A Conversation with the Honorable Timothy M. Kaine

Friday, October 5th, 2007 - 11:03
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Conversation with LeadersA Governor of the Commonwealth of Virginia

Dan Blair interview

Friday, August 31st, 2007 - 20:00
Mr. Blair serves as the first Chairman of the independent Postal Regulatory Commission, the successor agency to the former Postal Rate Commission.
Radio show date: 
Sat, 09/01/2007
Intro text: 
Missions and Programs...
Missions and Programs
Complete transcript: 

Originally Broadcast September 1, 2007

Washington, D.C.

Welcome to The Business of Government Hour, a conversation about management with a government executive who is changing the way government does business.

The Business of Government Hour is produced by The IBM Center for The Business of Government, which was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about the Center by visiting us on the web at businessofgovernment.org.

And now, The Business of Government Hour.

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

Recent postal reform has provided opportunities to address issues facing the country's Postal Service as it continues its transformation in a more competitive environment, with a variety of electronic alternatives for communications and payments.

With us this morning to discuss his organization and its efforts to facilitate this reform is our special guest, Dan Blair, Chairman of the Postal Regulatory Commission.

Good morning, Dan.

Mr. Blair: Good morning, Al.

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

Good morning, Solly.

Mr. Thomas: Good morning, Al. Good morning, Dan.

Hotlink Topic 1

Mr. Morales: Dan, let's start off by learning a little bit more about your organization, the Postal Regulatory Commission. Can you give us an overview of the Commission's purpose and its mission?

Mr. Blair: The Commission is a new organization built on the foundation of the former Postal Rate Commission. Last December, the President signed into law the Postal Accountability and Enhancement Act. And under that new legislation, the Postal Rate Commission was changed into the Postal Regulatory Commission, with new additional authorities and responsibilities to exercise oversight and regulatory authority over the Postal Service.

Mr. Morales: Can you give us a sense of scale then of this organization? Can you tell us a little bit about how it's organized, its size, its budget and perhaps its geographic footprint, if it has a broader footprint?

Mr. Blair: The organization is a very small organization. I was formerly at the Office of Personnel Management. We were around 5,500 employees -- on a good day with everyone there, 55 employees, but we oversee an entity that generates around $78 billion in revenues that has 850,000 employees, and so it's a big task for a very small organization.

Mr. Morales: $78 billion? That's probably about the size of a Fortune 50 company, if not bigger.

Mr. Blair: Oh, probably larger, probably larger, more like a Fortune 10, and really the depth and scope and breadth of the Postal Service is amazing. It's really the one federal agency that touches everyone almost on a daily basis.

Mr. Thomas: Dan, you've given us a nice broad context of the agency. Can you tell us a little bit about your roles and responsibilities as the Chairman of the Commission?

Mr. Blair: The Chairman of the Commission serves at the pleasure of the President, and is designated chairman from among the five commissioners. We have five Presidentially appointed Senate-confirmed commissioners; we serve terms of six years each; we are located in downtown Washington D.C., at 901 New York Avenue.

As chairman, I'm the administrative head of the agency, and have broad authority over the employees and over the management of the organization. Everything we do though is as a commission, appointment of office heads, organization, all require input of the commissioners, and we work very collegially together. And so I'm very fortunate to be part of a very intelligent, very hard-working group of individuals.

Mr. Morales: Great. Dan, earlier, you mentioned your transition from OPM. Could you describe your career path for our listeners? How did you get started, and what attracted you to leave your senior position at the Office of Personnel Management to become the first Chairman of the Postal Regulatory Commission?

Mr. Blair: I started my career on Capitol Hill working for the former ranking Republican on the old Post Office and Civil Service Committee in the House of Representatives. My issue portfolio included both postal and civil service issues. After the Republicans took over the House in 1994, I had the good fortune to become the Staff Director for then-Chairman John McHugh on the Postal Service Subcommittee. And one of the things that we began on that subcommittee was the Postal reform movement. We conducted a series of hearings on conducting oversight of the Postal Service, and came to the conclusion that the basic business model under which it was operating was broken, the legislation needed fixing. And under Chairman McHugh's leadership, he began the Postal reform movement.

After three years working on the House Government Reform Committee for Chairman McHugh, I moved over to the Senate side and worked for Senator Fred Thompson, who was the Chairman of the Senate Governmental Affairs committee at that time. My portfolio changed a little bit -- I got back into the civil service arena, but was also involved in the Postal Service as well, government ethics, budget issues, and it's from that platform that I was able to make the transition to the Office of Personnel Management, where I was appointed the Deputy Director by President Bush and confirmed by the Senate.

Served there for about five years. It was a phenomenal and educational experience for me, working with some really good people, such as one of the interviewers here today, Solly Thomas, but it was really a phenomenal opportunity for me to gain good management experience and insights on how to run an organization. My passion has always been I think on the Postal side, and when this opportunity arose last year to serve the President as Chairman of the Commission and serve on the Commission, I seized it, because I think this is a one-time opportunity to really help change the way the Postal Service operates.

The legislation granted significant new authorities, but also counterbalanced it by empowering a new commission, a regulator in this point, to make sure that the intent of the legislation was being properly carried out. We view ourselves really as the agents of transparency and accountability, and take that very seriously.

Mr. Morales: That's a very broad set of experiences. I'm curious, Dan, how have these experiences prepared you for this current role -- leadership role, and shaped your current approach and leadership style?

Mr. Blair: I think that my work at OPM certainly gave me the management skills that were necessary for running an organization. And they gave me an appreciation for one fundamental concept, and that is that the organization is only as good as the people that you have for it. So I come into the job with a special appreciation for the human capital side of the equation. I also come into with a broad knowledge and background in Postal issues. This is almost an alternate world of sorts in that many of the ways that government functions -- functions just a bit differently when it comes to the Postal side, and I think there is a steep learning curve for some folks, and luckily, I've had a background in that and I've able to negotiate that steep learning curve well.

Mr. Morales: What are the goals and priorities of the Postal Regulatory Commission?

We will ask Dan Blair, Chairman of the Postal Regulatory Commission, 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 Dan Blair, Chairman of the Postal Regulatory Commission.

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

Mr. Morales: Dan, can you give us an overview of the Postal Accountability and Enhancement Act? What was the impetus for this legislation, and what additional tools does the new law provide the Postal Service to meet the challenges of a changing marketplace?

Mr. Blair: The Postal Accountability Enhancement Act was intended by Congress to give the Postal Service additional flexibility in the way it sets its rates. Right now, the way we set rates for the Postal Service is that they come into the Regulatory Commission, it's a 10-month litigated proceeding at which point we make a recommended decision, which is then considered by the Governors of the Postal Service. This process was clearly broken, it was very adversarial in nature, and I don't think there was anyone who thought that this was a viable model for a 21st Century Postal Authority.

Under the new legislation, we won't be recommending rates, we'll be reviewing the rates, but we'll also be looking at all aspects of Postal operations. The new legislation divided Postal products into two areas: competitive products and market-dominant products. And this is really a watershed in the way that Postal products are viewed and how they'll be regulated.

Mr. Morales: Now, the enactment of this new piece of legislation brought about several changes to the organization itself. Could you describe the fundamental differences between the roles and responsibilities of the predecessor agency?

Mr. Blair: Most fundamental is the name change, and I think that that speaks volumes. We were formerly the Postal Rate Commission, and what we did was recommend rates. As a regulator, we'll be reviewing the rates that the Postal Service sets in the future, but we're also going to be looking at things such as, is there cross-subsidization? Are they keeping rates within the price cap?

The new law has said that the Postal Service could raise rates within each class subject to a price cap, which should be equal to the rate of inflation. But within that, they have great flexibility; we'll be reviewing those rates as well.

Also, the legislation strengthened the complaint process, and it gave the regulator the authority to order corrective action. Now if there's a complaint filed with the Commission, we could only recommend changes. Under the new legislation, we can enforce those changes. We have subpoena authority. So there is significant new authority vested in the regulator to counterbalance the flexibility and additional authorities granted to the Postal Service.

Mr. Thomas: Dan, can you talk some more about the new oversight roles and responsibilities, and to that end, what are your goals and priorities, and how do you plan to accomplish them?

Mr. Blair: Right now, we're multitasking. The legislation gave the Postal Regulatory Commission 18 months from the date of enactment to come up with a new set of regulations governing the new system of ratemaking. In our conference with the Postal Service, I said that I thought it would benefit the system if we had those regulations in place sooner rather than later, and suggested that we might be able to get those regulations up as soon as October of this year, and we're on target to do that. Thus far, we've put out two Notices of Advanced Rulemaking in the Federal Register to receive comments on what this new system would look like. We're engaging the Postal Service in the preliminary stages before full consultation on how to develop new service standards for Postal customers as well with the Postal Service.

But still, we have some clean-up to do under the old act. We issued a decision cleaning up from the rate case that was issued back in February of 2007. We still have a number of smaller cases that are pending. We have negotiated service agreement cases that are pending -- one by Bank of America -- so we're multitasking, we're doing things under the old law, we're trying to get the new law in place, and we're also -- I'm trying to make sure that the organization is prepared to undertake the new responsibilities granted to it by the Congress.

Mr. Thomas: We'd like to give our listeners a better understanding of the relationship between the Commission and the U.S. Postal Service. Can you explain the regulatory role played by the Commission?

Mr. Blair: We have a great relationship thus far with Postal Service. I think it's one of mutual respect and understanding. I've developed a good working relationship with Postmaster General Jack Potter. I think he's done a fine job in his position. Also, Jim Miller, as the Chairman of the Board of Governors, has reached out, and we've established a good working relationship there.

But the legislation definitely empowered the regulator, and we're going to be working to make sure that the regulator fulfills those roles. Part of this will be compliance with the new rate cap, making sure that rates are within the cap that's envisioned by Congress; adherence to new Sarbanes-Oxley reporting requirements.

The Postal Service will be required to develop for the Postal Service new accounting principles for their competitive products category. In addition, we'll be consulting with them later this summer in a formal process on development of service standards, and so it really has given the Commission a new role in helping the Postal Service obtain its missions and objectives.

Mr. Thomas: Given the rather unique nature of the U.S. Postal Service in that it receives no federal funding and operates on its own revenue generation, could you elaborate on this, and how the Commission works to ensure the sustainability of the Postal Service?

Mr. Blair: Under the old law, it was a cost of service pricing system whereby the Postal Service would come in and say that their costs are "X," and the Rate Commission would recommend rates to cover those costs. Under the new regime, the Postal Service will be able to raise rates up to inflation, but will have to manage within that, and so if rate increases in the future will mirror inflation, they're going to have to manage their cost within the allowed framework. It's a substantially new framework for them to operate in.

Congress envisioned more flexibility in ratemaking for the Postal Service under this legislation, but they also said that the overarching considerations were that rate stay within the price cap, and so we'll be making sure the rates within the class -- that the class itself isn't raised higher than the rate of inflation.

Mr. Morales: Dan, you've used the term now "competitive products" and "market-dominant products." Could you describe more specifically what these are for our listeners?

Mr. Blair: The market-dominant products include Postal products such as first class mail, your letters and sealed parcels, post cards, periodicals, magazines, newspapers, standard mail, the mail that you read -- advertising mail, including catalogs, single-piece parcel post, packages that you might sent through the Postal Service and library mail. The competitive products are those areas where the Postal Service finds itself competing against private competitors, and they include products such as priority mail, expedited or express mail, and bulk parcel service for business users.

Mr. Morales: Great. Now, going back to the Postal Regulatory Commission and the Act, one of the most critical requirements of the Act is the establishment of a modern system for regulating rates and classes of market-dominant postal products as you've described, and the law is very clear on the objectives of the system as well as factors for the Commission to consider.

Can you describe these in a little bit more detail for us?

Mr. Blair: Congress granted the Postal Service the ability to raise rates within each Postal class up to the rate of change in the Consumer Price Index. This was done in order to give Postal customers the ability to better predict annual increases, and that was especially important to business mailers. We've seen that under the old cost of service system, some rates were more predictable than others, and that some rates would shoot up based upon their cost, and that would lead to hardship for many businesses. And so a price cap is intended to solve that by introducing an element of predictability and allow businesses to better budget for price increases in the future.

The Act listed objectives and factors by which the rates will be evaluated. The objectives include the value of the Postal services to both the sender and the recipient, making sure that we have regular and effective access to Postal services for all communities, both urban and rural, ensuring that the Postal Service's customers receive reliable delivery, speed and frequency of Postal service, and that they also have objective external performance measures for each of the market-dominant products, and that's what we're working with the Postal Service in the future to develop.

Mr. Morales: On a related matter, can you talk about how the Commission plans to in fact establish this system, and what are your ongoing efforts to outreach to stakeholders, mail users and other government agencies?

Mr. Blair: The first thing we did was we issued a notice in the Federal Register earlier this year, asking stakeholders what this new system rate regulation should look like. We received I believe 30-some-odd responses. Also, those responses were subject to reply responses as well. We also issued another Notice of Proposed Rulemaking. We co-hosted a summit with the Postal Service with over 200 attendees talking about what this new system would look like, and we've also invited comments on service standards and performance measurement for market-dominant products.

But this has all been really Washington-centric, and we wanted to take the message out beyond Washington, and so what we're doing is conducting three field hearings in Wilmington, Los Angeles and Kansas City, in which we're going to hear from different Postal customers as well, and we're inviting written testimony from the public as well as in the Federal Register.

Mr. Morales: Great.

What is the Postal Regulatory Commission's approach to performing its auditing and reporting function?

We will ask Dan Blair, Chairman of the Postal Regulatory Commission, 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 Dan Blair, Chairman of the Postal Regulatory Commission.

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

Dan, with the recent postal rate increase, the Commission also approved the Postal Service's new "Forever" stamp to ease the transition to the new rates. Could you tell us about this new innovative approach, and how does this effort illustrate your collaborative relationship with the Postal Service?

Mr. Blair: Well, I think the adoption of the Forever stamp really evidences the collaborative relationship between the Service and the new Regulatory Commission. It was a proposal by the Postal Service, but it's also grounded in the Commissioner's desire to move forward with something that was very consumer-friendly. We've heard complaints throughout the years of people having old stamps, which they had to go buy the make-up stamps for, if you had a 37-cent stamp, you had to go buy another 2-cent stamp. And so people have rolls and rolls -- odds and ends of old stamps in their desk drawer.

The Forever stamp is intended to be very consumer-friendly, and if you purchase it, it will be good for -- a single piece for a class letter basically forever. But this was an instance where the Commissioners had voiced support for the concept; the Governors of the Postal Service took that and made that a formal recommendation. The Commission adopted it, and it shows you that this can work, that good things can come out of a very collaborative environment. It was a win-win for Postal customers and for the Postal Service.

Mr. Thomas: Dan, under the Postal Accountability and Enhancement Act, the Commission is also advancing toward performance of its auditing and reporting responsibilities. Can you talk about the actions you plan to undertake at the Commission to carry out these responsibilities?

Mr. Blair: The new Act does require the Commission undertake significant new auditing and reporting responsibilities. Part of that will be involving consultation with the Department of Treasury on recommending appropriate accounting principles in the competitive market areas. We've engaged the Department of Treasury in that area. We're also consulting with the Federal Trade Commission about laws on governing competitive products. And Congress asked us to perform a number of reports in the legislation, which we'll be doing over the next few years, in order to give them an idea of where we stand on implementation of the Act as well as ways that we might be able to improve on the Act in the future.

Mr. Thomas: Dan, you've taken over a relatively small agency that now has new authorities and responsibilities, and surely this is a tall order for any agency, particularly one with limited resources.

What changes do you see are necessary for the Commission to carry out its mission and its new responsibilities?

Mr. Blair: That's where I approach this job maybe little bit differently than my predecessors did. Having come from the Office of Personal Management and helped lead the President's Initiative on the Strategic Management of Human Capital, I have a special appreciation for the people that work in an organization, realizing that the organization is only as good as the people that work for it. And so we want to take a hard look at the Commission to make sure, and do the cross-walk between what our old responsibilities were, what the new responsibilities are, what that difference or delta will be, and make sure that we have staff capable of performing those new tasks.

And if we don't, how are we going to bring the staff up to speed, or what new staff are we going to have to bring in to augment that? Along this course, we've hired some outside experts to conduct a skills gap analysis and recommend some organizational changes. We're looking at succession planning. The Commission, much like rest of the federal government, is facing a retirement wave. I believe that 100 percent of my senior management team will be eligible to retire over the next five years, and so we're taking a look at that, to ensure that we have some good succession planning strategies in place.

One of the new areas in which the Commission hasn't had to focus on before, but the legislation requires it, is in the financial reporting area. For example, the Sarbanes-Oxley reporting review and the new accounting principles. So these are new areas for the Commission, and we'll be working to fulfill our goals and roles in these areas over the next few months.

Mr. Morales: Recently, the Commission made two structural changes: the appointment of the Commission's first Inspector General, and the creation of the Office of Public Affairs and Governmental Relations.

Can you elaborate on why these two changes were made, and what are you looking to accomplish with these new organizations?

Mr. Blair: When I came to the Commission, realizing the Commission's augmented role and profile with regards to its new role as a regulator, one of the things that struck me is that we really need to make sure we have a good external outreach. And so the Commission undertook an effort to develop and create a new Office of Public Affairs and Government Relations.

The Commission has been very fortunate in that we were able to secure the services of a long-time Hill staffer who worked on the Senate Homeland Security and Governmental Affairs Committee, Nancy Langley. She's doing an outstanding job in working with our media stakeholders, as well as with our congressional oversight committees and appropriators, to make sure that we're communicating well with them and meeting the expectations of the Act.

The Act also called for the appointment by the agency of a new Inspector General. So that was one of the first actions that we took at the Commission was a creation of this office. And Jack Calendar joined the staff of the Commission as its first Inspector General. Jack came to us as the Chief Postal Counsel from the House Oversight Committee, where he served as Chief Postal Counsel for ranking Republican member Tom Davis.

Also have the good fortune to have join us at the Commission, Ann Fisher, who served as the Deputy Staff Director on the Homeland Security and Governmental Affairs Committee for Susan Collins. Senator Collins was the chief sponsor, along with Senator Carper, of the reform bill in the Senate, and helped shepherd that legislation through the Senate and through its enactments. So we have some really good new staff joining the Commission as well.

Mr. Morales: With the Commission's changed role, do you see the need to undergo further changes in the Commission's organizational structure, its workforce size, skill mix, staff expertise, or perhaps in the policies and procedures? And can you talk about what you think these changes might be?

Mr. Blair: Again, we've brought in an outside consultant to help us better focus on what we need to do differently in order to be successful in meeting the mandates of the new Act. We want to make sure that our organizational structure is best-suited and aligned to this new role. So one of things we're going to have to do is develop a strategic plan.

And we're also moving in several directions at one time, which makes it just a little bit more interesting, if not more complicated, by wrapping up the old rate case and soliciting comments on the new system, reviewing a new negotiated service agreement case, along with the possibility of another rate case being filed before December, which is the last date in which the Postal Service can file for an old cost of service rate increase under the old law.

Mr. Morales: So it's fair to say that the organization is still under a state of transition?

Mr. Blair: We're very much under transition, and we're working forward to making sure that we have the right people onboard in order to carry out the duties of the new Act.

Mr. Thomas: Dan, as a follow-up to your discussion on your role as chairman of the agency, can you also describe your business interactions with the other Commissioners within the agency?

Mr. Blair: As I said early, the Commission's comprised of five Presidentially-appointed Senate-confirmed Commissioners. The President designates the Chairman. The Chairman is the administrative head of the agency. However, all the decisions that are rendered by the Commission, including the employment of office heads, are done on the basis of majority vote of the Commission. Decisions that we've rendered since I've been there, we've been fortunate in that they've all being unanimous decisions, which I think shows you how well and collegially the five Commissioners work together.

We come from divergent backgrounds, with different points of view and different political philosophies. But I think it's a testament to the way that the Commission works is that rather than emphasizing our differences, we've emphasized where we have our commonalities, where we share common beliefs and common strengths and we're able to work out any differences. And so I think that it speaks well for the Commission and strengthens the Commission that we're able to work in that kind of fashion.

Mr. Thomas: Dan, given the regulatory nature of the Commission, can you describe to our listeners the deliberative process that is in place at the Agency?

Mr. Blair: Right now, under the current rate regime, the Postal Service comes into the Commission with a request to raise rates, and that is a fully-litigated case in which parties hire representation and counsel. We have briefs filed, we have cross-examination of witnesses, and it's an adversarial quasi-judicial proceeding. At the end of ten months, the Commission issues a recommendation to the Governors.

That will be changing, however. Since the Postal Service will be given the flexibility to determine it its own rate increases subject to a 45-day review of the Commission, our quasi-judicial role will really be taking a background to our regulatory and oversight role, which will be reviewing how those rates were set, whether or not they are in compliance with the cap as established, and other issues that might come up regarding compliance with the law.

Mr. Morales: 45 days certainly sounds more efficient than 10 months.

Mr. Blair: That's why the Congress enacted it

Mr. Morales: Great. What does the future hold for the Postal Regulatory Commission?

We will ask Dan Blair, Chairman of the Postal Regulatory Commission, 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 Dan Blair, Chairman of the Postal Regulatory Commission.

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

Dan, we don't often see many federal employees with your type of background, particularly one who has held senior positions in both the legislative and the executive branches. Can you tell us what some of the major differences, or perhaps similarities, there are between life in the legislative and life in the executive branches?

Mr. Blair: I think life in the legislative branch allows you the opportunity to conduct the oversight and to get to know government broadly, and to get know the agencies in which you can exercise oversight. The flip side is actually being in the agency where the oversight's conducted and you see the operational challenges and the daily activities, and you gain an appreciation for what it actually takes to make the trains to run on time.

I've been able to come full circle. I've been on both sides. I helped initiate with Chairman McHugh a fundamental reform movement of our largest domestic federal agency, the Postal Service, and saw that to fruition -- from the legislative branch through my work with Senator Thompson, then working for the executive branch when the President signed it into law; now, I'm chairing the Commission which was a key component of that legislative reform effort, and making sure that the intent of Congress is carried out through the regulatory oversight that the Commission will be conducting.

That's a full plate, but it's interesting to see how that has come full circle. I come from a government oversight background. I worked for both the House Government Reform Committee and the Senate Governmental Affairs Committee. So I have a full appreciation for the efforts involved on both the legislative and executive branches of good governance. I helped lead while I was at OPM the President's Strategic Management of Human Capital Initiative, and saw how important it was for agencies to have the right people with the right skills in place, and for agencies having strategies in place to bring that about as well.

I also saw the efforts of good government acts such as Clinger-Cohen and the Government's Performance and Results Act and the CFO Act, and how important that is to management initiatives within the federal sector. And so I have a keen appreciation for the way that federal government works, in an effort for transparency and accountability to the public and to Congress.

Mr. Thomas: Dan, in your last position as the Deputy Director of the Office of Personnel Management, you led a number of government-wide initiatives to address human capital challenges, such as recruitment, succession planning, leadership development, and performance management.

We'd like our listeners to get your broad prospective on what you see as the biggest issues facing the federal government as a whole.

Mr. Blair: You know, it's on several fronts. One I think is making sure that we have a workforce that meets the talent requirements of the federal agencies, making sure that we have good talent onboard, and that we can bring that good onboard quickly rather than having them languishing over periods and months in which you have to go through a hiring process. We've made gains in that area, but I think there's still a lot of ways that we can go on in that area.

I think addressing the security background backlog -- OPM is working hard to do that, but I think that as we continue in the War on Terror, I think bringing people into government with credible suitability backgrounds is going to be ever more important in making sure that we can conduct those backgrounds on a timely basis, will always be an effort on the part of OPM, which does about 90 percent of those background checks, and other agencies as well.

The retirement wave -- I look at the retirement wave in two aspects. One, it certainly is a challenge, because you don't want to have your key staff leave; at the same time, it's a tremendous opportunity to bring new staff on and to grow staff. And so that's why you need to have systems in place to bring younger people on -- people in mid-career on. At OPM, I was able to be part of some initiatives where we looked at mid-career hiring. And so I think that having a well-balanced workforce is a key to success in the succession strategy planning of the future.

So I think those are things that have to be done -- you look at the big picture, but you also have to look at the little picture -- making sure that the workforce that you have in place is meeting your goals and expectations. You need to align workforce performance goals with that of the agency and make sure that's cascaded down to the people who are in the mailroom understand as well as the top executives what the mission of the agency is, and how what they do every day, and how their jobs contribute to the overall success and mission of the agency.

Mr. Morales: Dan, given all the changes, what do you see as your vision and goals over the next five years for the Postal Service?

Mr. Blair: Clearly, we have to get a new regulatory regime in place, as envisioned by the Act, and the Act does lay out specific reporting requirements as well. But overall, I think that our measure of success is to the degree to which we have a vibrant Postal system in the United States. Clearly, the viability and sustainability of the U.S. Postal Service is important, but so is the importance of the competitive nature of the system, and the competitors making sure that there's no cross-subsidization, ensuring fair competition, but also making sure that businesses are being well-served, that individuals are being well-served by the Postal Service, and that the Postal-dependent businesses, be they small or large, that the system itself is vital and that we have done everything we can to encourage the vibrancy of that.

Mr. Morales: So that it continues to provide growth for this country?

Mr. Blair: Absolutely.

Mr. Morales: Dan, you've had a very broad and diverse set of experiences with your career, and you've been very successful.

What advice would you give to a person who perhaps is considering a career in public service, or perhaps in the federal government?

Mr. Blair: I think it's an incredibly important calling to be able to say that you can put yourself out -- there is a key speech by President Theodore Roosevelt about The Man in the Arena. When you get battered about in the press or you've had a bad Congressional hearing, or you've had just a generally bad day in which people are second- and third-guessing everything you are doing, you have to remember that you're putting yourself out there on a line and you have to do the best you can everyday.

I think public service is a very noble calling. It may not be for everyone, but you know what? It doesn't have to be for everyone. And anyone who picks up that mantle to engage in public service, it's not something they have to do for a career either. It's turned out to be a career for me, but for others, it can be a period of a couple of years, five years, a short time or a long time, but I do think public service is very important, and I think we need to create an environment in which public service is recognized and appreciated.

Mr. Morales: Dan, that's a fantastic prospective. Unfortunately, we have reached the end of our time together.

I want to thank you for fitting us into your busy schedule. But more importantly, Solly and I would like to thank you for your dedicated service to our country across your federal career.

Mr. Blair: Thank you Al, I appreciate that. And thank you, Solly. I also want to thank the folks who helped me prepare for today's session, and that includes Nancy Langley, Jeremy Sermons, Ann Fisher as well as Judy Grady.

Mr. Morales: Great. And thank you, Dan.

This has been The Business of Government Hour, featuring a conversation with Dan Blair, Chairman of the Postal Regulatory Commission.

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

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

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

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

Until next week, it's businessofgovernment.org.

David Wennergren interview

Friday, July 20th, 2007 - 20:00
Mr. Wennergren provides top-level advocacy in creating a unified information management and technology vision for the Department and ensures the delivery of the capabilities required to achieve the Department's transformation to net centric operations.
Radio show date: 
Sat, 07/21/2007
Intro text: 
Technology and E-Government...
Technology and E-Government
Magazine profile: 
Complete transcript: 

Originally Broadcast July 21, 2007

Washington, D.C.

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

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

And now, The Business of Government Hour.

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

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

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

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

Good morning, Dave.

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

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

Good morning, Linda.

Ms. Marshall: Good morning, Al.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Morales: Excellent.

What is the DOD's netcentric vision? We will ask David Wennergren, Deputy Assistant Secretary of Defense for Information, Management, and Technology, and Deputy CIO, to share with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with David Wennergren, Deputy Assistant Secretary of Defense for Information, Management, and Technology, and Deputy CIO.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Morales: Great.

What about the DoD's IT innovation? We'll ask David Wennergren, Deputy Assistant Secretary of Defense for Information, Management and Technology, and Deputy CIO, to share with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with David Wennergren, Deputy Assistant Secretary of Defense for Information, Management, and Technology, and Deputy CIO.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ms. Marshall: That Linda's is better.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Morales: Pictures, too?

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

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

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

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

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

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

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

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

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

Mr. Morales: Great.

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

We will ask David Wennergren, Deputy Assistant Secretary of Defense for Information, Management, and Technology, and Deputy CIO, to share with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with David Wennergren, Deputy Assistant Secretary of Defense for Information, Management, and Technology, and Deputy CIO.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

So there's lots of opportunities for growth.

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

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

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

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

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

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

Mr. Morales: That's fantastic.

Mr. Wennergren: Happy hunting.

Mr. Morales: Thank you.

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

My co-host has been Linda Marshall, partner in IBM's defense industry practice.

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

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

Thank you for listening.

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

Until next week, it's businessofgovernment.org.

Jonathan "Jock" Scharfen interview

Friday, July 6th, 2007 - 20:00
"Immigration services has to be focused on national security throughout all of its missions."
Radio show date: 
Sat, 07/07/2007
Intro text: 
Jonathan "Jock" Scharfen
Magazine profile: 
Complete transcript: 

Originally Broadcast Saturday, April 28, 2007

Washington, D.C.

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

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

And now, The Business of Government Hour.

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

A secure homeland depends on the integrity of its immigration system. Since its inception, the United States Citizenship and Immigration Services, otherwise known as USCIS, has sought to strengthen the security and integrity of the nation's immigration system. With much discussion surrounding the possibility of comprehensive immigration reform, much of its execution and success will rest on the shoulders of the Citizenship and Immigration Services.

With us this morning to discuss these challenges is our special guest, Jonathan (Jock) Scharfen, Deputy Director of the U.S. Citizenship and Immigration Services.

Good morning, Jock.

Mr. Scharfen: Good morning, Al. How are you?

Mr. Morales: Great, thank you.

Also joining us in our conversation is Dave Abel, director of Homeland Security Services at IBM.

Good morning, Dave.

Mr. Abel: Good morning, Al.

Mr. Morales: Let's start off by setting some context for our listeners.

Can you tell us about the mission and the evolution of U.S. Citizenship and Immigration Services? Give us a sense of its history and the programs it runs.

Mr. Scharfen: Yes. The U.S. Citizenship and Immigration Services was originally the INS, Immigration and Naturalization Service, which was part of the Department of Justice. But after 9/11 and after March 2003, it was broken out -- "it" being the old INS -- was broken out from the Department of Justice and placed in the Department of Homeland Security. And then in turn, the old immigration service was broken into three parts.

One part was the Customs and Border Protection. Another part was the Immigration Customs Enforcement. And the third part was my organization, the United States Citizenship and Immigration Services.

Immigration Services has to be focused on national security throughout all of its missions. And we work in conjunction with the other organizations. We work with CBP and ICE almost in -- if you think of it in terms of concentric circles -- CBP protects the borders. ICE does internal enforcement, and we run the immigration services. We provide the benefits when people apply for citizenship or a green card or for some type of immigration status.

To give you a sense of the scale of our operations, Al, we end up processing about 6 to 8 million applications a year. We have 250 offices throughout the country and the world. The scale of it gives you an indication that the management -- you started off talking about the management of Immigration Services -- is a real struggle. It's a challenge for any good manager to be able to manage just the daily operations.

For instance, we conduct 135,000 security background checks a day. We have 135,000 visitors visit our internet site a day. We have 82,000 calls, phone inquires, to our phone lines. We take 8,000 sets of fingerprints. We welcome about 2,000 new citizens every day and swear them in. You can see that the management side of immigration services alone is a serious challenge.

Mr. Morales: In support of that broad and complex mission, can you give us a sense of the budget and the employees involved in your organization?

Mr. Scharfen: Our budget is approximately $2 billion a year. Most of that is derived from fees, and so it's not from appropriated monies, Al, but rather fees that the applicants for immigration benefit when they make an application -- they also have to pay a fee, and we collect those fees, and it comes to about $2 billion, and we run our enterprise based on that.

In terms of our employees, we have 15,000 employees. 10,000 of them are full-time employees, and then we have on top of that 5,000 term or contract employees, for a total of 15,000 employees.

Mr. Abel: Jock, let's narrow in a little bit. We're talking about CIS broadly. I'd like to get a better understanding of your role as Deputy Director. What do you do on a regular basis?

Mr. Scharfen: Dave, I serve as the Chief Operating Officer. The Director, Dr. Emilio Gonzalez, sets the goals and emphasizes strategic direction of the organization. I work with him closely with that, but I'm in charge and responsible as a Chief Operating Officer to implement that, to operationalize, if you will, those strategic directions. And I work with the Domestic Operations Director, our Refugee Asylum and International Operations Directorate, and our National Security and Records Verification Directorate. Those are three major directorates the way our organization is broken down.

We have a chief financial officer; we have an information technology officer; and then we have a few offices that are peculiar to the Immigration Services. For instance, we have an administrative appeals office that works on appeals, on decisions in different immigration benefits.

Mr. Abel: How many people support you directly? How many people are on your direct team?

Mr. Scharfen: Well, in my direct team, it's rather small. I have just a handful of people that support me directly. But what I do is I reach out to the directorates, and then that's my mode of operation is I work with the associate directors of the organization, and then those organizations in turn provide anything I need.

Mr. Abel: So with such a small group of people supporting you directly, and the numbers you're running through are astonishing in how large they are as far as how many benefits are processed -- phone calls, contacts, things of that nature -- what are the top challenges that you and your team face on a regular basis?

Mr. Scharfen: After 9/11, clearly, we always start off in answering this is that it's national security. Well, no one needs to be reminded, of course, is that the hijackers, many of them had abused different aspects of our immigration system. We know that terrorists continue to want to take advantage of our immigration laws, and so we have to remain vigilant to ensure that our people are trained and that they understand the threats that are out there.

For instance, just last fiscal year, we stood up the National Security and Records Verification Directorate. Its sole mission is to ensure that national security is kept to the forefront in our organization.

A second challenge, I would say, would be public integrity. Recently, unfortunately, there have been some stories just here in the region about fraudulent behavior of some of our CIS employees, and that's of major concern to us. We want to make sure that our employees are honest as well as efficient. And just recently, we announced the creation of an Office of Security and Integrity, to ensure that we have good management systems in place.

Finally, one of our major challenges would be the efficient delivery of immigration services. Just recently, we cleared a 3.4 million application backlog. We were augmented by the Congress with appropriations; half a billion dollars to pay what it took, extra manpower, to work back that backlog.

Moving forward, we have to ensure that we are performing our mission as efficiently as we can so that we don't end up creating backlogs like that again, and that's going to have to end up in the necessity of a fee role in a transformation program.

Mr. Morales: Jock, we had an opportunity before the show to talk about your career as a Marine and as a lawyer, which I find to be a very potent and dangerous combination.

Could you describe for our listeners your career path? How did you get started?

Mr. Scharfen: My dad was a career Marine, and I knew -- gee, since I could remember -- I always wanted to be a marine. So I went to the University of Virginia on a Marine option scholarship, joined the Marine Corps and became an infantry officer.

The Marines have a great program, as do all the Services, and it's a funded law program, and then sent me to law school at the University of Notre Dame. And then later on, the Marine Corps sent me to get a master's of law in environmental law at the University of San Diego.

My assignments were varied in the Marine Corps. I had some great command both as an infantry officer and then as a lawyer. And I had a command as a lieutenant colonel in Frankfurt, Germany, where I commanded Marine security detachments at different embassies.

I was able to serve as a prosecutor at Camp Pendleton. I had three tours at the National Security Council, where I got to see national security policy made and managed.

And then when I finished with the Marine Corps, I retired after 25 years. I then went to work on Capitol Hill. My mother influenced my second career choice. My mom had worked for Senator Warner for 20 years, and I had always admired my mom's work on Capitol Hill. She was a caseworker for Senator Warner, and one of her responsibilities was immigration. I was chief counsel for the House International Relations Committee for three years before assuming my current duties as Deputy Director.

Mr. Morales: That's just a fascinating story and fascinating career. So tell me, how has this broad set of experiences prepared you for your current role at USCIS, and how has it shaped your management approach and leadership style?

Mr. Scharfen: Good question, Al. I would say that the Marine Corps is known for many things, but one of the things that they inculcate in all of its Marines when they train us is the importance of values. So I've taken those leadership traits and values that were taught by the Marine Corps, and I tried to live by those in my current job.

The emphasis on mission, and to try to do the best you can in terms of achieving your mission. Finally, I think in terms of background as being a lawyer, that respect for the law has to be throughout the organization, and so those two things, I try to bring: values and the respect for law, and then finally, the respect for people throughout my management.

Mr. Morales: That's great.

How will USCIS handle the passage of comprehensive immigration reform?

We will Jock Scharfen, Deputy Director of U.S. Citizenship and Immigration Services within the U.S. Department of Homeland Security, 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 Jock Scharfen, Deputy Director of U.S. Citizenship and Immigration Services.

Also joining us in our conversation is Dave Abel, Director of Homeland Security Services at IBM.

Jock, as a result of a comprehensive fee review, which we began to talk about in our first segment, USCIS has sought to adjust the immigration benefit application and petition fees of the examinations fee account. What prompted this comprehensive fee review, and what are some of the examples of fees that applicants will be paying under this proposed structure, and when will they become effective?

Mr. Scharfen: Al, this has been the subject of some intense public debate, and we've gone up to Capitol Hill and testified before some House committees on this. The fee review was prompted by a number of things. First of all, the President, in his FY 2007 budget request, directed that the USCIS reform its fee structure.

A second reason was that the Government Accountability Office, the GAO, had done a report for both the House and Senate Judiciary Committees that indicated and concluded that the fee structure that we currently are operating under was insufficient to fund our operations. In other words, we were operating in the red every year because the fee was inadequate to cover our operations, and the GAO recommended that we do a new fee study to make sure that the fees covered operational costs.

And then, finally, there's a legal requirement under the Chief Financial Officers Act of 1990, which in 2004 began to apply to the DHS, that requires that fee-based agencies have a fee review every two years. But really what's driving this, the reality of this is that we are not covering our current costs. We fall short hundreds of millions of dollars over actual costs.

The backlog numbered up to 3.4 million just back in 2004. That backlog was building because we did not have the fees coming in to be able to pay for both the processes and the manpower to work out those applications in a timely fashion.

Another reason why we need to do the fee rule is that all the new security steps that we're taking, the different integrity measures that we're taking, have not been funded. Those were all new requirements that we placed on ourselves that are not being funded, because the last major fee study was back in 1998. So in between the last major study, we had 9/11 and the requirement of all these national security measures, and they're unfunded. And this leaves us short hundreds of millions of dollars.

Mr. Morales: Can you expand a little bit more on the details of the overall impact of this fee increase? And you referenced a statute, so will USCIS then be conducting these fee reviews on a more regular basis?

Mr. Scharfen: That's correct. Every two years, we're committed and we're required by law to do a new fee study, to ensure that the fees are either meeting the costs of our current operations. We have a new staffing model, we have a new fee model that we're using that's a more nimble and now analytical tool, and we'll be able to, we think, as we go forward here, have fee adjustments that will reflect the actual costs of our doing business, and it will be better for the public.

But to give you some examples of what we're talking about here, to give our listeners a little bit of a context of what this means, I'll just start with the average increases here. Right now, we have an average increase -- if you take the weighted average of the application -- and that's the way you get that is you take the volume, the mass volume of applications, and we'll call that about 4.7 million -- and then divide that by the total projected costs of processing those, which would be roughly $2 billion -- that comes out to a weighted average of about $491 per application. Compare that with the current one, which is $264. That's the average fee for an application. You get an increase of $227.

But when you start taking a look at that in the individual applications, it's not always that great. And if you indulge me here, I'm going throw out a few more numbers, and I'll run through what's a highly-used application. A guess a big, if you will, a business line of USCIS are the I-485s, which is the Adjustment of Status Application.

Today, an individual, an applicant when they file an I-485, or a Application to Adjust Status, they would apply or make an application using this form. They pay $325 to do that. However, in the course of their waiting, they will frequently end up having to apply for an Employment Authorization, which is called an I-765. Or they'll apply to travel -- they need a travel document -- and that would be an I-131.

When they apply for these other benefits, Al, they have to also pay a fee. When you add that up, it comes to about $800. What we plan on doing is charging one fee at the beginning, so when you apply for an I-485, when you want to adjust your status in the United States, in the future, if the rule goes through, and as we propose it, you would make one application, and you'd make one fee. You'd pay one time, and that would be $905.

But what I would like to add here, Al, is that we're not insensitive to the fact that no matter how you slice this, these are significant fee increases. And we realize and we don't take lightly our proposal on this, and that these are not insignificant fee increases, and we are receiving our public comments as we get through this, and we've gotten some very good ones. We realize that we have a responsibility to the public to make sure that we look at those comments carefully and that we have the fee schedule down properly.

And then the flipside of that is that when we go forward, and we hope that we will be able to go forward with the final fee regulation, that we provide better services to the public.

Mr. Morales: So just as a quick clarification, the $905 that you reference is sort of like a projected lifecycle cost, and so you're sort of providing a convenience by bundling that together?

Mr. Scharfen: Al, I think that's exactly the way to think of it, and I'll start using that now. "Lifecycle cost."

Mr. Abel: Jock, when you were talking about the fees, you mentioned that one of the purposes of increasing the fees was to make sure that CIS has sufficient resources in order to be able to meet its mission going forward.

There's a big debate going on right now about immigration reform. Is CIS ready today to be able to accept the impact that will be created by immigration reform if a temporary worker program does come into existence?

Mr. Scharfen: I would say yes. We've been planning for this day for some time. However, much of what we have to do will be dependent on what type of bill we get. We are working carefully -- the Administration and USCIS -- is working very carefully with the different committees on the Hill to make sure that we're communicating what's operationally feasible, so that whatever bill comes out of the Congress, we hope it'll be something that will be feasible in terms of the operational side of it, and we're working very well and cooperatively with the Congress to try to get those parts of it as right as we can.

But it will be a big lift. We're talking about 12.5 million applications. And if you take a look at our current annual business, we do about 7 million applications on average a year. On top of that, Dave, we'll go from 7 to 12.5 million. It will not be an insignificant management and leadership challenge.

Mr. Abel: I would imagine one of the things that makes growth of demand like that so difficult to be able to meet is the manual paper-based environment in which you currently operate.

Can you tell us a little bit about CIS's integrated digitization document management program?

Mr. Scharfen: Yes. This is part of our effort to move from a old paper-based system. To give our listeners a mental image maybe of what we're dealing with here, we have approximately 100 million paper records in our systems, Dave, and we have different record facilities around the country. Some of them are quite large -- there's just boxes and boxes -- we have records facilities, that you look on it and they go on forever.

That's fraught with extra expenses and dangers: the misfiling of a record, and the trying to manage those, and it's very labor-intensive and it's just not efficient, and it's not congruent with our current capabilities. We should be electronically adjudicating cases. That's what this program is designed to do. It's made up of two parts.

The first part, we have a records digitization facility, and that exists to scan or convert our paper-based A files -- those are Alien files -- into a digitized format. And then with that, we have a management system that will store, manage, and provide access to the digitized files to our organization. And the benefits of this will be we hope to have just-in-time electronic file delivery operation. It'll make it easier to share information with the Department of Homeland Security with our components.

For instance, you can understand ICE, and enforcement actions, need to have access to our files. It'll be faster. We'll get rid of shipping costs as well. And then finally, it reduces significantly the danger of misplaced files.

Mr. Abel: It sounds like a lot of the results of this particular program will help folks within CIS and within the Department of Homeland Security to more effectively manage a case or manage a file.

Are there activities that you're doing electronically that focus on the immigrant or those that are applying for benefits as well, such as online applications or telephone support? Are there customer-facing activities that you're enabling as well?

Mr. Scharfen: Yes. We want to expand our e-filing capabilities significantly. Among our users of the immigration system, we get different requests. For instance, our business users really want us to increase e-filing because they're comfortable with making a computer-based electronic application. Some of the immigration community-based organizations are less enthusiastic about it -- we're trying to do two things. We're trying to be sensitive to both needs there. We want to increase our electronic filing, but in the interim as we move forward with increasing electronic filing opportunities for immigrants making applications, we want to tie this into also including with that the ability to make a paper-based application until people get more comfortable.

We'd like to do this in a number of ways. One, we're working with the Treasury Department, and they have a great system called the lockbox operations. And they specialize in taking in large numbers of applications, taking in the money, as well as setting up electronic filing systems, because the banks that work with the Treasury Department that takes in the money, it's in their business interests to make it as easy as possible to take in the application forms. And they'll set up -- they're expert at it -- new e-filing application forms for us. And so we get to leverage that and perhaps save some money and keep costs down for the immigrants making applications by using these different lockbox contracts to have expansion of our e-filing systems.

Mr. Morales: Jock, we opened the show with you describing one of the greatest challenges is the support of our nation's security.

Could you elaborate on improvements USCIS has pursued in such areas such as background checks, fraud detection, and worksite inspections to meet current and emerging threats to the integrity of the immigration system?

Mr. Scharfen: Yes. We've done a number of things, Al, to try to improve our ability to ensure that we meet our obligations to the American public on national security.

I believe under the Director Gonzalez's leadership is that he set the right tone. I think the principles and the missions emphasis that are made by the Director are very important, and people pick up on that. They want to do what the Director has laid out, and he has made it very clear that national security is the central goal of his. He likes to say there's a reason that USCIS is in the Department of Homeland Security, and that's because of national security.

We've emphasized to our employees that national security is important, and I think that that can't be overemphasized, the importance of that.

The other thing though is what we've organized for national security. We've created just this last fiscal year a new National Security Directorate, and part of that -- also one of the sub-offices of that is a Fraud Detection Office. They are dedicated to looking at the different areas of national security and fraud, both to study our vulnerabilities and then to seek out enhancements. And I'll give you just a couple of examples.

We have been authorized to hire an additional 400 immigration officers. We are in the process of already doing that and deploying them out into the field, who will concentrate on the research and analysis and other aspects of detecting fraud throughout our application pool.

They, for instance, do benefit fraud assessments. They did an assessment on religious worker fraud. And we took some of the statistics from that, which were very telling, and then we've made some policy changes and operational changes in order to try to preempt some of the fraud that we saw with the religious workers.

We have increased our site visits where we go out and we make sure that if someone is making an application as a religious worker, that the person sponsoring that applicant, that the church actually exists, that it's not a fraudulent storefront, and that it's not just a front. We hope to get out a proposed rule that will tighten down some of these processes even further.

On the national security side, we have been careful to ensure that we do fingerprint checks and national security checks. We take 10 fingerprints; we run it through the FBI and run it through the FBI fingerprint checks. We also do name checks, and we run it through the FBI databases to ensure that the individual isn't on, for instance, a terrorist watch list. We have procedures to make sure that we handle that appropriately.

Mr. Morales: Great.

What are USCIS's efforts to build an immigration service for the 21st century?

We will ask Jock Scharfen, Deputy Director of U.S. Citizenship and Immigration Services within the U.S. Department of Homeland Security, 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 Jock Scharfen, Deputy Director of U.S. Citizenship and Immigration Services.

Also joining us in our conversation is Dave Abel, Director of Homeland Security Services at IBM.

Jock, in your efforts to build an immigration service for the 21st century, USCIS continues to pursue an organizational and business transformation program.

Could you elaborate on this transformation initiative? To what extent does your recently developed strategic acquisition plan inform the underlying transformation strategy? And if I may, what are some of the critical challenges facing your organization as it pursues this transformation initiative?

Mr. Scharfen: Thanks, Al. One of the ways we hope to avoid future backlogs, especially of the extent that we had built up in the past where we had millions in the backlog -- we also want to improve the quality of our services that we give to the different applicants. And the way we're going to do that is to transform our business processes of USCIS, and that involves both organizing how we do go about our business of giving benefit applications, or granting them, and also, it feeds into our technology, so it's both the business side or the process side and the technology.

And right now, the different pieces of our transformation initiative involve the digitization, moving from a paper-based system a computer-based system. It also involves moving to a person-centric process from a form-centric process.

The way we look at our immigration applications right now, we do it by application type. When you come in about your application, Al, I wouldn't put your name in. I would have to try to get the A file number and try to match you up with your application file number. I would be able to do a name search for you, but it wouldn't necessarily identify all the different applications that you had submitted. And what we want to do in the future is have a person-centric system where we would be able to get all of the applications up and to get your history there.

That's more efficient for you, for the applicant, and it's more efficient for us to be able to see your record all in one keystroke. The other thing is, that's also better for national security. Because then we can see whether or not you're being consistent in the story you're telling.

Another thing that we want to do with this transformation program is that we want to have our records and our applications put into electronic form. We have electronic filing, we have paper filing and we scan in the paper into an electronic system and then we get rid of the paper and we just keep that electronic file.

We want to manage that case then from beginning to end electronically. And that requires a sophisticated, nimble system, both hardware and software, to manage the case electronically. How are we doing that? We're starting off with a pilot, the International Adoption Pilot, and we're trying to put all of these different pieces together with that pilot and taking some lessons learned from that and moving on.

We have a spend plan, and it's for $100 million this year. $43 million of that were from appropriated funds, and then we matched it with -- or a little bit more -- $57 million of our fee money to come up with $100 million, and this is moving forward to the next increment of the transformation program.

We'll take our experience there -- and that's if this is approved, of course, by the Department, but it's there and we're talking with the Hill on this, and this has to go through, by law on the transformation program, the Hill is taking great interest in this. And we are working carefully with the committees, and GAO will have to take a look at it, too. But working cooperatively with the Department, with the Congress, we hope to have a robust stage two of this -- increment one, we're calling it -- where we then start taking the lessons we've learned from this initial pilot program and moving it into the naturalization. We have about 11 different applications that fall under the naturalization rubric, and we'll then start seeing whether or not we can have this transformation system work on a larger scale.

Again, we'll work with the Treasury Department as much as we can to set up lockbox operations where the applications will come into these processing centers for the case intake, and it'll either be electronically or it'll be by paper and then it'll be scanned. We're looking then to have biometrics. Those are the 10 fingerprints and the photograph. We want to make this easier so that when you first come in, you have to do that just one time, and we hope to include that into our transform system.

Finally, working on the electronic adjudication piece of it, and that would include having electronic or by computer scheduling for the applicant, as well as notices.

In our fee rule, we would be looking to put $139 million roughly a year going forward, making a very large investment as we move forward in this transformation system.

Mr. Morales: You know, it sounds like this individual-centric single view of data would serve as a great model for the health care industry, who I think is struggling with the same issues around how do you consolidate large amounts of data around a single individual as opposed to having it in disparate systems.

Transformation is often described as an alignment of people, process, and technology with robust investment management.

How has USCIS strengthened its investment management review process to better ensure that programs and initiatives align with the overall strategy, business, and IT initiatives?

Mr. Scharfen: We have hired about a year or so ago a very good Chief Financial Officer, and he is just superb. Rendell Jones has really provided great management organizational skills, as well as just leadership in this area. And what we've done is we have started a strategic resource board where we review the enterprise investment decisions, and the transformation office feeds into -- for instance, its proposed expenditure plans -- go before the Strategic Resource Board, and all of those are reviewed by the senior leadership of the organization.

We put those into the larger context of USCIS's large strategic plan, we put the transformation piece in there and we make sure that it's integrated, and that the different leaders within the organization are first fully advised about the transformation expenditure plans, and then that everyone has a chance to vote on it. We work in a collaborative, collegial fashion there, and we have quarterly reviews then to go back and take a look at -- to make sure that we are getting feedback in to make sure that the expenditures are resulting in the things that we expected.

We also have a review process of these annual expenditure plans. We work with the Department carefully, and we also work closely with OMB, which has a longstanding and continuing interest in our transformation program, and with GAO and Congress.

Mr. Abel: Jock, one of the risk areas in a transformation program like this is being able to work effectively with stakeholders. The stakeholder community for CIS is large, it's complex, and it's diverse.

What are some of the activities that you're doing to make sure that the redesigned processes, systems and IT services meet just not the needs of folks in CIS, but those in the community as well?

Mr. Scharfen: That's a good question, Dave, and my transformation project officer was really spending a lot of time on the road personally going out and meeting with stakeholders. His name's Dan Renault, and he's a very good manager -- I sat down with Dan and I said, Dan, what's going on here? And he explained it to me, and I have to be honest with you, at first, I was a little dubious about the value of that much outreach. Well, I am now a convert, and I understand the value and importance of that.

Number one, we don't have all of the answers, and it's important to reach out to them. And the type of people we've reached out to, for instance, is on the adoption pilot. If I could use that as an example. We have really invested a lot in reaching out to those different adoption agencies, and in fact, right up to the eleventh hour, we've been making changes to our pilot program to reflect some of that input, and I expect as we move forward, as we roll this out this summer, that we'll continue to make some of those changes.

Finally, we expect to get some of our smart people who really know process and who know IT, information technology, kind of brainstorm this thing. Dan has done this on his own, really took the initiative to doing this, and this is one aspect of it that I think we've done well.

Mr. Abel: Jock, a bit earlier, you mentioned that one of the benefits of modernization, of transformation, was an increased ability to be able to share information with other components within DHS and other organizations within the federal government. Can you elaborate a bit on CIS's efforts with other DHS subcomponents to share information, and what your role and responsibility is there?

Mr. Scharfen: Yes, Dave. I think we all can remember that post-9/11, when you had the Commission's report; one of the big failings is is that the government failed to share information. And when it did share information, it didn't share it in the right manner or it didn't share it in an efficient way. And so we're all reminded of that frequently by the Department, and the Department's direction to us has been very clear, that we are to take the initiative and reach out within the Department to share information, and also outside of the Department. For instance, with the State Department.

And our orders on that are very clear from headquarters, and so that's our challenge and that's what we're trying to do. And I'll give you a couple of examples where I think we're being successful on that.

First, within the Department, we are improving our timely sharing of information with US-VISIT, and those would be our fingerprints and our photographs that we include in that database that the US-VISIT then manages for the entire Department, and, for instance, State Department feeds information into US-VISIT and can then tap into that and make checks from abroad on that database.

I met with ICE and CDP representatives to make sure that our digitizing of files are being done in a way that is going to meet their needs. Our mission and our requirement as USCIS was to make sure that we met their needs, that it was given to them using the proper standards and in a way that they could use it efficiently.

We also collaborate with the different departments in that regard, and I think that our big challenge, though, is that we need to digitize our entire operation. We have to go electronically. Until we do that, until we transform into an electronic system, our ability to share information quickly and efficiently will be impeded.

To give you an example of that, if we were subject to another attack, a terrorist attack, one of the first things that are done is that you want to identify who the terrorists were, and if they are immigrants, whether they've touched the immigration system at all, and whether there are any records there. And obviously, the law enforcement agencies would be very interested in getting those files immediately.

It would be much easier just to share that information with multiple investigating law enforcement agencies electronically with just a keypunch. If you're paper, you've got to copy it, you've got to send it, you might be able to scan it, but it's still not as efficient.

The other part of it is, until it's digitized, Dave, we can't datamine it, and I'm careful of how I use that word. We're always advised by our lawyers and our privacy offices, and when we speak about datamining, all of those issues are, I believe, managed aggressively and well by USCIS, but the fact remains is that datamining is important, so that when you want to identify, for instance, other people who have associated perhaps with a terrorist, you're better able to do that when you take a look at the data electronically. You can't do that with a paper file as easily.

Mr. Abel: Jock, nobody can replace CIS's responsibility for adjudicating a benefit decision, but there are lots of industries -- Al mentioned health care previously, and if you look at banking, finance, insurance, there's a lot of industries that have been moving towards a person-centric case management system.

To what extent do you anticipate opportunities for public and private partnerships in the execution of your transformation program going forward?

Mr. Scharfen: Dave, that's a good point, and I think that it's one that we've been talking about extensively with the Department, and we are looking to take advantage of all the opportunities that are out there for a public-private type partnership.

We've been working with our procurement division to ensure that as we go forward with future contracts, particularly some of these major contracts, whether it's if we do get a TWP program, for instance, or our Transformation program, when you take a look that we might be spending $100 million in the upcoming fiscal year, and $100 million going to $139 million in the years as we go forward, that's a significant investment.

We have a responsibility that we spend that money in the wisest, smartest way so that we leverage that to the best of our ability, and that means we have to be open to doing things not just the old way, but that we're open to new ideas, and that we make sure that we have contract provisions that will be designed in such a way that we can get those type of different proposals.

We're going to ask those who make a bid on our contracts is that they include their alternate financing mechanisms, those things where you could just contract out by the transaction, for instance, where the government would own none of the infrastructure, and it would just be a contract for services, just as an example, that they would be able to do 12.5 million transactions of a certain type, and they would deliver that and we would set out the standards, and the way they do that would be a matter of contract and all.

But what we would do is that we would invite those type of different alternate scenarios for the provision of these contracting services, or we could go out, alternatively -- it may prove to be better to go out and buy the system for the government, where you buy all the hardware, you buy all the software. But what we want to do is make sure that those options are put into the contracting mechanisms so that we can take a look at that and we do have those type of choices.

Well, we may see what they have to offer in that regard and make business choices based on what we see from there, but we are very interested in trying to get as many different types of offers that we can get so that we can evaluate them and pick those choices that do two things: leverage our money, our investment, the best we can, and provide the very best services, both maybe in the short-term and in the long-term.

Mr. Morales: That's great. That's really going to the marketplace with a limited set of constraints to really get as many ideas as you can. That's fantastic.

What does the future hold for USCIS? We will ask Jock Scharfen, Deputy Director of U.S. Citizenship and Immigration Services within DHS, 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 Jock Scharfen, Deputy Director of U.S. Citizenship and Immigration Services.

Also joining us in our conversation is Dave Abel, Director of Homeland Security Services at IBM.

Jock, what trends will have the largest impact on USCIS in the next 10 years, and how will the organization need to adapt to these changes?

Mr. Scharfen: Well, I think that as we've been talking about the transformation of this organization is that we're clearly in the world of electronic and IT transformation is that as we move into this transformed business process where we go from paper-based to electronic-based, is that that will never end. We will continually have to go back and reassess where we are, and I think that on information technology and re-looking at our processes, that this is not just a one-time effort, but that we'll have to continue to look at that and improve upon that.

And I think in the next decade, the challenge will be first to make sure that we move from a paper-based to an electronic-based, person-centric, modern system, and then to ensure that that system works efficiently and it continues to be improved as it moves on.

I think that we'll also continue to have challenges with managing large numbers of immigrants, and that a subset of that issue of just sheer numbers is also the type of immigrants.

It's important, and we hear from our different stakeholders, is the importance of getting students into our universities, foreign students into our universities, and also getting high-tech immigrants and non-immigrants into our economy. And that is I think an issue that will persist, and that will be one that we'll have to manage going forward in the years ahead.

Mr. Morales: Jock, there's a lot of discussion these days around the pending government employee retirement wave.

I'm curious, how is your organization handling this phenomenon, and what are you doing to ensure that you have the right staff mix to meet the demands of these transformation efforts?

Mr. Scharfen: Al, I can't tell you today we have the answers to that. I can tell you that we've got in place a strategic workforce plan. And that strategic workforce plan for USCIS will profile our workforce, give us the demographics, and give us things like the age profile, fit in the retirement aspects to that. It'll also tell us about our diversity profile, which, by the way, looking at our EEO, our diversity numbers, we're happy with those, but we're going to work hard to make our organization reflect our country as much as it can.

Although the strategic workforce plan will have many parts to it, one of the key parts to that will be the future workforce, and we hope to identify where we're going to have gaps in the future. And that was one of the key things we asked them to do so that we can start planning, that we can identify those gaps, whether it's retirement gaps, whether it's skill gaps, whether it's diversity profile gaps, whether it's education gaps, whether it's our recruitment on the front end, whether we're getting the quality-type people we want.

Question here is right now, we do not require a college degree. That will be addressed there. All of those type questions -- we hope to put them into gap-type language so that we can then not just analyze it, but come up with some type of practical action plan.

Mr. Abel: So as you look at those gaps, to that end, what steps are you taking to attract and maintain a high-quality technical and professional workforce?

Mr. Scharfen: Director Gonzalez has a lot of experience in this area. First of all, he has a Ph.D. and he is committed to education, and he's a thoughtful guy. And he is also in the Army. He has worked in education -- he taught at West Point, and he was also in the personnel leadership management area within the Army, which is a huge organization to manage, and so he's an experienced personnel manager. And he's looked at this and he has come to a number of conclusions, and one way to attract and maintain our high quality of workforce is to offer first-rate world-rate education and training.

This year, we moved $2 million in the short-term into increasing our education and training for our employees from both the most junior employee to our most senior leadership. We also though, looking under the fee rule -- a big part of the fee rule would go towards better training of our employees, and also educational opportunities. And we're talking about investing tens of millions of dollars into the training of our employees and education of our employees. And we believe that that will help attract and maintain that high quality we need. We'll also take a look at the intake process there of how we recruit people. The Army has a saying that the Director is fond of saying, and that is that everyone is a recruiter. He's encouraged the organization, and I've seen that, where people are going out and recruiting.

For instance, we're going to Walter Reed, and we're trying to recruit disabled combat veterans from Iraq, and we're finding a very high-quality group of people there: our veterans, our disabled veterans. But that kind of personal touch that Director Gonzalez is out there setting an example recruiting himself, and he comes back and he has names of individuals who happen to be very good, for instance, in computers. And it's a good thing both to recognize the needs of our disabled vets, and it's also good for our organization.

Mr. Morales: Jock, along a similar theme, you've obviously had a fascinating and a very highly successful career as a Marine and as a lawyer, all in the service of our country.

So what advice would you give to someone who is perhaps thinking about a career in public service? What do you tell that young individual at Walter Reed?

Mr. Scharfen: First of all, I would encourage it. I've really enjoyed public service. And one of the things I mention is that those people I know, for instance, in private practice, when you speak to them, many times, they get the greatest personal and professional satisfaction when they somehow volunteer or get involved in public service.

For instance, I have a friend who's a partner in a law firm here in Washington, D.C., and he volunteers his time as a lawyer to our disabled vets, and he gets great satisfaction out of that. He's a very successful lawyer here in Washington, but when I see him on the soccer field or somewhere else, what he wants to talk about is that service that he's been able to provide, and he gets great personal and professional satisfaction out of that.

So first of all, I'd just encourage them in general and tell them they're going to enjoy it. But that there's a lot of responsibility that goes with that, and that if you do go into public service, that you go into it with the right attitude, and that it is about service. You go in with the right attitude, and if you go in with the goal to serve the public, it has its own rewards. You may not have the largest paycheck and you may be able to get a larger paycheck elsewhere, but you get paid in a different coin, and it's that coin of going home knowing that you've served the public well.

So first of all, I would encourage them to do it. Next, I'd tell them they should take chances, and they should do what they're interested in doing, and that if they see a job, they should not be hesitant to apply for it.

But I'd add a quick caveat to that, that the most important thing you can do, though, is to do the job you're doing currently well, and be enthusiastic about it, and do the best job you possibly can and work well with others, because the government is all about working well with others. You've got to be a team player. But first do the job you're doing well, but then don't be shy about reaching out and trying to apply for a job that may be a little bit out of the ordinary, but you never know unless you apply. And don't be discouraged the first time you've applied and you've been told no. When you reach my age, you can take a no better than when you're younger. And I've been told no many times and you get over it, but that shouldn't stop you from reaching for that job that you're interested in.

Mr. Morales: I think that's fantastic advice for all of us. Unfortunately, we have reached the end of our hour this morning. I want to thank you for fitting us into your busy schedule, but more importantly, Dave and I would like to thank you for your dedicated service to our government in protecting the homeland, and we most definitely want to have you back in September to hear about the results of your strategic workforce plan.

Mr. Scharfen: Thank you very much, Al and Dave, and if I could just close off by making reference so that our listeners can visit us, USCIS, on our Web site. It's uscis.gov, and it's the new Web site that we have there. It was put together by our IT guru, Jeff Conklin, and our communications guru, Jose Montero. I think it's pretty good. We're working hard to make it better, so we encourage the listeners to come visit at uscis.gov.

If you've got some suggestions to make that even better, don't hesitate to give us some ideas. I know those two fellows are working hard to make it the very best they can.

Mr. Morales: Fantastic.

This has been The Business of Government Hour, featuring a conversation with Jock Scharfen, Deputy Director of U.S. Citizenship and Immigration Services.

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

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

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

Until next week, it's businessofgovernment.org.

Toni Dawsey interview

Friday, June 15th, 2007 - 20:00
Ms. Dawsey is responsible for setting the agency's workforce development strategy; assessing workforce characteristics and future needs; aligning the agency's human resources policies and programs with organizational mission, strategic goals and performance outcomes; and, serving as a member of the Office of Personnel Management-led Chief Human Capital Officers Council.
Radio show date: 
Sat, 06/16/2007
Intro text: 
Human Capital Management...
Human Capital Management
Complete transcript: 

Originally Broadcast Saturday, June 16, 2007

Washington, D.C.

Welcome to The Business of Government Hour, a conversation about management with a government executive who is changing the way government does business.

The Business of Government Hour is produced by the IBM Center for The Business of Government, which was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about the Center by visiting us on the web at businessofgovernment.org.

And now, The Business of Government Hour.

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

As the National Aeronautics and Space Administration approaches its 50th year, it retains one of the most complex and exciting missions in the federal government.

With the Shuttle Program, the International Space Station, and its cutting-edge research in aeronautics, space science, and earth science, NASA expands our knowledge of the universe and applies these insights to our daily lives.

A few years ago, President George Bush gave NASA a defining challenge for the 21st Century, to expand human presence in space. The success of this ambitious vision rests on NASA's pursuits of an effective workforce strategy.

With us this morning to discuss NASA's critical effort in this regard is Toni Dawsey, Assistant Administrator for Human Capital Management, and Chief Human Capital Officer at NASA.

Good morning, Toni.

Ms. Dawsey: Good morning.

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

Good morning, Solly.

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

Ms. Dawsey: Good morning, Solly.

Mr. Morales: Toni, many of our listeners are generally familiar with NASA as an organization, and certainly given its public recognition.

But can you give us an overview of NASA's history and its mission today?

Ms. Dawsey: Congress sent the legislation creating NASA to President Eisenhower less than one year after the Soviet Union launched Sputnik. October 1, 1958 was the official start of NASA, and almost immediately, NASA began working on options for human space flight.

Between 1961 and 1975, NASA completed the Mercury; Gemini; the Moon Landing Program, Apollo; Skylab; and Apollo-Soyuz Programs. After the Skylab and Apollo-Soyuz test projects for the early and mid-1970s, NASA's human space flights efforts again resumed in 1981 with the Space Shuttle Program that continues today to help build the International Space Station.

NASA also has continued to conduct cutting-edge aeronautics research; launched a number of significant scientific probes that have explored the Moon, the planets, and other areas of our solar system; and sent several spacecraft to investigate Mars.

The Hubble Space Telescope is very popular, and other space science spacecraft have enabled science to make a number of significant astronomical discoveries about our universe. NASA has helped bring about new generations of communications satellites, and NASA's earth science efforts have also literally changed the way we view our home planet.

NASA technology has resulted in numerous spin-offs, also in wide-ranging scientific, technical, and commercial fields.

And then, as you said, in January 2004, President Bush gave us a new vision, and that is to go back to the Moon and then on to Mars and beyond. That vision changed our mission. We are planning to retire the Shuttle in 2010 and launch the new Crew Exploration Vehicle by 2015, and hopefully return to the Moon in 2020.

Our New Crew Exploration Program is referred to as the Constellation Program.

Mr. Morales: Now, Toni, these are very, very broad and complex missions. Could you give us a sense of the scale of the organization? Can you tell us a little bit about how NASA is organized, the overall budget, a sense of the number of full-time employees and contractors, and its geographic footprint?

Ms. Dawsey: Sure. NASA's organization is comprised of NASA headquarters in Washington, D.C. and 10 principal field centers, including the Jet Propulsion Laboratory and many smaller facilities located around the country.

In addition, NASA has a wide variety of partnership agreements with academia, the private sector, state and local governments, and other federal agencies, and a number of international organizations.

NASA's appropriation for fiscal year 2007 is $16.2 billion, and we have about 16,400 permanent employees and over 18,000 civil service employees of all types. We also have over 38,000 on or near-site contractors.

Mr. Thomas: Toni, now that you've provided us with a sense of scale of the larger organization, could you tell us more about your specific role? What are your responsibilities and duties as NASA's Chief Human Capital Officer? And could you tell us more about the areas under your purview, such as how the office is organized, as well as the size of the staff?

Ms. Dawsey: Sure. I have responsibility for NASA's civil service workforce. I'm responsible for setting the workforce strategy, assessing workforce characteristics and future needs based on mission and strategic plan; aligning the human resources policies and programs with organizational mission, strategic goals, and performance outcomes; developing and advocating a culture of continuous learning to attract and retain employees with superior abilities; identifying best practices and benchmarking studies; and serving as a member of the Office of Personnel Management-led Chief Human Capital Officer Council.

Mr. Thomas: And regarding your responsibilities and duties as the agency's Chief Human Capital Officer, what are the top three challenges that you face in your position, and how have you addressed these challenges?

Ms. Dawsey: Well, as I've said, we're going to continue Shuttle flights to complete the International Space Station, and then retire the Shuttle by 2010, and in the meantime, prepare to launch a new Crew Exploration Vehicle by 2015. This is going to cause major workforce transitions.

So the top three challenges that we in Human Capital face are developing good workforce planning processes and tools; ensuring workforce skills stay aligned with changing mission requirements; and providing HR systems that ensure timely, reliable, and authoritative data for agency workforce decisions.

Mr. Morales: Toni, you're returning back to government, so I'm curious. Could you describe for our listeners your career path? Many probably don't know that you came back first as Deputy Chief Human Capital Officer and now serve as the Chief Human Capital Officer.

What brought you back to NASA?

Ms. Dawsey: In brief, my career as an HR specialist started at the Federal Trade Commission, back where we started as functional specialists. So I started as a staffing specialist and then moved on to classification.

And I left FTC to join NASA at the Goddard Space Flight Center to broaden my experience, and there, I became a personnel management specialist, which not only incorporated the first two functions, but broadened them into employee relations, and I was an HR advisor on all programs to the head of the Engineering Directorate.

From Goddard, I went to the Department of Agriculture's Agricultural Marketing Service and became a team lead and then a supervisor. From there, I moved on to the Department of Transportation's Office of the Secretary to work on the policy and program development side of HR, and later to manage their HR Operations Branch.

I left the Office of the Secretary to become the Personnel Officer for Transportation's Office of Inspector General, and then two years later, I left HR altogether to serve as the Deputy Assistant Inspector General for Inspections and Evaluations. And there, I directed headquarters and regional staff in providing independent and objective inspections and evaluations of Transportation's programs and operations.

I retired from that position, and then after nine years of retirement, I rejoined NASA in 2004 to serve as the Director of the agency Human Resources Division, and then in December of '05, I was appointed to my current position.

When I was offered the opportunity to work for NASA, I was honored. NASA had just received an award for being the first human capital office to go Green on the President's Management Agenda, and the agency was working hard to return to flight, and I wanted to be working in this agency that was so progressive, had employees dedicated to a terrific mission, and had many exciting challenges ahead of it.

Mr. Morales: That's a great set of broad experiences. So I'm curious: how have your previous roles prepared you for your current leadership role and shaped your management approach and your leadership style?

Ms. Dawsey: First, as I said, I started out as a specialist in two of the major HR areas -- staffing and classification. And that gave me a very important and thorough grounding in those two functional areas.

I then accepted other positions earlier in my career, with the intent of building a well-rounded HR portfolio, and then later, working to build a leadership portfolio, which gave me both credibility within the HR community and confidence.

Second, I was greatly influenced by the director of the Engineering Directorate at the Goddard Space Flight Center. As I also mentioned earlier, I served as his Personnel Management Specialist and advisor. And very importantly, he included me at his table, along with his management team, and he treated me accordingly.

He told me the same thing he told them: I want to hear how we can get things done, not how we can't, and I want to hear solutions for problems, not just problems. It would require that we think outside the box, and I never got back in that box.

Lastly, just moving across different occupations, working with different leaders, and in different types of agencies was very developmental, and it went a long way in building my knowledge base and my confidence level.

Mr. Morales: That's fantastic.

What is NASA's human resource strategy? We will ask Toni Dawsey, Assistant Administrator for Human Capital Management, and Chief Human Capital Officer at NASA, 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 Toni Dawsey, Assistant Administrator for Human Capital Management, and Chief Human Capital Officer at NASA.

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

Mr. Morales: Toni, according to the 2006 Federal Human Capital Survey, NASA ranked in the top three agencies in job satisfaction, leadership, and workplace performance. Why do you think your co-workers think so highly of NASA as a place to work, and what do you think the secret is?

Ms. Dawsey: The secret really isn't a secret. It's our mission.

NASA is filled with employees at all levels who love what they are doing. They're inspired by supervisors and managers who love what they are doing. And they are surrounded by highly educated dedicated co-workers who keep the bar high and make for a challenging, exciting environment.

Mr. Morales: Toni, earlier you mentioned the PMA, so let's delve into that for a moment.

NASA was one of the first agencies to achieve a Green status in human capital management under the PMA. Could you elaborate on the challenges and your efforts to getting to Green, and what's the Department need to do to achieve and sustain a Green status rating?

Ms. Dawsey: NASA got to Green quickly because the human capital organization had tremendous support from the Administrator and his management team. They believed that the human capital agenda was an agency agenda, and we continue to operate that way. And that is not only how we got to Green, but how we have remained Green.

Mr. Morales: So pretty straightforward, then?

Ms. Dawsey: Yes.

Mr. Morales: Let me switch gears a little bit. The NASA Flexibility Act of 2004 gave your agency certain flexibilities for recruitment and retention purposes. Could you talk a little bit about some of the flexibilities you were given, and which of these has had the biggest impact on recruiting and retaining a high-quality workforce?

Ms. Dawsey: Well, we were given over a dozen flexibilities that include enhanced recruitment, relocation, and retention bonuses, expanded use of term appointments, pay authority for critical positions, and enhanced travel benefits and annual leave benefits for new hires. And what works best for us really is combining all these different flexibilities into incentive packages tailored to the needs of specific candidates.

And that's been a particularly successful strategy for us.

Mr. Thomas: Toni, earlier, you had talked about the workforce planning efforts at the agency, and I want to talk a little bit more about that, if you don't mind.

NASA's most recent workforce strategy represents a new, more centralized approach to workforce planning. Would you talk about this new approach? What are some of the central components of this new planning process, and how does it better position NASA to meet the demands of its mission?

Ms. Dawsey: NASA has a number of initiatives underway to improve workforce planning, which, as I mentioned earlier, is one of our primary goals in human capital.

We needed to go from a near-term, budget-driven process to a longer-term, scenario-based workforce planning process. And we needed to go from a center-centric planning to an agency, a corporate workforce planning process. So we established an agency workforce planning governance structure. We enhanced workforce data tools to identify people with programs, and to be able to locate expertise across the agency.

We've developed workforce capability measures so that we can identify early gaps and surpluses across the agency. And we've established a Shuttle Human Capital Council just recently that includes not only NASA HR directors, but contractor HR directors so we can work with another as we transition and learn from one another's best practices. And we've integrated -- and this is the most important -- we've integrated this workforce planning process with our budget process.

In addition, we're currently engaging with Mission Directorates and the Centers in scenario planning. We're developing a workforce planner's handbook so that we're all talking a common language across the agency, and most recently, we've started a mapping process. We're developing a process where we can map employees from the Shuttle workforce to Constellation program work.

And with a strong workforce planning capability, the agency will be able to synergize its ability to meet challenges and perform the overall mission. We're integrating workforce planning with the program, budget, and business support functions, and that will allow us to take workforce planning from the near-term that I was talking about to the longer-term process that starts as soon as program requirements are defined and as far out as they can be defined.

Mr. Thomas: And staying on the workforce planning topic, NASA's workforce strategy places very strong emphasis on the development of 10 healthy centers that are fully engaged and productive.

First, within a human capital context, what is a healthy center? And second, what are the seven key attributes that you see of a healthy center?

Ms. Dawsey: Within the human capital context, a healthy center is one that first of all can assess its overall capability of total workforce and has the ability to align that workforce to future work.

The second is to be able to surface workforce misalignments that require agency intervention; that is, solving the problem at the agency level. And the third is to be able to shape the size, composition, and the management of the center workforce over time.

The seven key attributes that we use are: one, core, clear, stable, and enduring roles and responsibilities for a center; two, clear program project management leadership roles; three, major in-house durable spaceflight responsibility; four, skilled and flexible blended workforce with sufficient depth and breadth; five, technically competent and value-centered leadership; six, capable and effectively utilize infrastructure; an seven, strong stakeholder support.

Mr. Thomas: Toni, NASA's new approach seems to reflect planning and integration at many levels of management. What are the specific benefits of this enhanced workforce planning capability, and how do you feel it better enables NASA to address the workforce challenges and issues?

Ms. Dawsey: Well, leaders will be able to identify skill gaps quickly and plan strategically to address surpluses and gaps in a targeted and deliberate way across the agency, and to quickly identify expertise and be able to use it wherever it is needed in the agency.

Mr. Morales: Toni, it's been said that NASA's workforce is not ideally aligned to the programs and projects that are being undertaken to support the vision for space exploration, and it's commonly referred to as uncovered capacity.

Could you elaborate on NASA's efforts to reduce its current uncovered capacity level?

Ms. Dawsey: Sure. Two years ago, we had over 2,000 FTE that we called uncovered, and that translated to far more than 2,000 people. So we went into what we called a transformation mode, and today, there are very few what we call now "available for new work."

To solve the problem, we conducted buy-outs and early-outs. We held job fairs to place employees within and outside NASA. We used our new legislative authorities. We had hiring freezes. We set tight ceiling controls. We moved work across the agency. We reassigned staff, provided career transition assistance, and we started retraining programs.

Mr. Morales: Along those lines, could you elaborate on recent NASA initiatives to close the core competency gaps? Specifically, could you tell us about NASA's competency management system?

Ms. Dawsey: Yes. The competency management system first of all was built in-house by engineers at the Kennedy Space Flight Center, one of whom is still on my staff.

And it's an agency-wide competency inventory in a common language, populated with both an employee's position and individual competencies. And it enables NASA to know first of all what the current competencies are in the workforce, and then, as I mentioned earlier, locate expertise that's required to implement specific tasks.

And it also gives a good demographic snapshot to enable us to do more in-depth workforce data searches. It aids in the competency gap surplus problem, and it assists in assessing center readiness for new activities.

If you use it in conjunction with the workforce planning processes, which we're doing, we can help assess workforce impacts on programs and projects at a greater level of detail. And it also provides, then, information to our Office of Education so we can recruit students in those areas, and we can help employees in determining how best to expand and develop their careers.

Mr. Morales: How is NASA managing its blended workforce?

We will ask Toni Dawsey, Assistant Administrator for Human Capital Management, and Chief Human Capital Officer at NASA, 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 Toni Dawsey, Assistant Administrator for Human Capital Management, and Chief Human Capital Officer at NASA.

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

Toni, NASA has a fairly heavy reliance on contractors. I believe in earlier segments, you mentioned 38,000. Could you tell us how federal managers can effectively manage an ever-increasing blended workforce composed of contractors and federal workers? And what are some of the key differences intrinsic to these two core groups?

Ms. Dawsey: Just to give you some perspective, less than 15 percent of the agency's authorized funding is expended on civil service salaries and benefits. In fact, one of our most renowned installations, the Jet Propulsion Lab in Pasadena, is run entirely through a contract with Cal Tech. We have approximately, as you said, 38,000 contractors working on or in close proximity to our NASA sites.

In managing our blended workforce, we have to make sure always that the government is in the driver's seat. There are, of course, numerous inherently governmental activities carried out in NASA. These are defined by the Office of Management and Budget, and they include the exercise of discretion in applying government authority or the making of value judgments and making decisions for the government. Civil servants make the plans, formulate the budgets, and decide strategy and policy.

In managing the blended workforce, we need to ensure we have a sufficient in-house knowledge base to be a smart buyer of services from industry. And that means we have to have sufficient depth among civil engineers and scientists to specify our requirements, and not only oversee the contractor efforts, but have insight into the technical issues that arise.

In the end, it is NASA personnel who make the go, no-go decisions for our programs. Additionally, it's also critical for us to have strong capabilities in systems engineering and project management, since these skills are critical not only to our mission success, but also to getting the most out our contractor workforce.

Mr. Morales: Toni, I also want to go back to one of the other topics from our previous segment, and that's around recruitment. Could you tell us what changes are you making to the recruitment process at NASA? Does the agency use flexible compensation strategies to attract and retain high-quality employees who possess these mission-critical competencies?

Ms. Dawsey: NASA is refining our recruitment process, our recruitment strategy, in several ways. We're conducting more targeted recruitment. For example, we're recruiting for mission-critical occupations and underrepresented groups in diversity.

We're increasing our collaboration with our Office of Diversity and Equal Opportunity and our NASA Education Office, and we're enhancing and expanding student programs that can serve as a pipeline into our workforce. We're developing our partnerships and relationships, for example, with non-profit organizations, industry, other federal agencies, professional organizations, and educational institutions that can be beneficial in future recruitment efforts, initiatives, and strategies.

Mr. Thomas: Toni, although it's important to bring new talent into NASA, your organization's approach to strengthening competency needs also involves leveraging the talent that's already available in the current workforce. Could you elaborate a bit on NASA's retraining efforts?

Ms. Dawsey: Yes. NASA is engaged in several activities designed to realign our workforce to meet our new objectives. We have training and what we call retraining programs in support of program and project management, systems engineering, and quality of mission assurance, and we're also training technicians to be technologists.

We're developing a deliberate and systematic growth and development opportunity path through actually what we're calling a career pathing approach, and through redesigned leadership development programs.

The career pathing is providing for each discipline a transparent career progression path. Ordinarily, employees when they enter government are looking to see what duties they need to perform to be promoted to the next-higher grade level. But in NASA, we're looking to build pipelines for our journeyman level, our program project management level, senior executive service, senior technical, and senior leads.

And that requires more than just working to be better within what we consider a stovepipe of the promotion career ladder. We're trying to give employees a look at the broader goals they need to seek to be part of the technical management leadership team at NASA.

So each career path will not only show the duties they need for the next grade level, but it will show recommended and sometimes required assignments, competencies, developmental experiences, training, certifications, if needed, rotational assignments, coaching, and mentoring.

And the purpose of this is to have employees that we can select from inside who understand all of NASA, not just one center, to have employees understand the institutions and the programs side of the house, and employees who have networked and know how to network and collaborate, both internally and externally.

So we're trying to start at much lower levels in the agency to develop well-rounded professionals to take on our management positions over the next several years.

Mr. Thomas: Toni, staying on the employee development theme, could you talk a little bit more about NASA's key learning and development strategies and initiatives? And in particular, what is NASA doing to ensure continuity of leadership through succession planning and executive development?

Ms. Dawsey: Okay. I started to touch on that, but we are doing so much at NASA, I really like to talk about it, and so I'll expand on that a little.

We have a corporate integrated approach to leadership development first of all. NASA has created a leadership strategy, which is used by both agency-wide and center leadership program managers as a framework for designing and implementing leadership programs. This framework provides continuity through succession planning and executive development.

We've redesigned the agency's residential leadership programs -- that includes a program focus on the strategic alignment of leaders to the NASA vision for space exploration, as well as programs that focus on current hot leadership topics relevant to achieving mission.

We have a new program. What we've done is we realized that while we have excellent leadership training programs, those programs have been geared to employees at the journeyman level or close to. And we realize in today's world that this type of training is very important at much lower grade levels. We need to teach our professionals at -- for example, grades 11 and 12, which we started doing with a new program called NASA First.

We're teaching them about NASA, about rotating around centers to learn what centers are doing, and learning the leadership skills of collaborating, benchmarking, using best practices. And with that program, starting at grades 11 and 12, we're getting to people when they're also -- it's a lot easier to get them into training and start the culture change. And in NASA, that means learning that mobility is important, and that being called from one center to another center is something that they should expect and probably will be required to do in the future as the mission transitions to Constellation.

And they set up a network that has been really, really helpful, and that they're seeing how an engineer can help an information technology person, who can help a scientist, and just through the different kinds of tools that we have in common, for example, systems tools, and hear that exchange and see the network -- for example, of an engineer expand to include people in the chief financial office and in other business support offices -- for example, procurement, even human capital. It's very exciting.

And so the leadership development program now basically starts at a much lower grade level and then proceeds up through into our senior executive candidate development program, which is a rigorous program, and we're very proud of it. It has Office of Personnel Management approval. It is a program that they hold out as a model in government.

We also have fellowship programs that ensure that employees have the opportunity to obtain best-in-class development at the finest educational institutions. And in terms of our succession planning efforts, we've developed and implemented a succession planning framework also.

The plan centers around NASA's leadership model and includes a newly created leadership framework which is designed to articulate developmental experiences for all leadership roles within the agency. This corporate leadership succession strategy supports creating a skilled pipeline for leadership within the agency. It includes a variety of components -- workforce planning and analysis, formal leadership development programs, formal and informal coaching and mentoring programs, and leadership training -- and is supplemented by center-level developmental activities.

The plan capitalizes on the agency's long-time support of leadership development and training. It defines a leadership life cycle of development and enhances existing programs by incorporating, as I said, the entry-level leadership program NASA First, and we have created an advisory council composed of senior leaders that will oversee succession management within the organization, including participating in selections for our formal leadership development programs.

The group also will complete an annual review of the succession management framework to ensure that it stays relevant to agency needs.

Mr. Thomas: Toni, NASA is also addressing unique challenges presented by retiring the Space Shuttle. Could you talk about some of the specifics of these challenges facing the organization, and also, what is NASA doing to address these challenges?

Ms. Dawsey: Yeah, NASA is facing some unique challenges associated with Shuttle retirement, and we need to retain skills necessary to safely execute remaining Space Shuttle missions to the very last flight, and then we need to manage the transition of appropriate Shuttle workforce into Constellation; and we need to retain skills between fiscal years 2010 and fiscal year 2015 necessary to safely execute Constellation flight operations.

To address these challenges, one effort underway is what we are calling the Shuttle workforce mapping project. Many of the employees currently working on the Shuttle program will be needed to work on the Constellation program. For that reason, a team of headquarters and center representatives is developing a mapping of the Shuttle workforce to Constellation work. This plan will reflect the planned migration of our employees supporting the Shuttle program to Constellation, phased to correspond to key milestones in both programs.

And the first mapping is scheduled to be completed in mid-August. It will be iterated and refined regularly after that date, particularly as Constellation program needs and the Shuttle flight manifest schedules are updated.

In addition, we're holding agency-wide capability assessment forums to further refine our workforce planning picture. Several modeling, simulation, and analytical tools also are being evaluated in our quest to better capture system dynamics and requirements-driven workforce and skill mix forecasting.

Cumulatively, these activities and prospective tools will enhance our analytic capability in these areas.

Mr. Morales: Toni, let me switch gears for a moment now. Under its Integrated Enterprise Management Program, and sometimes it's commonly referred to as the IEMP, NASA is transforming its finances, human resources, assets, and processes through a combination of supporting technology and business infrastructure. Could you elaborate on the IEMP's human capital information environment project, and could you give us a sense of the benefits from its implementation?

Ms. Dawsey: Sure. Until just recently, we had 75 different human resource systems that were not integrated. They didn't talk to one another. So we set out two years ago to integrate them first, and that was, as I said, accomplished last month, and as of the end of this month, our HR portal, as we call it, will be open throughout the human capital community.

We are now, as part of what we're calling the human capital information environment, working with IEMP to incorporate that HR portal into the other business support systems. We intend to provide authoritative single source and timely workforce data this way.

To kind of give you an idea of what the human capital information environment will provide, we'll be able to integrate existing NASA budget data with workforce data, and we'll be able to view projected workforce information, budget actuals, and workforce planning data. And we've not been able to do that.

We'll be able to view employee-related cost information, view a collection of current and historical workforce information to support the budget planning process, and we'll understand the total workforce composition, moving from a system with compartmentalized, self-contained capabilities to a system with a better understanding of all its capabilities. We'll be able to facilitate informed decisions regarding the current and planned workforce, to view their status based on plans and actual labor charges. And we'll be able to assess full cost data and loaded rates.

Mr. Morales: Toni, we talked earlier about some of the challenges around the blended workforce. And so given the composition of NASA, how does your organization evaluate HR field performance, as well as impart the best practices to NASA's HR community? And what steps are you pursuing to ensure that these policies and procedures are documented and communicated in a timely and comprehensible manner, and that its implementation is being monitored?

Ms. Dawsey: NASA evaluates center HR performance through a comprehensive human capital accountability system designed to assess the health of human capital programs across the agency. The accountability system ensures accountability for efficient, effective, and aligned human capital programs while balancing the need to assure that human capital decisions are made based on merit.

NASA has embraced the five-pronged approach to managing the assessment activities. We do agency program studies. We do agency quality reviews. We do agency on-site reviews. We do center self-assessments, and we do external oversight audits.

We utilize several methods to evaluate center HR performance and to impart best practices to the HR community. The workforce strategy division within the Office of Human Capital conducts human resources on-site reviews on a quarterly basis at the NASA centers. The overall purpose is to focus on three specific goals: first, the review team seeks to understand how NASA's workforce implementation plan sub-goals are translated at the center level. And we haven't talked about it, but our workforce implementation plan was developed from the agency's strategic plan, and it contains approximately 150 tasks that we need to perform to meet the goals that I talked about earlier in workforce planning, workforce alignment, and systems and accountability. So that is one area of the review.

The review team is also concerned with strengthening relationships within the HR operating community, and the review team assesses NASA's compliance with human resources laws, rules, and regulations. That review focuses on the HR authorities that sustain the three key drivers of human capital management: strategic competencies, performance culture, and leadership and learning.

At the conclusion of each of the reviews, a comprehensive report is prepared which includes recommended and required actions as appropriate. The report is sent to the center human resources director and the center director, describing significant positive, for example, best practices or negative findings.

On a monthly basis, NASA headquarters conducts video teleconferences--we call them VITS -- with the HR community on a variety of subjects. The VITS affords NASA the opportunity to communicate information in an interactive format in real-time. NASA also issues personnel bulletins on a variety of HR-related issues. The personnel bulletins supplement current NASA policies and procedures, and if necessary, provide guidance to clarify any existing policies and procedures.

Mr. Morales: So, Toni, along similar lines, recently, the National Academy of Public Administration, otherwise known as NAPA, released a report entitled "NASA: Balancing a Multi-Sector Workforce to Achieve a Healthy Organization." And in this report, it recommends that NASA continue to find ways to balance its multi-sector workforce and restructure its existing civil service components.

Could you tell us briefly about this report, and to what extent is NASA planning to implement any of the human capital recommendations?

Ms. Dawsey: The NAPA report is quite far-ranging, and was done as a joint request of NASA and its appropriations committees in Congress. NAPA believes that NASA has an opportunity to lead the public sector as it manages and realigns its multi-sector workforce, the civil servants and contractors, for Constellation.

In planning and decision-making, NAPA recommends that we develop a risk-based planning strategy to deal with alternative futures, including program, budget, and schedule changes. NAPA favors scenario planning to inform decision-making, workforce plans, and strategies.

We have been thinking the same way, and, as I've explained, we are currently exploring methodologies for doing budget and workforce scenario planning.

Our administrator has set the policy that all 10 of our centers will contribute to the work required to implement Constellation. All have their own strengths and will be needed. The program work assignments have been managed in NASA to ensure all 10 centers can remain strong and healthy. NAPA proposes a health center framework and metrics with critical factors and success elements. They believe that NASA headquarters should conduct annual center health evaluations, and centers should perform ongoing assessments. This is something we are increasingly engaged in, and we will look carefully at NAPA's recommendations in this area.

Other areas covered by NAPA in its report include acquisition management, the engagement of the human capital function with agency planning and decision-making, maintaining an appropriate balance between contractors and government personnel, and between permanent and non-permanent civil service appointments, and finally, some ideas for new civil service flexibilities to enable more-rapid expanding or shrinking of the workforce. And as I've mentioned, we're already engaged in a lot of what NAPA is recommending.

Mr. Morales: That's fantastic.

What does the future hold for NASA? We will ask Toni Dawsey, Assistant Administrator for Human Capital Management, and Chief Human Capital Officer at NASA, 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 Toni Dawsey, Assistant Administrator for Human Capital Management, and Chief Human Capital Officer at NASA.

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

Toni, with the evolution of NASA's new vision for space exploration, how do you envision NASA's human capital needs evolving in, say, the next three to five years? And specifically, how do you envision your office will evolve to meet these challenges?

Ms. Dawsey: I see human capital evolving in a very positive way. I see human capital specialists becoming true partners in the strategic planning process, not only internally with our stakeholders, but externally.

And I think in terms of skills, I was talking earlier about how important it was to have the functional expertise. A lot of that is being sent to shared services centers, and what's evolving is the real true professional human capital expertise, which means looking more towards people who have some of the skills that I was talking about earlier -- workforce planning skills; that is, statistics and modeling competencies -- and skills in systems development and integration, program project management skills, because we're helping to develop and implement programs on an agency level -- and a lot of them.

And I think we need human resource specialists who have real good communication skills not only in writing and speaking, but the ability to see the way to communicate a huge amount of data that we create nowadays in a format, in a dashboard, for people at all levels in the agency. We can't give all this workforce data I'm talking about as it is to the leadership when they need to make decisions. We need the kind of HR people who are analytical enough to know what of that data is critical for the immediate decisions.

Mr. Thomas: Toni, today's broader multi-sector workforce requires the high level integration of acquisition and human capital planning, which is long overdue for the federal sector. How will NASA be at the forefront of the 21st Century governance, perhaps pointing the way for other federal agencies facing similar workforce challenges?

Ms. Dawsey: Well, we're finding it quite difficult to forecast the workforce and human capital policies we'll be needing five, 10 to 20 years out, and especially for Constellation. The decisions to what we call make or buy, meaning do work in-house or contract out -- the decisions to do that -- to decide how the work will be accomplished is a critical one, and greatly impacts the size of the civil service workforce we'll need.

What we found is that the critical make-buy decision needs to be addressed earlier in the planning process rather than later. We're making changes in our planning processes to move these decisions up and make sure the right players, including human capital, participate in the decision-making.

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

Ms. Dawsey: We believe that automation is key to improving the management of human resources. I've already talked about our human resources portal and our human capital information environment. And we've implemented a lot of other automated systems.

The one that we haven't so far that we're looking into is our performance management system. We want to implement a system that will not only contain electronic documents, but also route them appropriately and provide immediate notifications and feedback to employees and management officials.

Mr. Morales: Toni, I often ask my guests about the pending retirement wave in government and what type of impact it may have on their operations. What are you seeing within NASA, and what are the plans to mitigate these effects?

Ms. Dawsey: Well, right now, we have about 12 percent of the workforce that is eligible for immediate retirement, and this is normal for NASA. Fortunately, the percent of scientists and engineers that are retirement-eligible is less. They're only at about 11.3 percent.

Over the next five years, each year, about three percent of the current employees will become new retirement eligibles, and about three percent of all employees will actually retire each year.

We have forecast total expected retirements over the next five years. Some of the retirements will cause a loss in our corporate memory. Nevertheless, as NASA moves out of the Shuttle era and into a new phase of space exploration, retirement losses should be well within our capabilities to hire replacements, and retirements will give us the opportunity to bring in new talent.

Mr. Morales: Now, Toni, you've had obviously a very successful career within public service, and as we mentioned at the start of the show, you're actually returning to federal service again. What advice would you give to a person who perhaps is out there thinking about getting started in a career in public service?

Ms. Dawsey: I think there is now so much information available on a career in the federal service that we didn't have years ago. And so I recommend that those looking for employment and trying to decide between the public and private sector make sure that they do their homework about all the career possibilities across government and within each department or agency. For example, people are surprised when they hear about all the career opportunities in NASA, because they tend to think engineers, scientists, and astronauts. So do your homework.

The second is learn about the work/life benefits and flexibilities that now exist in government and which allow us to be competitive with the private sector. We have put a lot of focus on that in government, and I think it would surprise a lot of people of how important that work/life balance is in government now.

And I guess lastly, I asked a new employee whom I just hired from the private sector why he chose to go federal, and he replied that after years of working in the private sector, he did not have the feelings that he saw existing at NASA, and that is contributing on a team to fulfill a real mission for the nation, actually for the world, and so I think that's important that you look at a job in terms of what it is you're contributing to society, and the government gives you plenty of opportunity to do that.

Mr. Morales: So it's a real sense of pride and accomplishment in the role.

Ms. Dawsey: Yes.

Mr. Morales: That's fantastic.

Toni, unfortunately, we have reached the top of the hour, and we've run out of time. I do want to thank you for fitting us into your busy schedule today, but more importantly, Solly and I would like to thank you for your dedicated service to our country.

Ms. Dawsey: The last thing I would like to say is we're very proud of NASA. There is a lot going on at NASA. And we invite you to learn about us on nasa.gov.

Thank you.

Mr. Morales: Thank you.

This has been The Business of Government Hour, featuring a conversation with Toni Dawsey, Assistant Administrator for Human Capital Management, and Chief Human Capital Officer at NASA.

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

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

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

Thank you for listening.

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

Until next week, it's businessofgovernment.org

Raj Chellaraj interview

Friday, June 8th, 2007 - 20:00
The Bureau is responsible for administrative support operations; supply and transportation; real property and facilities management; official records, publishing, and library services; language services; domestic emergency management; overseeing safety and occupational health matters; small and disadvantaged business utilization; and support for both White House travel abroad and special conferences called by the President or Secretary of State.
Radio show date: 
Sat, 06/09/2007
Intro text: 
Human Capital Management; Managing for Performance and Results...
Human Capital Management; Managing for Performance and Results
Complete transcript: 

Originally Broadcast Saturday, June 9, 2007

Washington, D.C.

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

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

And now, The Business of Government Hour.

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

With its unveiling of transformational diplomacy, the U.S. Department of State has charted a bold new course in U.S. diplomacy, a course that rests on working with U.S. partners around the world to build and sustain democratic well-governed states using America's diplomatic power and resources to help people across the globe better their own futures, build their own nations and thrive under an umbrella of security and peace. Supporting this ambitious approach seems no small feat.

With us this morning to discuss his Bureau's efforts in support of transformational diplomacy is our very special guest, Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State.

Good morning, Raj.

Mr. Chellaraj: Good morning, glad to be here.

Mr. Morales: And joining us in our conversation is Bonnie Glick, project executive at IBM.

Good morning, Bonnie.

Ms. Glick: Good morning.

Mr. Morales: Raj, most of our listeners are probably familiar with the Department of State as the diplomatic arm of the U.S. government. But perhaps you could give us a sense of the State Department and its history. When was it created, and how has its mission evolved over time?

Mr. Chellaraj: Surely. The State Department was the first federal agency, created in 1789. Thomas Jefferson was our first Secretary of State. It is the lead U.S. foreign affairs agency. Currently, Secretary Rice has defined transformational diplomacy in this way: it is to work with our many partners around the world to build and sustain democratic well-governed states that will respond to the needs of their people and conduct them responsibly in the international system. That means all of us need to think about how we are doing business, and adapt and change to meet these new priorities.

Here are some current initiatives under the leadership of Management's Under Secretary Fore: one, provide buildings and administrative infrastructure to 38 agencies overseas; maintain American presence with over 260 embassies and consulates, utilizing technology with virtual posts that can be accessed from anywhere in real time; help to ensure secure borders and provide a dignified welcome to visitors.

Mr. Morales: Raj, obviously, this is an extremely broad mission. Can you give us a sense of the scale at the Department of State? How is it organized? Can you give us a sense of the budget, the number of full-time employees, and its geographic footprint?

Mr. Chellaraj: There are nearly 57,000 employees worldwide. Nearly 45,000 of them are overseas. Over 7,500 Americans proudly call the State Department home who are overseas, and 37,000 locally engaged employees. There are more than 260 posts in 189 countries, and also in the United States. The State Department's appropriation for the past several fiscal years has been roughly $30 billion per year, and includes both State operations and foreign assistance. The FY 2008 request is about 11 percent increase, and it's around $36 billion.

Ms. Glick: Now that you've provided us with a sense of the larger organization, maybe you could tell us more about your specific area and your specific role within the Department. What are your responsibilities and duties as the Assistant Secretary of State for Administration? Could you tell us a little bit about the areas under your purview, how your area is organized, the size of your staff and your budget? Also, given the Bureau has responsibility for both overseas and domestic operations, can you give us a sense of how you balance limited resources between domestic and overseas operations?

Mr. Chellaraj: Wow, there are a number of questions in that one question. So let me just at least highlight the key areas. Some departments, as you know and our listeners know, have offices. Our department has Bureaus. So the Bureau of Administration provides global administrative support for the people and programs of America's diplomacy. We are proud that our work supports every foreign policy initiative, every employee and family member and every agency that's involved in foreign affairs activities.

The "A" Bureau is one of the Department's most diverse and dynamic organizations. The "A" Bureau budget is approximately I would say $600 million, with over 2,000 employees in over 30 offices. The Bureau's mission is making diplomacy work. And when I joined the Bureau, I added the word "better," making diplomacy work better. One of my priorities and our priorities in our Bureau is customer service and satisfaction. Our Bureau programs and services are very varied.

Let me just highlight on some of them. One, domestic real property and facilities management. We do procurement, roughly $5 billion or so a year, and that's a billion with a "b." Supply and transportation. Diplomatic pouch and mail services. Official records, publishing, library services, language services. Setting allowance rates for U.S. government personnel assigned abroad, and that's a fairly key one, as you can imagine. Overseeing safety and occupational health matters, small disadvantaged business utilization. Support for both White House travel abroad and special conferences called by the President and Secretary of State.

We also do direct services to the public and other government agencies. These include authenticating documents used abroad for legal and business purposes, responding to requests under the Freedom of Information and Privacy Acts, printing official publications, codifying policies into Department regulations, designing, publishing, and maintaining the Department's electronic forms, processing all Department public notices for publications in the Federal Register, and the list goes on.

Ms. Glick: The list does appear to go on. You're quite right when you say the responsibilities of the "A" Bureau are very varied. Regarding those responsibilities and duties, what would you say are the top three challenges that you face in your position, and how have you addressed those challenges?

Mr. Chellaraj: Surely. There are many challenges just based on the types of things we do, and frankly, we look at challenges also as opportunities to see how we can improve overall customer satisfaction. Let me give you three specific ones. Firstly, our posts are scattered throughout the world in different working environments with different technological capabilities and operating constraints, and so you can imagine the issues associated with that.

Secondly, in addition, emergency or crisis situations arise, as was the case when the war broke out in Lebanon last summer. We provided the logistics support, ships, planes, not quite cars, but vans and buses for safe passage of American citizens, 15,000 of them approximately, out of harm's way. By having sound and well-thought-out management processes in place, we are able to respond to these types of unexpected situations quickly and effectively.

Thirdly, it is really difficult to predict where the next challenge will arise, so we have our antennas and radar up and be very vigilant in terms of where the next challenge will come from.

Mr. Morales: Raj, I want to switch gears a little bit here and talk about you. You've had obviously a very diverse background, starting in the private sector and now migrating over to various roles within government. I'm curious, how did you begin your career?

Mr. Chellaraj: Surely. I immigrated to the United States with a Bachelor's degree in Engineering and a couple of dollars. I realized very soon after I got here that the American education, the critical thinking was a great equalizer, and so I worked, went to school, worked, went to school, and did this a few times, and I moved from the focused field of engineering to the broader issues of public policy.

The early days were simply tough, but I struggled and survived. And career-wise, I moved between private sector and government many times, and I would encourage your listeners out there who are considering a public sector career and an opportunity to come contribute in the government to consider doing that. And over the last 25 years, this is my fourth agency in government, and this has been a real tremendous opportunity. And I will always come back when a President calls, when the Secretary of State calls or when I'm called upon to serve the country.

Mr. Morales: That's fantastic. So with these various experiences both in the commercial sector as well as now in government, I'm curious, how have these experiences shaped and formed your current leadership style, and how are you applying those experiences to your current role?

Mr. Chellaraj: I have handled and been responsible for most of the functions that are currently in the Bureau of Administration in my prior life, prior career, either in government or in the private sector, and I really believe good management transcends both the public sector and the private sector. And let me give you an example here. Take procurement, for example. In government, you have the Federal Acquisition Regulations, known as FAR, which I'm sure our listeners are familiar with.

In the private sector, it's not too different. There's what is called DOAG. You know, there are always all these acronyms, and essentially, DOAG is Delegation of Authority Guide. And the principles are essentially the same, in areas like procurement. You want to have the proper checks and balances, the internal controls, and who can sign up to what limits, and the principles are the same. People generally say -- either when I'm in the government or in the private sector, and I hear this in government a lot -- we are really a unique organization. We are different. Not really sure whether something will work, and what I really look for is commonalities and similarities on how we can improve processes to be more effective.

Mr. Morales: So even though the core missions are different, many of the core fundamentals are really the same between the commercial and the public sector.

Mr. Chellaraj: That's absolutely true.

Mr. Morales: How is State administering its resources in more efficient ways?

We will ask Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State, 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 Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State.

Also joining us in our conversation is Bonnie Glick, project executive at IBM.

Raj, given the release of the joint State and USAID strategic plan for 2004-2009, could you tell us about the efforts to integrate USAID operations with those of the State Department, and what efforts has the Administration Bureau undertaken to streamline its operations in line with the efforts of the Joint Management Council of State and USAID?

Mr. Chellaraj: Thanks, Al. Again, there are several questions there, and I'll try to highlight the key points. Interestingly enough, I worked at USAID a while back. In fact, my office then was on the same floor as where I am today, just down the hall. Who would have thought I'd be back again?

Frankly, USAID does certain functions very well, and State does certain functions well. This is about getting the best of both. State and USAID have been attempting to restructure our overseas presence to meet the challenges of transformation diplomacy and sustainable development. We both recognize the need for a shared overarching vision for management partnership, overseas and domestically, to contain growth and consolidate administrative support services. The Joint Strategic Plan established the Joint Management Council. The Joint Management Council's mandate is to identify opportunities for cooperation, cost avoidance and improved service through operational improvements. The results from our pilot posts are very encouraging.

We believe the joint approach will result in significant savings as well as a more logical, more manageable administrative platform at our overseas posts. Our focus in the Bureau has been identifying the activities where we carry out tasks that are common to both organizations. We believe that by doing this, we discover opportunities to both save money and enhance performance for both of us.

Mr. Morales: So how has this joint effort enhanced the ability of both organizations to ensure that the nation's foreign policy and development programs are fully aligned, and how has it impacted your workload?

Mr. Chellaraj: Sure. In terms of impacting the workload, it is a little difficult to quantify, as some individuals and offices directly concerned with the joint management initiative work on projects would be underway regardless of whether we had a joint management effort. Let me give you an example. We have something called the Integrated Logistic Management System, or ILMS. This is a very customer-friendly IT platform that enables us, both our contracting officers, logisticians, and most importantly, our customers, to track items from the time they are purchased until they're eventually disposed of.

Through ILMS, we get a clearer picture of our worldwide logistics operation than we've ever had before. Enhanced transparency and a whole new level of accountability for our resources. This particular initiative and effort will be important to the success of joint management, particularly overseas.

Mr. Morales: So to provide a more specific and broader context, could you provide a brief overview of such initiatives, such as the right sizing initiative and regionalization?

Mr. Chellaraj: Surely. Transformational diplomacy has a number of ramifications for the Bureau of Administration, and Department management generally. For example, we're addressing the practice of each Bureau or post providing the full range of administrative services. Today's technology allows, as you know, many of these functions to be performed by a smaller group of people anywhere in the world and shared among Bureaus and posts. For example, the Department is working on establishing human resource centers of excellence.

The Bureau of Administration's executive office is one of those centers of excellence. Overseas, the security environment concerns underscore the need to provide the most efficient support services in the safest possible locations. My office is working with the regional bureaus to expand the number and scope of services currently provided by regional support centers located in Frankfurt, Bangkok, and Fort Lauderdale.

Another regionalization initiative that the "A" Bureau spearheaded along with the regional bureaus is the standardization of support services according to best practices identified and endorsed by a central governance council. These efforts I'm sure will facilitate our ability to further consolidate and regionalize overseas support services.

Ms. Glick: That sounds great. Given even tighter budget constraints, would you tell us a little about your efforts to administer the resources of the Department in the most efficient ways? How has the International Cooperative Administrative Support Services System that's known as ICAS assisted you in this regard? How does it operate and who uses it, and to what extent has it achieved its primary goals? Are there any plans to enhance the ICAS system and its use?

Mr. Chellaraj: Bonnie, the ICAS system that you refer to is really a cost-sharing mechanism. Industry has been using this for 15-plus years, and it provides us, the U.S. government, a platform for overseas shared support services. The State Department is the primary service provider at more than 260 posts worldwide. State provides these services for the Department employees, and most importantly, for the employees of dozens of other federal agencies posted overseas. There are more than 280 separate entities that receive invoices under the ICAS system. And it is really a customer-driven interagency mechanism for managing and funding administrative support services.

For example, it gives the post the authority to determine how services are delivered at what cost and by whom. This is about acting locally, ensuring that service providers are formally accountable to the customer, and incorporates a full-cost recovery mechanism for the Department of State.

Ms. Glick: Raj, you serve as chair of the ICAS Executive Board. Would you tell us about the strategies ICAS has developed to address several recommendations outlined by the General Accountability Office regarding the need to improve ICAS accountability and enhance its cost containment capability?

Mr. Chellaraj: Surely. The ICAS Executive Board -- let me just give you a little background on that. It is really composed of 15 senior representatives of Cabinet-level agencies, and we meet quarterly or more often depending on what the needs are. And this is set up similar to -- akin to a corporation that would have a board of directors and management. There is a working group -- we have several subcommittees, and it is staffed and funded office within the Department of State. You're right, the GAO's report in -- I think it was in September of 2004, which was the first systematic review of the ICAS performance since it was established in 1998.

And overall, I must say the GAO found that ICAS is generally effective in providing quality administrative support in an equitable and transparent manner. Like all organizations, we take these recommendations seriously, and it will continue to be a work in progress as it evolves and we adopt the recommendations and continue to move forward.

Mr. Morales: Raj, I want to turn to the President's Management Agenda for a moment. The Department of State is one of only two federal agencies out of about 15 that have recently achieved a Green for both status and progress on the PMA's federal real property initiative. Could you elaborate on this achievement, and could you tell us about your efforts in developing and implementing an OMB-approved asset management plan? And I'm curious, what advice would you give to some of your colleagues who are perhaps pursuing the same area?

Mr. Chellaraj: The responsibility for asset management of real property is really shared by two bureaus within the Department, the Overseas Building Management office and the Bureau of Administration. In terms of advice, the short answer is there are no quick fixes. Be real detail-focused, results-oriented, and continue to monitor the progress.

Mr. Morales: Now, competitive sourcing is another initiative under the PMA. Could you tell us about some of the key competitive sourcing initiatives being pursued by State that have affected your Bureau, and as a member of the Competitive Sourcing Executive Steering Group at State, could you give us an update on your Department's overall progress in this area?

Mr. Chellaraj: Surely Al, happy to. The important thing about competitive sourcing is we are looking for the most effective outcome for the government, whether the work is done inside the government or outside. And competitive sourcing is not outsourcing, and that is a concept that has been misunderstood. It is a really effective management tool, a tool designed to obtain the best value for the government, whether the work is done internally or externally. We completed the first standard competition, and it was to transform printing and publishing activities for the Department, with an estimated savings of $80 million over the next 10 years.

This is fairly significant. Modernizing printing and publication services will -- we believe -- will enhance the Department's ability to communicate its public diplomacy message in a more-timely, compelling and visually interesting way to overseas audiences. There were actually three offers that we received, and the award went to the revamped in-house organization, the Global Publishing Solutions Group. The in-house organization shifted to a market-driven pricing arrangement and adopted industry best practices and performance standards.

The Department overall from a broader picture on competitive sourcing has a green plan charting future studies which we have submitted to OMB, and we've committed to plan in terms of how we move forward. We are reviewing other administrative functions and really rethinking how the Department delivers domestic administrative services.

Mr. Morales: That's fantastic.

What are some of the challenges in administering the diplomatic missions in Iraq and Afghanistan? We will ask Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State, 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 Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State.

Also joining us in our conversation is Bonnie Glick, project executive at IBM.

Raj, what are some of the significant challenges your Bureau faces in administering the diplomatic missions in Iraq and Afghanistan? How does the model for overseas management support within your Bureau ease the burden of administrative support in dangerous posts such as these?

Mr. Chellaraj: Thanks Al, for that question. Operationally, the model for overseas management support is now known as the Iraq Orientation In-Processing center, OIP. This center developed several concepts and methods to ease the burden of administrative support in danger posts. While developed for danger posts, many of these have potential applicability for other overseas posts.

Employees from all federal agencies who are bound for Iraq and who are subject to chief of mission or the ambassador's authority, go through the center to receive their electronic check-in, their OpenNet and e-mail log-ons, cyber security training, deployment support, common access cards and so forth.

This remote check-in process allows the employees to take up their responsibilities sooner at posts. It also saves embassy human resource personnel and diplomatic security staff considerable time and effort in the processing, and spares them from responding to policy questions from multiple federal agency headquarters and entering security eligibility data into the Department of Defense systems.

Mr. Morales: Now, Raj, earlier we talked about the very complex mission that your organization has, so I'm curious, what kinds of interagency, private sector, and nonprofit partnerships are you developing to improve operations or outcomes at State, and what are you doing to enable the success of these partnerships and collaboration efforts?

Mr. Chellaraj: Sure, happy to address that. Our offices throughout the A Bureau partner with other government agencies, the private sector, and nonprofit organizations regularly to achieve their individual missions. I encourage the A Bureau staff to seek out the best in class in their respective fields, both government and private sector, and benchmark against them.

For example, we sponsor the Management Immersion Program, where we place Foreign Service officers in recognized, well-managed external organizations to learn management best practices and bring them back to their posts and the Department. Another example is our Overseas School Advisory Council. Having been a product of several degrees myself, I take real pride, and this is very important to me and for us in the Administration Bureau and the Department.

In '67, the Department of State established the Overseas School Advisory Council, a public-private partnership with U.S. corporations that have substantial overseas operations. OSAC, as it's known, is the longest-running advisory committee in the Department. The purpose of this partnership is to obtain the advice and support of the American corporate community in providing quality education for U.S. citizens, children attending overseas schools.

Currently, there are 194 American overseas schools in 132 countries assisted by the Department of State, and serve 112,000 school-age children of U.S. government and private sector employees stationed abroad, as well as children of host country and third country nationals.

Mr. Morales: Along the same lines of partnerships, could you tell us about the Department's commitment to the small and disadvantaged business community? We understand that your Bureau annually recognizes selected small business contractors who have displayed exemplary performance. Could you tell us more about this award and your Bureau's efforts in this area?

Mr. Chellaraj: The Department of State is committed to ensuring the small businesses, including small disadvantaged, (8a), women-owned, HUBZone, and service disabled veteran-owned small businesses have the maximum opportunity to participate in the Department's acquisition.

For example, last year, the Department awarded approximately $1.3 billion to small businesses. The Department's Office of Small and Disadvantaged Business Utilization is a strong advocate for small business firms, and has a strong history of providing outreach to the small and disadvantaged business community.

Our office participates in many small business outreach events locally and throughout the U.S. that offer small and disadvantaged business with opportunities to learn about contracting. For example, we participated in 38 events last year. We also have a successful record of achieving small business goals.

Here's something we're very proud of: the Small Business Administration presented the Department with the Gold Star Award for excellence in achieving small business goals in both 2005 and 2006. We are also proud of the mentor-prot�g� program, which encourages large business prime contractors to provide mutually beneficial assistance to small businesses.

The Department recognizes the achievements and contributions that small businesses make to its mission during the annual Small Business Prime Contractor of the Year Award ceremony. The Award is sponsored by the Bureau of Administration. It recognizes contractors that have displayed exemplary performance, customer service, management and technical capabilities.

The 2006 award was presented to a team of four highly skilled interpreters, translators, who traveled with our ambassadors in Iraq and provided interpreting support. We also host a small business trade fair at the Department each June for firms that sell office supplies and common usage items, as well as three information technology fairs a year, a prime subcontracting networking session in October and in veterans business affairs. So we do quite a bit in this area, and that is why we are successful, and we're really happy that the Small Business Administration has recognized us for this.

Mr. Morales: That's quite impressive.

Ms. Glick: Turning again to the topic of language services, the State Department has an Office of Language Services that effectively delivers timely, world class interpreting and translating services to the Department as well as language training.

A significant challenge, though, facing this program is recruiting a pool of direct hire employees and contractors who are among the world's best interpreters and translators. How has your organization handled this challenge, and are there any plans to relax some of the Office of Personnel Management's applicant rating procedures and security clearance requirements, which may hinder the recruitment of direct hire employees in this area?

Mr. Chellaraj: Surely. This is a very critical area for us, and we compete head-on with many organizations, particularly international organizations. Our language staff services has a staff of approximately 45 interpreters and translators working in eight languages, and a roster of 1,500 contractor interpreters and translators in 40 languages.

Finding talented individuals to perform these tasks, evaluating their abilities and ensuring that they can pass the necessary security scrutiny will always be a challenge. State Department has certain advantages, we believe. The work we ask our interpreters and translators to perform is difficult, but it's also interesting and it's international. Anyone who can say they work for the State Department, whether as a staff employee or as a contractor, enjoys considerable respect in the profession, we've come to know, because we are well-known for the rigor of our testing process.

In our recruiting efforts for qualified contract interpreters and translators, we require individuals with the highest skill levels and in many languages, and this means that the pool of qualified applicants is limited, in some instances because there's no recurring commercial need for interpreters and translators, and certain languages of limited diffusion.

We actually have to find individuals with strong language skills and provide them with training in interpreting or translating. Let me give you some examples. We've achieved considerable success in the programs we've organized in such languages as Haitian Creole, Urdu, Hindi, Albanian, Vietnamese, Macedonian, Turkish and Greek.

The search for interpreting and translating talent, particularly for the languages of limited diffusion will be an unending quest, and it'll continue. Our staff attends conferences, seminars, regional gatherings, academic symposiums, and job fairs to find the talent we need to perform the work that is required by our clients at the White House, the National Security Council, Department of State, among others.

We also work closely with our colleagues in the Bureau of Diplomatic Security, turning to your question about the security challenges, to perform the required background checks in a timely manner. We receive excellent support from our Diplomatic Security Office, but there are no shortcuts, as you know, when you're trying to do background checks on people who have lived all over the world. This will always continue to be, I believe, a work in progress.

Ms. Glick: As the Chief Acquisition Officer, would you give us a sense of how procurement works within the Department of State? Given the State Department's global footprint, how decentralized are procurement operations within the Department, and what are the benefits of this decentralization, what are some of the challenges? Also, to what extent does your acquisition model emphasize the customer is king approach within your area?

Mr. Chellaraj: Sure. Procurement is a key area for us. In our Department, it is unique, because we have over 200 individual procurement offices at each embassy and post. These offices are located in virtually every country on the planet, with every imaginable set of market conditions. Some of this procurement must be done at post, because necessary goods or services can only be obtained there. Some examples would be renting a facility for a conference or obtaining janitorial service and vehicle maintenance.

These overseas procurement responsibilities are handled by Foreign Service officers who generally manage procurement, as well as a larger portfolio which could include warehousing, shipping, housing and motor pool operations. Locally hired procurement staff would support our Foreign Service officers.

For both the Foreign Service officers and local staff, one of our priorities is to provide worldwide training and oversight of this procurement workforce. Our Office of Procurement Executive, which is in our Bureau, uses the Department's improved Internet capability and e-mail to assist with these trainings. We have all the online training, we have the website, we have the help desk. So all we have made as part of standard operating procedure.

And the Department also uses regional procurement support offices. These are the ones I mentioned earlier in Frankfurt, Fort Lauderdale. It doesn't have to be procured from posts; if it doesn't have to be, we don't do it. We do it regionally as best as we can.

We're also focusing more on our technical representatives. In government, it is called COR, Contracting Officer Representative. And we hold seminars to build a community of practice. These CORs need to learn from each other. This is in addition to the normal training required to be designated a COR at the Department. We are also focusing on strategic sourcing. We've selected medical supplies, furniture, and digital copiers as strategic sourcing targets, commodities that the Department uses throughout our worldwide operations.

For example, we are piloting buying medical services by teaming up with larger partners such as DoD and the Veterans Administration. We are negotiating furniture contracts that'll standardize the types of furniture at posts for easier asset management and will leverage our worldwide purchasing power. With digital copiers, we are more concerned about supplier management and increasing the availability of suppliers.

So there are a number of things under way. Procurement is a real critical function, and we want to ensure that as we standardize and we change some of these processes, we maintain procurement integrity and the proper internal controls and the checks and balances are there.

Ms. Glick: That's great. One of the other areas that you focus on is in the area of allowances, and the Office of Allowances coordinates policies, regulations, standards and procedures for overseas allowances and differential payments throughout the federal government. Would you tell us about the e-Allowances Initiative, and what is the status of this initiative in its implementation?

Mr. Chellaraj: This is an area, where again, we are trying to focus on the customer and improve the service. The Office of Allowances, which is very closely monitored, for obvious reasons, as you can imagine, protects the interests of U.S. government and its employees and families serving overseas by ensuring that overseas allowances and differentials are appropriate to reimburse them for extraordinary costs and difficult living conditions associated with serving abroad.

Conditions at our overseas locations may change abruptly. Our current subsystem for submitting and reviewing allowances is a paper-based system, which obviously will have a lag, as you can imagine. And we really think this delay is unacceptable and began developing e-Allowances, an online way of doing things with quicker turnaround, so the surveys are done, it's reviewed properly, and the adjustments are made in a very effective manner.

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

We will ask Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State, 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 Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State.

Also joining us in our conversation is Bonnie Glick, project executive at IBM.

Raj, given the management changes already underway at the Department, where do you see the Bureau of Administration going in, say, the next five years?

Mr. Chellaraj: Sure. If I had to blue-sky this, my objective during my tenure is to ensure that the fundamentals are in place and working well, that we have the flexibility to respond to the changes coming in the future, such as the new IT capabilities. And it's a work in progress, and certainly will be influenced by the external environment.

There will continue to be an evolution to more quicker turnaround, you know, better cycle times, solving issues in real-time.

To your point about advice for successors, I would say focus really on people. People are the key to making things happen, and I would say attracting a talented, innovative, diverse team of experts on the Bureau team, and continuing to do so, is very important. We are currently focused on that, and the Department and the Bureau need to focus on that, and also the processes -- do the standard operating procedures -- are they making sense, and are we doing things the most effective and efficient way possible?

Mr. Morales: Now, Raj, I understand that BusinessWeek has identified the State Department as one of the top 10 places to launch a career, specifically for new college graduates, and was the only federal agency listed in the top 10.

Could you tell us how significant this recognition is to your Bureau, and how has this recognition benefited your Bureau?

Mr. Chellaraj: Oh, this recognition is very important. As you know, competition is intense for top-notch employees, and on that list you will find many recognizable names who are in the Fortune Top 10, Top 20 companies. I recently spoke at an entry-level officers' conference for those serving on their first or second tour in the Middle Eastern region, and the work experience and the academic credentials these individuals offer the Department are very impressive. They represent a wide range of backgrounds and areas of expertise, and language skills. This is exactly the type of individual the Department needs both here and overseas.

Ms. Glick: To that end, and in the spirit of the BusinessWeek ranking, what steps are being taken to attract and maintain a high quality technical and professional workforce?

Mr. Chellaraj: That's a great question. The Department senior leadership, including Secretary Rice, are fully committed to ensuring the Department's workforce reflects the excellence and diversity of America; we want the best and the brightest to come to State, and we are seeking diversity. Now, well-run private companies, as you know, have already realized this and have taken major steps in this direction. Not having diversity is not an option. Look at President Bush's leadership team here at State.

In addition to doing diversity, we are also forming partnerships with many organizations, take part in conferences and gotten our message in print and electronic media. We have diplomat residents in 17 college campuses currently across the country and growing. We identify, counsel and mentor. We have broadened outreach to many minority organizations. We need Arab-Americans, Turkish-Americans, Chinese-Americans, Korean-Americans, scientists, IT professionals.

In terms of the recruiting for the civil service, the Department is one of the most active participants in the President's Management Fellows Program. In FY 2004, we ranked second among overall government agencies for employing the Presidential Management Fellows. We've expanded the Career Entry Program, which is a two-year career development program open to the public, with positions in areas like contract management, personnel management, financial management and other areas and other areas.

In addition, we've done something fairly unique. We have a number of students, interns and career development programs. We have something called a "Stars Program," which is a student program that allows students to work part-time on Freedom of Information Act issues and declassification programs. We have something called CLIMB, which is an entry-level career ladder program for logistics professionals. State really is reaching out to ensure that we have the best and the brightest workforce, and that is why I believe that we are on the Top 10 list.

Ms. Glick: It is fantastic, and it's quite an accomplishment. Attracting employees is important, retaining employees is important. How do you ensure that your employees have their appropriate training and skills to do their jobs? What's your organization doing to ensure that it has the right staff mix to meet the upcoming challenges that will be faced by the Department of State?

Mr. Chellaraj: Bonnie, the Department established a civil service training continuum, which is a tool designed to be a career planning roadmap and a means to ensure that an employee systematically acquires the knowledge and skills needed for successful performance from entry-level to senior-level.

In addition, we have identified certain types of trainings as mandatory for all employees, or in some cases specifically for employees at a grade level. Give you some of these examples: computer security awareness training, mandatory leadership training, equal employment opportunity diversity awareness. Our Bureau works with our colleagues at the Foreign Service Institute to develop and teach a variety of courses; both classroom and distant learning courses, on topics such as emergency preparedness, grants management, procurement.

I mentioned the Management Immersion Program that we have sponsored. I personally encourage and support our own staff to participate in external training opportunities such as the Department of Defense National War College and the Department of Agriculture leadership programs. One of our own special assistants will start at the National War College this August.

Mr. Morales: Raj, there's an ongoing discussion around government, and even in the private sector, about the pending retirement wave. How are you preparing for this within your organization?

Mr. Chellaraj: Sure. Happy to address that. Along with the rest of the federal government, this is an important human capital issue at the State Department. As part of the Department's broad succession strategy, we have developed numerous initiatives and programs designed to ensure we have the right number of people with the right skills to carry the Department's mission.

The Foreign Service system, which is roughly 60 percent of our workforce, is an up or out career system. Higher-level positions, needs will be met by those already in the system through promotion and seasoned employees according to anticipated needs at each level. With the civil service currently -- 14 percent or so of our civil service workforce is eligible to retire, and by 2010, nearly one third of our civil service workforce will be eligible to retire. This is a fairly sizable challenge for the Department of State.

To prepare for this, we've undertaken several initiatives under the leadership of the director general. The Foreign Service Institute School of Leadership and Management Development ensures the leadership training is part of every employee's career path. We project that by the end of the first quarter of 2007, 100 percent of the State Department's target population of roughly 7,000 mid-level employees will have completed this program.

There is the Senior Executive threshold seminar, which is a mandatory 2-1/2-week course for employees newly promoted to the Senior Executive Service or the Senior Foreign Service. Mentoring is also emphasized in the Department, both for our civil service employees and Foreign Service employees. Our own Bureau of Administration also promotes and encourages using individual development plans for our employees.

The individual development plans, or IDPs, as they're known, is a statement of long- and short-term career goals and development objectives that provides a systematic approach to the training needs of employees. By planning needed training and experiences in consultation with their supervisors, employees are better able to develop the knowledge, skills, and abilities to contribute to the organization in achieving their career goals, and more importantly, meeting the Department's mission.

Mr. Morales: Raj, we're coming to the end of our time, but I want to ask, given your diverse and highly successful federal career, what advice would you give to a person who perhaps is considering a career in public service?

Mr. Chellaraj: That's a great question, and that's a great last question. First, I highly encourage everyone to work in the public sector. The government needs innovative, dedicated and energized people. As you consider what you want to pursue, I would remind your listeners do what you're really passionate about. This may mean your career follows a non-traditional path; it certainly has for me. When I started my career, I did not plan to be the Assistant Secretary of State for Administration. Lastly, I would also say work hard, do your job well and you will get recognized and rewarded.

Mr. Morales: That's fantastic advice.

We have reached the end of our time. I want to thank you for fitting us into your busy schedule, but more importantly, Bonnie and I would like to thank you for your dedicated service to our country across the various roles you've held in our government.

Mr. Chellaraj: Thanks again. It's been a delight being here. In summary, as you can see, we in the Bureau of Administration touch a lot, we work hard at making diplomacy work better. And thanks again for the opportunity to speak to your listeners and share with them our mission and programs. I'd encourage our listeners to look at www.state.gov for very timely information relating to the Department of State.

Thanks again, it's been a pleasure.

Mr. Morales: Great. Thank you.

This has been The Business of Government Hour, featuring a conversation with Raj Chellaraj, Assistant Secretary of State for Administration at the U.S. Department of State.

My co-host has been Bonnie Glick, project executive within IBM.

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

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

Thank you for listening.

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

Until next week, it's businessofgovernment.org.

Terry J. Pudas interview

Friday, June 1st, 2007 - 20:00
"Transformation can allow you to do things more efficiently. And that's what the question is about; it's not about numbers, it's about capability."
Radio show date: 
Sat, 06/02/2007
Intro text: 
Innovation; Strategic Thinking ...
Innovation; Strategic Thinking
Complete transcript: 

Originally Broadcast Saturday, June 2, 2007

Washington, D.C.

Welcome to The Business of Government Hour, a conversation about management with a government executive who is changing the way government does business.

The Business of Government Hour is produced by the IBM Center for the Business of Government, which was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness.

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

And now, The Business of Government Hour.

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

President George Bush's mandate for defense transformation was "to challenge the status quo and envision a new architecture of American defense for decades to come."

Over the past several years, it is becoming increasingly clear that defense transformation is not simply a response to global terrorism, but rather a way to leverage the core strength of the U.S. armed forces, which is its ability to adapt and change.

As the rate of change of technology continues to accelerate, it will be even more important that the U.S. military keep pace.

With us this morning to discuss this critical challenge is our special guest, Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources.

Good morning, Terry.

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

Mr. Morales: And joining us is in our conversation is Chuck Prow, IBM's Defense Industry leader.

Good morning, Chuck.

Mr. Prow: Good morning, Al, Terry.

Mr. Morales: Terry, to provide our listeners an overall context on the subject of military transformation, could you give us a sense of the history, mission, and evolution of the DoD's Office of Forces Transformation and Resources, as well as its predecessor organization, the Office of Force Transformation?

Mr. Pudas: Sure, I'd be glad to. Let me just sort of go back in time, so maybe 5-1/2 years ago, when we first embarked on this journey. The President had declared transformation as a key priority. Secretary Rumsfeld clearly was charged was transforming the military for the new world, the new global security challenges in the 21st Century. And so my former boss, the late retired Vice Admiral Art Cebrowski, was asked to take the challenge up. The way we did that initially, of course, was we created an office that was intended to be a catalyst and a focal point for transformational thinking, and tried to jump start that kind of activity within the Department.

And so we went from that idea to creating a fairly modest office of about 15 people or So began to develop concepts of transformation. What was it, first of all? Everybody was kind of confused by this word. What do you really mean by transformation? And why do we need to do it? And of course, change is always very frightening for a lot of people -- how is it really going to affect me? And so that was a lot of the work we did in the first several years.

And besides just sort of the developing the concept, we tried to look at what are some alternative views of the future, perhaps with some alternative logic for the decision-makers as we run through this transformational activity. And then we actually created some sort of what we called experimental articles along the way as sort of tangible examples of those things.

So we went from there to last year, when we realigned the office within the Under Secretary of Defense for Policy to continue that kind of work within the Department. So essentially, we went from sort of this what is this and how is this going to affect me to the culture of the organization actually changing in a way where you can move this activity from outside and more closely align it with the formal processes within the building.

And so that's where we find ourselves today. We're a fairly young organization, obviously, but we're getting our portfolio together and developing the new relationships and making decisions about where you engage in certain processes and the things you can do to continue the work.

Mr. Morales: Now, certainly this area of transformation is very broad, so I'm curious, what is the size of the budget that you manage, and have you moved up from the 15 employees in your organization today than you were 3-1/2 years ago?

Mr. Pudas: Well, actually, the budget's remained fairly constant over the last several years, and it's fairly modest. I mean, we have probably around $5 or $6 million dollars that we use to catalyze projects with and research and studies and war-gaming kinds of events, and we always do that in collaboration with other partners, so we don't embark on these with ourselves. We try to develop a large community of interest in these things.

And the size of the office is about the same. We have about 15 to 20 folks comprised of sort of government employees and military officers as well as some outsourcing support, which we've done.

And so the question is, how do you do this with such a modest budget and few people? Well, you develop a lot of relationships with other folks. And so we have relationships with many of the think-tanks in town, and FFRDCs, or Federally Funded Research places, as well as academia, and quite frankly, with industry. We have -- all the large industries have groups of people that think about strategy and the future, and so we try to team with them as well. So you leverage a small amount of people and build a large virtual team.

Mr. Prow: Please describe your specific responsibilities and duties as Deputy Assistant Secretary of Defense for Forces Transformation and Resources.

Mr. Pudas: Well, I'll try to be as definitive as I can. The vision is really to align the transformational thinking, mainstream it within the Department, as I said, and be connected to some of those formal processes that look at the future strategic environment, think about what future capabilities might look like, and then participate in the processes along the way that lead to the fielding of those kinds of things. And so that's a major undertaking. As well as to continue to sort of push the envelope and look at alternative futures, look at alternative capabilities, look at what technology opportunities might be out there from a policy perspective.

And then part of my tasking is to be sort of the policy point of contact for all of those good transformation issues that are going on at the Joint Forces Command in Norfolk, and of course, Allied Command Transformation down there as well.

So that takes up a significant amount of time, and then, of course, we want to look broadly across all the general purpose forces to look where those interdependencies might be, and highlight those kinds of things.

Mr. Prow: What are the top few challenges you face in your position, and how have you addressed those challenges?

Mr. Pudas: If you've ever worked in a large organization, which I'm sure both of you have, that catalyzing change is always very, very difficult. And so that's one of the specific challenges, obviously, to do that. A large organization has a tendency to be bureaucratic, and so you have to find ways to deal with that and still be effective.

For me personally, not having been within the mainstream here for some time, that's a challenge for me to understand how that works, and so we're doing that. And then of course, it's always a challenge because there's very many competing priorities. But we are not necessarily charged with worrying about the near term. Our job is to be somewhat custodians of the future. And so to have that mix and still be relevant to some of the current things that are going on is always somewhat of a challenge.

Mr. Morales: Terry, we had a few moments prior to our show to talk a little bit about your career, and some time that you spent with the German Navy. I'm curious, how did you get started in your career, and how did you start with Defense Transformation?

Mr. Pudas: Yes, it's very interesting. I had a career as a naval officer for 32 years. At one point there during Desert Storm, I was working for a fellow named Capt. Art Sebrowski, who I got acquainted with very well in a particular job that I had, and it was very interesting. And anybody that knows of him or has been around him knows he's a very unique individual. And so that was the beginning of my association. We then parted ways and went on our own careers, and we ended up working together again up at the Naval War College in his capacity as president, and he asked me to be somewhat of a special assistant.

At the time, his charge was to sort of catalyze transformation in the Navy, and so we worked very closely together for two or three years, and then of course, he was asked to come and take this post, and he asked me if I would be willing to help him do that. And it's pretty hard to pass up a chance like that, to really have a chance to contribute, and of course, it's very hard. He used to talk about what he had spent his professional career doing, and he used to describe it as working at the intersection of national security and large-scale change. And there isn't any more difficult task, but there also isn't one that's more rewarding than that.

That's sort of how I've evolved into this position, and then of course, he stepped down a few years ago, and then I became acting for a couple of years, and we continued the mantra, and then I ended up where I am today.

Mr. Morales: Well, that sounds like a very busy intersection you just described there.

Mr. Pudas: Yes, it is.

Mr. Morales: You used the term "catalyzing change," and so I'm curious, how has your previous experience, your 32 years as a Navy officer and as a pilot, how do you think that's prepared you for your current leadership role and informed your managed approach and leadership style?

Mr. Pudas: Well, first of all, to be a good leader and manager, you have to have some competence in a particular subject, which is always key. And I learned a lot from my former boss, obviously -- you've got to be able to craft a vision for people. And then you have to be able to inspire them towards that vision. And so those three big pieces right there are the areas you have to work very hard at.

I had been in leadership positions in the Naval service and large organizations, and so I had some experience with managing people and different things. I alSo of course, had a history of making my own changes. And so some of the things that I learned were that you have to make change a very inclusive activity; you can't expect people to sit at their desks and wait for permission to think. And so what you do is you invite people into the process, you try to inspire them towards this vision, and then you invite them in to help craft their own future or participate in the transformation. And so I think some of those things that I learned while I was in Naval service, some of those I learned with my former boss, but those have been things that have sort of served me quite well.

Mr. Morales: That's great.

What is the Defense Transformation?

We will ask Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources, 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 Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources .

Also joining us in our conversation from IBM is Chuck Prow, Defense Industry leader.

Terry, could you define transformation and transformation rate within the military context? What are some of the keys to transformation, and how has transformation changed from when then-Defense Secretary Rumsfeld first established the transformation office?

Mr. Pudas: Well, defining transformation is somewhat difficult. I think what I'd like to do is maybe try to describe it for you.

Our concept at Transformation is really about doing those things that allow you to continue to have a competitive advantage. And so the concept is really based on the fact that if you are in a competitive environment, whether it's in a national security context or whether you're in industry, and you're not doing this thing called transformation or constant creativity and improvement, you soon find yourself in a very big pickle here.

You are essentially a strategic fixed target. And if you think about it, there's lots of industry examples, and of course, in history in our nation-state examples. So the concept is to this continuum of constant innovation and creativity, seeking those things that are going to be the source of your competitive advantage. And it's really at the high level, it's really about strategy. It's really about choosing a competitive space and then going about the work of creating organizations, capabilities, policies, those sorts of things that influence that competition in the space.

So if you think from your side in industry, it's really the same thing, right? You're not interested in chasing the emerging market; you really want to create the next market. It's about creating the future. The future that you would like. So that's the competitive space. So essentially all the activities come under that sort of large, large strategic concept.

There's a number of things you do. You try to understand the future security environment. People like to look at it through the lens of technology. But it's really much broader than that. It's about new concepts, new organizations, doing things differently with different technologies. It's about trying to understand underlying principles, right? Which all strategists do; they look out there and they say that's really interesting that this is happening, but why is it happening? And is there a way that I could influence this particular trend in a useful way to my advantage?

So things like that. What's going to be the source of perhaps your next competitive advantage kind of thing, and there's some big examples in the past. There's the one from the Army that I always usually use is when the Army, several decades ago, said we want to own the night. Okay, well, we turned that vulnerability into an enormous competitive advantage for the U.S. today.

And it's looking for things that are game changers, changing the game and changing the rules. Changing the basis for competition. When we, for example, decided to compete on the basis of precise navigation and timing, that yielded GPS, Global Positioning Satellite, right? It not only changed the battlefield, but it changed the world. So are there things like that out there that we should be thinking about as well?

But really, and this gets to your question about rate, but it really is about people, it's about the culture of the organization. And all senior leaders know that that's where the real competitive advantage comes from. And so the ability to facilitate what you call a learning organization, one that has the ability to outlearn your competition, so this is about learning rate. And then of course, taking that learning and translating that into some kind of actionable kind of capability or organization or something. That's a real key to it as well, and if you listen to what very successful industry CEOs have done and other people, they really do focus on this learning rate piece.

Mr. Morales: That's interesting.

Now, recently, Defense Secretary Robert Gates has underscored that military transformation, and I quote, "is a major charge from the President that must continue."

I'm curious, how does the recent realignment of your office within the Under Secretary of Defense for Policy support this charge?

Mr. Pudas: Well, I think that we're there now to -- we're more closely along the line with the processes. We were more -- I guess I would characterize us as an influence organization, which would try to create some new logic and try to influence the larger processes, where now we are more closely aligned with the formal processes, and so it really has changed.

I mean, since I've been at this from the beginning, I remember trying to participate in certain forums to try to provide some alternatives, and that was met with mixed success sometimes. But now it's accepted. The views may not be accepted, but the views are always welcomed. And so I think that's a big change in the Department's culture, and so as I said, we're supposed to continue to do this. I mean, my job is to always be somewhat dissatisfied and impatient.

Mr. Morales: You just let out all your secrets.

Mr. Prow: Terry, the core of the U.S. defense strategy focuses on force security challenges outlined in the Department's national defense strategy.

Can you describe DoD's ongoing shift to enhance capabilities and forces needed to address irregular catastrophic and disruptive challenges?

Mr. Pudas: Yes. I mean, there's a tremendous amount of work going on here. Clearly, we had focused on what we called the traditional challenge. The Department of Defense is very, very comfortable in that particular quadrant and sort of took ownership of that, but when you step back and look at the larger competitive environment, you'll see that there's a dynamic that happens, and that is, as you create more and more capability to deal with what we call the traditional challenges, competition moves to the others. And that's part of what you're experiencing now. And so the question is, what kinds of capabilities and organizations and those sorts of things -- you need to deal with those, and so that's a great deal of the work right now. And of course, it's very complicated.

The traditional challenges were usually owned by the Department of Defense. The other three had a larger national security component to them where you now operate in interagency kinds of constructs, and so the team is much larger, so lots of work going on in developing those relationships and what do they look like, how do they contribute? And in many cases, you go from what people talk about as kinetic solutions to non-kinetic solutions, because it's really about behavior.

So what are those kinds of things that we need to be able to do to be more successful in that particular area? I mean, you hear lots of people talking about strategic communications, which is sort of the term of art today, but how much do we really know about that? How do we know about the cause and affect of those things. So that leads you to say, well, if we really want to understand that, then perhaps we need to bring in this group of cognitive sciences and cultural anthropologists to help us understand that particular dynamic.

The catastrophic things, those things are of course very troublesome because we are in a very globalized construct in the world today, where we are very interdependent, which brings with it an enormous amount of brittleness. What might trigger a shock through the system that we hadn't thought about? I sometimes refer to the SARS event in Singapore, right, which was in 2003. Our major focus was preparing for the Iraqi campaign. But the result of that had major disruptions in economics around the world. I think we had a couple of major airlines here in the U.S. that were on the brink of bankruptcy, and we all know what happened to the tourist industry in Canada. And so this catastrophic, cataclysmic kind of stuff is quite troublesome, so how to think through what might be the consequence management of those things.

Disruptive challenges are sort of another category. How do you think about those, and what kinds of things could you do deliberately to help mitigate those kinds of threats? And we have a construct, and if you're interested, we could share it with you. I know time is limited, but this is where rate of change comes in. If you're on a linear sort of path of modernization, a prospective opponent can get a bead on you at some point and disrupt whatever that is you're trying to create, and so being able to modulate rate of change becomes a very useful construct.

Mr. Prow: How can the U.S. military reduce its vulnerability to disruptive threats by increasing investments in programs that accelerate transformation?

Mr. Pudas: Yes, I just sort of touched on that a little bit, but clearly, there's lots of work going on in the Department to work on the processes. I mean, I don't think anybody would come in and say that we're really happy with our processes now and they're just fine, we don't need to change them. Because everybody acknowledges that the rate of change is causing us to re-look at how fast we can do things. So that's going on.

But how do we do other things that help influence our thinking about what are the kind of capabilities that we might want, and how would we use them and that sort of thing, and so this notion of experimentation really becomes a very powerful tool; creating sort of tangible capabilities or experimental articles, as I like to call them, putting them in the hands of operators, bringing the science and technology community together; and then on a very rapid cycle, the developing concepts and requirements and that sort of thing. And so I think that that's a very powerful activity which is very useful, this experimentation business.

Mr. Prow: Can you please elaborate on the concept of transformation chairs?

Mr. Pudas: Sure. I'd be glad to. That's something that sometimes is underappreciated and overlooked, but I talked about it briefly in the opening segment, which was this notion of culture. How do you fundamentally get at the culture of an organization? And of course, one of the key levers of that is education.

Several years ago, we said what could we do to effect that, and so what we decided to do was help facilitate the creation of transformation academic chairs at all of the departments, institutions, and as most people know, we have junior- and senior-level colleges. We have the academies; we have Naval post-graduate school; we have acquisition universities, a whole number of these.

So how can we catalyze transformational thinking in those institutions as sort of a focal point to insert certain things in the curriculum, help influencing how people think about things? And the chairs are interesting, but the real interesting piece is that they come together every quarter and they collaborate with one another, and they share experiences, and so it's sort of a large community, and it's been quite successful.

Mr. Prow: Very good. It sounds like you're creating new models in dealing with the academies and researchers.

Mr. Pudas: Yes. Yes, that's exactly the idea. This notion of collaboration is a different kind of construct in the Information Age. It means different things. And so to be able to facilitate that in this transformation chair network -- and we also have some affiliate chairs, both international and from other folks, too. So it's taking off.

Mr. Morales: Terry, you've used terms like "rate of change," modulating change, you talked about learning, you've talked about behaviors in culture. So I'm curious, to what degree has the DoD developed metrics for measuring the capabilities of transformed military forces and the effectiveness of transformational military services, and is DoD using these metrics in making decisions about programs and resources?

Mr. Pudas: Yes. Of course, that's really the hard question, isn't it; right?

If you're in industry, you can measure bottom line, but here, you're measuring behavior or outcomes that are very difficult to quantify, so they're normally qualitative, subjective kinds of things. And so there has been a significant amount of effort on doing that. It's difficult. We need to continue that effort.

We, of course, were great advocates, and continue to be, of this notion of networkcentric operations, or whatever term you want to use. Everybody seems to buy into that, and they like that, and it's no longer debated; it's how do you actually do it? But then of course, you always run into the question with the resource people, right, and everybody has this: so tell me about the return on investment. Okay, so you have to try to articulate that. And so we've done a number of case studies sort of things to look at different units and how their effectiveness was changed and different things, and so that's been a useful activity.

I actually have a personal metric that I use. And it's used to sort of judge the culture of the organization. Language conveys culture. So the words people use say a great deal about how they've changed, their attitudes about things. And so when I think back when we started, a great deal of talk always about coordination and deconfliction and those sorts of things, but you don't hear that anymore. You hear sharing and collaboration. People use those terms a lot. We used to talk about interoperability, and now we talk about interdependence of those systems. And so for me, that's a fundamental metric for judging how the culture is changing.

This is a tough subject. Metrics have always been the Holy Grail. But we continue to work at it.

Mr. Morales: Well, as you mentioned, it's really all about driving behaviors, and behaviors historically have always been difficult to measure and quantify.

Mr. Pudas: Absolutely.

Mr. Morales: What about efforts in military innovation?

We will ask Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources, 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 Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources.

Also joining us in our conversation from IBM is Chuck Prow.

Terry, the Defense Science Board recently released its summer study on 21st Century strategic technology vectors.

Could you elaborate on this study, and what are your views on some of the key recommendations outlined in the study, specifically on the Board's new version of Observe, Orient, Decide, Act?

Mr. Pudas: Over the last decades or so, we had been very, very successful in sort of creating some sort of vectors in terms of precision, stealth, and a couple of others, which really, really served us well. But as we've been talking about, the world changes and the rate of change continues to grow. And so what are those things that we ought to really be looking at?

My personal view is that there are a whole number of exciting technologies out there which some people are calling revolutions in science, and in that category are things like robotics, nanotechnology, bioenergy information, and those are all really, really exciting. But historically, many times, the big advances have come when two or three or those collide in a very clever way or intersect, and you are able to do things that you didn't imagine before.

So I think we always want to be looking at these sorts of things, and I'm glad that they did this, and I'm sure that's going to be very useful to the Department to get their views. These are some very, very bright people who've got a lot of experience and are grounded in these sorts of things. But my view is that sometimes we also need to look at the intersections of these.

Mr. Morales: So do you have a perspective on what some of these new vectors should be, going back to precision stealth joint operations and so on?

Mr. Pudas: Well, these are personal views, but I think that there are things that are going to be very interesting in the future, and perhaps some small investment might be very, very useful.

For example, I already mentioned sort of this notion of the cognitive sciences. I mean, I believe there are many people that believe that is real science now. There were a lot of skeptics that wouldn't allow those into the scientific club, but I think that that's becoming less of a problem. I think that if we don't begin to look at things that affect logistics and sustainability, those sorts of technologies, that we're going to find ourselves out of balance. We have invested enormously in networking the force to allow the force to operate differently in sort of this large dispersed way, and so what are the things that are inhibiting us getting the maximum return on investment out of that?

And then I think that one of the things that of course is going to be extremely disruptive in the future are things in the category of directed energy. Anybody that follows that knows that it's a very interesting area, and lots of work going on there. You just have to look at the reports in the open press to know that there I think have been over 400 incidents of commercial laser kinds of things trying to dazzle airline pilots that are being used by criminals and things like that. And so I think that's an area that's going to be interesting to follow.

Mr. Morales: So again, it goes back to the novel ways of trying to drive behaviors, whether that's in a kinetic or a non-kinetic fashion.

Mr. Pudas: Right. Exactly.

Mr. Morales: Great.

Mr. Prow: Terry, have the fundamental rules of combat, meaning mass surprise, logistics in unity of command, given way to the rules based on information and knowledge?

Mr. Pudas: Yes. I mean, that's a very interesting question. I think that we're beginning to learn more about that. I mean, most people in uniform or that have been in uniform intuitively know that battles are won and lost in the minds of your opponent. It doesn't necessarily have to do with kinetic sort of stuff unless your strategy is attrition. And so what are those things then that affect the cognitive domain of your opponent?

Being surprised, being outmaneuvered, creating closely coupled events. Confronting someone with a situation for which they have no mental model, and so it is really about this notion of creating an information advantage and turning that into a competitive advantage. And so we have I think done a lot in that area.

There's still a lot to understand. It's really interesting to talk to commanders who have been in command of large network organizations and how they have admitted that they had to kind of think through their philosophy of command. All of a sudden, we have the ability for these chat rooms to pop up, and the horizontal sharing of information at lower levels, which isn't necessarily the old command paradigm, when things went up and down the chain. Now they can go across.

And so I look for sort of manifestations of different behavior kinds of things to give me clues to that. What do commanders want to command now? Commanders now want to command bandwidth, which is quite interesting, right? It used to be a back office function, moved to the front office because there's so much -- that's a source of power, and so I guess the rules or the goal hasn't necessarily changed, but I think the way we use information as a real source of advantage has become more appreciated, and people now are understanding how to use that.

Mr. Prow: Given your projection of future challenges to the nation's national security, what is the proper balance between conventional and special operations forces?

Mr. Pudas: Yes. I guess I couldn't give you an exact answer, but if I look at what happened most recently over the last several years and you see how those two conventional and unconventional forces have been operating in concert in many ways, we've always talked about being able to be more soft-like. I mean, that's been sort of the term.

What does that really mean? Well, I mean the ability to -- ease of employment and sustainment, having an appreciation for the local area that you're operating in. I mean, the Special Operations Forces have spent a lot of time doing that sort of thing. I mean, I don't know what the right balance is, quite frankly. I mean, we have to make sure that we have enough sort of capability to deal with any potential high-end kind of thing. And at the moment, of course, we're doing very labor-intensive kinds of operations, and I mean, there's been a lot of emphasis on language training and cultural awareness skills and those sorts, and those are all really, really good things.

I can tell you, though, that there are a lot of people engaged in this particular question. What exactly is the right balance? Are there synergies between the two, et cetera? And so I'm not trying to duck the question, but I don't have an exact answer for you.

Mr. Morales: Okay. Terry, I want to take us back to something that we talked about earlier around this notion of a return on investment. And certainly, calculating the potential cost of defense transformation is not a non-trivial matter. And skeptics have argued that the cost of transformation, both in the near-term and long-term, are uncertain, and that transformation therefore might not necessarily be less expensive than, say, routine modernization.

Could you elaborate on the efforts to really understand the costs associated with transformation within the military, and is it possible to reduce the defense budget and improve the Department's ability to carry out its current and future mission simultaneously?

Mr. Pudas: Let me answer it this way: I think that associating transformation to cost may not be the right metric, because it's really about making choices. Some of the choices that you make have enormous payoff to be able to operate differently than you could before, but are relatively cheap in terms of the overall system. And of course, there are some legacy things that very hard choices have been made over. I mean, you remember the big debate about Crusader and Comanche and all those sorts of things, so it's not necessarily tied to more money, it's tied to the choices that you make.

I'll give you a personal example here: so I'm trying to make the decision on my internet connectivity in my house, so the decision was do I buy this new computer, which was fairly expensive at the time, or do I invest in the high-speed internet? So I invested a modest amount in the high-speed internet, and the productivity in the household went up enormously. So it's not necessarily about buying some new high-end piece of stuff, it's how you use it that really makes a difference, and so making specific choices and understanding the return on investment I think is the real key here.

Mr. Morales: So it sounds like people are drawing an equation that transformation is equal to cost reduction, and that's not really what this is about.

Mr. Pudas: No, not necessarily. Transformation can allow you to do things more efficiently. And that's what the question is about; it's not about numbers, it's about capability. A brigade combat team today can do significantly more than one could a decade ago. And it's just like with airplanes. We used to have 200 sorties per target in World War II, and now we have targets per sortie. And so yes, you can create some efficiencies and effectiveness as you go down this transformational journey.

Mr. Morales: Terry, I only have another minute left, and we talked a little bit about this, so I'm curious, how are we using joint professional military education to transform the mindset and culture of the U.S. joint force community, including our allies and our industry partners?

Mr. Pudas: Well, of course, we talked a little bit about the transformation chairs, and that's a good thing, but one of the things that we also do is we sponsor what we call a transformation short course, which the National Defense University puts on for us. And of course, we invite everyone in the Department, as well as the other agencies, as well as members from industry, but it's pretty much opened up to just about anyone, and to sort of help catalyze this transformational thinking.

So that's been really successful, and most recently over the last -- I would say half year -- we also began a course on what we're calling stability and reconstruction. There's been a great deal of dialogue about that kind of capability and what it really is and how to think about that. And so education is a really powerful tool, I think, to get at this whole piece.

Mr. Morales: Great.

What does the future hold for the DoD transformation efforts?

We will ask Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources, 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 Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources.

Also joining us in our conversation from IBM is Chuck Prow, IBM's Defense Industry leader.

Terry, we talked a little bit about behaviors and habits, and so I'm curious, how do you make something like transformation a habit? And given your efforts over the years, could you elaborate on DoD's culture of innovation?

Mr. Pudas: You're right. I mean, people are creatures of habit. It's difficult to catalyze change, and you have to remember that the product of the Department of Defense is national security. And so you have to be careful. I mean, you have to do the appropriate due diligence and all those sorts of things, because it is a really big deal.

But I think the Department's leadership has done a lot over the 5-1/2 years when I look through my lens, in empowering people to propose alternative solutions and different -- my experience is that everybody probably at every desk has some ideas on how to improve things. And so having the ability to listen and empower those people to go ahead and make some change, and be able to do informed risk taking I think is very powerful, and so when you look on the industry side -- I don't like to use too many industry examples because I get criticized for that -- but other large organizations, they're successful, they have that sort of culture. That's what they try to instill, so I think that great strides have been made. It's something that you always have to pay attention to because it's very easy to retrench, and of course, that's not what you want to do.

Mr. Morales: Terry, the integration of the DoD policy directorate was just one of the many changes to take place within the DoD policy directorate. Can you tell us about some of the other changes, and how these changes illustrate the core transformation principle of creating a more adaptable organization?

Mr. Pudas: Well, I can try. I mean, I'm fairly recent to the organization, and this effort was started sometime before we actually arrived, but I know that the leadership of the organization felt that there hadn't been a major transformation within that organization for quite some time. There was sort of some evolutionary steps that were done, and so I believe that they felt that it was time to sort of realign the organization to reflect the global environment of today post-Cold War, and be able to be much more effective in the future, as well as looking at things that could be done to make the organization more effective from a business perspective and management perspective.

And then also, there's a human capital strategy component of this. And so the idea was then to create a different organization that would be much more effective and perhaps more efficient for the future, as well as to create an organization which we call somewhat adaptable. The ability to then change as things unfolded or as new requirements came up and to create an organization where the whole is greater some of the parts.

Mr. Prow: An emerging area of DoD's vision for defense transformation are actions to reduce DoD's energy requirements and to develop alternate energy sources.

What is your role in this effort?

Mr. Pudas: Well, this is something we took an interest in probably three years ago, perhaps even longer than that, because it was our sense that at some point we were going to have to start thinking seriously about this issue, and so we did a couple of modest efforts, a couple of studies, and we actually co-sponsored with Under Secretary of Defense for Acquisition Technology and Logistics a seminar series that meets once a month. It's open to anyone that wants to attend, to look at the energy issues broadly, and it's a very complex thing.

Clearly, there are technology issues, there are policy issues, there are cultural issues. There's a whole number of things involved, but you can see that if you look just on the operational side of the house, how it's becoming a significant deal. It's part of the logistics burden I talked about earlier. And so what we'd like to be able to do is operate in this very dispersed sort of network environment that we've created, but we don't want to spend all of our time protecting convoys of petroleum, for example. So it's both a cost issue and an effectiveness issue.

And then of course, lots of people are talking about peak oil and when is peak oil really going to come, and how's that going to affect the world economy, and there's a competition for energy resources, so there's many dimensions of this, as well as environmental and all of those things. So we are still working on this. I have a couple of studies going on right now that they're trying to look at this through different lenses, trying to create some data for the decision-makers on how to think abut this big issue.

Mr. Prow: Transformation creates new competitive areas and competencies. What qualities will be needed in the warfighter of the future?

Mr. Pudas: We talked about the complexity of the potential future competitive space. Right now, we see our folks being put in very, very complex environments. They're very, very difficult. And so I think there are a couple of pieces of this.

One is clearly, there's a cultural dimension on all this stuff with language training and different things, and how do you think about these complex environments? And then also, of course, there's a capabilities piece of this, something which I call sort of how do you move from binary solutions to something that has a scale of effects? So we give our folks very, very good binary solutions, put them in very complex environments, and then perhaps they have to accept either enormous risk or they do something and there's unintended consequences. And so I think that things in that particular category that have a capability from sort of a non-lethal to a lethal capability would be somewhat useful.

Now, having said that, that is not a simple issue. There's incredible policy issues and cultural issues that go along with that when you start going down that trail, but I think that's an area that we have to start thinking about.

Mr. Prow: It sounds like there are significant human capital issues associated with this subject. What is the Department doing to attract and retain the highest quality workforce?

Mr. Pudas: I think they're doing a lot. I mean, I am not that familiar with the national security personnel system that was just put in place recently. But clearly, that was an attempt to be able to manage the human capital better, because everybody recognizes that that's really what we have to pay attention to. And so how can you unburden some of the previous burueaucratic things and large organizations have those, and so people don't necessarily want to be subject to those and in that kind of environment, so to make the environment much better, and I think that they're working very hard to attract people into government.

Mr. Morales: Terry, we're coming to the end of our time here, but I do have one more question I'd like to ask you.

You've had a very successful career in the Navy, and now supporting the DoD transformation efforts. I'm curious, what advice could you give to a person who perhaps is considering a career in public service today?

Mr. Pudas: I would tell them to do it, because I think there's no higher calling than to serve your country, whether in uniform or in the civil side. And it's very, very rewarding. It's difficult in some cases, but I believe it's a very worthwhile effort, and no matter what kind of day I've had at the office, at the end of the day, I always feel good about that I was contributing to something that was very worthwhile, so I'd like people to consider it very seriously.

Mr. Morales: That's fantastic. Thank you.

We have reached the end of our time, and I do want to thank you for fitting us into your busy schedule. But more importantly, Chuck and I would like to thank you for your dedicated service to our country both as a naval officer, and now leading the DoD's transformation agenda.

Mr. Pudas: At the end of every time I talk to someone or give a presentation, I always like to put a little plug in for our website. You can find us at www.oft.osd.mil, and we're always looking for your comments on our website. We try to keep it updated, and we do answer the mail that people send to us.

So thank you very much.

Mr. Morales: Great.

Thank you, Terry.

This has been The Business of Government Hour, featuring a conversation with Terry Pudas, Acting Deputy Assistant Secretary of Defense for Forces Transformation and Resources.

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

For the 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

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