Originally Broadcast Saturday, June 23, 2007

Washington, DC

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.

One of today's greatest challenges is protecting our country against terrorists and the instruments of terror, while at the same time fostering the country's economic security through lawful trade and travel. With us this morning to discuss his program's role in facing this challenge, is our special guest, Lou Samenfink, Executive Director of the Cargo Systems Program Office at U.S. Customs and Border Protection.

Good morning, Lou.

Mr. Samenfink: Good morning.

Mr. Morales: Also joining us in our conversation is Alan Heath, partner in IBM's Customs and Border Protection Services Group.

Good morning, Alan.

Mr. Heath: Good morning, Al. Good morning, Lou.

Mr. Morales: Lou, perhaps you can begin by providing our listeners with some context. Could you tell us about the mission and the history of the U.S. Customs and Border Protection, sometimes referred to as CBP?

Mr. Samenfink: Absolutely, Al. I appreciate the opportunity to get on here and talk about the program that we're building, the automated commercial environment. In terms of Customs, it's been around since the beginning of the country really, but it was after 9/11 that a major change occurred -- and specifically, there were several agencies that were combined.

When I worked at the border, we had Customs, we had Immigration, we had different Agriculture folks working. And after 9/11, the Congress created the Department of Homeland Security and linked all these agencies together. And as a result, because of those events, while we've always been worried about smuggling, things coming into the country, illegal activity and so forth that we wanted to prevent -- public health and safety, the mission of the agency really changed. And quite simply, it's to prevent the entry of terrorists and their weapons coming into this country, while at the same time facilitating legitimate trade and travel. Commissioner Basham has often said -- my boss at Customs and Border Protection -- that if we hamper trade and travel and people and goods coming in and out of this country so severely to do the anti-terrorism mission, then in a sense, the terrorists have won as well.

Mr. Morales: Lou, this is obviously a very broad and critical mission to our country. But can you give us a sense of scale of this operation? How many miles of border are covered? How many ports? How many people and items pass through U.S. borders?

Mr. Samenfink: Well, I've got all kinds of numbers in front of me here, and without reciting them all down, and certainly, there's places that people can go to get more detailed information. But we have a 1900-mile land border with Mexico, a 5000-mile land border with Canada. There's 314 ports of entry around the country, and then of course outside of those ports, there's everything that the Border Patrol does in between the ports, 95,000 miles of shoreline that need protecting.

On a typical day, we process over a million passengers, collect about $80 million in revenue, we make almost 100 arrests across the country, seize 5,000 pounds of narcotics, and then, specific to the area that I'm involved in, which is international trade of cargo and so forth and imports and exports, we're processing hundreds of thousands of bills of lading coming in by various modes of transportation each day. There's 600,000 importers of record; people that pay duties, taxes and fees to this country, that we interact with. There's 2,800 automated interfaces we have with people that are giving us the information that they send in. In addition, as far as export is concerned, we deal with 135,000 different companies that are sending stuff out of the United States, that are reporting their exports that are going to other countries.

Mr. Heath: Lou, now that you've provided us a sense of the larger CBP responsibilities, perhaps you could tell us a little more about your specific role as the Executive Director of the Cargo Systems Program Office. What are your official responsibilities? How does the Program Office support the mission of CBP in the Department of Homeland Security?

Mr. Samenfink: Yeah. Sure, Al. We have an existing automated system that's been around for a couple of decades now; it's called the Automated Commercial System. It's still out there, it's still working, it's still doing a lot of processing. We're in the process of replacing it with a new system. But essentially, my mission and my job is to keep that existing system plugging along, working, doing the things that it has to do to support the mission of our officers and other staff in the field, and also build this new system. And in a sense, that's really it. It's interfacing with the business customers that I have, both inside the agency and our external stakeholders; members of the trade community, other participating government agencies; Food and Drug Administration, Department of Agriculture, Environmental Protection Agency and so forth, to make sure that what we're doing at those borders as cargo comes in, and what we're doing after the fact, to collect statistics, to protect the revenue and so forth, is all being supported by this technology.

Twenty years ago, when I came to Washington to work in Customs Headquarters, when I left the field, there was very little automation at the land border I was at. We had a few systems that we would query, and when I got to Headquarters, we were in the midst of building something that again is still out there today. And that automation, that ability to use that tool to eliminate a lot of paperwork, to speed up the ability of our officers to quickly check information, has really been a force multiplier. Our officers can do a lot more today using those systems than they ever could have done looking at pieces of paper one at a time.

Mr. Heath: What have been the top three challenges that you have faced, and how have you addressed those challenges?

Mr. Samenfink: That's a great question. And program management, I guess it's kind of a pain at times, depending on how you want to look at it. And I would put the top three things sort of in this order.

First of all, scope. We define a project, this is a development contract that we're on, there was not a very super-detailed set of specifications when we started off on this, Alan. You know that. And managing that scope, understanding the expectations that we have for both our internal and external customers, is so key.

Everybody wants everything. I can sit down with the trade community, "hey, Lou, wouldn't it be great if the system did this, and wouldn't it be great if the system did that?" And eventually you have to start telling people, "well, yes it would be," but guess what, I can't do that now because I've outlined a body of work and I have to maintain that. The folks don't want to hear that. So scope management is really I think at the top of the list.

The second beneath that is stakeholder management. There are a lot of cooks in the kitchen on this one. We have the trade community that has a lot of vested interests, other federal agencies that are engaged -- of course, my own senior management within Customs; the Department of Homeland Security. Congress is a huge player, and of course, just the American people. We're doing a show here today, doing outreach and stuff to folks in the Washington area. We've done other outreach across the country; we've been in a lot of newspapers and magazines. And the taxpayers are wondering how we're spending these billions of dollars on building this system, and what kind of value they're getting out of that.

So keeping those stakeholders apprised, keeping them satisfied, telling them the truth, that sorry, this isn't going to happen the way you thought, but we'll get to it eventually; another challenge.

And then the final one -- and maybe that kind of goes to sort of what this show is about a little bit -- is contract management. We're using a set of government employees and contract employees to build this system to maintain what's out there. And there's really a challenge there. The challenge is, we have to work together. And when you enter into a business relationship with someone, there's task orders, there's written documents, there's contracting officers, there's money changing hands, and of course, companies run business to make money, and we have to appreciate that.

And then at the same time, if we get so wedded to all of these contracts, to all of these Is that we have to dot and Ts that we have to cross, we lose sight of the shared responsibility and the mission that we have to achieve. And finding that middle ground where the government and the private sector are truly working together in an open, honest and sharing environment where they're communicating effectively, it's key -- it's key to success, and it's a challenge. I don't think it's a challenge because we're sitting down pointing fingers at each other saying, "hey, I'm not going to work with you or I don't" -- it's a challenge because you have bosses that are looking for their bottom line and I have bosses that are looking to put product out there, and somehow we have to come together and hit both of those marks. So those are the three challenges that I see.

Mr. Morales: Lou, you made a reference earlier to working at a land border. Could you describe for us your career path? How did you get started in government?

Mr. Samenfink: Yeah, sure. I was living up near the Canadian border back in the '70s. And I took a test in Civil Service and was selected for a position as what was then called a Customs inspector, and I worked in Champlain, New York, which is south of Montreal and north of New York City. We used to get a lot of traffic on that interstate going between those two major metropolitan areas, worked there for about nine years, learned a ton, met people from all over the world, very interesting work.

In 1987, they picked me to go to headquarters. And I actually worked on the existing legacy system that we have, the Automated Commercial System. And then since I've been in headquarters, every two or three years, I bounced around to different jobs, doing a variety of things, and I've learned a lot -- not any real big secret or anything. But I ended up about 2-1/2 years ago in this position, managing the program that we're on.

Mr. Morales: So I'm curious, how has these movements around the organization prepared you for your current leadership role and shaped your management approach and your leadership style?

Mr. Samenfink: Change. It's all about change. Everything is always changing. Nothing stands still. And I guess that's just the way life is, and in this program, the Congress will pass a law, or the Administration has a requirement, or the trade community needs something done, or our field officers have something that they need the system to do immediately -- the list goes on. And all the change and all the different jobs that I've had, and all the reorganizations that we've been through -- from one to another, I think that's the biggest thing that has prepared me, as opposed to if somebody gave me a book and said, "hey, eventually you're going to be doing this job, this is how you do it."

It's going through all those different positions; it's not staying in a comfort zone. It's going into jobs where you don't really have a complete grasp of what's happening, and you have to learn when you get in there. And I think that's what prepared me the most for. It's being ready and prepared to just do something different and give it a shot.

Mr. Morales: That's fantastic.

What is the Automated Commercial Environment, or ACE? We will ask Lou Samenfink, Executive Director of the Cargo Systems Program Office at the U.S. Customs and Border Protection, 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 Lou Samenfink, Executive Director of the Cargo Systems Program Office at the U.S. Customs and Border Protection.

Also joining us in our conversation is Alan Heath, partner, Customs and Border Protection Services at IBM.

Lou, given the very complex nature of your efforts, before we dive into the specifics of your program, could you elaborate a little bit more on the impetus for the CBP modernization effort? What were some of the reasons for even pursuing modernization?

Mr. Samenfink: That's a good question. Back in 1993, I believe it was, then-President Clinton signed the NAFTA, the North American Free Trade Agreement, and attached to that was something that we call the Customs Modernization Act, that really served as the foundation and gave the Customs Service the authority, if you will, the blessing from the Hill, to go forth and modernize its business processes, the processes that the trade community uses to import and export stuff into and out of the country.

We had already been building something called the Automated Commercial System, or ACS. And as I've said before, that system is still out there and operating. Well, since that act was signed, there's been a number of efforts to build what we're now calling ACE, the Automated Commercial Environment -- and simply the replacement for the ACS, if you will. And what's evolved to this point is a contract that we signed just prior to 9/11, and in addition to really modernizing trade practice, to looking at the existing processes that we have, and not just automated processes but the business processes, the things that our field officers are doing and the things that the trade community is doing -- a lot of things have changed. And obviously again, it'd be remiss to not mention 9/11, and the real focus that we now have on making sure that the security component of this system is baked in.

In other words, when merchandise/cargo is coming into this country, or for that matter even leaving, are there any things that we have to be concerned about in terms of our terrorist mission? And that's really what is behind ACE at this point, it's to make sure that as we do and process this legitimate trade, that we're taking time to ensure that their cargo is safe, that there's nothing that we have to worry about, that from a public health and safety perspective, it's good to go. And essentially, that's what it is. Now, using more modern tools in ACE and replacing what we have in ACS will give our officers a greater ability, if you will, to achieve that mission. And that's what it's all about.

Mr. Morales: So now that you've referenced ACE, what specifically are the goals of ACE, and how is it facilitating trade, improving national security and enabling the creation of a transparent global supply chain, if you will?

Mr. Samenfink: Well, ACE -- again, the Automated Commercial Environment, the replacement for this legacy system, it's to take what we have already built to the next level. Right now, we have a mainframe system, our officers that are using it have to remember function codes and so forth and so on. So there's this technology component that's going to put it in and make it a web-enabled system so that it will look and feel -- you'll be able to click with mice and pull information together and so forth and so on.

Essentially, the way it's improving national security is we're taking a lot of different systems. I'd mentioned ACS, but there are some other systems that we use as well -- and linking these together, and not just bringing in information that Customs and Border Protection needs to achieve its mission, but also finding ways to bake in information from other participating government agencies to make sure that when our officers who are at that port going to do cargo release, or if they're looking at information after the fact, that they have all the information that they need from Customs sources, but also from those other government agency sources, to complete their job.

We're using a portal, sharing information with the trade community. Right now, we have the ability through ACE to allow people that are doing business with Customs to come in and look at all the information that we have about them essentially in our legacy system. It's a window into that. Why do we do that? We do that because it improves trade compliance. Those individuals can look and see what information we have, what kinds of activities are going on, where we have done inspections and found problems and where we have done inspections and not found any problems. We're going to be able to better share information, not just within the Department of Homeland Security, but also across the government.

I had a meeting the other day with an administrator with the EPA, a deputy administrator, and we talked about how we can better share information about cargo coming in, to make sure that both agencies' missions are taken care of. And then I think finally, if we become more efficient using this tool, then it's going to free up our officers' time, not just on the frontline, but also those that are reviewing information after the fact, including regulatory auditors. It's going to give them more time to think about and to focus on their jobs, and to have a lot less time pushing paper around and taking care of rather mundane tasks.

Mr. Heath: Lou, speaking of supporting the trade, what is the ACE periodic payment process, and to date, how much in duties and fees have been paid through this process? And can you explain how the trade community benefits from periodic payments?

Mr. Samenfink: Sure. Part of the Modernization Act that I referenced before stated that Customs should find a way to collect money on a monthly basis instead of on a daily basis. Most folks -- up until this point when you're importing, you had ten business days after the cargo came in to pay us whatever duties, taxes and fees that we're owed. Our periodic monthly statement, since it's been out there, has collected more than $12 billion in revenue. In fact, we're doing almost 40 percent of all the duties and fees that we're collecting right now for periodic monthly statement. And essentially, the benefit to the trade community is float.

If you're a large importer and you pay $5 million, $10 million, $50 million or perhaps as much as $100 million a month in duty, which some importers do, instead of having to piece that out and give it to us every day of the week -- literally after certain transactions have occurred, if they can roll all that up, make one big payment and give it to us on a monthly basis, your float is increased. You don't have to be giving the money as frequently.

And furthermore, by making one payment instead of multiple payments, we've been told by a lot of business owners that that also was a cost savings to them, was much easier for them to manage. Now, on the Customs side, of course, the benefit is that we can fully realize all the benefits of ACE -- and we're still in process of deploying some of these things -- but when we have people in the field not shuffling pieces of paper around every day and actually doing these collection processes one day a month instead of every day of the month, it's going to be a big benefit to us as well.

Mr. Heath: A key component of your ACE modernization program is the advent of the eManifest functionality as mandated under the Trade Act of 2002. Lou, can you tell us a little bit about the eManifest capability? How did the eManifest decrease the processing times and help ensure border security?

Mr. Samenfink: Absolutely. This is a very visible part of ACE. We launched it a couple of years ago, and to be honest with you, it's been a tough go. We were linking actually four different systems together for our officers at the land border. When the Trade Act was passed as a result of 9/11, our then-Commissioner Bonner correctly realized that the only people that really know what's coming into the United States are carriers -- the people, the vessel operators, the air operators, the rail operators, the truck operators, that are actually bringing cargo to this country. And all of those individuals have to file a declaration.

Not surprisingly, we call it a manifest. Fancy word, but it's simply a declaration that says hey, here's my truck, I'm the driver and I've got 500 cartons of whatever on it. Getting that information in advance and allowing us to use it and take it against our watch lists to analyze it, to understand what it is -- the theory is and the reality is, it's a part of our layered strategy to defend the country against terrorism. Having that information in advance, screening it and making sure that that stuff is okay is what the Trade Act was all about.

When the Trade Act was signed in 2002, Customs and Border Protection, through its legacy system that I mentioned before, already had manifest systems for vessel, rail and air carriers. We had nothing for truck. And over the last few years, we've mandated the submission of that manifest information in advance for those three modes of transportation. Prior to that, the information did not have to be electronic and did not have to be in advance. It could be filed when the conveyance arrived. Now it has to be in advance.

Well, ACE, the first -- really, I would say big task that it took on, we have our portal that I mentioned before where trade folks can look at what we know about them, and periodic monthly statement is another piece of functionality. This truck manifest piece that we've deployed -- and are in the process of finishing our deployment -- is the same thing for trucks. It tells truckers when they're coming into the United States, hey, I want your electronic declaration. I want it electronic, I want it upfront, before you arrive in the United States, transmit it to me so that I can either a; tell you not to come to the United States because I'm concerned about what you have; or when you arrive, my officers will have already had an opportunity to understand whatever threat there might be with that.

Volumes are growing. We're having a lot of success with it at this point. And soon, I would say within a year, every truck arriving in this country is going to have an electronic manifest filed in advance.

Mr. Morales: You've used the term portal a few times now. So what is the ACE Secure Data Portal, and what features and abilities are provided by this portal?

Mr. Samenfink: Well, the portal is a means for viewing and transmitting ACE-related data. For example, in the truck manifest piece that I just talked about, there's two ways that the trade community can get us their electronic manifest information. They can become an EDI participant -- an Electronic Data Interchange participant. We have record sets out there that folks can transmit us the information in advance. Many times, larger carriers will do that -- carriers that have 800 or 1000 trucks in their fleets -- they will build that into their bill of lading software, their trip software or whatever, and they'll send us the information.

The other mechanism that carriers can use to send us their manifest information is the portal, the ACE portal. And I look at it just as signing on to Internet Explorer and clicking on a link, and bang, up pops a screen where there's all the information that we require for a truck arriving. You can sit down and type it in. In fact, I just had a conversation with a woman from Mexico, a Mexican trucker. She's doing about 25 manifests a day using the ACE portal and she loves it. She has no problems whatsoever. Users can go in there, they can store their equipment information, their driver information, they can store information about consignees and shippers and so forth, all the information on the manifest that they normally need to have. And they can save that in the portal, and then just put their manifests together as they need them.

The other thing that the portal will do for importers and brokers at this point -- if I'm a major importer -- I've had, again, the pleasure of talking to a lot of importers that are using it, they use that portal to go on and run reports. There's 100 different reports that are available on that portal right now. They can run all kinds of information. For example, if you're an importer and you're using a licensed Customs house broker -- that's somebody that we give tests, we issue licenses -- and if you're a licensed Customs house broker, you can file this entry paperwork on behalf of importers.

Many of these importers are concerned that there's brokers out there filing entries that they don't want filing entries for them anymore. They can use the ACE portal to go out and make sure that only those people they've authorized are filing entries on their behalf. They can also go out and see if entries haven't finished the liquidation process; is there anything overdue? Is there anything that they have to be concerned about?

One user of the portal told me that when his boss, his CEO, was taking a trip to a foreign country, he used the portal to go out and find out and get a summary of all the types of imports that that company has nationwide from that particular country -- in this case it was China. Within minutes, he was able to provide a report to his boss and he looked pretty good. So the portal also serves that function as well. And finally, we've allowed over 200 members of other federal agencies access to the portal so that they can look at information that Customs collects that could be supportive of their missions.

Mr. Morales: Will carriers be able to continue using some of the other entry release systems such as the Pre-Arrival Processing System, otherwise known as PAPS, and the Free and Secure Trade FAST program to submit entries and obtain cargo releases?

Mr. Samenfink: Absolutely, absolutely. That's a good question, and I'm going to go down into the weeds just a little bit for the listeners out there. I talked before about carriers coming in having to file a declaration -- a manifest, if you will, saying, here's what's my on conveyance -- let's use trucks as an example. Here's what's on my truck, I've got so much stuff. That declaration does not result in the payment of any duties, taxes and fees. That occurs through an entry, which is another declaration that we get from either the importer or his licensed agent -- a person that I talked about before, a Customs house broker. That entry paperwork can be filed in any number of ways. And yes, that entry process, if you will, is baked into and links into that manifest process, and the reason it does is we want to clear as many trucks as we can on primary.

When you enter the United States via a land border, you stop at a booth normally, and you talk to a Customs officer. Trucks do the same thing. The goal is to have as many trucks that are compliant, that we have no concerns about, that we've done all of our pre-screening and so forth, be released into the country right from that primary point. In order to do that, we have to make sure that we're going to collect the appropriate money later on those goods that are being imported, by matching up that various entry information -- and that's when you talked about PAPS and so forth, the Pre-Arrival Processing System, those things are baked in.

Another system that you mentioned, the Free and Secure Trade System, or FAST, was another brainchild, if you will, of then-Commissioner Bonner after 9/11, and that system allows us to do a lot more pre-vetting on transactions coming into the United States. For example, anything that's coming in under that program, the driver of the truck has already been pre-screened. We've gotten fingerprints, we've gotten declarations from that individual; we've been able to do our screening.

The carrier bringing that information or bringing that cargo in is a participant in that C-TPAT program, or that high level security program that I mentioned before. The importer in the United States is a participant in that C-TPAT program. So definitely, ACE truck manifests supports that program, and in fact, we're in the process of merging that into ACE so that we just have one piece of software to maintain. But the business process will go on.

Mr. Morales: How does collaboration factor into the success of the CBP modernization effort?

We'll ask Lou Samenfink, Executive Director of the Cargo Systems Program Office at the U.S. Customs and Border Protection, 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 Lou Samenfink, Executive Director of the Cargo Systems Program Office at the U.S. Customs and Border Protection.

Also joining us in our conversation is Alan Heath, partner in IBM's Customs and Border Protection Services group.

Lou, I want to go back to our discussion on eManifest, if you will. With use of eManifest currently at a relatively low percentage of the total number of manifests filed, could you tell us how is CBP going to handle a sudden influx that requires 100 percent of manifests be filed electronically at the ACE ports?

Mr. Samenfink: Well, I would say that it's not really a relatively low percentage anymore. We've gone up over the last year from perhaps getting 1,000 or 2,000 manifests a month to probably close to 60,000 to 70,000 manifests per week at this point right now. The reason that has happened is because we've said that folks have to participate. When we rolled out this eManifest process, we told the trade community, all right, it's something new. We're going to put it out there, start deploying it at the ports. We'd like you to give it a try, see how it works, so we can get any bugs out of it.

And frankly, a lot of folks didn't jump on board, and I think the reason for that was that the Customs Service was giving them pretty good service at the ports, they had to make an investment to participate in eManifest. And we had a few early adopters, we ran a lot of bugs out of the system and that was great. What we've done in the last year is put out, based upon the Trade Act, regulations that say all right, everybody, we told you that it was optional, but now it's mandatory. For example, right now in the states of Arizona, Washington and parts of North Dakota, a truck arriving that has not pre-filed an electronic manifest will be turned around at the border and not allowed to come into the United States, which is the ultimate punishment, I think, for a trucker, because he wants to deliver their cargo.

So we still have a ways to go. 75,000 manifests a week is lot less than we have to get to; we probably have to get to 300,000 to 400,000 per week, if I was to guess a number. So maybe we're getting close to 25 percent. And what's great about the way we're rolling it out and implementing it in stages is that we can make sure that the system can handle that volume as it goes forward. We did a lot of checks, and if we get to a point where we move forward and the system can't handle that volume, we'll just stop our implementation plan, do whatever we have to do with the system to get it forward.

But I'm confident that it's going to work, it's going to work well, and that we're going to start saving time. In fact, we're already seeing some crossings experience 15- to 20-second decreases in the time it takes to process a truck in primary, because our officers are no longer swiping light pens across documents, they're not handling pieces of paper by the bang of a license plate or perhaps from even an RFID tag on a truck. Information is popping up on their screens with one mouse click -- literally, if there's nothing to be concerned with on that load, they can let something proceed down the road and into the commerce.

Mr. Heath: Lou, could you elaborate on some of the outreach efforts that you're using to inform and encourage the use of eManifest?

Mr. Samenfink: Yeah. We're doing a ton of outreach. And in fact, we're doing something called an ACE Exchange. We'll be in Laredo, we'll be in Buffalo, we've been in Tucson, we've been in Detroit, and we've met with truckers in all those locations. We've met with importers, brokers, all members of the importing community that deal with truck manifests. We've done national radio broadcasts to get information out; we've done lots of media outreach; we have trucking company representatives that are baked into out development plans; we have a couple that we call ACE ambassadors.

In fact, not just with trucks but across the industry, we have about 25 to 30 trade members that we call trade ambassadors. These individuals actually underwent background checks, as a federal employee would, to make sure that they could get really involved in our requirements development. Well, it's bringing in experts in the trucking industry like that that's allowed us to build a system that will actually work. And I don't have a number here to give you, but I would say that probably close to 100 different individual conferences have occurred -- around both countries, in fact, not just in the United States, but also in Mexico and Canada -- free events where individuals can come and get information about using truck manifests.

There's an online free training syllabus that one can do in both English and Spanish that will show you how to fill out an ACE portal and so forth. And we're going to keep doing this. I just had a letter the other day from the Border Trade Alliance along the southwest border, and Maria Louisa O'Connell, who is their president. We had a meeting with her, and she had some concerns about the outreach that We're doing in Spanish for the Southwest border, for a lot of the Mexican firms that are going to have to be compliant with truck manifests. So she's going to help us figure out the best place to go for more outreach events.

Mr. Heath: Lou, to what extent does the success of the ACE program and the overall CBP modernization effort rely on input from the trade and transportation community?

Mr. Samenfink: It relies heavily on it. I talked before about stakeholder management, and it's very important because I'm working as a -- and I see myself as a Customs officer -- that whatever we build meets the needs of the federal government. But all the information that we receive in advance electronically, that we have been for 22 years, but now post-9/11 -- takes on a whole new role. What is on their conveyance? Who is sending what to whom? That information is critical to national security. And because of that, it's imperative that the people that we're receiving that information from -- and those are importers, carriers and so forth -- that that information be accurate, that they can provide us that information in such a way that it does not hinder their ability to move cargo into and out of this country and so forth.

To make sure that we have their requirements identified, and to make sure that as ACE is fielded and built in stages over the coming years, we have developed a trade support network. It's got about 300 members in the trade community in it. It's broken into a variety of committees that look at things from vessel manifests to legal policy issues to deployment issues to issues that have to deal with participating government agencies and so forth. We have committee meetings throughout the year. We have plenary sessions where we gather everybody together for a couple of times a year, and we rely heavily on those individuals that are on those committees, those trade members, to look at us and say, "you know, you guys are out of your minds if you do it that way."

And you know, I'll tell you something, Alan: many times, they have solutions that we didn't even think of, and those solutions help us achieve our mission and at the same time ensure that -- going back to, I guess, the first thing I said -- you know, preventing the entry of terrorists and their weapons, but at the same time facilitating legitimate trade and travel. They're helping us achieve that objective, giving us accurate upfront information that we can rely upon, while at the same time not slowing down the movement of those goods.

Mr. Morales: Lou, I want to turn this topic about reach around for a moment. Given the large-scale transformation that's being created by the ACE program, can you tell us about your internal CBP outreach strategy, and any formal training programs available to educate CBP employees about ACE?

Mr. Samenfink: Right now, we actually have a lot of field people in that are looking at out next delivery of ACE that's coming up in August of this year, where we're going to have all of our import specialists and some of our entry officers -- perhaps 1000-plus employees -- actually starting to use ACE for various parts of their jobs. And what we have done is, after we've built this thing and we've got it in a state where they can come in and actually take a look at it in one of the development phases that it's in, we bring these folks in to show it to them to get their opinions on it to see if we have once again hit the mark.

The training that we're doing is, we have internal stakeholder conferences, for example, on the eManifest roll-out -- we've gotten together on several occasions with field supervisors to make sure that we've taught them and discussed with them all of the issues that they're facing with the system. We have weekly phone calls that are doing outreach to the land borders to make sure that the officers that are out there are using the system, if they have questions and problems, they can get their questions answered.

We have a 7/24 help desk where folks from inside Customs can call and if there's a problem -- it could be as simple as, "I forgot how to sign on or I forgot my password." Or it could be more complicated: "The system isn't doing what you told me it was going to do, what is wrong with this?" And we open up work tickets and so forth. We have field advisory committees from the field that we use to not only help us understand what the system is, but give us advice on how to train people. You know, any organization like Customs is always introducing new things that people have to do.

An automated system is just one of those tools. And reaching out to the supervisors out there that are using the various systems and so forth to get their buy-in is important. There's web-based classroom training that we're going to be offering. As we deploy parts of the system, we've developed a field readiness network, our next -- again, release of ACE in August -- we've established and reached out in advance to all of the field officers that we have that are going to be using the system.

There's 20 field offices. Within each of those field officers, we've developed a cadre of field readiness coordinators that we can reach out to to make sure that the proper computer terminals, if we had upgrade them, have been installed; to make sure that the individuals that are going to be using the system have had the requisite classroom training, or have available to them a superuser that has been assigned to give them some hands-on training.

Mr. Morales: To stay with this topic of an internal view of the program, performance and accountability frameworks are important for ensuring that promised capabilities and benefits are being delivered on time and within budget. Could you elaborate on the ACE program's established accountability framework, and how does the program measure its progress and performance against these established commitments?

Mr. Samenfink: The accountability framework, it's interesting. There was a -- when I first got into this position, the Government Accountability Office, we have tons of oversight on this. And sometimes you get frustrated by it because everybody is kind of looking over your shoulder. But on the other side of the coin, at the end of the day, I find it reassuring because it's great having another set of eyes looking at things and if you're doing something really dumb, they say, hey, you shouldn't be doing that. One of the findings that the Government Accountability Office came out with was that -- and they recommended that we create an accountability framework so that me as the manager of the program could do a better job.

And I remember sitting down talking to a few representatives from the GAO and asking them, "hey, can you tell me what do you mean by this? What is it talking about?" And it was through those discussions that it really came to me that for each one of these chunks of ACE that we're building, there are certain key things that I need to know, and I need to know them on a daily basis. I have to be able to pull that information up immediately as I need it. I need to understand the capabilities that we're building in each one of those releases. And while that doesn't necessarily change a lot, especially as we get towards release, it's important that it be there.

I have to understand what this thing is costing me. Now, the Office of Management budget has mandated that programs use earned value measurement. And I'm not going to talk to your listeners here and certainly bore them to tears with earned value measurement. But essentially in my mind, the way I look at it is hey, I said I was going to spend this amount of money, and as I'm spending that money, it actually measures how much money I've spent on the work that's actually being done. And I can compare that to what was budgeted, and if I see those lines going the wrong way, I can take early action and find out what is wrong, keep things within budget.

This accountability framework, in addition to keeping those capabilities on the forefront so that I understand what I am building, we use earned value management to make sure that we're hitting those promised benefits. Schedule is always a challenge. You know, we estimate a year-and-a-half from now, "oh, we're going to deliver such and such in 2008." And I'll tell you, between now and 2008 a lot of things can change. The accountability framework has to take into account schedule.

Risk. We've got things that we've identified that we're concerned about. And you mentioned a few of them before. Training. Are our officers ready to receive this information? Scope. Somebody came in from the Hill and said, "hey, we want you to do things like this now. We want you to get additional advanced information to enhance national security and so forth." We have to identify those risks and build them into this framework so that as we're deciding if we're on target and doing what we have to do, that those risks are being properly mitigated.

You know, what is the benefit of what we're doing; what is the mission value; are we going to process trucks quicker? Are we going to bounce more information off of our terrorist watch lists? Are we going to protect the revenue better? Are we going to enforce the rules of other participating agencies, other federal agencies, in a better manner? We have to keep that mission value and that benefit up there so that we keep driving towards what we said we were going to do.

And then finally, measures. Are we actually doing what we said we were going to do? We said we were going to clear our process -- more and more duties and fees via periodic monthly statement, or what were your goals, and you set them out there, and are you tracking those as you move forward?

That is what the accountability framework is. It's kind of a fancy name for a management tool that allows me to not have to go through 50 PowerPoint slides, but have on one or two pieces of paper a high-level snapshot of a specific ACE release, and also a program-level release to make sure that we're hitting the basic scope, schedule, and cost of our program.

Mr. Morales: That's fantastic.

Going back to this theme of collaboration, could you elaborate on the International Trade Data Systems, or otherwise known as ITDS? How does this enable the expansion of ACE participation among other border enforcement agencies and ensure a coordinated cargo security strategy?

Mr. Samenfink: ITDS is really a misnomer. And when folks hear that, they say well, you're talking about the Automated Commercial Environment, now you're talking about the International Trade Data Systems, sounds like a couple of different systems. At one time, the International Trade Data System, or ITDS, was a separate system. It was over at the Department of Treasury in the late '90s, and it never really got done over there. There was a lot of discussion, a lot of things about what it should be, and now it's really a part of ACE.

ACE is the system that Customs and Border Protection is building, that the Department of Homeland Security is building, that is going to be the platform for import/export activity in this country as far as all federal agencies are concerned. And essentially, I think it was about last fall, the Congress passed a Safe Port Act -- Security and Accountability for Every Port Act -- and that Act mandated that any federal agency that was involved or had a mission with import/export activity into or out of the United States needed to participate in this ITDS thing that we're talking about.

Well, there's a concept that's known as single window, and I think the best way to look at this is from the perspective -- well, two perspectives. One would be the trader. If you're somebody that's importing something into the United States -- let's say it's a food product -- well, you need to give Customs information so that we can collect duties, taxes and fees and so forth and so on. But if it's a food product, you probably also have to give something to the Food and Drug Administration. They have rules and regulations; they want to make sure that the food is safe and so forth and so on.

And it's not uncommon for a lot of imports to have regulations that apply to those commodities across the whole range of federal agencies. Environmental Protection Agency is another one. A good one as far as hazardous materials are concerned. Well, what as a trader you wouldn't want to do is say hey, Customs, build ACE, and I'm going to give them their information herein; oh, Food & Drug built another system, great, I'll send the information they need over here," and "oh, EPA has this and so forth." The goal here's to create the single window.

Through ACE, traders are going to be able to send us the information they need to the federal government, to the entire federal government, that says here's my shipment of food, Customs, and here's all the information I know about it. I'm going to give it to ACE." ACE will take that information and segment off that stuff that the Food & Drug Administration needs and send it to them. Now, right now, with our truck manifest system, we're doing this with the Department of Transportation -- specifically the Federal Motor Carrier Safety Administration -- responsible for truck safety in the country, and we're collecting a lot of valuable information for them that that we're currently passing to them so that they can support their mission.

Things like, are trucks properly insured, are drivers properly licensed? If it's a hazardous material truck, has it got the right driver behind that wheel? Great idea of sharing information -- so instead of saying to truckers coming in, hey, send Customs this -- and by the way, you have another system you have to comply with, these guys in DOT. It's one thing coming in. And that's it. That's the vision of the single window. Now, two perspectives -- I'll give you the other perspective, that of a Customs officer standing in that primary booth on the land borders.

Cargo comes in, he looks at it and he says oh, here's a shipment of food. The goal is to have that result come back to him when he looks at that computer screen and say, hey, as far as Customs is concerned, don't worry about it. We have an entry, that thing I referred to before. That means we're going to get our duties taxes and fees. And oh, look, the trader has also told the Food and Drug Administration all about it and there it is, there's the response from Food and Drug that says good to go, don't worry about it, officer.

That way, our officer who is responsible for knowing literally the rules and regulations of dozens of different federal agencies can relax and know that as far as Food & Drug and trade compliance is concerned, that requirement has been met. And then going back to a point I made earlier about security and efficiency, because that information is being taken care of and collected and put in front of our officers so that he can understand it, he can spend time asking questions off that truck driver, looking at the conveyance, thinking about his environment.

He can spend time doing his job that he has been trained for, and not worry about, did I get this piece of paper; did I get this, did I get that. Oh, look, there it all is, it's there, it's electronic; it's in advance, thank you. And he can do all the things that the computer doesn't do, because the computer can't do it all. There's a human factor there, and that human factor is very important in the equation.

Mr. Morales: So this is as much about security as it is about facilitating trade?

Mr. Samenfink: Absolutely, absolutely. It's about security and it's also about helping those federal agencies meet their mission requirements. The Department of Transportation is all excited about collecting information from us. They're going to be opening up the Southwest border at some point, I think, for Mexican drivers doing long haul in the United States. It's a controversial issue for some folks. Customs being able to give them electronic information about everything that's coming into this country and those arriving conveyances is going to help the Department of Transportation ensure that what's happening is according to their regulations.

Mr. Morales: Fantastic.

What does the future hold for the CBP's Automated Commercial Environment and its overall modernization effort?

We will ask Lou Samenfink, Executive Director of the Cargo Systems Program Office at the U.S. Customs and Border Protection, 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 Lou Samenfink, Executive Director of the Cargo Systems Program Office at U.S. Customs and Border Protection.

Also joining us in our conversation is Alan Heath, partner, Customs and Border Protection Services at IBM.

Lou, how has the face of trade changed over the last three years? And how has that change manifested in new trade law enforcement regimes? Could you elaborate on the fundamental principles of CBP's trade strategy now and into the future?

Mr. Samenfink: Well, that's a good question. And in my mind, I see the following as how trade has changed: obviously, when 9/11 hit, getting advanced electronic information, supply chain security and so forth and so on, has become imperative. It's something that we have to do, and that has been a very significant change. And in fact, the Safe Port Act that I mentioned before, the Congress has mandated that the Department of Homeland Security look for even additional advanced information that we can get to ensure the safety of this country.

In terms of -- when I hear trade strategy, it's all not just security. There are things that we have to do to make sure that, for example, the intellectual property rights, or trademarks and copyrights of various U.S. companies, are protected from merchandise coming in, that public health and safety is taken care of. I mean, the Food & Drug Administration and the Customs helping them has a very important role to make sure that only safe things get into this country in the first place. And there's revenue to protect. We do collect duties, taxes and fees; about 30 billion bucks a year. So we want to make sure that that's being protected.

The changes that I see in that arena are as follows: free trade agreements. The Administration is very big on free trade agreements. When free trade agreements are signed -- most recently, Singapore, Chile, obviously the NAFTA with Mexico and Canada, and others that are in the works -- that affects how we do our job. It requires the automated systems to recognize that things are coming in from countries where we're not going to be worrying about duties and fees. But it also layers and other regulations that we have to take into account: is this stuff really coming from those countries where they are free?

There's a much greater emphasis I think, and it's greater all the time, on global cooperation from Customs organizations across the world. The World Customs Organization, based in Brussels, has the mission of making sure that, to the extent possible, Customs processes are harmonized across the world. If you're a trader, the ideal would be to have one packet of information that would serve as import into one country and export from another, and just allow your cargo to go across the world.

Many companies that are multinational meet with the WCO on a regular basis to make sure that those requirements are met. I was in Veracruz, Mexico recently, meeting with some WCO representatives and also members of Customs administrations across the country. And as we try to harmonize our procedures and so forth, some of the changes that I see in trade are, how do you identify individuals involved in the supply chain? You know, in the United States we rely on things like Internal Revenue taxpayer IDs and Social Security numbers. Well, those things don't exist in other countries. But yet we want to know who in those foreign countries is sending us, or is responsible for sending things to the United States.

People have suggested that ACE create a unique identification number for companies. But would other companies use that? Folks have suggested that we use third-party validators like Dun and Bradstreet, or D&B, but are we going to mandate that everybody in the world go out and get a D&B number? These are tough challenges and things that we have to face as we try to bring the world closer together, as we try to bring customs administrations closer together.

Another thing that we discussed while we were down there was product identification. There's a harmonized tariff code, it has about 15,000 numbers in it, that everything that's imported can be broken down and understood by those codes. Well, the Food & Drug Administration has hundreds of thousands of product codes, because to say medicine or aspirin isn't enough, they want to know dosage; they want to know where it was made, and so forth and so on. They have a much different product code database that they use. And the reason I mention this is that as we build ACE, as we move forward, and as Customs tries to understand what's coming into the United States, and if we have to look at it, or if we have to get folks from other agencies to look at it before it can be released, we have to make sure that we have all the information that's necessary.

So I think a change you're going to see in trade in the future is a greater focus on trying to identify commodities using some sort of global numbering system, whatever it might be. And there are some out there, that folks will tout GS1 is one -- it's non-profit and so forth. That's going to be stuff that's going to be facing the trade community and governments across the world.

And then the single window concept; we mentioned it before with ITDS. Again, when I was meeting with folks and vendors from around the world that we're talking about what they could do for Customs, this focus on having one packet of information that satisfies all of the country's needs. Very, very important -- and it makes sense, and it's efficient, and it's something that we have to move towards.

And then finally, the workforce. Our workforce is changing within Customs. And as we deploy things like ACE, and use other types of technology to do our jobs, the traditional role of someone sitting at a desk and getting pieces of paper in an inbox and looking at them and making decisions, and maybe banging stuff into a computer screen now and then; that's going to change. They're going to be doing more analysis. They're going to be looking at trade patterns. They're going to try to understand, not just transactionally, but from an account basis, what is it that's coming at me in my port today? And this particular importer, not just this one transaction, but I want to look at everything that they're doing. I want to understand better what they're doing.

As far as CBP's trade strategy is concerned, we're going to continue to maintain a focus on our anti-terrorism mission. That can't go down. We're going to look for more and more ways to get additional information, to better screen that information, to use technology to ensure that what's coming into the country is safe. And on the backend, if you will, on that trade compliance end, I say we're going to use more and more of a reg-audit approach. We're going to keep records -- before, I mentioned in the Modernization Act the whole business of informed compliance and telling folks that are importing, hey -- or exporting -- here's the rules, here's what you need to do, and you've got to keep records so that we can check on you.

I think the thing that scares folks more than somebody stopping a load coming into the United States is, you know what, we're going to make sure that you've got all the records that you're supposed to have, and we're going to make sure that the way you estimated duties, taxes and fees is correct. And guess what, we've got a team of regulatory auditors that are going to visit your office next week and they're going to spend the next month with you and really go through your books -- you know, like a ton of bricks. I see that is how we're going to be focusing on making sure that the trade is compliant.

Mr. Heath: Lou, you've mentioned a couple of times the importance of securing our nation. With recognition that the War on Terror's impacting the budgeting priorities of all our homeland security agencies, how will the ongoing War on Terror impact CBP, and in particular the ACE program in the coming years?

Mr. Samenfink: I believe that, and I know that the Department believes, otherwise they wouldn't be approving expenditure plans for us, that ACE is playing a key role in homeland security. Again, the information that we're collecting from the trade community and doing our advance screening on is what we're collecting via our legacy system, and now with truck manifests through ACE. It's important that that tool work, that it be efficient, that it pass that information correctly over to our targeting systems, that it receive information back and display it to our officers on the line exactly what it is, if anything, that they have to be concerned about.

You know, we have a program plan in place, and we hope to finish delivering this system sometime in the year 2011, all aspects of it, retooling the existing systems that we have. I can tell you that with the existing legacy system that we have, that perhaps that system was never really completed. It's still changing, as it needs to. And I predict that same will happen for ACE, that when we've got that basic foundation laid, that those -- our leaders both in Congress and Capitol Hill are going to demand that we do even more with that system to protect the homeland better.

So I would suggest that after we finish building ACE that we're going to continue to receive the investments that we need to make this program even better. That goes back to us being able to demonstrate that there's real business value, not just to the trade community: "hey, you're saving money, this and that," but also to the government, that there's a real tangible benefit to having ACE in place, and to allow that information to be to the people that need to have it when they've got to have it.

Mr. Morales: Lou, given your statements about the importance of ACE, and given the breadth and technical complexity of ACE, would you elaborate on your ACE workforce strategy? And what steps are you taking to attract to maintain a high-quality technical and professional workforce?

Mr. Samenfink: We have really two groups of folks working on this as a team. We have our government team and we have our contractor team. And that's been a successful model force in the existing system that we have, our ACS or legacy system. We're using that in ACE as well. And so I would cite kind of our contract oversight. Certainly, we've looked at the team that we're working with right now to bring properly skilled people to the table.

As we develop task orders, and as we develop work products that we have to achieve, my team sits down with the contractor team and looks at the specific skill sets that are coming to the table. I've been tracking things like contractor turnover, as you know very well: are individuals that we've attracted to the program staying in place? I've made it my personal mission to meet with everybody that's working on the project so that I can sit down and tell them, you know, you're down into this particular part of the system, you're testing, you're writing code, you're doing development activities, you're doing outreach activities, you're managing the money."

Like the conversation we're having here today, let's take the blinders off for a minute and look across the program. And I'm trying to let folks understand how and what they are doing in terms of their technical expertise is actually making the country safer. Truck manifests is again a good one.

The government workforce, as we're moving from one technology to another, a lot of folks have expressed concern and angst, if you will, over what's the future for me here? I mean, I know these types of technologies, but clearly those are going away. We're going to turn ACS off. We're going to be in a new platform. And we're working with them to make sure that there's proper training opportunities available so that they can improve their skills and stay with us on the program.

At the end of the day, it goes back to the point I made earlier. I think that this is a team effort. The integration has to come from both sides. The contracting side has to rely upon the government to give clear direction, consistent direction, and at the same time, the government side needs to make sure that the contracting folks that are working on this are working as one, and that there's not stovepipes over there going in different directions.

Mr. Morales: Lou, you've had a very successful career and just a tremendous amount of passion for the mission and public service. I'm curious, what advice would you give to someone who may be out there thinking about starting a career in public service?

Mr. Samenfink: That's a tough question. And I think my opinion, others are going to certainly see it their own way. You know, I'm nearing the end of my federal career, and it's hard to believe that it's been almost 30 years. And when I think back to working on the border and doing that mission for almost a decade and then coming into headquarters and working a variety of different jobs, I would tell you that it's been very fulfilling. As I think about moving on and retirement and all the things that that holds, it's with a certain amount of -- I don't know; sorrow -- that I look back and think that this thing is over.

You know, it's not just a job where you're making dollars for a corporation. And I've done a lot of things before I came with the government. I was a salesman. I worked in a machine shop making stuff, and those jobs have their own thing.

When 9/11 happened and I was over at the Department of Treasury, and that was great job. I enjoyed what I was doing over there, but I looked back at Customs where I was, and I realized that that frontline organization was really going to have this heavy lift in what it had to accomplish, and the challenges that it has every day. And a lot of us that had drifted off and gone into different organizations came back to Customs, came back to work there because of this sense of mission.

It would be wrong for me to sit here and say that, yep, that's it, we can protect this country and there's absolutely no risk whatsoever to everything coming in. I mean, we live in a free country, but I can tell you for a fact that all of the things that we've been doing and continue to do have made the country much safer than it is.

You know, I don't envy the Secretary of Homeland Security's job, my Commissioner's job, you know, the President's job and all of this. But being part of, I hope, the solution to really do what's important for the country has been very important for me. So I would encourage people to look at government service. There's job fairs that you'll see. I think the Department of Homeland Security recently had one, and I know they'll have more. I know Customs did. I would encourage anybody out there to at least consider a career in the federal service, to look at what it has to offer, and to consider it. It's very rewarding.

Mr. Morales: That's wonderful advice and a great perspective. Unfortunately, we have reached the top of our hour, and we're out of time.

I want to thank you for fitting us into you busy schedule, but more importantly, Alan and I would like to thank you personally for your dedicated service to our country in securing and facilitating trade to and from the United States.

Mr. Samenfink: Well, hey, thanks a lot to both of you for bringing us on here. It's great to talk about the program and so forth. And I guess my final thing to the world out there would be if you want to learn more about ACE, because we really just scratched the surface here, or about the Customs mission, I think the best place to go is on our website, cbp.gov. If you go on there, there's tons of information about our mission, how we've evolved, about ACE modernization, the programs I mentioned before, C-TPAT; other programs that we have about who is leading the agency right now.

You can also link over to the Department of Homeland Security's site from there. So I would encourage you if you're interested in careers, or interested in more information about these topics, to use that as a resource.

Mr. Morales: That's great.

This has been The Business of Government Hour, featuring a conversation with Lou Samenfink, Executive Director of the Cargo Systems Program Office at the U.S. Customs and Border Protection. My co-host has been Alan Heath, partner in IBM's Customs and Border Protection Services Group.

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 the government, but who deserve our unconditional respect and support.

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

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

Until next week, it's businessofgovernment.org.

Friday, August 26, 2005

Arlington, Virginia

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

Ms. Combs: Good morning.

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

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

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

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

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

Ms. Combs: Thank you, Debra.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Morales: Linda, thank you.

Tuesday, August 17, 2004

Arlington, Virginia

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

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is Lieutenant General Steven Boutelle, Chief Information Officer and G-6 of the Department of the Army. Good morning, sir.

Lt. Gen. Boutelle: Good morning, Paul, great to see you this morning and I appreciate the opportunity to talk about what we're doing in our service.

Mr. Lawrence: Great. And also joining us in our conversation from IBM is Chuck Prow. Good morning, Chuck.

Mr. Prow: Good morning, Paul.

Mr. Lawrence: Well, General, perhaps you could begin by describing the mission of the Department of Army's chief information office, G-6?

Lt. Gen. Boutelle: That's a great question. The CIO and G-6 of the Army really has multiple roles. As the CIO we hold that traditional role, which is providing IT services across the force. Now, when we say "across the force" for the Army that's significantly different in some corporate worlds, that is, global requirements for IT wherever you are in the world, any time, any place. And generally and quite often in today's environment that is in a place where there is no infrastructure.

Under the G-6 role we actually provide the soldiers, the young men and women who operate many of those services, be it in Afghanistan or Djibouti, Horn of Africa, South America, or here in the continental United States.

Mr. Lawrence: Tell us about the people on your team, especially the skills.

Lt. Gen. Boutelle: The skill set is a varied skill set but they do have a common core and that is somewhere they're involved in the IT industry. We do have those people that are in the resourcing business but really in the IT industry and that is all the way from software and computers up to transmission systems via satellite, tropospheric scatter, microwave, or hand-held tactical radios.

Mr. Lawrence: And how about the size of what you're taking place in terms of a budget, don't want any secrets but it's always interesting to put what's going on in the service in the context of other Fortune 500 companies?

Lt. Gen. Boutelle: Our IT budget is about $6 billion and that runs over our palm so it's a significant budget in the size of business.

Mr. Lawrence: And then you were describing how combat operations in Iraq and Afghanistan and the like are involved. How do they affect the budget?

Lt. Gen. Boutelle: We have the normal budgets that we have in peace time although our budget doesn't significant change although it's increased with the current supplementals in the war in Iraq and Afghanistan. So those are usually supplementals on top of our normal budget where we buy and push services be they leased services of satellite services or information services or actually buying systems, commercial systems, to put on the ground in Pakistan or Afghanistan or Iraq or other places.

Mr. Lawrence: A while back we interviewed Kevin Carroll, the program executive for Enterprise Information Systems for the Army and he talked to us about how his organization was now falling under the CIO/G-6. Could you talk to us about the reorganization?

Lt. Gen. Boutelle: Sure. The Army has, like many of the services, program executive officers. Those are the acquirers. They award the contracts for research and development and eventual production, whatever the system is, be it an airplane or a helicopter or in Kevin Carroll's place it's enterprise services. Most of the work that Kevin Carroll does in PEO EIS, and he would tell you 50 to 60 percent of the work is resourced or funded by my organization, those are large-end satellite systems in Baghdad or enterprise systems around the world.

Mr. Lawrence: So by putting it under the CIO does that make things more common?

Lt. Gen. Boutelle: Makes it much more common. There are about 12 program executive officers in the Army, one for aviation to buy helicopters, one for ground combat systems that buys tanks, another one for missiles, and it was a natural fit for Kevin Carroll and EIS to roll underneath the CIO/G-6. The other 11 PEOs currently work under Lieutenant General Joe Yakovac and he's responsible for providing those services.

Mr. Prow: Good morning, General. As CIO and G-6 for the Army what are your chief roles and responsibilities?

Lt. Gen. Boutelle: Well, several chief roles and responsibilities separated. As the CIO I do provide the enterprise services and the direction and the guidance and that is to ensure that the user at whatever level, be it the tactical level, the young soldier in the field, or back in the United States, whether he's operating at a depot or an office or behind a desk, has the appropriate IT services. That means bandwidth to the desktop or to the soldier moving across the battlefield or to the attack helicopter, provide all of those services. Some of those are leased services, some of those are products, and some of those are buying at an enterprise level.

Mr. Prow: Can you share with us a few of the highlights prior to you becoming CIO and G 6 of the Army?

Lt. Gen. Boutelle: It's a long road to be the CIO/G-6 and I will tell you if you look at my predecessors each one of them has had a different path. My immediate predecessor was Lt. Gen. Pete Cuviello. He came up pretty much more of a traditional communications role. But in my case I started out as an inductee back in 1969 and elected to join the Army and started out in nuclear weapons electronic repair.

At one point in time I went to artillery officer candidate school, probably because I had reasonable math scores, and in the wind-down of Vietnam I also had a background in electronics and electrical engineering and was shifted over into communications and electronics, spent quite a few years in that. Most of us spent a lot of years initially in combat divisions and I was in the 3rd Infantry Division, the 8th Infantry Division, and 5th Corps, 7th Corps in the United States, in Korea, and, of course, various places around the world.

At a certain point I went into the acquisition business and that is looking at buying products from the commercial world. And when you get into that business you make a shift. You're no longer primarily working communications. You're more working general electronics, software, computers.

And probably the defining event was about 19 -- probably about '87 when the PCs first started to hit the market and I worked in an organization where they were coming in. And I came home one day and I said I think these new things called personal computers are going to go somewhere and spent many nights and evenings doing some very, very basic programming and rebuilding and building computers and have been at it ever since.

Mr. Lawrence: When you look back at those experiences are there any one you talk about when you talk about your career that prepare you for where you are today perhaps from going from a doer to managing a doer or understanding the role that you would play as a higher ranking officer?

Lt. Gen. Boutelle: Well, I think that's a great question and one of the most difficult things we do, as our chief says, is build a bench and that is identify those people who need to take your job should you depart that job or who your replacement's going to be. And I don't think we do that all well or as well as we could both in industry and in government. And one of the things we do as senior officers is we look out across the landscape of those people who work for us or who are around us and try to identify those young people who are starting to broaden their horizons and no longer looking down at just doing the function that they're trained to do but start looking at where the Army is going, where the nation is going, where the world is going, looking at the geopolitical environment and how to start to apply the technologies to where we need to go, not where we are today but where do you need to go in the future. And so identifying those people is one of the things we as leaders need to do and then mentor those people.

We seldom want to send our superstars off to school for a year or six months. We want to keep them close to us. And we need to make those hard calls and send those people out and make sure they get the right experience, they get the right schools, they get the right exposure so we can bring them up to take our job and hopefully do a better job of it than we've done.

Mr. Lawrence: I have a pretty good idea from your description of what drew you to public service but what's kept you in? I imagine from time to time you might have thought about going into the private sector. What's kept you?

Lt. Gen. Boutelle: I think a combination of two things. You go along for a certain period of time and you do it strictly because you really enjoy the feeling of accomplishment. And in my business on a day to day basis and some days are better than others but you generally feel that you've accomplished something and you're pushing this technology the right direction. And I think probably over the last few years it's probably been a knowledge that since I have been in this business for a long time, I've been a program executive officer, I've been a project manager, I've built systems, that I thought that I had a bench of knowledge where I could apply those or help apply those to the young soldiers in the field and in the current war and what I believe will be the future wars on terrorism.

Mr. Lawrence: Tell us about some of your personal style in managing and leading, for example, communication. A lot of people talk to us on this show about the importance of getting your message out and communicating to your team but yet you have a big team and it's spread all over the world. How do you do that?

Lt. Gen. Boutelle: One of the things we do and one of the things I've tried to do is right up front have a very narrow set of objectives that everyone can understand, six or seven things that you want to accomplish in the period of time you're going to be there, two or three years or whatever it may be, and don't change or adjust those unless absolutely necessary. And then you will find that if you put that out to the senior leaders that you'll find that everywhere around the world globally they all understand what you're trying to do and where you're trying to go and be consistent. You need to know where the boss is trying to go. You may not agree with him but you need to know where he's trying to go.

And the second thing is visit them as often as possible. I don't believe we need to micromanage these professionals. They know how to do good work and make things happen. Draw the white lines in the road and give them the objective and the direction, surround yourself with some really good managers and senior people, and I have a superstar staff, and periodically check on them and praise them when they do a good job and give them guidance if they don't. But I am extremely pleased where the Army people are going around the world.

Mr. Lawrence: How do you think about the speed of decision-making in government? Is it fast enough? Is it slow enough? I know we've talked to a lot of people who've come from the private sector who joined government and are somewhat surprised at the speed by which decisions are made. How do you think about that?

Lt. Gen. Boutelle: I think we're in a hybrid right now. In peace time we build very strong armed forces but we do it very methodically and we do it within the system. The exponential growth in the IT world, specifically in IP, XML, web services, that's happening around us does not lend itself to making decisions and putting those systems in the field as quickly as we want. Every circuit board I buy for a system in six months is outdated and there's a new one to replace it. Our process does not support that.

Having said that, in the current war and with the nation in the state it's in today and still in national emergency after 9/11 we are able to do things very, very quickly based upon supplementals and a wartime environment and bring systems in very quickly, replace old systems. So I would suggest today we can make a decision today and make things happen in a matter of sometimes hours or days. That is not true in a peace time environment and that's okay. In a peace time environment you want that structure, you want to build that underpinning and that base to have a stable Army or a stable Navy or Air Force. But right now we can make decisions very, very quickly and execute very quickly with industry.

Mr. Lawrence: That's an interesting point about the speed. What does the term "network-centric operations" mean and why are we hearing so much about it these days? We'll ask General Steven Boutelle of the US Army to explain this to us when The Business of Government Hour continues.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence and this morning's conversation is with Lieutenant General Steven Boutelle, chief information officer and G-6, Department of the Army, and joining us in our conversation is Chuck Prow.

Mr. Prow: General Boutelle, can you tell us about some of the IT lessons learned from Iraq and Afghanistan and how those lessons are affecting Army technology?

Lt. Gen. Boutelle: I'd be glad to, Chuck, and, as you can imagine, Afghanistan and Iraq have many lessons that we've learned. Probably the one lesson I've learned, and I just returned from the theater, is where there's a vacuum today or something doesn't exist today with the pervasiveness of the tools that we all use somebody's going to fill it. And what I mean, if I don't take and provide a particular IT tool, a radio, a computer, a wireless network, to a certain organization within, say, Afghanistan in a very short period of time to meet their needs with the availability of those things off the commercial network they will buy their own, they will install it themselves. These young men and women are just like the kids here. They know they can buy a router and a switch. They know they can buy a wireless network and a bunch of cards and build their own network. If you don't provide them the right tools quickly and a vacuum appears they will fill that vacuum out of their discretionary funds.

Mr. Prow: Interesting. Has the evolution of technology affected the evolution of war fighting?

Lt. Gen. Boutelle: I would say absolutely. Two things, one is when you make IT pervasive as it is today and information pervasive as it is today you tend to flatten your hierarchy of management much as is happening in the commercial world. Let's face it. Today in the commercial world as well as in the Army if a young soldier or sailor or airman decides to launch an e-mail message to his boss or to his wife back in the United States it goes at the speed of light minus switching time and that information flow is so quick and the ramifications of it flow very quickly. No longer do you have the point where you have someone at the bottom part of the architecture or the hierarchy who has to manually put something on a piece of paper and send it through maybe his boss and his boss's boss and his boss's boss and over a period of time get a decision. It's near instantaneous so you flatten the management hierarchy.

What that's caused us to do in the Army is relook at how many levels we have. The Army basically has four major levels of hierarchy. We have brigades, divisions, corps, and army. We're in the process of removing one of those levels and in that process when you move a level you start parsing out and sharing those management responsibilities. So when we finish this process we will have three levels. We know that. We know we're going to have brigades; we've already announced that. Divisions, corps, and armies, at the end of the day only two of those will continue and you'll parse those functions. And you can do that because of the information technologies.

Mr. Lawrence: How long will it take to resolve which two of the three?

Lt. Gen. Boutelle: I think that'll probably resolve within 12 to 18 months. We've already decided that the lowest level, the brigade, will still survive, but what we've done is we've enhanced that brigade with IT technologies to allow it to be able to operate within other services, in other words take an Army brigade and nest it in a Marine division. We can do that as we're building IT services in. So the brigades the brigade is our basic fighting unit today as we evolve, as we're building today, where in the past it would have been a division but we're going to make those brigades very autonomous and independent and we are able to do that with a lot of command and control communications, satellite systems, IP-based networks.

Mr. Lawrence: We've heard you speak about the importance of reading and understanding the Chief of Staff and the Secretary of the Army's paper, "Serving a Nation at War: A Campaign-Quality Army With Joint and Expeditionary Capabilities." Could you summarize the key messages one should take away from this paper?

Lt. Gen. Boutelle: The key message in that is we need to make a dramatic change in the structure of our Army. The Army is primarily and has been designed for many years to fight on the East German plain-North German plain against the Soviet Pact or in the Korean Peninsula and it's a very structured Army. We knew the battle space, we knew the ground, we knew the cities and the mountains, we knew exactly where we were going, and we knew what we thought we were going to do when we got there. In today's contemporary environment with the war on terrorism and the radical fundamentalist groups that we're going face they are a nonnation state. They don't belong to a nation. They don't wear a uniform. They move back and forth between countries and they move globally. To be able to address that threat appropriately you need to have small mobile organizations that can quickly move around the world and perform whatever mission we assign to them.

So the Chief's and Secretary's paper says look, the brigade will become our combat fighting unit. We're going to call them brigade combat teams. There will be many of them. We're going to increase the number of them. We're going to enable them by satellite-based networks because so many of the places that we have found the al Qaeda and other organizations are in nation states that have failed or Third World nations where there is no infrastructure. So to enable those organizations takes lots of satellite capability, lots of IT capability, a heavy reliance on intelligence, and providing that to those organizations. So I think the Chief and Secretary's paper is you've got to dramatically change this Army and you need to do it now.

Mr. Lawrence: What does it mean to the individual soldier?

Lt. Gen. Boutelle: There's a couple of pieces in there. One piece of the Chief's paper says look, we're going to be a campaign-quality Army and we're going to be joint. The Chief would like us to have home station operation centers and project force out of the United States and in doing that he will stabilize the force. Right now and in the past we've moved people about every three years, sometimes more often. Do we need to do that if we're going to be a force-projection Army?

A young man or woman can come in the Army and really spend three, four, five, six, even up to seven years at the same place, have his family buy a home there, settle into that community and use that environment. And if he gets promoted move him around that post, camp, or station. There's no good reason in today's environment to move him automatically every three years just because the clock ticks off three years. When the Chief says I want your families in the same place let's have them in a home station. Let's have a good quality of life there and spend some resources on making that a very powerful quality of life and project force out of that place when we need to.

Mr. Lawrence: The paper talks about a lot of big change and I'm curious. It doesn't really talk about how long it will take to achieve this point, the change?

Lt. Gen. Boutelle: Good question. The 3rd Infantry Division, which returned from Iraq this spring, which is the division that actually went into Baghdad, will be radically changed by the end of this year. It will not have three maneuver brigades. It will have four maneuver brigades. It will have the new IT system, the new satellite system, the new voice-over IP systems, all the new networking, all the new Red Switch and CIPR and IPR and all those types of things. We have started delivering that last week. Soldiers are already training on it. We will completely outfit that division, turn it around, and have it ready to deploy again after the first of the year. We will do three more divisions in calendar year '05, the 101st Airborne Division, the 10th Infantry Division, and the 4th Infantry Division, all before the end of calendar year '05.

Mr. Prow: General, we often hear of the concept of network-centric operations. Now, what is N-CO and how does it apply to the Army?

Lt. Gen. Boutelle: Network-centric operations which we are trying to achieve I think is an end state, and I'm not sure quite what the end state is, but we have tremendous amounts of information that we generate and that we store. The question is how do you get that information readily to all the decision makers, be that decision maker at the lowest level or somewhere back at a depot on a sustaining base in the continental United States.

Most of us are primarily circuit-based and have been circuit-based for many years; that is, a data stream flows from point A to point B. Network-centric operations presume that you can make that data centrally stored, you may cache it elsewhere, and it's available to everyone. And as we do that we start to get the synergism that has been promised to us for so long. The tools that will make that happen are really the web services, a combination of XML and SOAP and UDDI, lots of the web services protocols that will start to allow us to leverage these terabytes and in some cases petabytes of information we have stored.

Mr. Prow: On that topic can you also describe LandWarNet and how it will impact the business of war fighting within the Army?

Lt. Gen. Boutelle: Yeah, Chuck, LandWarNet is an attempt we've made with the TRADOC commander, General Kevin Byrnes, and Headquarters, Department of the Army, to try and bound and define what these networks are. I mean, most of us grew up that have been around for a few years where we had a separate network at the low end and it really wasn't a network. It was a voice capability at the lowest level. It was a tactical voice capability on tactical radios. And as you moved up in our infrastructure you got into what we call mobile subscriber equipment. Yes, you had a network, primarily circuit-based. It was locked on mountain tops; it was not mobile. And then when you got back in the United States you got into other circuit-based networks that tie together depots, the corporate world, the Army corporate world, and the other services. You've merged these now together with TCIP becoming the de facto standard. And now you've merged the lowest level to the highest level to the sustaining base in the continental United States with a TCIP backbone. It's a router-based network and we've all joined that network.

But as we've merged these into a single network we had to name them. And so what we're saying is LandWarNet for the Army is the network that goes from the lowest soldier all the way back to our sustaining bases and depots be they in Europe, in the Pacific, or back in the United States. It's the network plus the applications that ride on that network.

Mr. Lawrence: As you talked about this discussion of technology I hear a story of change and you talked about how change flattens the Army. And I'm curious. What's happening to in the civilian world what are called middle-level managers, people who were trained for a certainty in the world and now it's all changing? How's their life changing?

Lt. Gen. Boutelle: I think dramatically and to some people it probably is a terrible awakening because that information does flow so quickly. But it's a double-edged sword. On one side it flows very quickly. On the other side if we're not careful we leave out the middle-management level where they are there to make decisions and make recommendations and in some cases it'll flow directly from the bottom of the organization to the top of the organization without much massaging, staffing, and thought process in it. And so the good side is the information flows very quickly. On the other side in some cases you tend to lose the influence and the richness that is added by the staff. So as you trim down and eliminate some of that staff we're trying to be very careful to keep a very strong group of people in there that still add the richness to that raw information and data as it comes forward for decision making.

Mr. Lawrence: That's an interesting point, especially about the staffing. What is knowledge management and how is the Army using it? We'll ask General Steven Boutelle, CIO of the Army, to take us through this when The Business of Government Hour continues.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence and this morning's conversation is with Lieutenant General Steven Boutelle, Chief Information Officer and G-6, Department of the Army. Joining us in our conversation is Chuck Prow.

Mr. Prow: General Boutelle, we know that systems interoperability, particularly in the joint arena, is key for you. What are some of the ways that your office seeks to promote coordination within the Army and across the services?

Lt. Gen. Boutelle: Great question, Chuck, and that, as you know, has been a continuing issue and although we do have interoperability issues I think sometimes we don't give ourselves credit for all the things we should.

Interoperability applies at many different levels. One is just at the communications level or radio level. Will one radio talk to another? And so you have to solve that problem first to make sure they both talk to each other be it on the same spectrum, same frequency, and so you solve that one first.

Then you move to the next level and say what do I want to pass between the two systems and you'd have to talk about the application. What application am I going to have on one side versus the application on the other side? Are they designed to talk to each other? Are you trying to make a logistic system talk to an intelligence system? Obviously they probably will not interoperate. So you have to map and architect what those systems are.

And if you assume the applications are designed to talk to each other then you have to take it to the next level and say what messaging am I using. Am I using the same type of messaging across the network? Is one of them operating at a VMF bit-oriented message and the other in a character-oriented?

So then when you line up and get that correct then you say what's in the message. And when you define what's in the message you may both be operating on character-oriented message or bit-oriented message but then you need to get down to the data element level and align the data elements to make sure that you're passing data that you want to pass to the other application.

And once you get the data passing back and forth the next step in interoperability is how do you display it. In other words are you displaying it on a graphic screen? Have you come to an agreement on the symbology? Is it mil standard 2525B that I'm on and you're on FM 101-5? So you've got five or six different areas.

We do pretty good, pretty good, at the radio level, not perfect, of being able to talk to each other or, say, one satellite system to the other. We do pretty good when you get down to some of the other levels. And where we usually run into issues is taking the applications over time and say what is it that we really want to do. What are you really trying to do from one end to the other? And yet we tend to throw it all into one basket and say we're not interoperable and try to solve all of those things when many of those things are already solved and we need to get down at the application level and say what is the thread of information we're trying to pass and what are we trying to do when we get there.

Mr. Prow: We understand that Information Technology Enterprise Solutions is one of the Army's recent efforts to centralize IT programs. How is ITES benefiting the Army?

Lt. Gen. Boutelle: As you probably know, ITES1 is run by a program executive officer, EIS, Enterprise Information Services. Mr. Kevin Carroll runs that program and ITES1 is primarily a services- or support-based contract. I think we've awarded so far probably about $157 million worth of work off that contract but it provides services, everything from wide area network services to LAN services, IT support, programming/database support, services type contract; very powerful, allows anyone in the Army to come to a single place to get those types of services.

Mr. Prow: How will ITES2 be different from the current ITES?

Lt. Gen. Boutelle: We're running out of overhead on ITES1. We've almost awarded all the dollars we're allowed to award against that. ITES2, we will increase the amount of overhead in that or the top end, how much money we can put against that contract, significantly.

Mr. Lawrence: Let me skip subjects here and talk about knowledge management. Could you describe the Army's vision for knowledge management?

Lt. Gen. Boutelle: I'd be glad to, Paul. First of all we all are collecting tremendous amounts of data. You've got tremendous amounts of data and information and documents probably on your computer and on your hard drive today and over time that becomes not only megabytes and gigabytes but pretty soon terabytes and petabytes and, believe it or not, we can talk in petabytes in information we have in storage today and that information is pretty much static unless you have ways to access it and sort it and provide it to the right person at the right time.

That's the process we'll working right now, a combination of two things, all the information, and that information can be in the form of video, imagery, documents, messaging, translations of information that we've got around the world, open sourcing. How do you take all that information and how do you access the piece you want for one thing, to be able to make a decision in a rapid time in order to action something and have some successful event take place? When we get into Army knowledge management it is really taking data and being able to massage that data and facilitate that data to get it to the right person someplace globally to make a decision.

Several ways you can do that. One is you can just do searches on it like you do on Google or Yahoo! or Excite or something else with a search engine. What you really need to be doing right now and what we're beginning to do and what the Department of Defense has directed, which I think is absolutely the correct way to do it, is employ a lot of the XML standards to sort that information for content and intent and as we start to convert that to XML then you will start to really get the power that we're all after in this knowledge-based world.

Mr. Lawrence: Tell us about tracking progress as you move towards those goals.

Lt. Gen. Boutelle: One is to be able to convert tremendous amounts of information into those protocols, into XML and those family of protocols, and that's going to be one part of it. The second piece is just start to apply that to the many, many, many hundreds, if not thousands, of systems that we have across the Army. Look, it's pretty easy to fix one system or mod one system or build one new system. But when you get a large organization like the Army, the Navy, the Air Force, the Marines, we have tens of thousands of applications and so we need to parse those applications and decide which we want to attack first.

We do have a requirement now that all new systems coming on board will use an XML back plane as part of that and we broke it out by domains. We have war-fighting domains, we have business domains, we have domain owners, and we are now assigning those domain owners responsibilities to modify those systems to operate within the XML environment. The larger environment is what we call the NCES environment, which is a Network-Centric Enterprise Services environment, which really the DISA organization is administering.

Mr. Lawrence: Let's take it down a level lower to the individual soldier. Could you tell us about Army Knowledge Online and how it affects their lives?

Lt. Gen. Boutelle: AKO or Army Knowledge Online, which is the largest portal in the Department of Defense, has several pieces to it. It has an unclassified portion which we operate, what we call the NIPRNet or the unclassified for day to day operations within the Army. It has a piece of it, the CIPR, which is the secret side, which is primarily used by our intelligence community, our war-fighter community, and our operations people, and then there's another side of it that are the websites open to the public.

For the individual soldier and family we have a tremendous amount of things that are going on. First of all, for any deployed soldier we offer the opportunity for him to provide guest passwords and access and collaboration sites to his family and kids. So a deployed soldier today can go to one of the many Internet cafes we have throughout the region in South America or other places and actually exchange e-mail and messaging and pictures and other things of their family and their kids and different events that take place within the family. That's on the personal side.

On the professional side if you go on Army Knowledge Online like I do every morning and I boot that system it provides me instant messaging to the people I work with around the world but it also provides me role-based things. Today when I boot on it's got a series of stoplights and said your physical is green but you didn't take your flu shot so it's amber or red. Go take your flu shot, you need a dental checkup, those types of things. So it is tied to many databases and systems throughout the nation.

Effective in October we'll really be role-based. Not only will it tell me that I need to take my physical or I haven't taken my flu shot but when you log into the system it'll be role-based. It will not only know about my physical and my flu shot but it will know what my role is in the Army and present information to me that's based upon who I am, what my age is, what my specialty is, what part of the world I work in, what my organization is, and start to provide role-based information for that individual. If he's up for promotion it should come up and tell him, okay, you have an opportunity for promotion here. You need to do these types of things to get ready for it.

Some of those are available today but we're going to pure role-based shortly. That gives us two things. It focuses information on the individual but it also makes sure that he or she does not have access to information that she does not need or is sensitive information that she should not have access to.

Mr. Prow: On the subject of knowledge management can you describe the Army's Battle Command Knowledge System and how this evolving knowledge management system will affect the Army's ability to fight wars?

Lt. Gen. Boutelle: The BCKS or the Battle Command Knowledge System is one of our very, very powerful stories. It's grown out of a couple young soldiers who decided that probably the big Army was not receptive and adaptive enough to do what they wanted to do, and they referred to it when I talked to them. They said we built the website companycommander.com, which was the original website, as if a bunch of company commanders were sitting around on somebody's front porch talking about how they operate every day and what works and what doesn't work as a company commander. And these young soldiers decided that a great thing to do would be put it on a website and they found that there was such a demand for sharing of information from company commanders in Korea and Alaska and Hawaii and South America and Europe it was an overwhelming success, exponential growth.

But they thought that because they did it on their own with their own servers that that was the only way to do it. And we worked with them for many years and we've now rolled that into a bigger program and that bigger program is BCKS. It does reside on Army Knowledge Online. It is now in the dot-mil domain. We're extremely pleased. We not only have the companycommander.com on the mil domain now. We've expanded that to platoon sergeants and battalions so that information is shared.

And when you start sharing that information and hopefully tacit information you have very, very powerful results. And so the young soldier who has an IED problem and a solution in Afghanistan when he was a company commander is now sharing that with a young soldier who's in Fort Riley and about to go to Afghanistan or Iraq. And so we're seeing all the sharing and collaboration of information; very, very powerful, very useful in our business.

Mr. Lawrence: Fascinating, especially the sharing part. Are military IT programs different from IT programs for civilian agencies? We'll ask General Steven Boutelle of the US Army for his perspective when The Business of Government Hour continues.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence and today's conversation is with Lieutenant General Steven Boutelle, Chief Information Officer and G-6, Department of the Army. Joining us in our conversation is Chuck Prow.

Mr. Prow: General Boutelle, you are considered a pioneer in the area of tactical communications. Can you explain the importance of tactical communications to our listeners and what innovations you expect to see that will positively affect the Army?

Lt. Gen. Boutelle: Great question, Chuck. The tactical communications world is a little bit different. In previous times prior to 1989 tactical communication was pretty much tethered to infrastructure within Europe, within Germany, where we thought we might have to fight a war with the Warsaw Pact.

Tactical communications today in a fight against a group of terrorists that have no alignment to a particular state or nation requires you to go into many of these fallen states or Third World countries or very poor countries, Afghanistan probably the third poorest country in the world. There is no infrastructure. There's no electricity. There's no potable water. There are no places to buy batteries for your radios. You have to bring it with you. There are no telephone systems, no cell systems, although they are starting to evolve cell systems in the bigger cities like Kabul, but you have to bring it all with you.

So when you bring it all with you and you have no electricity to plug into you get into the tactical world very quickly. And that is I have to be able to talk to someone either across the street, on the next mountaintop, or in the next valley and the way you do that are usually systems that are not readily available in the commercial market. They must be able to withstand the tremendous temperatures and weather environments that we operate in and that drives you to the tactical arena, usually it at the lowest level of FM voice and usually secure FM voice, and you move up for longer distances to what we call tactical UHF satellite.

That whole world of tactical arena is only somewhat applicable to the commercial world and usually pretty much customized to the work we do although we're seeing much more use of things like the 802.11 protocols b and g and some of the other protocols. We're starting to see a little bit of inroads to the commercial protocols. That's primarily the tactical world and it's really a stand-alone, sustaining, power it yourself, carry it on your back, or carry it in a vehicle if you can get a vehicle into a type of type of communications.

Mr. Prow: Information technology has and will continue to play a vital role in current operations around the world. What can industry to improve IT for the benefit of the Army and its evolution into overseas conflicts?

Lt. Gen. Boutelle: A couple things we need to think about. One, at the higher level, and this is really across the entire network, is information assurance piece. Let's face it. We're out there and we are an information-based Army and we are an information-based Department of Defense and federal government and that's a strength but it is also a weakness. And so tremendous amounts of resources and effort are being put into things like firewalls and anti-virus packages and packages that will push the IAVA updates across the battlefield to every computer. That's one piece that we really need industry's help on and it's a continuing thing. We can secure all of our networks today but the enemy has a vote be that a script kiddie or a local hacker or maybe a determined enemy on the 'net. So even though we secure our nets today that enemy will continue to try to attack and have better techniques and better tools in the future so you must continue to improve those information assurance things.

And the other piece is we need to push the envelope. When you're pushing people out in strange places in the world in a mobile and harsh environment the commercial product as it stands probably will not do the job. Much of the mobile computing came early in the armed forces. We were running mobile computers in helicopters and airplanes and tanks significantly before we had it probably in our house or were carrying out PDAs around. So as we continue to push that envelope we find higher demand for more bandwidth, to have higher resolution imagery, to see unmanned aerial vehicle streaming video. Those types of things will continue to push the industry on providing protocols and standards to give us those products in a timely manner.

Mr. Lawrence: Let's take a step back and think about IT projects in general. How would you compare and contrast, say, creating technology solutions in the military versus civilian agencies and the federal government?

Lt. Gen. Boutelle: In the military today, unlike 20 years ago, we don't create a lot of IT solutions. There was a time when the Army held and we still hold many patents but we actually created devices, we created radios, we created things. Now we rely heavily and we leverage the commercial community to do that. So I think you'll find that across the federal government that the Army by law is very much restricted and bounded by some things we do. We fight and win the nation's wars and so we focus primarily outside the continental United States.

Now, the National Guard under Title 32 does have a role within the different states and that's pretty much codified. So we focus outside. The National Guard focuses inside unless we activate and mobilize them and bring them with us. And the Reserve, of course, is part of the active Army in direct support.

So we really focus a little different, each federal agency, be it the Department of Homeland Security, the FBI, the CIA, really, which enclaves they focus in. The FBI is very centric to the United States. The CIA is outside the United States. The Army and the armed forces focus outside the United States. We have some role in certain occasions within the United States.

Mr. Prow: How do you see the Army's CIO/G-6 evolving in the years ahead?

Lt. Gen. Boutelle: The CIO role, as you know, has become increasingly more active in the last few years. A lot of that is because of the Klinger-Cohen Act. The Klinger-Cohen Act gives each agency very strong roles for the CIO, the chief information officer, to perform and that's codified in law. But I would suggest, and some of my CIO counterparts and brethren may not appreciate it, that at the turn of the century we had a vice president for electricity as we brought electricity into manufacturing plants. And so the CIO today will probably be here for 10, 20, 30 years but as IT becomes the common backbone of everything we do that will be an evolving role. I have no idea what that role will be 20 years from now but it will be significantly different today when we are initially bringing on IT services versus getting into knowledge management and where that goes. It may be more of a knowledge management officer than a CIO.

Mr. Prow: More generally where do you see the Army's movement over the next five to ten years?

Lt. Gen. Boutelle: I think the Army's movement is really networking the force to the lowest level. We can provide the transport network anywhere we want to today by brute force and resourcing. The issue we still have to solve and we have on the books and we're working on it very hard, and I believe it'll be solved in the next three to five years, is networking in the soldier at the lowest level or the special forces operator. That's the hard part. He needs a lot more bandwidth and he needs it in places where there is no infrastructure on this globe. That's the hard part, that's what we're working on, and battery technologies support it. It takes a tremendous amount of battery technology and lots and lots of batteries to support just about anything we do so power technologies to support those things in getting that large bandwidth out to the individual soldier or special operator.

Mr. Lawrence: You've spent the bulk of your career serving our country. What advice would you give to a young person interested in a career in public service?

Lt. Gen. Boutelle: I think the first thing I would do is it's like any other thing you want to do. If you want to get into something be good at what you do. You can take that niche, whatever niche you decide you have an interest in, and become the expert in that niche be it IP services, XML, whatever that may be. It's significantly different.

When I look across our population that we have in the Army, civilian and military and contractor, all three, I find a seam there age 30-35. If you're under 30 or 35 you probably grew up with IT technology, maybe just as a tool around the house. If you're over 30-35, if you've taken an interest in it or it was part of your job, you may become very good at it. If you're not into that business you need to make a concerted effort to learn some of these basic technologies about the web and IT services.

Great opportunities to do great things. It's very fast-moving. There are opportunities when you deal within the Department of Defense to get access very quickly to high-end systems, technological systems, systems used globally, technologies that are far beyond what you might be able to do in the public sector.

So I would suggest that a lot of this force is self-schooling, a lot of reading, a lot of time visiting different organizations and how they do business, but there are great opportunities in the civilian sector, in the Department of Army civilian sector, and also in the military sector in these technologies. It's in demand. It is something the Army needs and it is something our nation needs to empower those war fighters to do the things that are important for our nation in the future.

Mr. Lawrence: Well, that'll have to be our last question for this morning. Chuck and I want to thank you very much for joining us, General.

Lt. Gen. Boutelle: Thank you, Chuck. Thank you, Paul. It's been a pleasure.

Mr. Lawrence: Thank you. This has been The Business of Government Hour featuring a conversation with Lieutenant General Steve Boutelle, Chief Information Officer and G-6 of the US Department of Army. Be sure and visit us on the web at businessofgovernment.org. There you can learn more about our programs and research into new approaches to improving government effectiveness and you can also get a transcript of today's fascinating conversation. Once again that's businessofgovernment.org.

This is Paul Lawrence. Thank you for listening.

Arlington, Virginia

Tuesday, February 11, 2003

Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, the co-chairman of The IBM Endowment for The Business Government. We created the endowment in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the endowment by visiting us on the web at www.businessofgovernment.org.

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation this morning is with Linda Combs. Linda is the Chief Financial Officer at the Environmental Protection Agency.

Good morning, Linda.

Ms. Combs: Good morning.

Mr. Lawrence: In joining us in our conversation is Morgan Kinghorn. Good morning, Morgan.

Mr. King: Good morning, Paul.

Mr. Lawrence: Linda, perhaps you could start by giving an overview of the EPA, tell us about its mission and its types of programs.

Ms. Combs: The EPA's mission is to protect the environment and human health. We have just under 18,000 employees working in many locations across the country. We have ten regional offices as well as laboratories and field offices. And, of course, a large number of our talented people, about half, are located in Washington, D.C. We have many, many talented folks that work in EPA. We have scientists, engineers, attorneys and given the work that we do, science is very important to the core mission of our agency.

Our mission, of course, is to protect the environment and human health. We have generalists as well as environmental protection folks of many different scientific backgrounds, biologists, zoologists, ecologists, toxicologists, right along with the financial expertise we have in my own office. But, we have a very dedicated group of people that work at the EPA and I think that one of the statements that I have heard that capsulizes that is that I know that there are people currently working at EPA that first came in in 1970 when EPA first opened its doors. So, there are a number of dedicated and talented folks that work at EPA.

Mr. Lawrence: In terms of the Chief Financial Officer, that is quite large at EPA, very diverse programs as you mentioned. What are your responsibilities as CFO at the EPA?

Ms. Combs: We have in the CFO Office about 350 of those dedicated people that I spoke about a moment ago. We have many of our folks in the Washington, D.C. area in the CFO Office but we also have some field offices in Cincinnati, Research Triangle Park in Las Vegas. And, of course, our people are primarily accountants and financial specialists, budge and program analysts but we have environmental scientists in our CFO Office as well as writers, policy specialists, and system specialists as well as economists.

Our responsibilities are broad enough to require a very wide range of skills to get our jobs done. As the agency's senior financial manager, my job as CFO is basically to provide executive oversight for all of the aspects of the EPA's annual budget which is approximately $8 billion dollars a year. We are also responsible for the agency's strategic planning efforts in accordance with the Government Performance and Results Act. We have an integrity and accountability function as well as an auditing function in auditing tracking function in our office as well. We have financial computer systems that we're responsible for as well as accounting. Of course, we're the office that pays people. So, payroll is very important part of what we do in the OCFO Office.

We have an integrated budget in performance system. And, we have a web based financial reporting system that is our financial data warehouse. But, in addition to all of that, to keep up with our April $1 billion dollar budget, we do budget formulation, execution, analysis and reporting within EPA's integrated planning and budget and accountability system.

So, we basically have oversight for all the financial operations, all the financial statements and reporting and we have budget formulation as well as execution responsibilities.

One of the responsibilities that I feel is very important for any CFO to participate in and I take that responsibility very seriously as I work with the chief financial officers counsel. I think it is important to have EPA at the table in promoting the things that are important to EPA. But, I also think it is important for CFO's to provide a leadership role across government and we have responsibility in our own office for the President's Management Agenda as many CFO's across government do.

We actually have three of the five areas in our own responsibility. I am very, very happy and one of those reasons I bring that up is we were actually the second agency to earn all green scores in financial, excuse me, in all of the progress areas related to the President's Management Agenda.

So, the President's Management Agenda has served a number of purposes. It's brought CFO's across government together but it's brought people in our own EPA environment together as well around five specific agenda items that is important to each and every manager and that are also important in a CFO Office.

Mr. Lawrence: So, then you're obviously involved in having to write down the appropriations processes and you're involved with them before. Do you see any difference in that process so far in terms of any of the detail or the structure or the craziness?

Ms. Combs: Well, I think one of the differences is that the process seems to be stretched out. This year particularly we are still, of course, in a continuing resolution as we speak. We have a long group retracted period of time. We work on three years budgets at a time. We are currently awaiting our 03 final conference. We currently have just presented the President's 04 budget. And, we have already started some preplanning for the 05 effort.

So, I would say the biggest difference Morgan is probably our -- my impression that the process has become much more protracted. And, that just causes all of us to have a lot of input in how we do our daily jobs in thinking over a span of several years at one time. Part of that's good but a lot of that is some uncertainty that interjected there as well.

Mr. Lawrence: Morgan hinted at your different experiences. Can you tell us about your career prior to coming to the EPA?

Ms. Combs: Sure. I was the Assistant Secretary for the Treasury for Management from 1989 through 1991. I was Acting Associated Administrator for Management at the Department of Veterans Affairs before that. And, Deputy Under Secretary for Management at the Department of Education in the early and mid-eighties. Prior to my Federal career, I was Advisor to the Governor of North Carolina, and an elected Board Member for the Board of Education in Winston Salem for South County, North Carolina. I was Manager of National Direct Student Loan Programs for Wachovia Corporation. Also, in North Carolina. And, in my very, very, very early career, I was an Administrator and class room teacher in the Winston Salem for South County schools in North Carolina.

My husband and I have over the last ten years managed our own entrepreneurial business. So I have seen large, large organizations and have had responsibility for very large organizations as well as small entrepreneurial activities and have wonderful successes and wonderful memories with all of those.

Mr. Lawrence: If I counted correctly, you've had positions in education, Veteran's Affairs and Treasury. And, I'm curious if you can contrast the differences in management styles at those three places.

Ms. Combs: One of the things that I always like to think of are the similarities. The similarities which is not what you asked me about, Paul, but I'll get there.

Mr. Lawrence: It's the opposite.

Ms. Combs: The similarities reflect a lot around dedicated people. And each and every one of those responsibilities because each and every one of those encompassed management areas, I have found such dedicated and talented individuals that work in the Federal Government. I am always, always so impressed with the caliber of people that the Federal Government is able to attract. And, how committed and dedicated those individuals are.

So, the differences I would say relate to the missions of those organizations. The Veteran's Affairs had a very discrete and determined mission. The Treasury Department was broader and much more over arching and encompassing because of the number of bureaus and number of large bureaus within Treasury. Education had a very discrete mission. And, here now at EPA it's one of the regulatory agencies and it, too, has a very different mission.

So, I'm saying the differences rely more in mission. The similarities lie in people.

Mr. Lawrence: That's a good stopping point. Rejoin us in a few minutes when we continue our discussion with Linda Combs of the EPA. How has the EPA created a results based management. We'll ask Linda with The Business of Government Hour returns.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence. And, today's conversation is with Linda Combs. Linda is the Chief Financial Officer at the Environmental Protection Agency. And, joining us in our conversation is Morgan Kinghorn. Well, Linda, one of the things that you talked about in the last segment when you were describing your responsibilities, you mentioned that you were a member of the Federal CFO Council. Could you give us an overview of the kind of work that the Council does?

Ms. Combs: Sure, Paul. The CFO Council itself is a group of CFO's, any CFO that is in the 22 or 24 Cabinet level agencies and we work collaboratively to improve financial management across the U.S. Government. The Council was first established under the provisions of the CFO Act of 1990 in order to facilitate and coordinate the activities of agencies and its members across the U.S. Government.

Since I was one of the first CFO's in Government after the CFO Act became law in 1990 when I was at Treasury, I got a first hand experience there at what this Council could do as well as what the management council across government could and should do relative to more cross cutting issues. It's a special experience for me now to come back and years later as EPA CFO to see how that position and the Council itself has grown over time.

The CFO Council itself has a number of projects right now. One of the projects that I co-chair at this time is a project to look at financial metrics across government. There are things like cash balances, various metrics that we are identifying that would be a small number of metrics that one could look at and if bubbled up through all of the 22 Cabinet level agencies, would create a picture in and of itself what the Federal Government looks like. All the reconciling on a timely basis and various financial metrics functions that business constantly looks at. We think it's important as CFO's to step up to the plate and say we ought to be looking at those things not just in our own individual agencies and departments, we ought to have a representation that could span across government so that these could be looked at on a Government wide basis as well.

Mr. Lawrence: As you know, the CFO Act was passed nearly 13 years ago, 13 years ago this December and you're alluded to the fact there's been a lot change in the CFO community. One of the things folks have talked about since is how the CFOs' sort of partner with the rest of their agencies and colleagues to improve financial and budgetary management within the agency. How did you proceed to do that since you've come back into this kind of position?

Ms. Combs: I think the biggest issue that we face is probably how well we gather, how well we manage and integrate information about costs and pare that up with results to our programs. I think this is a cost cutting issue that many agencies and departments are dealing with a little bit differently now than when I left 11 or 12 years ago.

At EPA, we have looked very closely at budget and performance integration. And, fortunately we are looked to as a leader in this area. We've had our goals and objectives for planning, budgeting, and financial reporting for several years. And, are constantly working to improve those.

That's one of the areas of the President's Management Agenda that I spoke about earlier. And, because we had an early start on this and we are recognized as one of the leaders in Government in this area. We recently earned recognition as one of the seven finalist for the President's Quality Award in Budget Performance Integration. So, we're leaders in Budget Performance Integration, we still have a ways to go in looking at costs information, activity based costing as it's associated with results management in our programs. And, I think it's real, real important as my role as CFO to bring to the table and to bring to the managers of these program areas better business tools with which to operate. I consider that one of my prime responsibilities as CFO is to have a full deployment of business intelligence tools so that mangers can make the best use of these new capabilities that they will have on their desktop. And, whether it's a dashboard approach or different kinds of approaches that help them manage their programs better with better costing information as well as what are the results that they are getting for there programs. That's what I think one of my major roles as CFO is.

Mr. Lawrence: One of the issues that has really existed really probably after that last couple of years, is in the drive to look at performance. Some of the stakeholders, whether it's the Congress or external stakeholders have never seen that interested in looking at results. And, I know that's changed generally and I think it's probably changed in your environment. Can you give us a sense of maybe the last ten years when you moved to go up to appropriations on OMB? I'm sure people are really asking about results including the people who are investing in your programs. Has that changed?

Ms. Combs: I think that has changed. I think when we talk about at EPA our goals being cleaner air, purer water, better protected land, and how that protects the environment and human health as our major mission, it's very difficult sometimes to translate our immediate results to showing long term human health and protection for U.S. citizens. But healthy communities and eco systems is a very, very important element of what we do. And, we have to continue to strive to find better ways to display the results that we are getting for the dollars that we put into our programs. We are looking at better effectiveness measures. We're looking at the way our strategic plan and the geperal (phonetic) results all fold in hand in hand. So, we're really trying to look at this whole area in a broader more encompassing way in order to show to our stakeholders, whether it's Congress, OMB or certainly the American people that here's what you're getting for your dollars. This is important to human health and here's why.

When I talked earlier about science being an important aspect of what we do and how that's a foundation of what we do that makes science even more integral and important to us. It is helping us to show these results.

Mr. Lawrence: What kind of time frame do you use when you talk to people about results? For example, in the examples you gave, you talked about scientific goals which might take decades to achieve yet it sounds like people to you and want to know results on a much shorter interval. How do you translate those conversations into the real thing?

Ms. Combs: That is very difficult. You know, one of the things that we're -- we have previously looked in Government and this is not just true for EPA, it goes for education, some of the other departments that I have been involved in as well. We've been looking at outputs. Now, we're being -- we're hoping to move toward more outcome based knowledge in everything we do. And, you're exactly right, Paul, that that's hard when it's going to take a long time to show environmental results or health results but we happen to think that if we continue to measure some what I would call medium output measures that are leading toward our further outcome based objectives and goals. And, we put these in our strategic plan. We feel like we're much better off today than we would have been without doing that. But, it is going to take a matter of years. But, this is not anything that we're going to be able to look just tomorrow. We're going to have to think longer term and be able to show some short to medium term results that build into our longer term output.

Mr. Lawrence: That's a good stopping point for this segment. Please come with us in a few minutes as we continue talking about management with Linda Combs of the EPA. How's the EPA doing with the financial management portion of the President's Management Agenda? We'll ask Linda from her prospective when The Business of Government Hour returns.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence and today's conversation is with Linda Combs. Linda is the chief financial officer at the Environmental Protection Agency. And joining us in our conversation is Morgan Kinghorn.

Well, Linda, can you tell us more about the Managing for Improved Results Steering Group at the EPA?

Ms. Combs: Sure. This group was managed from my office at the initial request of the deputy administrator and it brought together people from all of the agency's offices to think about very practical ways that we could make some real improvements in the way EPA managed its overall programs that the agency could implement right away. The group made some genuinely useful recommendations and it gave some longer-term approaches as well that we could also adopt.

One of the most important recommendations for immediate action was to take a look at our annual performance, goals and measures, and see if we could devise a more rational set of categories. Time I think the agencies can find measures of success over as we establish and maximize our priorities and measures and as priorities change. The longer-term recommendations that came from the steering group focus on enhancements to our overall strategic plan with greater emphasis on the outcomes of EPA's work, reinforcing accountability for specific performance objectives, and building the agency's capacity to indeed manage for results and how those results are costed out, how they're calculated, and how they're determined.

Mr. Kinghorn: You mentioned that you were one of a very select number of agencies that all green on progress for the President's management agenda. Could you share with us some of your activities related to the financial performance piece of that and what are the timetables for these initiatives and what do you expect to get out of them?

Ms. Combs: Sure. We have as our prime objective under the financial management arena continuing to get clean-audit opinions. I think everybody in financial management, private or public sector, would say that that is one of the bellwethers that you must have in order to say that you are fully performing in the financial arena. We have automated our financial statements. That's been a big help to us. And in terms of the financial management scorecard itself we have sat down with OMB each and every quarter over the last year and we'll continue to do so to further define and further refine which specific elements we're going to be responsible for.

And we've laid out our own timetable about moving from our legacy financial systems and making sure that our financial systems meet each and every standard, new or old, for the government financial systems. I mentioned a while ago the reporting tools and how important those are for managers but they're very important for us as well in the financial arena to be able to use this business-intelligent software and these new kinds of reporting tools for managing program results but also to support our financial goals as well.

Mr. Kinghorn: Well, if you look at your budget probably 45 percent of it's allocated in a variety of programs for grants to states, tribes, and other EPA partners, everything from construction grants to Superfund to cooperative agreements. And harking back to what we were talking about on performance, this is tough to measure the success. It's an indirect application. I mean, you give grant money, heaven knows what you get for it. What are some of the things you're looking at as an agency that devotes that much of your budget to other forms of financing in terms of performance?

Ms. Combs: This does go to our discussion on some of the difficulties involved in actually measuring environmental outcomes. The significant portion of the EPA's budget that directly supports state, tribal, and environmental programs does indeed create some important environmental results across the country but it does continue to be a challenge for us to carve out which of those results can be attributed to state efforts and tribal efforts and which can be derived from the actual grant money that EPA gives as opposed to other specific resources. And for those reasons we think partnerships are very, very important.

It's important to emphasize, I think, that we have a very special relationship with our state and tribal partners and that we maintain very close working relationships with state governments and state agencies across the country. We enjoy that close working and growing relationship with the Environmental Council of the States. ECOS is an organization of state environmental commissioners and we consult with them regularly, we've consulted with them on our strategic plans and our annual reports under GPRA, and we continue to take steps to involve those representatives and our state and tribal representatives in our agency planning discussions every year.

The states don't work for EPA but we will continue to hope that they will work with us. We're certainly aware that right now states have some very difficult situations that they're dealing with in terms of their financial situations and we think it's very important that this partnership be closer than ever because we need to know what their difficulties are, understand what their difficulties are, and make that relationship work even better in the times in which we are dealing right now.

We feel like it's important for our office where we deal with accountability as well as strategic planning to further define the regional performance contributions along with our agency goals and see what those obvious connections are that can be made between our states and our tribal partners. We think an important element here could be to develop a set of measures to look across the regions and see how we are being most helpful to our state and tribal partners as well as seeing where we feel like we could end up being more effective as well.

Mr. Kinghorn: EPA has a structure to manage the finances, I think, of your grants, your cooperative agreements, and general contracts delegated to RTP, to Cincinnati, and Las Vegas, which really seems to advance what other agencies are just thinking about doing. Has that structure served you well in terms of specialization in each of those locations, particularly at RTP, which is also closely linked to some of the core programs of EPA?

Ms. Combs: And I have a special place in my heart for RTP since I'm from North Carolina but we certainly think it has. I think, too, in terms of the way we're looking at special provisions that may need to be made as we look toward better protection of the homeland and of homeland security this diversity that we have, I think, makes itself even more important in today's environment.

And one of the things, too, I would offer in terms of not just our own internal structure related to where grants and payments are processed but we have also a very important financing operation that we feel very good about at EPA that's managed out of my own office. It's the Environmental Finance Advisory Board. It's a federally-chartered advisory committee that's composed of independent financing experts from public and private sector organizations who are interested in lowering the environmental cost and increasing investment in environmental facilities and infrastructure and services across the nation. So they produce policy and technical reports that actually leverage better public and private resources.

And as I spoke earlier about the need for better partnerships and closer alignments as we have the situation in this day and time, our environmental finance centers, which are located at various universities around the country, also provide some financial outreach to our regulated community. And these networks and these partnerships as well as information on our own website help communities and environmental programs across the nation in ways that we could not do alone with our own internal financing effort. And they're staffed with a number of volunteers basically, people who dedicate their time and energy, particularly for the Environmental Finance Advisory Board. Those are volunteers, people who spend their own time, effort, and energy in their own local communities. They're just excellent people to have access to.

Mr. Lawrence: That's a good stopping point. We've got to go to a break. Rejoin us in a few minutes as we continue talking about management with Linda Combs of the EPA. What role will EPA have in homeland security? We'll ask Linda for her thoughts when The Business of Government Hour returns.

Announcer: How can we strengthen the relationship between performance and public service? A recent endowment report makes the case for performance management by confronting conventional attitudes. For a copy of the report, "Performance Management: A Start Where You Are, Use What You Have Guide," by author Chris Wye visit our website at businessofgovernment.org or call us at 703-741-1077.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence and today's conversation is with Linda Combs. Linda is the chief financial officer at the Environmental Protection Agency and joining us in our conversation is Morgan Kinghorn.

Mr. Kinghorn: Linda how do you define and measure financial management success at the EPA?

Ms. Combs: Well, Morgan, when I see that green score for progress in financial management on the executive branch management scorecard I think that'll be a splendid indicator of our success. But I must tell you we won't sit on our hands after that. I've dedicated myself to moving financial management at EPA to what I call beyond green. One of my more important personal and professional goals when I came to the CFO Office at EPA was to basically say we're going to have the most respected CFO Office in the federal government. We're well on our way to achieving that and we're not just doing that to win accolades of recognition from OMB or from the public or from any of our constituents.

But if we are the most respected CFO Office in government that means a lot of positive things for our organization. Number one, it means that we do our business efficiently. If we do our business efficiently there are actually lots of rewards that come back to us. We're able to get back for paying our bills on time, for example, some rebates that we would not have access to otherwise. And just last year EPA because we do our business efficiently we got over a million dollars in rebates. Ninety-three percent of the rebates that we could possibly collect we're collecting those because we do our business more efficiently. So part of the success for our efforts at EPA in financial management come directly through the other program offices and maintaining those positive relationships with other program offices at EPA and ensuring that we're doing the right thing to manage our programs better is a particular dimension that I am very proud of now and would like to continue to be proud of.

There are lots of challenges that continue to come our way. One of the things that we have looked at since I've been at EPA is maintaining talented people with the skills and abilities it's going to take to work in the CFO Office of EPA in the 21st century. We've done a lot of work in that arena already and in the coming year we're going to keep looking and working toward acquiring the kind of talent we need to do our job well.

Mr. Kinghorn: The issues that you suggested that you have been successful, I mean, systems help, data warehouses help, but it is people and in terms of future financial managers I know that the market seems to be getting stronger now. People are coming back into government. If you look at the information from Harvard schools and Syracuse a very high percentage relatively compared to past years of people is coming into the federal government. They used to go into state or nonprofits. Have you seen that happen and are you trying to recruit them in to continue to replenish the talent that you have that has led to the successes but to continue that in the future?

Ms. Combs: Yes, we certainly are. This pipeline for future financial managers I think has to start with a recruiting effort in the federal government the likes of which we've never seen before and in my opinion now is a perfect time to do it. The federal government couldn't be in a better position to take advantage of talented MBAs coming out of schools whether it's Harvard or many of my schools that I'm aware of in North Carolina and reaching out to those schools and saying here's who we are and here is what we do is part of what I'm about.

I continue to talk to people as much as possible about the most interesting opportunities that are available in working in a CFO office. The expanse of opportunities that people deal with in federal government positions is not to be found by MBAs going into the private sector for their first five or ten years in business. Having come from a banking background myself I know that to be true and if we are going to optimize on the skills that are necessary for financial managers in particular to come into the federal government now is our time to do it.

And I think it behooves all of us, particularly CFOs, in the federal government to take on this mantle of opportunity and work with the Office of Personnel Management in making absolutely certain that we work with every hiring authority that we currently have available to us as well as creating additional ones because young people are indeed interested in working for something that is greater than their themselves. That's what the federal government opportunities give to them. Where else in the federal government could I when I was at Education and managing then a multibillion-dollar budget at age 35, have the opportunity to do that? Certainly not in the private sector. So I see our opportunity now as a great one if we can take advantage of it and capitalize on it quickly.

Mr. Lawrence: Homeland security's on everyone's mind these days. What role will EPA play in homeland security?

Ms. Combs: Well, we certainly don't know what lies ahead for this country but we certainly can be certain of one thing at EPA, that EPA is going to step up and take part in any task that's presented for us to do. Most recently our EPA people have had some leadership roles in recovering debris from the Columbia disaster, certainly a sad task that none of us anticipated but we certainly are proud that we have the talented and right kind of people and the right kinds of places to be able to immediately mobilize and do the kinds of things that were required there.

Governor Whitman and our senior executives for emergency response are in close contact with Governor Ridge and our other colleagues at the Department of Homeland Security and I think as the Department of Homeland Security comes together over the next few months we'll continue to work closely with them to address whatever needs that the EPA is equipped to fill. I think obviously we're still under a continuing resolution for '03 but whatever resources have to be taken I think that's where our office comes in in being able to fulfill its mission of supporting other areas within EPA itself.

Most people do not readily recognize, I think, the hazards people that we have in our emergency response team and how vital and critical their role is. But it takes something, I think, like, unfortunately, the Columbia disaster for people to realize hazardous chemicals there, call the EPA, and often a disaster has taken place before EPA is recognized as needing to have a role right there. But I think as homeland security itself gets underway our role will become even clearer and more focused and more prominent.

Mr. Lawrence: We have time for one more question so I'd like to ask you to reflect on your career and perhaps give us a perspective about the kind of advice you'd give to perhaps a young person considering a career in public service.

Ms. Combs: I've had a number of opportunities, I think, over the years to talk to young people about their careers and particularly about public service. I think sometimes we don't initially recognize the fact that many people who come into public service believe that public service is a public trust and it's an honor and a privilege to serve your fellow Americans and to uphold that public trust.

As I mentioned earlier, particularly young people and people changing careers want to do something that's bigger than themselves. Yes, that sounds like a job for idealists but there are idealists in every single profession whether it's a scientific professional, whether it's a financial profession. Those people I think over the years of their career have an opportunity to realize that the job that they could do for the federal government would play a large role in making life better for Americans and for the rest of the world as well.

The broad, encompassing jobs that I mentioned earlier, whether it's a fiduciary role or whether it's a scientific role, those broad and encompassing roles can be found in federal service. And combined with the public trust and the experience that people bring to the table some of the best minds that we find anywhere are in the federal government. And with the privilege and honor of serving I think that I would and will continue to advise young people considering a career in public service certainly to consider the federal government.

Mr. Lawrence: Well, Linda, I'm afraid we're out of time this morning. Morgan and I want to thank you for fitting us into your busy schedule.

Ms. Combs: Thank you.

Mr. Lawrence: This has been The Business of Government Hour featuring a conversation with Linda Combs. Linda's the chief financial officer at the Environment Protection Agency. Be sure and visit us on the web at businessofgovernment.org where you can learn more about our programs and get a transcript of today's conversation. Once again, that's businessofgovernment.org.

This is Paul Lawrence. Thank you for listening.