation to e-government for us, too.

Homeland Security Presidential Directive 12, HSPD 12 has sort of said, well, this idea about a common card that you would use for physical access like we're doing with the Common Access Card, the DoD needs to be standard across all of government, and so we're a real leg up on implementing HSPD 12 because of what we've done with the card.

Biometrics are another fascinating area, because biometrics have the added advantage of telling you about somebody's history. The power of the PKI and the Smart Card is about I am who I say I am, and I'm still a valid member of the community. So this is Wennergren, and he's putting his card in the slot, and we have not revoked his certificate, so he's still a valid member of the community. The power about biometrics, like fingerprints, is that they connect you to your history. So a biometric of somebody trying to enter a base can be compared to the biometric that's in a database about a criminal activity, and allows us to connect people to problems. So biometrics work is a real growth industry for us, too.

And at the moment, fingerprints and iris scans and voice recognition and facial recognition are some of the big ones, but the number of biometric technologies that are being looked at grow by the day. It's really exciting to see. The interesting thing that's happened is that, as I mentioned earlier in the interview, what security means to us changes as you move to a web-based world. And so it's kind of fascinating now, a lot of the effort is being spent on what we call continuity of operation planning, because in this new world, it's all about being able to get to the knowledge that you need.

So a continuity of operation plan that you had a few years ago about how to protect the boundary of your network and what you would do if the server was down locally may not be the same kind of continuity of operation plan you need in a world where you're relying upon this single authoritative data source.

So there's a lot of work that's going on in addition to the things we've already done like the identity management work to improve our FISMA scores. There's a lot of work being done to make sure that we really understand the survivability and the sustainability of the network and the internet. How would you function if part of it's not available to you, and the fact that we're all in this together. I can do the best job in the world of securing my DoD computer, but I don't do this alone. I do this with partners in industry, I do this with partners in academia, and we're all sharing data together. So the security level of each of my industry partners, and the academic institutions that I do business with, has to rise with my security levels, too, or else they now become the weak links in the network.

Mr. Morales: David, I want to take us back to something that you said in our first segment. As the Deputy CIO, a big portion of your job is to put in place the policies, cultural change, strategies, and educational outreach to help staff recognize that they are part of this broader enterprise that you described. To this end, what are some of the common push-backs that you encounter in this role?

Mr. Wennergren: Push-back? People don't like what the CIO does? There is an interesting dynamic tension that happens. Because -- not to be clich�d, but I think the C in CIO actually should stand for "Change," because a majority of my time -- as a CIO, you have to understand technology because you have to be able to describe it to others, but I do spend the majority of my time focusing on cultural change issues. Not surprisingly. So we survey our workforce and our leaders and we understand who they are and -- so we're a bunch of type A personalities, and not surprisingly, we're a bunch of control freaks, right?

People want to have the -- give me the money, tell me what you want done, and I'll go get the job done, leave me alone. And we become very expert. And so now I'm an expert that wants to own it myself, because that's when I feel most comfortable. And yet in this Information Age, it's often about me relying upon somebody else to do something for me. So this shift that says it's time to step out of your comfort zone and begin to rely upon somebody else to do something for you or you're going to lose some personal control, it's a huge part of my job.

And so whether it's about the duplicative legacy system -- you build a time and attendance system, Linda -- Albert, you build a time and attendance system, how many time and attendance systems do I really need? So as the CIO, it's my job to tell you, Albert, that --

Ms. Marshall: That Linda's is better.

Mr. Wennergren: Exactly. Right. That maybe your baby's ugly, right, and doesn't need to be around for us anymore -- those are hard conversations, right, and so they often smack on the -- but I understand my business better than you because you're the IT guy, and I'm the -- fill in the blank, the doctor, the lawyer, the financial management specialist.

And so part of the job of the CIO is to help point out that there's a business case, right, and there's actually ways to measure. And so you can let these things be your guide to help you understand that there is a future path that might be more effective if you could come with us from where you are today in your comfort zone and be willing to step out of it.

Ms. Marshall: Dave, I think it's fair to say that information technology is an area sometimes noted for its turf battles and proprietary views.

Mr. Wennergren: Everybody has an opinion, don't they?

Ms. Marshall: Would you elaborate on your efforts to foster an enterprise view and to break down silos, and how does the Department's Enterprise Software Initiative support that effort, and how does it enable your organization to operate more like one enterprise as opposed to in those silos?

Mr. Wennergren: The DoD Enterprise Software Initiative is a wonderful example. There are lot of things that are going on, because you're absolutely right. The beauty of moving to the web, the beauty of having enterprise portals, the beauty of web services is that all those things help -- allow us to move from the world of local solutions to the world of functioning as an enterprise. So there are these great technologies that are forcing functions.

The DoD ESI initiative is focused on this idea about leveraging your buying power and being aligned in what you do. And so it's a great example about moving to an enterprise. And it's been so successful for us that it spawned the idea of the federal governmentwide smartBUY initiative. So they're sort of co-branded now, the DoD-ESI effort and the federal government led smartBUY.

It began as this idea about if you buy in bulk, you get a better deal. So if I need 10,000 copies of a software license and you do it, rather than each of us buying separately, we could band together. But it really grew into so much more, and we have Enterprise Software Initiative agreements with dozens and dozens of companies. And I think if you had them in here, Oracle would be a great example.

In my Navy life, we created a single enterprise licensing agreement for Oracle database products. It was great for me, because I knew I had an ever-increasing base of people that were using Oracle database products, and so how is it going to stay ahead of the licensing costs? I got one fixed price for the entire Department of the Navy to use the Oracle database parts, but it was a win for them, too, because it reduced them from having hundreds of separate contract vehicles and administrative overhead to one vehicle, one bill, one payment, and it allowed them to say, you already have my database product, may be you'd be interested in other products that I sell, too.

And so they really can be win-wins. And the efforts just continue to grow. We estimate that over the last seven, eight or nine years, we've probably helped the Department of Defense avoid spending about $2 billion in licensing costs by having done these agreements. The one that we're about to unveil is for data at rest, encryption technologies, which of course is a pressing concern of everybody now -- what happens if a laptop is stolen or lost. Was the data encrypted to protect any sensitive information on it? And this one's going to be incredibly groundbreaking for us. Again, it's a co-branded SmartBUY federal government DOD-ESI initiative to buy encryption technologies.

And so we will pick the two or three products that are the ones we want to buy and will not only be available to all of DoD, it will be available to every federal agency, and for the first time for one of these agreements, it will be available for every state and local government agency. So we'll be able to help make more efficient use of our resources and raise the bar of security not only across the federal government, but across federal, state, and local governments. That's what the power of working as an enterprise together does for you.

Ms. Marshall: Related to this discussion and regarding IT portfolio management, DoD-IT investment decisions need to be aligned to your strategic goals to improve combat capability, warfighting readiness, and mission performance. To this end, would you elaborate on DoD's capital planning process? What sorts of budget constraints are you dealing with now that you didn't have to face several years ago?

Mr. Wennergren: You know, people often don't fully appreciate the power of portfolio management. It often begins as an exercise that sounds like, well, it's about being good stewards of the taxpayer dollars, which is really important -- it's about what are you spending money on and how can you change the way you spend money. But it really is so much more.

So for us, it began as this idea about what you have, what have you got, tens of thousands of legacy systems and applications and hundreds of legacy networks, and do you really need those? And so which are the ones that are really part of your future? But what it really became was the forcing function to move us to netcentric operations, because you're able to have a preference. I choose four solutions that will be, and then fill in blank about what your future needs to be.

So for us, at the risk of far too much IT jargon, it's going to ride on an enterprise portal, it's going to be a web service, it's going to use the DoD Common Access Card to gain access. Those sets of things that help allow us to be netcentric. And so now you can choose in preference of those solutions. You can help move the organization from what they had before to what they need to have for the future, but it doesn't stop there. Because as we move away from the legacy networks, we move away from the networks that are less secure. And so the new solutions are improving security. So this portfolio management process, which helped me understand what I owned and what I was spending money on, and reprioritize and being more effective at how I spend money, has also helped me to achieve my vision of netcentricity and helped me to raise the bar in security.

Ms. Marshall: Would you tell us about your efforts to establish a standard IT product configuration to be used across the federal government and not just in DoD? What are the benefits and critical challenges to this effort, and what's the status?

Mr. Wennergren: If you want to be netcentric, you have to be aligned, and you have to be interoperable. And so the more that you can be aligned to commercial off the shelf solutions -- the more you can be aligned to standards, the better off you'll be able to be. If you have to build a solution for 28 different versions of an operating system, there's a lot of nuances there that go into what happens. And so the DoD team, the Air Force, the National Security Agency, a lot of folks have worked really hard -- the Army -- putting together a partnership with Microsoft to develop what the secure configuration of Vista looks like that every DoD computer will have, and it will be available through all the hardware sellers. And the secure configuration of Vista has been adopted by OMB and will be used by all of the federal agencies now, too.

So again, this idea about if you get together and talk with your industry partners, you can understand what you need and where they're headed, and you can create a partnership that will raise the bar on security and product conformance for everybody, and so it's a wonderful example.

Mr. Morales: David, I want to come back to this theme of partnerships and collaborations and focus now inwards again to the organization. As you've described, government work is accomplished by teams of employees. Could you elaborate on your approach to empowering your employees, and how do you lead change and enable your staff and those within the organization to accept the inevitability of change and make the most of it?

Mr. Wennergren: Change happens, get used to it. It's one of my favorite subjects. It smacks on human nature and psychology and all sorts of interesting disciplines. It really is at the heart of everything that we do. Organizations are often the last thing to change. It takes a long time to shut down an organization -- as they say, tear down the flag pole, move buildings and those sorts of things, but the challenges have spanned organizational boundaries. So getting people to function as a team is hugely important.

When I was the Deputy CIO for the Navy, we cared enough about this, we actually wrote a book called The Power of Team, and it was geared to help organizations create effective CIO organizations, and the only way to have an effective CIO organization is to have an effective team. And so this idea about being a positive force for change and being able to work with rather than work against others is hugely important. It doesn't have to be a case of my victories at the expense of your defeat, right? We really can find ways if we work together that it will be better than if we went our own individual ways.

There's lots of great leadership books about this. One of my favorites is Max DePree's book, Leadership Is an Art, and it's just fascinating to read. It's one of those great books with big print, lots of white space, a few number of pages, a great easy book to read.

Mr. Morales: Pictures, too?

Mr. Wennergren: No pictures, but every time you read, you will get something more out of it. And he has this great quote about, "Great leaders see opportunities where others see challenges or problems." And that really is the key, are you going to be a cynical voice for change or a positive voice for change? I think people fail to recognize that if you're an IT professional, whether you're in government or industry, you are viewed by all of your peers as knowing more about the subject.

And so your level of cynicism, your level of reticence, your level of reluctance or fear becomes like a magnifier for them -- it's a resonator, it's like the ripples in the pond, a little bit of perturbation on your part creates great angst in the rest of the workforce. It's not to say that you want to endorse things that are bad ideas, but to the extent that things are a good idea, you have to be an avid vocal storyteller about why they're a good idea.

It's no surprise that if you drew a bell curve of an organization, the majority of people are not like early adopters of change; they're change-neutral or change-averse. And so if you want to get an organization to move from where it is to where it will be, you have to help the organization have courage and be willing to understand the new idea. We often underestimate the power and importance of storytelling. You can't do it alone, right? Everybody has to be a good storyteller and everybody has to work together as a team.

There's another great book that I love -- forgive me, I have lots of books that I love. Another great one is the book Execution by Larry Bossidy and Ram Charan. And in it, they have a fabulous quote that says, "Leaders get the behaviors that they exhibit and tolerate." And it is so true. If you're going to be a positive force for change, if you're going to be a leader of teams that are empowered to do great things, wonderful things will happen. If you're not, then you'll fret and fear and things won't get done.

Leaders help others find their gifts and find their talents and help create a better future. If you empower smart people to get the job done, amazing things will happen. If you feed their creativity and don't be an impediment in their way but support them as they go, fabulous results will happen.

Mr. Morales: So David, not to add more challenge or complications to this equation, could you tell us then how federal managers can effectively manage an ever-increasing blended workforce, which is composed of both contractors and federal employees? And can you tell us a little bit about the intrinsic differences to these two groups?

Mr. Wennergren: Yes. It's a fact of life. Workforces are blended workforces. In the Department of Defense, we use a term called "total force." It is a recognition that an effective warfighting team is composed of active duty military personnel, selected Reservists, government civilian employees, contractors, we're all in this together. So clearly there begins with this conversation about what are governmental functions that have to be performed by government decisionmakers, what are functions that don't have to be performed by government people. Get yourself past that and get yourself to this idea about we're all in this together. Because I find organizations of the past often have like a class system, where contractors are like vendors or they're somebody that I'd just like feed things to, and they're not equal participants.

The successful organizations that I see recognize who needs to do what jobs and then function as a fully integrated team to get the job done. Once you understand who has what set of responsibilities, you need to be able to use the great ideas of everybody on the team. Offices that have large numbers of contractors in them are very effective, because companies are able to bring the right talent to bear quickly. And so there's this partnership of government decisionmakers with understanding of the organization and continuity, contractor teams that are agile and flexible and can help augment the knowledge of the organization quickly.

And that's the key recipe for success in my mind.

Mr. Morales: Great.

What does the future hold for DoD's IT efforts?

We will ask David Wennergren, Deputy Assistant Secretary of Defense for Information, Management, and Technology, and Deputy CIO, 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 David Wennergren, Deputy Assistant Secretary of Defense for Information, Management, and Technology, and Deputy CIO.

Also joining us in our conversation is Linda Marshall, partner in IBM's defense industry practice.

Dave, you are the vice chair of the CIO Council. Can you tell us about the Council's role and responsibilities and its initiatives to address federal IT challenges?

Mr. Wennergren: Sure. In our last segment, we were talking about a couple of books, and the role of the federal CIO Council reminds me of another one, The Power of Alignment by George Labovitz and Victor Rosansky, and it's a powerful book about the key issue that faces us all today, and that is, how are you aligned as an organization?

And in the book they talk about what's the main thing that you do. And understand your main thing, then you can work on issues of alignment, both horizontally and vertically.

And in a sense, that's what the federal CIO Council is all about. It is the forum where CIOs from every federal agency can get together to achieve alignment and sustain alignment, to share ideas, to share best practices, to not go it alone. There's a healthy amount of stealing of each other's ideas, and that's what it's all about. So I've been really fortunate to be involved in the federal CIO Council. It's the way that we implement the President's Management Agenda. It's the way we collaborate and share ideas. I have this great opportunity working with Karen Evans, who's the OMB information technology leader and the chair of the Council with me.

It's all about strategic use of information. We have three committees. We have a committee that focuses on architecture and infrastructure issues. We have a workforce committee which has done an outstanding job, and then we have a best practices committee. It's wonderful, because the group meets regularly, and so as issues emerge, like pressing issues that we have today about privacy and security, CIOs are able to volunteer time and resources to help resolve those kinds of issues.

Mr. Morales: With the evolution of the global threat environment, and the many challenges associated with it, how do you envision DoD and its information technology efforts evolving in, say, the next five years to meet these challenges?

Mr. Wennergren: You know, I do a strategic plan. I try to get the team to focus on the next two years, because the farther out you go in the IT world, the world becomes fuzzier and fuzzier. Five years doesn't seem like much when it comes time for doing Department of Defense budgets, but it's a great length of time in terms of all the wonderful innovations that take place. But as I look in my crystal ball, the importance of the web is huge, and we will continue a rapid migration -- rapid migration to portals and web services. And again, that speaks to the security issues then that we've already touched on about the sustainability and survivability of a global enterprise network that relies upon the commercial sector, and it speaks to the issues of can I trust the data; is there integrity of the knowledge that I'm using, because not being able to trust the data is as bad as not having the connection.

The other idea is of course we're all in this together. And so we've got to keep looking for ways to raise the bar in collaboration, to raise the bar on security, across government -- with industry, with other governments, with academia. And I guess the last part is that people need to keep their eyes on the innovations of the future. What often begins as something that seems recreational only actually fosters collaboration. I'm intrigued by YouTube, I'm intrigued by Second Life.

Second Life, which seems like a game to most people my age, is really like this virtual reality that companies like IBM have been huge users of. I understand they have like 2000 accounts to do virtual online collaboration. I think that's a fascinating example of the kind of thought leadership that IBM has had in this business. There is a hotel chain that uses Second Life to do virtual floor plans and see how the six million inhabitants of Second Life traverse. Two countries have embassies on Second Life now; Maldives and Sweden, and Reuters has a news desk now. If you're an old fashioned guy, you might look at that and say well, Second Life is this video game. But Second Life is actually this innovative new way to collaborate, and so we have to keep our eyes focused on the non-traditional ways of helping to get to the future quicker.

Ms. Marshall: So Dave, with innovation and transformation, these things create new competitive areas, new competencies, new ways of having to do business. What qualities will be needed in the warfighter of the future and those IT staff who provide support? And to that end, what steps are being taken to attract and maintain a high quality technical and professional workforce that are willing to take on that change?

Mr. Wennergren: It really is all about the people. Deputy Secretary of Defense Gordon England, who was my boss before when he was the Secretary of the Navy as well, he used to point to an aircraft carrier and say, "You see that aircraft carrier, big, giant, massive thing, it's not worth anything until it's manned by a crew of 5,000 men and women who are trained and equipped and ready to go." If you don't have the right workforce, you'll never be able to be an effective warfighting force of the future.

The interesting thing is that we survey the workforce extensively, and the common wisdom was that -- the number one issue facing us was the graying of the workforce, the workforce is about to retire. But we find that not to be true for the Department of Defense workforce. The much more pressing issue for us is the need for retraining, that people came into a job and they want to stay. But the skills that they developed initially are not maybe the skill sets they need for the future. COBOL programming, not such a big thing anymore. Being a knowledge manager, being an information security professional, being a website developer, so it's this retraining of the workforce that's really front and center for us. It's all about being a learning organization.

Peter Drucker was one of the great leadership minds of 20th century and he said a lot about the importance of continued learning, and I'm taking that to heart. He said that good management is all about making people's strengths effective and their weaknesses irrelevant. And that's what a continually learning kind of organization does. And so we are expending a lot of energy helping people to get professional certifications, which doesn't sound like a big deal, but it's something that the government wasn't so good at doing a few years ago.

Helping people understand that if you want to attain these competencies, this is the career path that you ought to go on and these are the kinds of training that you need to do and those sorts of things. Second and related to that is it's not just about the IT workforce, it's about the entire workforce and their expectations. You know, the average age on an aircraft carrier is 21 or 22 years old. People that are coming into our organization at that age, what are their expectations? What do they have as the technologies and advantages that they have in their life at home or at school, and are we going to provide them that kind of technology.

In my Navy life, our commercial of the day is about accelerating your life, which is a fascinating message, because accelerating your life implies that come and join us and you can be part of something better faster. And so we better make sure that we're staying abreast of the kinds of technologies that they're used to be using and using very effectively, and having them available for when they work here.

Ms. Marshall: Dave, you are the recent recipient of a Federal 100 Award, which goes to individuals who have made a difference in government technology, and as well, you have been a previous John J. Frank Award recipient. Given that peer recognition, first, would you tell us a little something about these awards? But more importantly, what emerging technologies hold the promise for improving federal IT?

Mr. Wennergren: You know, both being an Eagle Award Winner, the Fed 100 this year, and the John. J. Frank Award last year were really great honors for me. It's kind of humbling to be recognized by your peers for making a difference in the IT space, and especially humbling when these people who have been mentors and friends of yours have received these awards in the past, and to be able to join their ranks has really been a wonderful experience for me, and it's a nice feeling to be recognized for whatever work you do.

And you know, the fascinating thing is of course that the hard work that I do pales in comparison with the people that I do the work for. And so what motivates me everyday is the fact that there are tens of thousands of young men and women who are deployed far from home in harm's way defending the nation, and they chose careers of service and sacrifice. And so if I as the IT guy can help make that life more effective and better for them, then that's great motivation to come to work.

And so what are we going to give them to have them have a productive future? And I think that's the heart of your question, and I think we've sort of touched on it. You know, this idea about it's a web-based world is really at the heart of it, that if I'm a Naval CC officer and I'm stationed in Fallujah with the Marines, and when they reach back to get knowledge from an Army organization, can I do that? And we're saying yes, you can. And it requires all of us to be really vigilant about adopting these enterprisewide solutions, buying the right stuff, being interoperable, making the right choices about when's the right time to buy the one big system versus when's the right time to just ensure interoperability, to allow people to go do things with speed and agility, but have them do it in a way that's interoperable.

So portals, service-oriented architecture, web services, the security portfolio will continue to be a growth industry for us. We've made a big difference with Common Access Card and PKI, but there is much more to be done, much more to be done about attribute management, that is this combination of my identity and attributes about me that ought to give me access to data and the world of biometrics.

So there's lots of opportunities for growth.

Mr. Morales: Dave, you've had a very interesting and highly successful career within public service. What advice would you give to someone who is out there perhaps considering a career in public service?

Mr. Wennergren: Well, it's been a fabulous opportunity for me. And I think people choose one of two career paths. Some people have very organized career paths, where they plan they're going to do this for two years and do that for three years and plan out their whole lives, I kind of have managed my career by chaos. You know, one adventure has led to another, and I've been very fortunate in where those adventures have led.

I think working for the federal government has been great. It's a wonderful opportunity. You know, you get a chance to get leadership experience very early. In the military and in the civil service, you're a leader of large groups of people at a very young age, and so you learn leadership skills quickly and you get to work on some things that are very big stages. The scope and size of the military departments in the Department of Defense is unrivalled pretty much anywhere.

And so you get to be part of something really big. It does take the right blend of patience and impatience. Large organizations are like large ships, they sometimes turn slowly. You need to be impatient because you need to keep pushing for the next thing to happen. You need to have a certain amount of patience though so you don't become too frustrating where sometimes you have butt heads or don't make progress as fast as you like. But I think it's been a really rewarding experience for me, and I think it's an opportunity for somebody to be a positive force for change and make a difference quickly.

Mr. Morales: That's fantastic. We've unfortunately reached the end of our time here together this morning. So I do want to thank you for fitting us into your busy schedule, but more importantly, Linda and I would like to thank you for your dedicated service to our country across your federal career.

Mr. Wennergren: Thank you. Thank you, Albert. Thank you, Linda. It's been great being here with you. I guess I would offer to the audience that I'm easy to find. If you have questions, david.wennergren@osd.mil, and if you're interested in any of the things we talked about today, we do have a website; it's www.dod.mil/cio-nii. And all of the documents that we talked about today, you can find there.

Mr. Morales: That's fantastic.

Mr. Wennergren: Happy hunting.

Mr. Morales: Thank you.

This has been The Business of Government Hour, featuring a conversation with David Wennergren, Deputy Assistant Secretary of Defense for Information, Management, and Technology, and Deputy CIO.

My co-host has been Linda Marshall, partner in IBM's defense industry 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 you 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 the day's conversation.

Until next week, it's businessofgovernment.org.

Originally Broadcast Saturday, September 23, 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 Josefina Carbonell, Assistant Secretary for Aging at the Department of Health and Human Services. Good morning Josefina.

Ms. Carbonell: Thank you. Good morning to you all.

Mr. Morales: Also joining us in our conversation is Brenda Kunkel, managing consultant at IBM. Good morning Brenda.

Ms. Kunkel: Good morning.

Mr. Morales: Josefina, you have so much experience and passion for older adults. How did you get interested in this field of aging, and can you tell us how you got started on your career path?

Ms. Carbonell: Well, first of all, I started as a volunteer. Part of my family efforts have always been to volunteer and contribute to the community. And I started as a United Way volunteer many years ago, and with the Red Cross, in filling some of the needs, basically in emergency response, in '72, to an earthquake in South America.

Then they were developing all the Hispanic capacity building for community support and volunteering efforts, and I was asked to join the United Way in their efforts for recruitment of new volunteers. And of course then that transferred into really looking at community resources and public service mostly. And they developed a capacity to build new programs around the same time that the Older Americans Act was being created nationally as a pilot program. One of the first pilot programs for senior centers and Older Americans Act occurred in Miami, Florida. And I was asked to join that planning effort through United Way of Dade County at that time. That led, eventually, to my engagement in the first Hispanic aging organization in the country to be launched, at the end of '72, and then developed into a larger, mostly based in grass roots, and that led to a whole array of areas, both in health care and long-term care in the community.

Mr. Morales: Outstanding. Before serving at the Administration of Aging, you led an aging community services organization in Florida. How has your leadership style changed as you've taken the various positions you have in your career?

Ms. Carbonell: You know, like Secretary Leavitt likes to say, it depends on what seat you're sitting in, your role transcends that specific seat that you occupy. My perspective, the role that I come from is the community role. I am historically the first community provider, or business provider in the aging seat, ever. Mostly policy people have occupied university research -- persons. So I was the unlikely, but the right fit in that role as a leader. It was very clear to me as I came onboard that -- and having worked in the specific programs that the Administration on Aging administers throughout the states and local communities across this country, and I had done that work for over 30 years in the community.

It clearly gave me a very solid base on what our consumers were, what the role of the leadership role, and the functions of the U.S. administration was in a different level and a different perspective on how policy would drive, would impact the ability of providers in the community level, to be able to serve the ever-growing aging populations. So, you know, when I got into the role we realized that the role of the Administration on Aging needed really a quantum leap in the kind of modernization and getting up to speed to the rest of the health care transformation that was happening just around us, just in the immediacy of HHS.

I think the leadership of Secretary Tommy Thompson, which brought in incredible leadership, not only in welfare reform, but in aging services. He was the first one to develop the whole welfare reform change agent in the state models. He was also the first to develop the transformation of long-term care from institutional base to common community based in his own state.

So I was very attracted and very pleased and honored to serve under his tenure, and now under tenure of another very exciting governor, former governor, Mike Leavitt, both governors that had been chief operating officers for their own states. And as a chief operating officer from the community level in these programs, they gave me a distinct role and opportunity to shift, use my best talents, and modernize my talents to implement national programs and national policies, and transform really long-term care.

Mr. Morales: Excellent.

Ms. Kunkel: To clearly have an understanding of the impact of the policies that your administration is implementing on the community services, can you tell us a little bit about the mission and history of the Administration on Aging?

Ms. Carbonell: Well the Administration on Aging was created in 1965 by the Congress. The original mission -- you know, it's one of the unique pieces of legislation that I've seen. Our unique mission is, number one, to really develop the capacity to make sure that we provide services and supports and empower people to live independently and with dignity in their older age. But the second most important part of our mission is, we have a distinct charge to keep people out of nursing homes by allowing people to live independently.

So it has been a very -- in the kind of transformational change that I think that we're going through in health care reform in this country, and entitlement reform, and other kinds of challenges that we have for our older population, has given us a very important role and a very unique role for us to play within the changes. It developed a whole network, as the years progressed. It was born at the same time that Medicaid was born and Medicare, so it's 40 years old, 41 this year. It is a whole network that was developed locally based up, the other way around. So the capacity was built, unlike other agencies, in the department where you have -- you go all the way down to maybe just the regional level in the structure of the administration.

The greatest asset within our organization is that the bulk of all of our dollars are contracted out to the private sector and the local communities, the state units on aging and then the area agencies on aging, which sort of serve as our local planning and service areas, most of them privatized, run either by non-profits or also by public entities, counties, et cetera. And then you have over 29,000 providers, most of them in the private sector providers, either for profit or not-for-profit faith-based communities. And then you also have over 230 tribes that form part of the overall network that we contract with tribes across the country, so it has a tribal program alongside the states' programs.

So it really gave us the opportunity to have a system in place to be consumer centered. Most importantly it was locally designed. It means the planning efforts come from the local level up to the state plans, and then to the local, to the federal government, we set standards and basically monitor and improve the efficiency. But as the years progressed, we went from an agency that basically does grants, to positioning our agency and the services that we provide in a better role -- to take a central role in the transformation of health, and most importantly long-term care services in this country.

Ms. Kunkel: So for listeners who may not be familiar with the Administration on Aging, can you talk more about the current role of the organization?

Ms. Carbonell: The role of the organization -- we're the largest provider of home- and community-based care in this country. You have not only the meals-on-wheels programs, that -- one of the greatest achievements in volunteerism in this country has been led under the meals-on-wheels program and the nutrition services. But we are also -- home care, we run the adult daycare centers. We contract for services that support family caregivers, which was one of my responsibilities coming in, implementing the new family caregivers support program, knowing that family caregivers in this country are providing the bulk of the care for older people and disabled people in this country.

So our mainstay of long-term care and -- as our family caregivers. Also the role of prevention and health care promotion, and disease prevention in simple ways that we can implement it with simple tools so people can remain independent in their own communities. But most importantly also, being able to focus more on consumers versus services or service silos.

Ms. Kunkel: And what are your current priorities?

Ms. Carbonell: The current priorities are threefold: Ensure that we provide accurate and good access and information for people to access an integrated health and long-term care system. Less confusing, easily accessible, reduce duplication. We want to maintain -- give people the ability to maintain themselves healthier in their communities. And then we want to support family caregivers, to help their elderly remain at home, independent and living in their communities.

We also are focusing our efforts on promoting and preventing elder abuse, financial exploitation in areas of fraud and abuse that are perpetrating many of our vulnerable populations. We want to make sure that we do it in the best effective fashion that we maximize our taxpayer dollars. But most importantly that we assist people in using their own resources, empowering people using their own resources better, so they may age in place, and plan ahead much better for their long-term care needs.

Mr. Morales: How is the Administration on Aging supporting new Medicare and Medicaid programs for seniors? We will ask Assistant Secretary for Aging at HHS, Josefina Carbonell 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 Assistant Secretary for Aging at HHS, Josefina Carbonell. Also joining us in our conversation is Brenda Kunkel.

Josefina, we understand that the Older Americans Act is currently being reauthorized and modernized. How will this change aging services?

Ms. Carbonell: Well, I think that first before talking about reauthorization I want to put this in some kind of context as it relates to our current long-term care system. Currently, long-term care system is really institutionally biased. It really focuses on institutional care and chronic diseases, although, you know, the incidence of chronic disease is really on the way to decreasing for boomers. People are living longer than before. The reality is that the inevitable condition of aging would bring chronic condition is one of the biggest challenges in chronic care, one of the biggest challenges that we have for the demographics of aging in this country.

I think that the goal to keep people, and to assist people to live longer, is to assist them to take care of their chronic conditions or to manage their chronic conditions better. So our goal to modernize long-term care, which is basically the centerpiece of the reauthorization of the Older Americans Act, goes along with the reform and the transformation and the modernization that has occurred with Medicare, and it is simultaneous to the changes that we are trying to implement in Medicaid reform.

So again it will be a parallel movement to ensure that we transform the long-term care system from an institutional medical model only system to a more integrated model where we will have not only the supports but focusing instead of just on services or caretaking role to more of empowering people and assisting the people to plan ahead, and a more consumer-directed option of putting the consumer front and center.

So again, number one, the role of the reauthorization and our reform and transformation is really targeted at the capacity of our nation to respond to the aging of the baby boom generations, and then of course future generations as we look at that. And then of course to be able to reflect those changes, we need to really transform the act from an institutional based program, which obviously, unfortunately, it's financially unsustainable. Mostly due to the unintended consequence that Medicaid has become the primary payer for long-term services in this country. Yet it only covers 12 percent of the population. But the reality, it's unsustainable. And, it's really based on an old demographic model. We're living longer, so therefore that paradigm has changed and the goals should change alongside with it. Currently it's very complex, very fragmented, and difficult for people to understand, and most importantly, again it's heavily based on institutional care when we know that people want to remain in their communities, and in their homes independently as more if possible.

So there's three key approaches to that we're using, or three key principles that will drive the reauthorization proposal, which is called Choices for Independence. Again, we're shifting from institutional care to consumer-based and community-based care. Number one, most importantly is that we will empower individuals to make informed decisions about their care options, and to help them access the care that they need. And that includes not only dealing with the older people right now, because the act allows us to reach a younger population than retirement age. It gives us the opportunity to reach people at younger age or at middle age, there's still time to make some planning, changes in your -- both your financial security, but also in your long-term care planning goals to be able to meet the needs in the future.

We're also making sure that to enable to turn the tide around, both on spend-down of people to Medicaid or on a direct link between hospitalizations and nursing home. It's really provide and target services to those at highest risk of nursing home placement before they become eligible for Medicaid, but most importantly before they become disabled and on a down track to more dependence and spend-down.

And then thirdly we're trying to enable people to make behavioral changes that really reduce the risk of disease and disability as they age. We know that our older population and our seniors are much healthier than their former cohorts were. We want to keep that.

We want to be able to also deploy the best science and the best evidence-based prevention science that we have, that we invest through our institutes of health at the department, and our research and science institutions across this country, and the medical technology and health technology to be able to keep people at home and empower them with the right tools that they can simply be able to assist themselves. And then really target public dollars at those at a highest risk, and again at those that most need it.

Mr. Morales: Yeah, the theme of empowerment certainly comes through very clearly. How does the Administration on Aging support seniors on Medicare policies and programs?

Ms. Carbonell: One of the things that I found out early on is obviously their partnerships are so crucial to an agency such as Administration on Aging, because obviously aging crosses all the sectors that we work with; we can't do this alone. So one of the agencies that we have been closest to in partnering since the early times have been the Centers for Medicare and Medicaid Services, particularly on the Medicare portion.

Number one, most importantly, our network or the network of our providers provide the majority of the insurance counseling for both Medicare and Medicaid products throughout the country. And, most importantly, the network has worked very closely with the Centers for Medicare and Medicaid Services, most recently to help inform, educate, and assist in the enrollment for the new Medicare drug benefit that came online January this year.

And then the second portion of our work and our partnership with Medicare is and has been and will continue to take a more important role in the future with the new Medicare benefits in assisting people on how to make best use of the prevention, and the chronic disease prevention benefits that have been put online and have been brought into the new Medicare law in assisting people to make sure that they get their vaccines, that they have access to the kinds of new benefits that have come online, and that we assist them in how to navigate and access those new preventive benefits that keep people healthy in their communities.

Ms. Kunkel: Great. One of the areas of collaboration between AoA and the Centers for Medicare and Medicaid Services that you mentioned is the new federal benefits, prescription benefits program. How would you characterize the implementation of that new program?

Ms. Carbonell: We're very pleased with the outcome. We've worked very hard, the Administration on Aging and our partners in the community. It has been a tremendous effort where not only have the communications, the ads, and the efforts done under Medicare was important. I think the partnership that we developed with the Centers for Medicare and Medicaid Services gave us the grass roots local community support that was so needed for particularly our seniors, our older seniors, our seniors -- our low-income seniors, which are a very difficult population to reach and to assist in educating about this new benefit.

So the partnership that we developed early on, working together, adding value, and adding, most importantly, a very critical part of the work that we do, it was a natural for us at the Administration on Aging to partner. As part, not only of our statutory role as the lead aging advocate throughout the government, but most importantly as a very effective bringing down that personalized assistance to the individual Medicare beneficiaries played a very key role in achieving 90 percent enrollment of 38 million people by May 15th, and the work continues, it hasn't stopped. We're working through, particularly with our low-income communities, where we know that the majority -- about half of the people that still had not enrolled are eligible for the additional benefits.

So we continue to work with those communities and rural communities, in limited-English-speaking communities where we know that more people need to be assisted through this effort. And again, at the end of the year we will continue to work in the second phase of the enrollment period. So we're very pleased that even in those most vulnerable populations, we have achieved three-quarter percent enrollment in the Hispanic community, in the African American community, in the Asian American community where you have so many languages. It was very rewarding to see that the work had paid off, and most importantly that paid off because of that personalized assistance was there at the community level.

And also in the private sector, it created opportunities, greater opportunities for enriching the partnerships at the community level. Private and public partnerships where you saw municipalities coming together with banks and other business sector community in assisting people to enroll, either because they were lending them the computers at the community level to access or they were lending staff resources or volunteers, or they were partnering with community colleges and universities to bring their service down to the community.

So it was very exciting, and has been very exciting and has opened up other avenues of further collaboration that are going to very much serve us as we move forward with obviously creating better access, better information, and better consumer empowerment.

Mr. Morales: Josefina, we only have about a minute, but I want to touch upon something that you mentioned earlier, which I think is very important for seniors, and that's this whole issue around financial protection and financial security, and fraud. Can you tell us a little bit more about what you are doing in this area?

Ms. Carbonell: We've run the Medicare patrol programs, which are really another fantastic volunteer, and certified volunteers, which assist us in educating and preventing health care fraud and assisting people in understanding their Medicare bills and making sure that they get the kind of services what they purchase.

We also -- we know that the vulnerability of many of our seniors are tied directly to their functional status. So we know as people age and become frail and dependent and homebound and isolated, they're at highest risk of being abused financially, you know, whether it's a caretaker, whether it's a family member, or just -- the opportunities are abound, to be taking care of -- to be really taken advantage of.

We also run eldercare programs in the legal services to assist people, you know, about their rights, but most importantly to protect them. We have developed a whole -- we run the Nursing Home Ombudsman Program, which is another huge program that serves as the -- we serve as ombudsman for nursing home and long-term care independent living facility members, and we are the conduits, an independent body to assist the elders and their caregivers in problems that they're having in facilities, and we work very effectively to educate, but also to assist.

We worked again with Centers for Medicare and Medicaid Services in their implementation of their quality improvement initiatives, both in nursing home and in home healthcare. To use the ombudsman program as another avenue, another support, adding value at the community level, adding local resources that people could turn to, to be able to support them in questions or problems in challenges that they were encountering.

Mr. Morales: Great. How is the Administration on Aging tracking results? We will ask Assistant Secretary Josefina Carbonell to share the details 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 Assistant Secretary for Aging, Josefina Carbonell. Also joining us in our conversation is Brenda Kunkel.

Ms. Kunkel: Josefina, there is some points that we would like to follow up from our last segment. Starting with, how is the Administration on Aging supporting a more effective long-term care approach?

Ms. Carbonell: What we're doing is really we're looking at key models as strategies that we've been investing in as a segue to the implementation of the new reauthorization when it comes through, is really focusing on strategies that will improve our efficiency, but will allow us to transform from the current old system of care to a more integrated model.

And particularly we're focused on those areas, where we know that states have been successful in transforming their own long-term care system and home and community-based care, Wisconsin being one of the first ones, Utah, Washington, et cetera, et cetera. So we've invested in four program areas under the discretionary area that have led us to the point that we are right now.

One has been the investments in developing of the Aging and Disability Resource Centers, what we call the ADRCs or -- or for short, one-stop centers in which we are creating a single coordinated system of access and information to long-term care supports, for people -- for general people in this country.

Second is, using again our -- the best science that we have developed and best technology and making sure that that we implement the programs under an evidence-based science model, particularly in the area of prevention. So we're using our best science, which has already been proven, taking it off the shelves and putting it to test at the local level with people, and making sure simple tools for people can remain healthy and independent in their communities.

The third area is of course the most important, it's transforming from a siloed approach, service-oriented infrastructure, to a more consumer-driven and consumer-directed care approach model. And then of course our own -- your own future campaign, which is the whole -- insuring that we provide the right tools for people to plan ahead for their future and their future long-term care needs.

Ms. Kunkel: Great, and let's return to that first element, which is the Aging and Disability Resource Centers. Can you tell our listeners more about them?

Ms. Carbonell: Well, the Aging and Disability Resource Center initiative really represents a historic partnership, again between the Administration on Aging and the Centers for Medicare and Medicaid services where it had never been done before, that funding was put together jointly under the Systems Change Grants initiatives that occurred in the investments, since '01, to the current period, to really build the capacity to initiate system's change in access to long-term care. So what we're trying to is again, looking at the fragmented system, the duplication and the real difficult system of access to long-term care of different agencies, and develop a one-stop shop kind of programs, where they are virtual one stop, "no wrong door" kind of concept at the community level to assist people with disabilities of all ages to make informed decisions about the care supports that they might need.

Again, also provide the information assistance to all individuals regardless of income and serve as a single point of entry to all publicly administered supports including Medicaid, the Older Americans Act and state revenue programs. Since 2003, we've funded 43 ADRCs -- Aging and Disability Resource Centers or one-stops, and we have received grants. Currently it's being expanded and extended and it's exciting to see that many of the states are already taking these programs nationally.

States have also implemented their own state statutes to integrate the long-term care systems to again, reduce fragmentation, improve access, but most importantly, improve the efficiency of the programs and give people better choices to remain at home, including using their own resources. And we've really focused on performance and outcomes, and we define outcomes not only on financial side, but really define outcomes on a consumer perspective. So we want to make sure that we developed a whole array of tracking outcome information and sharing lessons learned across the centers.

Again, as we see the fragmentation between the different models in each states, we want to make sure that we give grantees the ability to not only set the guidelines at the federal level, but most importantly, to assist them in tracking those outcome data in areas such as program visibility, trust, effectiveness, and efficiency. And again, they must develop efficient ways of getting information to consumers again, as well as for sharing information across state agencies.

We know that in many states -- we know that the programs, the different long-term care services or supports are funded through different agencies and through different regulations and guidelines, and it just makes it a maze for people and their caregivers to access those kinds of care. One-stop centers have really brought that together with CMS -- brought one single point access into all publicly funded support systems. But it has allowed us to begin to develop the capacity and the infrastructure for taking on people in all income levels and assisting people to also plan ahead about their long-term care needs.

Mr. Morales: Josefina, on this topic of outcomes we understand that you focused efforts on measuring program results, especially focusing on outcomes in your management of the Administration on Aging including the development of new GPRA plan. Can you tell our listeners about this plan?

Ms. Carbonell: Well, the most important thing is that, of course, the key element of the President's management agenda, is the integration of performance measurements with the program budgeting. And at AoA, we know that our budget success really relies on the quality of our performance measures. And that was quite a surprise for folks looking at me -- coming from the private sector saying, "Why would you be passionate?" And one of the first things that I did when I got into office was to bring on someone with extensive experience in performance outcomes from the general department, the management and budget area, to come into the immediate office of the Assistant Secretary, not only because I was passionate about performance, but most importantly because we knew that how important performance was going to be to the success of our budget and our operation and our programs.

We've streamlined our performance measures to focus really on three broad areas that are critical and resonate not only with the OMB and Congress, but most importantly with us, and that's improving our program efficiency. To us it means increasing our return on investment, making sure that we have turned the agency around, increasing the number of people served for a million dollars. So not necessarily getting more money to do more work, it's really getting better efficient programs, better outcomes out of the existing dollar amounts that we have, so again, increasing our efficiency.

Efficiency to me also is defined in the way that we provide client outcomes. Not only are we serving a meal, are we keeping people healthier by serving that meal, are we assisting people to remain at home independent, versus institutionalization by providing home care supports that range not only from costlier home health care kinds of service, but then we have transportation and we have other modes of non-intensive or non-medical supports that are very practicable and very much needed by people to remain at home.

And again, increasing our targets to again, to vulnerable populations. If we are to prevent, you know, institutionalization, we really need to serve those at highest risk. So we want to make sure that we are serving the right people.

So those are the three areas where we really focused our investments, really improving our efficiency factor by 15 percent from 2002 to 2004. You know, we are paying attention to increasing our return on investment and that it's really not only doing better with the dollars that we have, but providing quality services. So we're tracking outcome by measuring results by consumer satisfaction, and also, most importantly, by assessing how effective are our services in keeping people in their homes and communities and assisting caregivers to care for their loved ones longer.

So those are the results that are very promising that are coming in. We are very encouraged. We'll continue to build upon them to improve. Of course, the targeting measures are really targeting in the sense of making sure that we are serving the right people and that we target those that are more vulnerable to nursing home placement, and being able to assist them immediately by the personalized service, and again by the partnerships that we develop in the community.

Mr. Morales: So in this arena it really is as much a question of effectiveness as it is about -- with efficiency?

Ms. Carbonell: Absolutely, and we're particularly proud of our outreach to consumers. Again, one of the most important things we did as a management tool and as an administration tool for the Administration on Aging was really focusing on who are our clients and who are we really trying to serve. Are we trying to just continue to build upon services infrastructures with actually no context of who our real customers are, then that's why consumers and providers that are really the ones that serve, you know, our customers to making sure that the senior remains at home independent, we wanted to make sure that we were doing the right things, and in the kinds of standards and policies that will facilitate that transformation from a service siloed approach to a more consumer-based approach. So again, giving them the right tools, investing in areas where it would improve the efficiency of the programs, but it would also improve the quality of the care and the transformational care that needs to happen in a long-term care.

Mr. Morales: We only have a minute, but this is such a critical topic -- along this theme of program success, we talk a great deal and you have mentioned this around collaboration. And this is a collaboration and partnerships between the agency, other governmental agencies, NGOs or even the private sector. How do you see this partnership evolving over the coming years?

Ms. Carbonell: Well, I think that almost virtually every significant initiative that the Administration on Aging has taken on has been based on partnerships. That tone was set early on in this administration. How -- we needed to look at how, you know, interdependent we were, but most importantly how important it was for us. I mean, for me coming from the community, it was clear that part of the fragmentation that we experienced at the community level, whether be it on an individual basis when an elderly or a family caregiver was trying to access those kinds of support or information and the fragmentation or a provider, like I was, to be able to serve that whole individual and all their needs was trying to see how we could collaborate better in not only the systems but in the implementation and the direction that we gave at the federal policy level and guidelines.

So again, collaboration is critical to our work, it's certainly collaboration with CMS on the implementation of the prescription drug benefit like we talked before, you know, has been able to be of critical importance to millions of people and that were educated and enrolled in the benefits as a result of the partnership. The partnership with CMS on the Aging and Disability Resource Center, the one-stop, has opened the door that will lead to the modernization, both the Older Americans Act and the Medicaid program and how important -- and we've begun to eliminate that fragmentation of access to long-term care at the national level because of our joint commitment. And that's translating down, channeling down to the local provider and most importantly to the consumers, which is where we're trying to impact the change.

Mr. Morales: Great. What does the future hold for the Administration on Aging? We will ask Assistant Secretary Josefina Carbonell 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 Assistant Secretary for Aging Josefina Carbonell. Also joining us in our conversation is Brenda Kunkel.

Josefina, it seems as though the very definition of retirement is changing. What do you predict for the future of the concept of retirement?

Ms. Carbonell: I think we have the first wave of baby boomers turning 60 this year. And we know we have two boomers that turned 60, President Bush and Sylvester Stallone. It really is defining the way that we look at age and retirement in this country. I think many people are choosing to continue to work past their age, and not so necessarily within their same job or same field. So we're looking at people taking pauses in their lives and doing career changes, or actually looking for non-traditional job structures where people will be working in different lifestyle changes along their lifespan.

I think we've talked about boomers and one of the thoughts for the future generations, and I think that as we learn from the past, we need to look towards the future. And I think the best advice is keep healthy. I think your best investment in your later life is to invest early in healthy -- adopting healthy lifestyle choices, and continuing to live them throughout your lives.

And second, most importantly, start saving early and planning early for when you're older, and also get back to your community. I think there is a great opportunity for people to give back and we know the great value that many of our older people are contributing to communities across this country.

Mr. Morales: Many of our guests share challenges in making sure that their staff have the best training and skill set for the future -- and I think this also ties to retirement and the amount of knowledge that is typically lost in organizations that have high rates of retirement. What is the administration doing to attract and retain highly qualified employees and to stem the tide of this brain drain?

Ms. Carbonell: I think the most important thing is that -- we looked at the appropriate mix of staff. I think the strategic human capital investments have been very important for us and they have really driven our reauthorization proposals and the principles of reauthorization. And that is to really retool our organization and agency from an agency that just had grants to an agency that's really leading change in long-term care reform, but most importantly in giving people and consumers the right information so they can have better choices to remain independent.

So the capacity of the shift in the strategic investments in our staffing, not only at the federal level, but also at the state and local level has been critical. I'd like to say that employers, I think in general, in both the private and public sectors really will be facing a great brain drain as a large segment of our workforce begins to retire. So this will create a powerful incentive really for employers to identify new ways of retaining, of retraining, and retooling, older workers and recruiting older workers. I think that certainly that's an opportunity for looking at some of the recent surveys that have come out from MetLife that found that half of adults aged 50 and 70 want to do jobs that help improve the quality of life in their communities. And I think that that's another wonderful opportunity to be able to actually attract a whole core of people to come in to the federal workforce as an opportunity.

Mr. Morales: That's fantastic. Josefina, you just have a wonderful personal career and I have to ask you this. Probably many people out there are interested in contributing in this field and so my question to you is what advice could you give to a person who is really interested in a career in public service or in community service?

Ms. Carbonell: Well, I think we need to continue to look at America as in transition. I think that the 21st century offers us some great opportunities and great challenges. I think that that's a wonderful time, a unique time to be in public service. I think more and more the business of government, there seems to be a thin transformation of that dividing line between private sector doing the government's business and government doing the government's business. And I think that it's coming closer together and it doesn't necessarily need to be in conflict with each other.

I see the opportunities for great public services, whether you're serving in that capacity in a government role or in inherent government capacity or you're serving in that role in the public sector as a private sector contractor to a government agency.

Mr. Morales: That's wonderful. Unfortunately we've reached the end of our time and so that will have to be my last question. I want to thank you for fitting us into your busy schedule. But more importantly Brenda and I would like to thank you for your dedicated service to the public and to our country in the roles that you've held at the Department of Health and Human Services.

Ms. Carbonell: Thank you. Thank you very much, and thank you for this wonderful opportunity to be with you. I think if I may, I'd like to -- obviously it's my role as the chief aging advocate in this country -- is to make sure that, you know, all of us have caregiving responsibilities. We either have our own families that we are trying to struggle, our jobs and struggle to deal with our loved ones as they age -- relatives or relatives-in-law, and I would like to put in a plug for our elder care locator number, which is what we're trying to do is improve the access of information to resources and supports of people -- can get the right choices to remain at home. And that number is 1 (800) 677-1116.

Friday, November 11, 2005

Arlington, Virginia

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

Mr. Dyer: Good morning.

Mr. Morales: And joining us in our conversation, also from IBM, is Lois Romeo.

Mr. Dyer: Sure. First of all, the Centers for Medicare and Medicaid Services, let met give you the acronym, we refer to it as CMS. I think that's how most people know us, and, fundamentally, it runs two programs. The Medicare program, which is for our elderly, which if people pay into retirement, their Social Security, they also pay towards that tax. And then they're covered for their hospital care. And then if they want to pay the co-payment for their outpatient services and doctor offices. The other half of it is Medicaid, which is the program for the low-income of this country. It is run predominantly through the states. The federal government matches with the states. And the states actually day-to-day worry about the running of it, the federal government exercises oversight of it.

Both programs, the total, spend about a half a trillion dollars a year. They're each about 250 billion rounded, plus or minus here or there. And as you can see, they take care of the elderly population, the low-income, low-income being mostly women, children, nursing home care, long-term care for the elderly low-income, and then, of course, Medicare. But besides Medicare, it also covers people with kidney dialysis and other illnesses. It has special features for that.

Mr. Morales: John, you've had a very long career in public service, and I understand you've also served our nation at OMB. How did this experience prepare you for the role of Chief Operating Officer?

Mr. Dyer: OMB was to me the best training ground I could have for it. They teach you very quickly there how to do hard-headed analysis, pull together the data, move to what the options are, and then lay out how you would actually implement any implications of each option. You're exposed very early to dealing with the top-level executives, and you deal with very broad policy cross-cutting issues. So to me, it was just ideally suited.

I got to, in my career there, move from starting on the health side, working on drug abuse programs, to move over to what they call the general government side there, where I actually worked on NOAA -- National Oceanic and Atmospheric -- programs, environmental programs, satellite programs. And then when I went on to be the branch chief of the commerce branch, I got into small business administration, loan programs. Department of Commerce has just about one of every kind of program. And in addition to that, I was fortunate when I started there, the policy officer in the unit I was in was Paul O'Neill, who went on to be Secretary of Treasury. So you get a chance to be with the best and brightest and learn how the right way is to do it, good examples.

Ms. Romeo: John, you have quite a few functions reporting into you. Could you give us a description a little bit about the functions reporting to your office and tell us a little bit about them?

Mr. Dyer: Sure. All of what I call the direct support functions report in directly to me. This is the systems, the human resources, operations management, the regional offices, the finance, and program integrity. Those are all direct-report. We also have other centers that are the programmatic, and it's those centers, the operational aspect of those centers reports in to me. Each one of those groups, whether its Medicaid or dealing with the fee-for-service world or the managed care world, they have a policy side and operational side, and I work with the head of that group and I have oversight over them in terms of their operational activities.

So I'm really focused on how do we manage with a workforce of about 4,800, roughly 63 contractors. Most of our work is done through contractors, so I'm working with each center director on that aspect of the operation. Or with the computers: we spend about a billion dollars in computer services, depending on what-not.

The administrator relies on me to be the person that integrates across the agency. My job is to make sure everything is getting done, what he wants done, the Secretary and the President want done, is being carried out from an implementation operational. I also worry about the processes that he has put in place to get the policy, to make decisions on how we're going to operationalize things. My job is to run it through. So even a policy that's starting, I'm worrying about is the process in place to get a good outcome from that policy, to get to the right policy, the right analysis. And then once the policy's made, we move into program design. Then I spend my time making sure it gets done. That's fundamentally my role.

Mr. Morales: Many of our listeners may not typically associate the Chief Operating Officer role with something that you would normally find within a federal agency. Can you tell us about a typical day in your shoes?

Mr. Dyer: Yeah. First of all, you're right, there aren't very many Chief Operating Officers that are kind of set up the way I am. As I understand it in this administration, normally the Deputy Secretary serves as the number two person and the Chief Operating Officer of the Department. In our case, we have me set aside, because when you look at all the things that our administrator, deputy administrator, and I have to deal with in a typical day, it's impossible for two people to do it all.

Mark McClellan, the administrator, is dealing with the outside advocacy groups, the interest groups, the Hill, the White House, the Secretary. He's just -- his schedule is unbelievable and he's trying to keep in touch. The Deputy is dealing usually with the Department and the Secretary's issues with the industry. So my job is really to worry about the day-to-day running of the organization.

So let me give you my typical day. Last Friday, I started out in the morning with the staff meeting with the administrator. He sits down with all his key folks. I was in Baltimore that day, he was in Washington; we're hooked up by a teleconference. We went over the various agenda items with the Deputy and laid out what was hot that day.

From there, I moved into meetings. I met, for instance, with the head of systems for us, and went over where we stood with all the latest systems we had to start bringing together for the Prescription Drug Program, which ones were ahead of schedule, which were behind, what were on target, went over that in great detail.

From there, I met with the person who was actually interested in working for us, a possible executive. So I interviewed that individual. From there, I went and had lunch with somebody who had a concern about our procurement operation, had they been treated rightly or not. And so, you know, I was trying to get some insight. And it was an individual who had worked in the agency before, so it was a good chance for me to kind of get his insights.

The afternoon, I met with all our managers to talk about how we're going to proceed with talent pooling or succession planning, what our plan is, what our game plan is. We had a session with the head of the group that runs the Medicaid program for us, went over what their issues are.

So you can see, I move across a wide spectrum of activities during a daily basis. I find it very interesting. I enjoy it.

Mr. Morales: That's certainly a full day.

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with CMS Chief Operating Officer John Dyer. Also joining us in our conversation is Lois Romeo.

Mr. Dyer: Okay. The reorganization was started a little bit before my time. I think it was 2002. And it was Tom Scully and Secretary Tommy Thompson who came up with the idea. I think it was several factors as to why they changed the name.

One, I think that the old name, HCFA as the acronym was, Health Care Financing Administration, had negative connotations. I think the sense was that the agency had not been as responsive as people would like. But more importantly, the Secretary and the administrator, from what I, again, have been told, saw that the mission and what the agency was doing was changing, that it was becoming more of a service organization, not just simply of financing. It had been viewed before that it just paid for Medicaid in the states, paid for the fees of the services of the doctors for the various Medicare beneficiaries. But now it was moving into getting into preventive services. It was mixing up the kind of programs it would finance and pay for and reimburse, moving from fee-for-service to managed care. So the thinking was to change the image and the title.

And my memory is when I at least read the accounts of going through and talked to friends there, the Secretary asked for ideas for the name. And at the end, they picked the Centers for Medicare and Medicaid Services, picking up on the notion of services, picking up on the notion that Medicare and Medicaid were the two major aspects of what the agency was known for and what it was accountable for.

Now, as we look at it with Dr. McClellan, we even see it as a public health organization, because when the Medicare Modernization Act was passed a couple of years ago, it expanded the role and encouraged the agency to go into preventive care services, to pay for them, such as immunization shots, physicals. When I was there 15 years ago for a couple of years, it was very simply if you had a medical problem, you got surgery, it paid for it and that was it. Now it covered a wide spectrum, tried to move more into the prevention. And as we have gotten into now bringing up a major prescription drug program, that really helps the person take care of themselves. They don't have to go to the extreme of surgery if medication works or other choices work. So we see ourselves as more the whole approach to it, so the name carries that connotation with it.

Mr. Morales: You used the term "service," and since reorganizing, we know that CMS has taken steps to improve customers' understanding of Medicaid and Medicare. How did CMS decide to focus on customer satisfaction, and what steps did CMS specifically take?

Mr. Dyer: Well, you know, at the end of the day, service in the health world is either that you got well from the medical procedures and that you're happy with what it was, the outcome. So ultimately, you really need to think about what people's satisfaction is, particularly as you're moving towards health maintenance organizations, where there's a lot more of are they really giving an overall good package and a good approach to people as people begin to shift in that direction. So that was the stuff.

The other thing is, you've got to realize that we're serving in Medicare 42 million people and in Medicaid a little over 40. And it's very important that they understand and have a good appreciation of what we cover, how it works, that it's easy for them to understand. These are elderly people; some things can be a little confusing. I get confused at 58 with some of the things I have to understand. So the whole idea was how to make sure that our beneficiaries, people who've actually paid into Medicare, all their life have put aside money to pay for it, or Medicaid, where they tend to be at the low-income spectrum and more, I guess, a need, that how do we make sure that they really can understand what is available to them, how the program works? And now that we have, as I said, different ways, different things we'll finance, whether it's fee-for-service, managed care, prescription drug, that they understand what the implications are, what it means to them in terms of premiums, paying out of pocket. So we have really built a lot more of an outreach benefit approach.

We have a center called Beneficiary Choice, and it has -- a large part of it is to be service-oriented, in contact with the beneficiaries. The programs range from -- we run an 800 number nationally, which has traffic of over 40 million calls a year, you know; it's going to reach over 50 this year. You have lots of information we put out now in English and Spanish, where we've tried to simplify it, make it very clear. We have websites that we've brought up, www.medicare.gov, where you can go in and ask basic questions of what's going on.

We work with the providers to give them information that they can pass on with the doctor or nurse. When we were doing the drug card, we had a lot of information we provided to pharmacies, because we knew that the beneficiaries people would be coming in there and that would be a good place to contact them.

So the emphasis is, you know, this is a program people have a right to and they've earned. And we're trying to figure out how best to make it easier for them to understand how to operate what their choices are.

Ms. Romeo: John, as you look at your key operational goals, can you help our listeners understand what some of those are for the year?

Mr. Dyer: Yeah, this past year, the key one has been to bring up the Medicare Modernization Act that passed a couple years ago. The biggest piece of it is what I mentioned earlier, is the Prescription Drug Program. And it provides -- has us setting up plans across the country. We refer to them as PDPs, prescription drug plans, are under the managed care, or MA as we use the acronym. You can take your HMO, health maintenance organization, program, and add more prescription drug features to it or mix it up.

So the Act calls for us to have it in place and up and running November 15th. And on November 15th, the public can begin to sign up with the plans. And we have, for the past year, been working with the industry, going out explaining what it is, laying out the rules of how it'll work. We completed the contracts and the bidding and all that a month or so ago. And so people who want to get into a prescription drug plan are able to pick and choose whichever plan they want. There are multiple plans out there. And we've also set up websites to help you narrow down to if you want to pay a certain premium range or this or that, the pricing is very good. But that is what we've been spending our time putting in.

So one has been to lay out the policies and how it will work. The statute left a lot of the decision-making up through the regulatory process, of how to design the plans, what to require, what the specs would be, where to put the subsidies, just a lot of policy issues that we've spent the last year and a half working through.

The second thing is that you have to bring up huge systems to handle this, and that's where I've been spending quite a bit of time, which is that it involved 15 systems. And everything from how does the plan know that the person is eligible for Medicare who's applying to the plan -- the process for enrolling the person, for us to know who the plan is, the processes to pay the plan, the business processes we've worked out with Social Security to identify low-income recipients. And, also, with Social Security, if someone wants the premium for the prescription plan taken out of their Social Security check, they can do that. So we've worked that through the systems with Social Security. So all of that has been put into place. Plus then, the follow-on of appeals, the tracking through.

We also put together a campaign. I don't know if you've been watching the campaign unfold, but about a half a year ago, we started to say it's coming. The President joined us in announcing this looks good. Then we began to start to explain what the plans would look like, what you needed to think about.

There are roughly five different groups of people out there that we think would break the plans in. There are the low-income eligible. The Act requires subsidies for particular people that their annual income is below a certain amount, or their resource levels.

It, secondly, takes care of what we call the auto-enrolls. These are folks that were being covered before for their prescription drugs by Medicaid, which we were paying Medicaid for. Now they've moved directly over to our plans.

They have what I call euphemistically the regular. That's the vast majority of the Medicare retirees. There's a smaller group of those who are already in managed care plans with us that can expand or adjust their plan.

And then the law also has a feature for if you come into the private sector and your business that you're working with gave you health coverage, prescription coverage, after you retired, such as a General Motors or some of the bigger companies tend to be there, it provides a subsidy. If that company brings its prescription drug feature of its plan in sync with our basic requirements, they get an 18 percent subsidy, which goes towards paying for their costs.

So it had a lot of features, and we had to start to lay out how do you explain to people this. We put it in the Medicare handbook and we've sort of been laying that out. We've been now moving to say, okay, we have these websites you can go to or you can call our 800 number. So a major effort to get information out so people would understand how it works, what the advantages are, what the pricing has come out to be. So is it convenient to them? Does it meet their cost requirements? Is it a good deal for them?

Mr. Morales: John, we've heard a lot about the contributions of various public and private enterprises in the wake of the hurricane disasters. How did CMS specifically contribute to the Hurricane Katrina disaster relief?

Mr. Dyer: In lots of ways. First of all, remember, we're a financing organization. We don't have doctors and nurses that you can send out, necessarily. We have some that did go. But generally, what we did is we looked at a couple of things.

On the Medicare front, the Secretary and the administrator moved very quickly to issue waivers. We have a lot of requirements that you have to have procedures done by certain doctors and groups that have gone through, you know, various certifications and protocols. We waived a lot, because getting medical care, not every hospital, not every doctor in the situation they were under could deliver it. So we moved very fast to make sure that we could finance and reimburse quickly for whatever was out there.

On the Medicaid front, we worked with the states, because you had a lot of folks crossing state lines, being moved around. This was a hurricane that -- one of the first I can really remember where it went largely outside each state's jurisdiction of impact. So we, early on, were working with the states, said, well, how do you pay for someone moving -- Medicaid moving from one state to the other. What were the implications? We've been working with the states and the governors and the Congress to work through for the future payment of Medicaid, what will 100 percent federal, what will be, you know, be a state match. So everything we could do to be responsive to make sure that the money was going to follow whatever the services were, and that people moving from one jurisdiction or out of one style of paid program would be picked up elsewhere, we did as fast as we could.

The second thing that's been done by CMS is that the President asked the Secretary to take the lead for helping Louisiana, Mississippi, and Alabama bring back up to the degree whatever medical capacity had been; infrastructure had been lost. It made sense to have us involved because we're one of the big payers. We pay for about a third of the care in this country. So my administrator, he tasked the Deputy, our Deputy, Leslie Norwalk, to be working on this multiple group that has people from the state, locals, and out of the federal establishment to start to think through, well, how do you begin to bring back up the health care system? Obviously our input being to support where the states and locals want to go. So I haven't seen too much of our deputy administrator because she's been spending a lot of time working on the task forces.

Mark McClellan, of course, went and made several visits with the Secretary to the region, so that he could have his ear to the ground, see what could be done, and tried to basically respond on what they're hearing and what the needs and requirements have; been working with the Congress, with the Office of Management and Budget, and everybody to move forward and make sure, you know, things get covered and funding gets taken care of. So overall, it's been quite an effort.

The other thing we learned was how to prepare to be even better and more responsive to upcoming hurricanes. So as Wilma came and others have been arriving, we have been integrated earlier on and have started working with the medical groups, the hospital groups, and sitting down with them and saying, okay, if the storm's going to move this way, how are you going to move the patients? Where is the best way to move them? How do we move the financing to go with them? How do we track-through the continuity of their care? And we've tried to be even more proactive up front. So it's been a good learning experience and I think a good success story. And at the end, I think people will be pleased as to where Secretary Leavitt and others go with those communities to have first-class medical systems reestablished there.

Mr. Morales: That's great.

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with CMS Chief Operating Officer John Dyer. Also joining us in our conversation is Lois Romeo.

Mr. Dyer: Well, as I said, annually we make a half a trillion dollars in payments. I think that's a pretty big number. We're doing a lot of things across the board.

One, obviously in the systems, we've been working on how to improve them. We've been bringing up a big project with IBM called HIGLAS, which is that we will automate our chart of accounts and ledger and all of that. So we'll have one integrated system, which is now the financial requirements. This year, we were very pleased to move it in out of the developmental into the operational phase, and we've been bringing it up with some of our contractors, some of our payment sites. We're going to be developing the administrative piece of it later this year. So it is moving, and we've gotten basically a green on that because we have taken it out of developmental into operational. It'll take us a few years to obviously bring it up nationwide because we're going to do it in steps as we roll it out, but it's working. It's already saving us money. We're finding that it's catching transactions that shouldn't have been made and we've been able to stop them and save us, I guess, about $700 million. It's a pretty big amount of money in just a few months of working. So we're very pleased with that.

The other things we do is we run a large program integrity program, where we go out and we review the claims that are being paid or the bills that are coming into us from very many different aspects. For the last couple of years, we've been putting together a methodology to test our payment accuracy for Medicare for fee-for-service. This is for the hospitals and physicians predominantly. And as we drove this year to set a goal, our error rates were running around 10 percent. And this year, we were able to cut it in half, roughly.

And now, how did we do that? Well, a couple things. Some simple things, like we just gave people a little more time to get the information in. Other things, though, is we had contractors and we hired people to follow up to make sure that the information was fully filled out, because a lot of the errors were just incomplete information. So we've been working that and we've, I think, made a tremendous success to have a basically 100 percent reduction in a year's time. So we have a good tool to benchmark where we're going and we've been measuring against it.

On the other program integrity side of Medicare, we obviously have various contracts with different groups that look at the claim to see if it was done accurately, look for patterns of fraud, and those have been very effective. We've had large cases, like the Tenet case, where we've saved millions of dollars, where a hospital was just basically falsifying its records. We picked up patterns by looking at it and eventually tracked them down.

The Inspector General, law enforcement across state, federal, the Attorney General's office work closely with us. They use the data from an enforcement side. We use it from a cross-match to see things. We recently were able to spot a pattern of billing for us for HIV drugs in the Southeast. And that allowed us to jump very quickly in and see that people were not doing the correct thing there. So we have a very large system that, over the years, has been expanding.

We also now are going to have it grow to go with the new prescription drug program, Part D, as it's called. We've signed agreements with various program integrity plans so they can watch what's happening in the drug area. The drug area, you got to be watching everything from that they're falsifying eligibility to they're not providing the quality of drugs that they say that they have to give us under our rules, to falsifying the usage of drugs by the beneficiaries or the premium payments, a lot of things that can be taken advantage of. And so our idea is let's get in early, let's get started on it quickly, let's head it off. So we have a large effort.

We also brought up, over a year ago, satellite offices in Los Angeles and Miami, because we know we have higher traffic in some of those areas. So constantly watching for what is the trends out there, what's being falsified, where's new fraud being introduced, see if we can get on top of it, putting measures.

On the Medicaid side, we're coming up with a new measure that we're going to work with the states where we'll go in and pull a sample to see how accurate payments are being made, what's going on, so it'll give us a measure there that we want to come up with, so we can be looking at that. We pay the states, we give them funding for them to run programs for anti-fraud and other activities, and we work closely with them, as does the law enforcement, so we're very active in that arena. And over the last few years, it's been increasing. And the kinds of return and payoffs we've been getting have been very, very good.

Congress, if I remember rightly, about five years ago, actually encouraged us and set up a program and gave special funding. So it's been an all-around effort between the administration and the congressional branch.

Ms. Romeo: The CMS website lists some of your goals and relationships, and improving responsiveness, in particular, is one of your goals. Can you explain how our listeners would view your work around relationship-building?

Mr. Dyer: This is something that I think came to with the change in CMS and the leadership in the last few years. Historically, again, I keep going back historically because I worked in CMS between '84 and '88, and all the years when I was at Social Security from '88 to 1999, I, of course, interacted with all the administrators and the deputies in the key places at CMS, or HCFA, as we called it in those days. So I've always felt very close and I've been working closely with them.

I think that if you look at CMS from the old times, there used to be a time when it would issue regulations and just put them out there. It would take law and implement it without really that much consultation with who was going to be affected. The CMS today, we don't do anything unless we really have talked to all the players, from the Hill folks who design the legislation to the beneficiaries to the advocates. Anything we do, we're very up-front. To the degree we can provide information, share what our thinking is, what we're looking at, get data and information from outside groups that can help us make our determinations, get to the regs, so that when we issue a final regulation or a guideline or a policy or procedure, it should not come across as a surprise.

The other thing that recent administrators and secretaries have been very consistent on from CMS is that when we do go out and start to issue new things, that we really make the information available. We sit down and explain it to the press. We go over it carefully, that they may not like it, but there's nothing hidden from them as to what's going on.

The same thing with the advocate groups. For instance, the administrator announced the rollout of some new websites and, you know, he has a press release. We show them the screens that you can use. We walk through examples. The idea is to be very visible, open. This is, you know, going to impact on them, on the industry, and we want to be sure that everybody's had a chance to weigh-in, hear their views. We try to weigh them as best we can and then proceed. So very much of open problem. As I joke, in my day, we would take a regulation in the dark of night, throw it over the transom. Now, by the time we get the regulation out, if anybody's surprised as to what they read, it's pretty rare.

Mr. Morales: With the complexities of your mission and on this topic of public trust, how is CMS implementing the Sarbanes-Oxley, or A-123, requirements?

Mr. Dyer: This past year, we've been early with our audit reports and I'm just coming off of doing the audit report. And we started -- just to take this one, we started working a year ago on this. You know, the administrator and I, after we got last year's report, said we're going to do better. And so we sat down and we put together a group that I chair which pulls in the top executives of all our components, and said, okay, these are the material weaknesses that we have, these are the areas where's there indication that we're not fully in compliance. We're going to get these fixed. So we laid out plans for everything, both on the Medicare and the Medicaid side, and we started to work them through.

I and others met with the outside groups, our contractors, that do a lot of the work and said we no longer are going to have a material weakness on the systems side of the contractor world. On HIGLAS, if we didn't move from developmental to operational, we knew the auditors weren't going to be able to say to us, look, you're moving forward, you can continue to be in compliance. And so we went through the drill.

As the year went on, we saw we had some issues with managed care, and we started working earlier with the auditors to start to address and look at that. And so we got through this past year with only one material weakness, a new one, which we'll have fixed by the end of next year, if I have my say, but we were able to really make strides. And we've invested the effort and the time, and the administrator and I are pleased with where we've gone. So it's a matter of you've got to -- it's not hard. To live with that act is easy. You've got to sort of look at what's before you and you've got to get serious about solving it. You can't do it all in one year. Some things take a little more.

The other piece that we're working on now as we move into next year, it'll all be do you have adequate internal controls becomes the next question. So I've already been working with the Assistant Secretary for Management and Budget at our place for finance, Charlie Johnson. And we've begun to work across the Department with them and our part to start to say, okay, how do we put up good -- make sure our internal controls are adequate. And we've begun to tackle that. We have a contractor to help us lay out the methodology and approach. And using the same risk audit groups of our key execs, we'll run the same drill of going, okay, let's go systematically through everything, starting with the higher risk areas and working our way across. I did it at Social Security. It's doable and it's just a matter of, again, rolling up your sleeves and getting commitment.

We involve in the group. We'll have the IG present, too. We keep the General Accounting Office informed of what we're doing. So there are no secrets. I'm happy to share it with most people.

Mr. Morales: Great.

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with John Dyer, Chief Operating Officer of the Centers for Medicare and Medicaid Services. Also joining us in our conversation is Lois Romeo.

Mr. Dyer: I think that we're going to be able to handle it okay. We're finding that a lot of people are very interested in coming and working for us. And we are at the center now of health care policy. We purchase about a third of the care in this country. In the next decade, we'll be about half of it as the Baby Boomers move into Medicare days. So we are not that concerned. We've been able to compete pretty well at the entry level and the mid-level. Get to the higher end, obviously bringing people like me, in are hard to find that'll take the kind of reduction I took. But we are pretty confident.

We also, in a sense, lucked out that we got all this work with the new Medicare Modernization Act. But we were given the authority and we were able to bring in 400 people in the last couple of years, so we have been able to infuse the organization with a lot of diversity.

To me, as long as we're able to make the work interesting, continue to be a leader in our area, people are going to want to come work with us, because they're going to learn everything. And as I tell the new recruits coming in, if you're not happy doing this job, we have everything, every type of profession you can imagine. We'll give you the training. We'll bring you along. We'll develop you. And you can come into our place starting out as a programmer in a particular kind of software and you could move into 12 other types of systems issues, whether it's data storage or formularies, small quick programs, major ones, major systems. If you get into policy, you can move from hospital reimbursement policy to managed care. If you're a nurse and you want to get into pharmacy, you can move over to our choice side and work on prescription drugs. So there's just so many different challenges and interests.

And, you know, when I was -- for instance, I keep drawing back, when I was last at CMS, or HCFA, we were really a small part. We were still getting our piece of the action, you might say. Now we are the key player and we're going to be even more of a key player, so I think we have a lot of attraction to draw. I mean, we're sort of like the Federal Reserve of the federal government or the OMB for health care. We're in a good department. The Department gives us a lot of support, and so you can move across the Department. So to me, there's just a lot of opportunity and chance.

Keeping people at the higher end is a little tougher, but you find folks like what we do. I mean, they know at the end of the day they're looking out for the welfare of a larger and larger part of our population, and it's rewarding. And tough work, but rewarding.

Ms. Romeo: John, over the next 10 to 25 years, what types of patient population issues will CMS face?

Mr. Dyer: You know, if you look at the elderly, you start to see more and more people with chronic care, heart conditions, diabetes. So, you know, we see that to continue to be an area, so we don't see that much change in the difference of kinds of illnesses you get, cancer and the long-term.

What we see, though, is obviously the elderly population will be getting much bigger. The type of medical treatments will change dramatically as they go into being able to look at your DNA and treat you based on your DNA or the stem cell research, wherever it takes us, and all these things that are going on, which means that the medical professional of the future will probably have so many more -- a wider arsenal of treatment available to them, that a challenge for an agency like us will be how do you keep up with what's effective. What do you pay for, don't you? How do you work with the doctors to get it to less cost? When you look at the actuarial estimates of projected costs, one of the big factors is the introduction of new technology. As it comes on board, it tends to be more expensive. So how do we manage that? And these are technologies that are wonderful. People are going to live longer, better, less pain. It's going to be great. But how you manage that, how you pay for it, how do you make sure it's distributed equally, all these kinds of questions will be what people that follow me will be wrestling with.

Mr. Morales: John, what advice can you give to a person who's interested in a career in public service? You've certainly had a phenomenal career back in the '80s with OMB and Social Security, HCFA, and now back with CMS. What advice can you give to somebody who's thinking about starting in public service?

Mr. Dyer: Yeah, I've got to say that for me I've been blessed. I've had the most rewarding career in the federal government that I can think of most people. To be able to start out as a GS 9 in the Office of Economic Opportunity, just about six months before President Nixon abolished it, and wake up 25 years later as the Deputy Commissioner in Social Security, a career person in a political position, is pretty phenomenal. I was -- I'll be honest, I was lucky. At each turn when I was getting ready to make a move, something would come along, much to my amazement, I hadn't expected it, and I would take the chance.

I'd say for people that are starting in government, in my case, it's helpful if you've had some training in public policy or a master's in business. I found that extremely useful to be able to analyze and look at issues. My degree was in public health from Michigan, in the School of in those days was called Planning, but it was mostly economics and public policy; got exposed there to some good people, ideas. I did an internship with actually HEW in those days, HHS now, and that gave me a chance to see what it looked like. So I would encourage that, too, you know, go work a little bit, but try out -- you know, pick up a degree that would help you in a particular area. If you're a doctor, that's fine, they'll take you on a minute's notice.

And from there, as you look at where you want to go work in the government, it's important that you pick jobs that will allow you to move across the organization, not just get buried in a particular part, unless of course, you know you want finance or you know you want this or that. Try to go in with the attitude that you're going to move around. My rule was every three to four years, I'd change jobs. Sometimes, you know, I ended up staying at OMB 11 years, but while I was there, I had three different jobs. Same thing at Social Security. I took a step that the price to get to the new area was I had to continue doing a bit of what my expertise was, but I began to move to other things.

The government is doing whatever it can to recruit people. Sometimes the process takes a little longer, but it's getting streamlined pretty fast now. We've been able to hire people in 30 to 90 days, so it's picking up.

So my advice is, you know, look carefully at what agency. Try to get into the management intern programs, the scholar programs, because that gives you a chance to see what's around the agency, what are your choices. When given a chance to go take an assignment, take it. Get out to the regions.

The last thing that I found extremely helpful with me is I think you have to have a discipline that you know. You've got to be versed in something. If you look at my pattern, I was versed in budget and finance. Anywhere I've gone, anytime as an executive I confront an issue, it usually has some kind of a budget and finance issue. And I really know that part of that world, so I'm very comfortable. It gives me a framework to analyze issues, as does the economic training I've had. So that you want to have some kind of discipline that you're able to -- and I always advise this to people who haven't gotten their college degree that are in government or want to work towards a master's: Pick something that gives you a framework. A law degree, that gives you a way to think about issues. Systems gives you another way to go in. But then once you get there, unless you really know you want to be in that particular niche, look about how you can move around, try things, and I think you'll find that the opportunity will come. If you know your stuff, you're open to change, it's going to happen, because the government is moving so fast, changing so fast now, it's an exciting place to me.

Mr. Morales: Well, John, that's great advice. We've reached the end of our time and that'll have to be our last question. First, I want to thank you for fitting us into your busy schedule today. Second, Lois and I would like to thank you for your dedicated service to the public and our country in the various roles that you've held before your retirement in 2000, as well as your current role in the Centers for Medicare and Medicaid.

Mr. Dyer: First of all, I want to thank the country for giving me the chance to do these jobs. When I was in the private sector for the last four years, and I'll be going back in a couple of years, I really enjoyed it and learned a lot. But when you go to work at the start of the day, it didn't quite feel the same to be figuring out how you were going to increase sales versus my previous role as how you were going to make life a little better for millions of people.

The second thing I do want to pass on to everybody is that, I think as everybody should be aware of, we have now brought up the Prescription Drug Program. From what we can tell, it's a good deal. The premiums are much lower than we thought they would be. We've got some pretty good deals, a wide range of choices as to what they'll cover and not cover. People can get a lot of medical care for a lot less, depending if they want to go with a managed plan. It's worth looking at. There's a lot of choice out there.

We've put a website out and we have the 800 number. The website is www.medicare.gov. The 800 number is 1-800-MEDICARE. You got the Medicare handbook in the mail. If you didn't, your parents, aunt, uncle got it. It's a good reference point. So it's something that you really need to look into for your parents, or your parents need to talk to you or whoever's out there listening.

And we do also want to thank a lot of other federal agencies who have working with us on this. The Food and Nutrition Service in Agriculture works on this. The rest of the Department has been out talking about it with us, Social Security, just -- state/local governments. We've had just tremendous help, and I want to thank all those other agencies, too.

Mr. Morales: Great, John.