Norman Enger interview

Friday, May 21st, 2004 - 20:00
"The goal of the HR line of business is essentially to free HR professionals in the government from routine back-office type work so they can focus on recruiting, motivating, training and rewarding the people in the federal workforce."
Radio show date: 
Sat, 05/22/2004
Intro text: 
Enger discusses the HR Line of Business program, its relationship to the e-government initiative in the President's Management Agenda, and its alignment with the Federal Enterprise Architecture. Enger also describes some of the programs that have arisen...
Enger discusses the HR Line of Business program, its relationship to the e-government initiative in the President's Management Agenda, and its alignment with the Federal Enterprise Architecture. Enger also describes some of the programs that have arisen from the HR Line of Business and OPM e-government initiatives, such as the USAJOBS web site, the improved security clearance system, and improved employee training programs.
Complete transcript: 

Thursday, March 11, 2004

Arlington, Virginia

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

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is Norm Enger, E-government program director in the Office of Personnel Management.

Good morning, Norm.

Mr. Enger: Good morning.

Mr. Lawrence: And joining us in our conversation is Tom Romeo, also from IBM.

Good morning, Tom.

Mr. Romeo: Good morning.

Mr. Lawrence: Well, Norm, let’s start by sort of focusing on the mission and the activities of OPM. Could you describe for our listeners what OPM does?

Mr. Enger: The main job of OPM is to build a high-quality and diverse federal workforce based on merit system principles. To do this, OPM works with the President, the Congress, departments, and agencies to help them to develop and implement good human capital policies that in turn let the agencies meet their strategic objectives. OPM is essentially a consulting organization that guides the federal government, the civilian sector, to improve how it works with, manages, and guides development of human capital.

Mr. Lawrence: So you would characterize the relationship between OPM -- you use the word “guide.” What’s the relationship between OPM and, say, the rest of the federal government? How would you describe that?

Mr. Enger: Well, the OPM has the mandate, if you will, to give policy guidance to the civilian sector of the government, the human capital officers throughout the civilian sector, to properly manage their personnel and payroll systems, and all the systems that deal with the federal employee.

Mr. Romeo: Can you tell us a little bit about your role as the E-government program director for OPM?

Mr. Enger: My role is the E-gov program director, and the OPM received five of the 24 original E gov initiatives. The five E-gov initiatives, which we’ll talk about shortly, deal with human capital. The mandate of E-government is to transform government business systems. Therefore, in this context, the OPM initiatives seek to transform the human resource, the human capital systems, in the federal agencies. What is interesting in this context is that OPM, I believe, has been successful in this mission because we are the second agency to achieve green status, which is given by OMB to agencies that meet all of their criteria and milestones for E-government. So right now, we have just achieved green status in E-government.

Let me also add that E-government is a little bit unique in the sense that what we’re talking about is not minor Band-Aid changes to systems; we’re looking at transformational change, which means major, radical change to how the government does business. What’s also very relevant here is we’re talking about change in a very short space of time. E-gov has objectives to transform systems within 18 to 24 months. We wind up with a very, very ambitious schedule to accomplish these things.

I work very closely with the director of OPM, Kay Coles James, the OPM officials, and the agencies to, in effect, put into place and implement the vision of E-government. I also, of course, work closely with the CIO of OPM, because we have to work within the infrastructure developed by the OPM’s CIO.

Mr. Romeo: I know in other agencies, there are also E-government lead positions. Can you talk a little bit about some of those positions and the advantages of having such a role?

Mr. Enger: Well, there were, as I said before, 24 E-gov initiatives. Every agency that has an E gov initiative has assigned a project manager for the initiative. This is because of what I said earlier; namely, you’re looking a radical change in a very, very short space of time, 18 to 24 months. Therefore, to accomplish that, each of the 24 initiatives has a project manager, and each agency that is a managing partner, such as OPM, has assigned a manager for that purpose. These are really government-wide in scope, so just because an agency has an initiative, it means, in effect, the agency is responsible for working across the government to provide a government-wide solution. The perception here is not agency-centric, but government-wide. So as we’ll talk about in a few minutes here, what we have developed from OPM are used throughout the federal government, not just by OPM.

Mr. Romeo: Thanks, Norm. How many employees would you say work for the E government program at OPM, and what kind of skill sets do they have?

Mr. Enger: I have approximately 60 individuals working for me in the OPM E-gov program. These 60 individuals are a combination of full-time OPM personnel and contractors and detailees. The E-gov initiatives really require quite a spectrum of skills. We have IT specialists, human resource specialists, risk management specialists; a wide range, security specialists, privacy specialists. We really wind up with a mosaic and quite a spectrum of people required to effectively design, develop, and implement that E-gov initiative.

Mr. Romeo: Can you tell me a little bit about your career prior to joining OPM, and what type of skills do you think best prepared you for the E-gov program lead at OPM?

Mr. Enger: Well, my background has essentially been private sector. I ran my own computer system integration firm for many, many years, for over 20 years, providing basically systems and E-commerce solutions to federal and commercial clients. My firm was acquired about four or five years ago by Computer Associates, a very large system software and business software firm. And I therefore wound up running a smaller firm and then working as a vice president for a very large firm.

And then what happened is that approximately two years ago, I got a call from the chief of staff of OPM, asking me to come down and talk to them. I was quite unprepared for this. I went down, and essentially, the chief of staff and director asked me if I would be interested in public service. And I’d always had some interest in this, but never really focused upon where I would do public service. I met and talked to the chief of staff and the director, and was very impressed by their vision and their dedication to transforming federal systems, and I was asked to interview for the position. I interviewed, among other people, and I was selected to become the OPM E-gov program manager.

I must say that my prior many, many years in the business, and especially my private sector background with IT, information systems, for many, many years prepared me very, very well for the current position.

Mr. Lawrence: When you think about your days in the private sector, how would you compare the management styles used in the private sector versus the public sector?

Mr. Enger: Well, I was a bit surprised that in reality, the difference is not that dramatic. The senior executives in the federal sector are judged upon such qualifications as leading change, leading people, results-driven, business acumen, building coalitions. Well, these are very, very much the same criteria used to judge successful managers in the private sector. What has happened is that the government is more and more looking to the private sector for metrics and ways to improve its operations. I see more and more the transfer of solutions, metrics, and ideas from the private sector into the federal government. So therefore, in that sense, I don’t think at this point in time, you’re talking about a dramatic difference in the criteria or the mode of operation of successful federal people or private sector individuals.

Let me also mention that I was very, very pleasantly surprised to find when I joined the government that I had five project managers that were very, very talented. I was very impressed by the caliber of the people I had to work with, working for me. And I remain very, very impressed by the dedication and the hard work and the results of the people working for me in the federal sector.

Mr. Lawrence: Let me ask the question again, only this time focusing in on your technical skills, because you describe your experiences of leading technology organizations. How about comparing potential differences between creating technology solutions in the public sector as opposed to or compared to creating them in the private sector?

Mr. Enger: I don’t see a fundamental difference in the process of creating technology solutions in the public versus the private sector. In general, the private sector, though, is where you have the great breakthroughs in IT technology in terms of new software solutions, new hardware solutions, new communications solutions. So in general, the private sector is the leading edge, and the cauldron, in effect, where you have most of the breakthroughs in technology.

One goal of E-government is to look for the best solutions, whether they be public or private, and then implement the best solutions. What we do is we look carefully at a solution to a business problem in the government, and also outside. We do studies and then a cost/benefit analysis and then we determine where is the best solution, federal or private sector?

Let me add that my E-gov initiatives have very, very much used the private sector. We’ve outsourced a number of operations to the private sector. We’ll talk some more about this when we discuss USAJOBS E-training. But in effect, we have, under my five initiatives, used off-the-shelf commercial software and we’ve outsourced several operations from the public to the private sector.

Mr. Lawrence: That’s an interesting point, especially about the cost comparison.

What is golearn.gov and why was OPM recognized for this work? We’ll ask Norm Enger of OPM to tell us more about this when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I’m Paul Lawrence, and this morning’s conversation is with Norm Enger. Norm’s the E-government program director in the Office of Personnel Management.

And joining us in our conversation is Tom Romeo.

Well, Norm, could you describe the E-government vision and how the six OPM E government initiatives relate to the employment life cycle?

Mr. Enger: Well, what we have done is we took the five original E-gov initiatives, and the five which we can talk in more detail deal with recruitment of federal people, training federal people, their personnel systems, their payroll systems, their security clearance systems. The original five deal with those five discrete areas. And if we think about it, that frames the employee life cycle from recruitment and eventually into retirement. I should add also, our systems feed into the retirement system, which is managed and run by OPM. So we were able to effectively communicate a vision of the employee life cycle to the agencies and to the human resource people in the federal sector.

This is very important, because one of the difficulties IT people have is we talk in acronyms and jargon, and very often, we lose the audience for our vision. By framing the OPM initiatives into an employee life cycle, we’ve been able to very effectively convey what we’re trying to accomplish to the human resource officers in the federal sector.

We also have a sixth initiative, and that is called HRIS, Human Resource Information Systems. What that really is is going into a phase two, if I can use that term, of E-government, and that really now is looking at an enterprise solution for the entire human resource piece of the federal line of business. We’ll talk about that a bit more later.

Mr. Romeo: Let’s talk about the six initiatives in more detail. Since recruitment is at the beginning of the employment life cycle, can you describe the recruitment one-stop online service?

Mr. Enger: The recruitment one-stop initiative basically has a role or a mission to help the citizen find federal jobs. We want to simplify the process of locating and applying for federal jobs. When I came on board about two years ago, the OPM ran an old legacy system site called USAJOBS. The initiative has completely replaced and transformed that site. In August of last year, we brought up a brand-new actually outsourced site, using commercial off-the-shelf software; radically changed the old site. We actually shut down the old site.

I might add that this took place in August, August 4th, I believe, of last year. And I was apprehensive, because shutting down a complete site and then going live with a new one, there is some risk there. We shut down the old site on a Friday, went live on a Monday morning. And to my great surprise, on the Friday before, on the old site, we had 20,000 people a day on the site; on Monday, we had 200,000 people on the site. We increased the volume tenfold over that weekend from the old to the new site. I must say, to my great happiness and satisfaction, there wasn’t a glitch at all. The site went fully operational, and it’s simply grown in utilization. We now have 60 million citizens a year go to our USAJOBS site to locate federal jobs, put in résumés, and also to look and see what’s available relative to positions in the federal sector.

This has really improved the hiring process, because one of the real passions of Director Kay Coles James is to fix the federal hiring process. And what we’re doing here is we have replaced an old site with a brand-new site where a citizen can go, see what jobs are available, they can build a résumé. They actually now are able to track the application they file. They can see the status of the application.

We also have on the site here, we have all kinds of guides relative to helping them to determine what jobs they might be suitable for, help them with their career pathing. So in effect, we’ve gone and replaced an old legacy system with a very, very user-friendly, vibrant, and very successful new job site called USAJOBS. This site also is used by the agencies to -- we call it data mining. They can go in there and search for candidates for positions, and in effect, use that as a database, if you will, to see who’s applied for federal jobs.

Mr. Lawrence: Okay. So we just described the process of recruiting and hiring. So now once hired, a government employee is encouraged to build skills across a variety of subjects. And as I understand it, in 2003, OPM received a Distinguished Technology Leadership Award for the successful implementation of golearn.gov. Could you tell us what makes this a successful and innovative site?

Mr. Enger: Well, the concept behind the E-training initiative, and the website is golearn.gov, was to provide to the federal employee one-stop shopping for high-quality learning resources. Going back historically, in July of 2002, we launched a relatively humble site. I was standing with Mark Forman, and Director Kay Coles James gave the introductory remarks and we launched this site, which had at that time roughly 30 or 40 online courses, web-based courses. Since July of 2002, we have improved the site and it has evolved. So from a humble beginning, we now have well over 3,000 courses on the site. We have hundreds of E-books. As of last year, we had 30 agencies using this for their primary training. By the end of this year, we’ll have 60 agencies. It’s become a primary site for quality online web-based training for federal people.

The site itself is a -- it’s a virtual building with floors. And people can, in effect, go into classrooms and look at and take any one of these 3,000 courses. We have hundreds of books of all types, both technology and management and career-building and ethics, on the site. We have mentoring. People can have mentors help them to answer questions they have about either technology or about careers or whatever. We have resource centers that tie them to dictionaries, encyclopedias, libraries, et cetera. We now have over 1 million people a year actually come to this site and use this site. And actually, to my great surprise, the utilization is half civilian and half military. The site is running 24 by 7; it’s available full-time, 7 days a week. It’s used by federal people on every continent in the world.

And we have received numerous awards for this site. We received a very prestigious Gracie Award this year from our peers in the private and federal sector. So we’re very proud to, in effect, have a site which is delivering to the federal workforce an easy-to-use, available way to have continuous learning, to let the federal people continuously improve their job skills and make learning a process that is not difficult to reach, but becomes a part of their normal job pattern, per se.

Mr. Romeo: Norm, providing security clearances to federal civilian workers can be a very lengthy process, especially given the heightened importance of background checks since the September 11th incident. How does the government’s E-clearance initiative facilitate the security clearance process?

Mr. Enger: Well, this initiative, E-clearance, essentially wants to speed up and also improve the process whereby one gets a security clearance. When I first came on board two years ago, to my surprise, there was no central system whereby an authorized person could check security clearances across the government. What we did is, we at OPM, through this initiative, gathered into a warehouse all of the clearance information held by individual civilian agencies. We built this warehouse, and then in January of 2003, we linked this warehouse to a DoD system, called Joint Personal Adjudication System.

And the system I’m talking about, we call it the clearance verification system, CVS. And for the first time ever, you had a system which let a person who’s authorized inquire across the entire civilian and military sector for the status of somebody’s clearance. This system we built will hold 98 percent of all active clearances. To our great satisfaction, it was used by the new Department of Homeland Security last year to stand up and become operational. It used this system to do the background checks of the employees coming into that department from 22 different organizations. Roughly 160,000 employees were actually checked with this system.

A second part is moving all of the paper and forms for a clearance. For example, one form is the SF-86 you fill out. It’s a 13-page paper form to request a security clearance. We’ve made this electronic, and we’re making all the forms that people use for clearances electronic. By doing this, we’re moving from a paper system to an electronic system, and this cuts down the time it takes to get a security clearance, the time it takes to move information around, and in effect, the basic goal of E-clearance is to speed up and also to improve the whole process of security clearances.

Mr. Lawrence: This is a fascinating conversation of the life cycle, but we’ve got to go to a break.

Rejoin us in a few minutes as we continue our conversation with Norm Enger of OPM. This is The Business of Government Hour.


Mr. Lawrence: Welcome back to The Business of Government Hour. I’m Paul Lawrence, and this morning’s conversation is with Norm Enger, the E-government program director at the Office of Personnel Management.

And joining us in our conversation is Tom Romeo.

Well, Norm, we can’t talk about the employment life cycle without discussing one of the most important parts of employment, to the employees that is, the receiving of a paycheck, and that it’s current and consistent and timely. How does the E-payroll initiative help facilitate the government to do this in the most cost-effective manner?

Mr. Enger: Well, two years ago, when I took this position, to my great surprise, there were 26 agencies processing payroll for the 1.8 million civilian employees. I scratched my head, saying why are there 26 places paying these employees? The initiative essentially is to standardize and to consolidate civilian payroll processing. What we are doing is essentially we are consolidating civilian payroll processing from 26 down to basically two partnerships. We are collapsing from 26 down to two partnerships comprising four agencies, and eventually down just to two centers, if you will, that process civilian payroll. In the process, we’ll standardize payroll, but also, I might add, by shutting down these redundant operations, we’ll save the government, over a 10-year period, $1.1 billion. So in effect, we also don’t just achieve efficiency, but we also achieve significant cost savings by these initiatives. I might add that our partners here, the agencies that are in effect comprising the partnerships are Agriculture, Interior, Defense, and GSA.

Mr. Romeo: Norm, can you describe the vision, goals, and benefits of the Enterprise Human Resources Integration initiative? What is the EHRI’s relationship to the other E-gov initiatives?

Mr. Enger: Well, essentially, this initiative, EHRI, has several goals. Again, going back several years, I was quite surprised to realize that, from my point of view anyway, there really wasn’t a very rich corporate database on the civilian workforce. One part of EHRI, one goal is to build a corporate database or warehouse of real accurate information about the 1.8 million people in the civilian workforce.

Last September, September 2003, we actually brought up this new operation, this new website used by federal people. And what we have now is a richer and richer repository, describing in more and more detail the skills, the abilities, et cetera, of the 1.8 million civilian people. This is used for all kinds of workforce analysis, planning. We can look in there and determine retirement rates; we can do studies of age, sex, ethnic backgrounds, et cetera. So what we’ve done here is establish a corporate warehouse.

A second role of EHRI is to move away from paper personnel form. We call it the EOPF, Electronic Official Personnel Folder. What we’re doing is we’re leading the government in terms of showing the government how to get away from those voluminous and bulky personnel folders and move toward an electronic personnel record for the employee. Eventually when a person joins the government, there’ll be an electronic record created for them, a personnel record, and that will follow them through their federal career. So a second part of this is to, in effect, move toward an electronic personnel system.

To answer your question about its relationship, this initiative is defining all of the data elements that pertain to federal human resources and payroll. We have defined over 800 data elements that really comprise the standardization, if you will, of the information that is used in the federal personnel and payroll systems, and this also are the standards being followed by my other initiatives.

Mr. Lawrence: Norm, you’ve described the scenario where Executive Branch agencies may potentially invest in duplicative human resource information systems that perform core personnel transaction processing. For those of us who aren’t HR professionals, could you describe what a core personnel transaction process is? And then I’m curious, with this consolidation, you know, how you thought about, you know, the effect standardization will have on the government and others involved in the HR area.

Mr. Enger: The core personnel transaction processing is really the processing that updates the employee personnel record, the actions that update that record. This is called in the federal government the SF-5052 processing. This initiative, the HRIS, essentially is now moving toward an enterprise view of the human resource line of business.

Let me address it this way. We proved that the government could be transformed in a very short space of time. I think the original E-gov initiatives, the 24, have shown that there can be rapid change in the federal government. You can implement solutions in a very short timeframe. You can show tangible results, either dollar-wise or utilization. So in effect, this is really building upon the initial 24 and our five, I should say. And now we’re saying let’s look not just at those five points, if you will: training, recruitment -- look at the entire business itself of human capital in the federal government.

This HRIS is really using something that OMB has really pioneered called the Federal Enterprise Architecture. What that really says is that the OMB FEA is looking at the government as a business, just as you would look at a commercial private business, and what it’s done, looked at it across all of its operations and then defined lines of business: one being financial management, another one being human capital. And what we’re doing is we’re looking at the entire human capital line of business, what people do in the government relative to people and payroll. And what we’re doing is we are, within that context, looking at all the operations, all the business functions there. And now we’re looking to improve across the board, where we can, with better solutions and making the government more efficient and also to, in effect, improve how human capital operates in the federal sector.

Mr. Romeo: Norm, you just talked about the business processes and how they go across the federal government. All of the E-gov initiatives involve coordination of IT systems across the federal government, also. How is OPM working with other federal agencies to accomplish the goals of the different E-gov initiatives?

Mr. Enger: The agencies are right now all signing agreements to use wherever possible the 24 original E-gov initiatives. For example, we are on the Steering Committee, and we’re using E-authentication; another initiative. E-authentication essentially is used to credential or to identify who is on a terminal. That’s fundamental to all of E-gov, because E-gov depends on the Internet, on web-based services. So for example, in this one case, we’re on the Steering Committee and we plan to use the initiative.

The same thing goes with other initiatives. We’re using USA Services, an E-gov initiative, which provides help desk services to operations. So what’s happening here is that all agencies, including OPM, wherever possible, are incorporating and using other E-gov initiatives.

Mr. Lawrence: How much funding has been allocated to the E-gov initiatives?

Mr. Enger: Well, the OPM funding in 2004, we received approximately $10.8 million in appropriation. We also have fee-for-service operations for E-training and recruitment one-stop. So in effect, we have a combination of appropriations, and also, we have fee-for-service operations.

Mr. Romeo: What other critical success factors besides funding are needed to make these initiatives a success?

Mr. Enger: Well, when you have these initiatives, you obviously want agencies to shut down redundant systems and migrate to your initiative. Well, what happens here is you have to give tangible evidence that you have a solution. I think that a critical success factor is not just to say I have achieved success at E-training or USAJOBS or E-clearance, but you have to demonstrate and have a tangible, kick-the-tires proof that you have a solution. So step one in terms of a critical factor is you’ve got to be able to demonstrate a viable robust solution before people will shut down their old or redundant systems.

Another very important factor here is agency participation in the initiative. It’s very, very important that you outreach, that you work with agency partners. You go out and, in effect, you sell, you show what you’ve done and get buy-in from people that you’re asking to migrate to the initiative. So I think these two things: one, really have a solution, not smoke; and also to go out and really build up coalitions of support so people will use and migrate to your solution.

Mr. Lawrence: We left the conversation about E-payroll and the human resource information systems. The one thing I meant to ask was what’s the timetable for their implementation?

Mr. Enger: Well, for example, E-payroll, we have a target of September 2004, this year, for many of the migrations to be finished. We have at this point all of the agencies lined up for migrations, and we will pretty much meet the target of September 2004 for migrations.

Let me also add that in general, the plan of E-government is that by September 2004, the initiatives will graduate. And what that means, they’ll be operational. They’ll have achieved what the original goal was, is that from two years ago, the start, until September 2004, we have actually gone from concept to real operations. So the answer to you with E-payroll is, our target is September 2004, to, in effect, have finished many, many of the migrations.

The other one, HRIS, that you mentioned, this is really starting now. It’s a newer initiative, called a line of business initiative. And in fact, a task force for this is being formed for this as we speak, and I believe OMB and OPM will have an event on March 18th, this month, to announce the formation of this task force. And again, the task force and initiative, they’ll address enterprise solutions for the human capital line of business.

Mr. Lawrence: That’s interesting. It sounds like 2004 will be a busy year.

What’s the future of E-government? We’ll ask Norm Enger of OPM for this thoughts and perspectives when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I’m Paul Lawrence, and this morning’s conversation is with Norm Enger, E-government program director at the Office of Personnel Management.

And joining us in our conversation is Tom Romeo.

Mr. Romeo: Norm, we’ve talked a lot about the current E-government initiatives. In your opinion, what others do you think the future will hold?

Mr. Enger: Well, the vision of E-government is a government that is citizen-centered, not bureaucracy- or agency-centered, results-oriented, and market-based. The goal of E-government is to provide one-stop online access to the citizen to information and services. Citizens should be able to find what they want quickly, in seconds; not in hours or whatever, or days. A good example of this, for example, is the FirstGov website, where a citizen can go to a site and from that one site, they’re tied to all federal agencies; they’re tied to a variety of resources relative to grants, to national parks, to employment opportunities. So what we’re looking for here is to use the web, the Internet, to provide the citizen with very rapid -- three clicks or whatever -- access to a wide variety of accurate information that in effect provides them with first-quality service.

Mr. Romeo: How do you envision the government will conduct transactions across other federal agencies and/or state and local governments?

Mr. Enger: Well, what’s happening is that some initiatives are in effect dealing with the federal, state, and local situation. For example, one Homeland Security initiative is a secure portal that will deal with disaster management; in effect, dealing with disaster management and public safety, E-government is in effect developing systems and communications that link together federal, state, and local governments into one context, into one response to a disaster or public safety challenge.

Mr. Lawrence: Norm, you’ve been working in the field of E-government now for some time. What advice would you have for future leaders in E-government on how to be successful in this field?

Mr. Enger: I would advise future leaders in E-government to be aware that major transformations in federal business systems requires a full recognition of the need to build coalitions of support in affected agencies. Change management is a major factor in the success of E-government. Future E-gov leaders should not focus on technology solutions without recognizing the other dimensions of change necessary for success.

Mr. Lawrence: And how about in terms of a person considering a career in public service? You’ve been in both sectors, and you moved into public service after a long career in the private sector. What advice would you give to somebody interested in joining public service?

Mr. Enger: Well, I think this is a very exciting and challenging time for a young person to join the federal government. Our government faces challenges, even though we are the world’s greatest economy and have the world’s greatest and strongest military force. What is very exciting, and I think E-gov has made this possible, is that we have shown that you can transform government operations in a very, very short space of time. We can show that government can, in effect, reach out and, in effect, become more efficient, more effective, more responsive to the citizen population in a short space of time.

My advice to a young person considering a public service career would be to go and look at the OPM USAJOBS website. The site is www.usajobs.opm.gov. On this website, the person can locate a vast array of educational and job opportunities, all kinds of internships, grants, and job situations. Young people will be able to use the site. They can also on the site develop a job résumé to apply for a federal job.

Let me also add, there is also a Presidential Management Fellow program designed to attract into federal service outstanding young men and women from a variety of disciplines. Again, if the person goes to our site, USAJOBS, they will find more information about this PMF, this fellowship program.

Mr. Lawrence: Well, Norm, that’s our last question. Tom and I want to thank you for joining us this morning and being our guest.

And would you like to tell the people the website one more time, in case they’re --

Mr. Enger: Yeah, the website I mentioned earlier was www.usajobs.opm.gov/; g-o-v.

Mr. Lawrence: Thank you very much.

This has been The Business of Government Hour, featuring a conversation with Norm Enger, E-government program director in the Office of Personnel Management.

Be sure and visit us on the web at businessofgovernment.org. There, you can learn more about our programs and research into new approaches to improving government effectiveness, and you can also get a transcript of today’s very interesting conversation. Once again, that’s businessofgovernment.org.

This is Paul Lawrence. Thank you for listening.

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Hector Barreto interview

Friday, March 26th, 2004 - 20:00
Hector Barreto
Radio show date: 
Sat, 03/27/2004
Intro text: 
Missions and Programs; Leadership; Strategic Thinking...
Missions and Programs; Leadership; Strategic Thinking
Magazine profile: 
Complete transcript: 

Wednesday, December 10, 2003

Arlington, Virginia

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

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is Hector Barreto, administrator of the U.S. Small Business Administration.

Good morning, Hector.

Mr. Barreto: Good morning.

Mr. Lawrence: Joining us in our conversation from IBM is Tom Burlin.

Good morning, Tom.

Mr. Burlin: Good morning, gentlemen.

Mr. Lawrence: Hector, perhaps you could begin by talking to us about the Small Business Administration. Could you explain its mission to our listeners?

Mr. Barreto: Sure. I'd be glad to. The U.S. Small Business Administration was created 50 years ago. In 1953, President Eisenhower signed the Small Business Act, and that really created the beginning of what we know today as the SBA. Interestingly, the mission really hasn't changed that much. The mission at the very onset was to aid, counsel, assist and protect all small businesses in the United States, and that's really what the SBA does through all of our programs and services.

Mr. Lawrence: How do you describe the size of the SBA, its budget, its number of people, the people it serves? How do you think about it?

Mr. Barreto: Well, it's approximately $800 million, but we leverage that $800 million in so many ways, with partnerships, with initiatives. Last year, we did pretty close to $17 billion in access to capital. We have a portfolio of loans that we manage, well in excess of $35 billion, and we literally train millions of companies every year, provide billions of dollars worth of contracts for small businesses. So we have really learned over those 50 years how to leverage the resources that we have.

Mr. Lawrence: What are the skills of the folks working at the Small Business Administration? You described so much financially, I began to imagine bankers.

Mr. Barreto: That's one of the great things about the SBA. Because of the folks that work for us and all of the people that are a part of our network, we truly have a cross-section of small business talent and expertise, everything from financial assistance, and that could be microloans, working capital loans, real estate. We even have a Small Business Investment Company Program, which is really our venture capital arm. So very sophisticated applications of that capital.

Entrepreneurial development is really the place that we touch the most small businesses. Last year, we figure that we helped about 2.1 million small businesspersons in the United States, everything from how do you put a business plan together, how do you put a loan package together, how do I do better marketing, how can I use technology in my business, international trade. And then of course, we have a number of contracting programs that help small businesses access that $230 billion federal procurement pie. So it really is a cross-section, a lot of talent and expertise, for the benefit of small businesses.

Mr. Burlin: What about the administrator's position? Could you tell us about the duties and responsibilities that go with that title?

Mr. Barreto: Sure. My responsibility is to make sure that the Agency is reaching more small businesses every year in all of those areas. I am a small business champion. I am an advocate. I like to think that what I do is find the best people for the job and then get out of the way and let them do what they do best. So it is very much an internal and external function. I'm passionate about it. I've been doing it now for a little over 2-1/2 years, and I'm very excited about what's ahead for the SBA.

Mr. Burlin: We know you had experiences before that 2-1/2 years. Could you tell us about that?

Mr. Barreto: Sure. I've been involved with small business all my life. My parents were small business owners, so I like to say that I was born into a small business family. I learned a lot about many types of small businesses. My parents had restaurants, they had a little construction company. They even did a little importing and exporting. So I got a lot of experience at a very early age.

Later on, I went to work for a large corporation in Texas. I worked as an area manager for Miller Brewing Company in Texas for about four years. Then later on, I moved to California and started my own business. I had an employee benefits agency, and then later on, a securities broker/dealer, specializing in retirement plans.

I also got very involved in the community. I was the chairman of the Latin Business Association in Los Angeles, which is one of the largest Hispanic business organizations in the United States, and that's really where I met the President when he was the governor of Texas and got involved with him, and the rest is history, as they say.

Mr. Burlin: That is an interesting background. How did that background prepare you for your current assignment?

Mr. Barreto: One of the things is, I've lived the experience of starting a small business from scratch. I know the trials and tribulations, but I also know the great satisfaction and opportunities that are available by being in business for yourself, and I think that's the reason the President asked me to do this. He wanted somebody that had small business experience leading the SBA. What a novel concept, to have somebody that's actually done it be leading an organization like the one that I have the pleasure and honor to represent. So it's a great opportunity for me because I get to work with my heroes, which are those small business owners all across the United States.

Mr. Lawrence: A lot of people go to work for large businesses, others open their own business. When you think about that choice people make, are there characteristics, or what distinguishes people at that point?

Mr. Barreto: Many, many people would like to be their own boss, but a lot of times, what prevents them from doing that is just really the knowledge, the resources, the tools to be able to do it. I tell people that the first thing they need to do is their homework, because a lot of times, people throw themselves into a new enterprise, they're excited, they're passionate, they've got a great idea, but they haven't thought through all the different stages of the evolution of that business and what types of tools they're going to need to succeed.

But small business people are visionary, they're very entrepreneurial, they're trendsetters. I like to think that they're very courageous and patriotic people who work very, very hard and really have a higher purpose in mind oftentimes when they go into that small business, because they know what they do is going to impact their community, their employees, and, yes, their country.

Mr. Lawrence: Your experiences have been in the private sector, and now for two years now, you're in the public sector. How do you compare the two sectors in terms of management style and approach?

Mr. Barreto: Well, it's very, very interesting. When we came into the SBA, we wanted to take a more entrepreneurial approach. One of the things that we felt was very necessary is to change the perception of what it means to do business with the government. We wanted our customers, which are those small businesses, to really think of us as a partner, not an adversary. We wanted them to think of us as an advocate. We also wanted them to know that we were going to be responsive, because we know that small business people can take a yes and they can take a no, but the maybes kill them. So that's one of the things that we've tried to preach inside of the Agency; we're not a business, but we can think more like a business, and in that way, being much more customer service-oriented, much closer to our customers, and really by that measure really measure our own success by the success of the people that we're serving.

Mr. Lawrence: How about the speed by which decisions are made now? I think a lot of people who have come from business before in this administration as well as previous administrations wake up surprised at the difference in speed. Have you found that to be true?

Mr. Barreto: Well, that's a big challenge, because in business, time is money, and so you want to be able to capitalize on the time that you have and move the agenda as quickly as you can. What you realize is that things are going to take longer. More people are going to be involved in decisions. You're not always going to have all of the resources that you need to fast-forward an initiative or an agenda. So I also tell our folks that it's very important for us to focus in on less things, do less things better. I like to think of the concept of low-hanging fruit, and there is a lot of low-hanging fruit if you can focus in on it and really execute on a good business plan.

Mr. Lawrence: One of the things people are often surprised to discover in the public sector is the scrutiny you get. How have you found that?

Mr. Barreto: There is a lot of scrutiny, but I think the reason for that is that there's a lot of passion around small business. When I first came to town, they told me look, small business isn't a partisan issue. There are just small business solutions. There is not a D solution or an R solution, and I've found that pretty much to be the truth. I think everybody wants the same thing. We might have different ways of getting there. And again, what we want to measure ourselves by is the results, not just the outputs, but the outcomes that come from the things that we are able to offer to small businesses.

Mr. Burlin: What drew you to public service? How did you end up here?

Mr. Barreto: In a way, I've learned about public service from my own parents. My father was the founder of a Chamber of Commerce in Kansas City, Missouri. And then later on, he was one of the founders of the U.S. Hispanic Chamber of Commerce. So I saw my father giving a lot back to the community and to other small business owners. I think he imbued me with that sense of responsibility.

Of course, when the President of the United States asks you to take on a responsibility like this, it's a true honor, and it's something that I wasn't necessarily thinking about. I like to say I was busy minding my own business, literally, when the call came. But I've been so honored to be able to do this work.

Mr. Burlin: As a constituent of the Small Business Administration in your entrepreneurial days, has your perspective changed now that you sit on the other side of the fence?

Mr. Barreto: What has changed is my understanding of what is available to small businesses. I had no idea of the breadth and the scope of the SBA. I felt like I knew a lot about it before I came on board. I had no idea that over those 50 years, the SBA has helped 20 million small businesses in the United States. We have facilitated something in excess of $200 billion. We've helped create some of the best-known names in corporate America that started off as small businesses, and all businesses start of small.

So I just had no perspective as to the kinds of results that the SBA has created on behalf of small business, and that makes me very proud to be attached with an organization like the SBA, and really for that matter very proud of the legacy of the SBA.

Mr. Lawrence: That's an interesting point, especially those numbers you cited.

Why is health care such an important issue for small businesses? We'll ask Hector Barreto of the Small Business Administration for his thoughts when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Hector Barreto, administrator of the U.S. Small Business Administration.

Joining us in our conversation is Tom Burlin.

Mr. Burlin: Welcome back, gentlemen. Hector, let's talk about the President's Small Business Agenda and his vision to create an environment where small businesses flourish. Could you begin by telling us about tax incentives that the SBA is promoting?

Mr. Barreto: Absolutely. This President is very focused on small business, because he understands that small business really isn't small when you consider that there are 23 million small businesses in the United States. They generate 52 percent of the gross output of the economy. And they also generate about three-fourths of the net new jobs and a lot of the innovation that's coming out of the economy. So they're critically important.

The President calls them the engine that fuels the economy, and that's why his Small Business Agenda included this very important jobs and growth package that was passed earlier this year. That really provided millions of small businesses some very necessary and important tax relief, because the President understood that most small businesses are not incorporated; they pay some of the highest tax rates in the country, and when you lower that marginal tax rate from where it was at 38.6 to 35, you return $10 billion into the hands of small businesses. In other words, 80 percent of the benefit of reducing the top marginal tax rate accrues to small businesses.

We didn't stop there. He also quadrupled the business deduction from $25,000 to $100,000. So a lot of the purchases that small businesses were delaying because they were worried about if the economy is going to turn around quick enough, they're making now, and that's something that's helping get the economy going again, and also helping those small businesses create a lot of those new jobs that we need so desperately.

Mr. Lawrence: Expanding and improving health care coverages for small business employees is also a part of the President's agenda. Health care insurance can be very costly for small businesses. How is the SBA thinking about this?

Mr. Barreto: It not only can be, it is very costly for small businesses. I travel all around the country and talk to small businesses every day, and this is high on their radar screen. They tell me oftentimes that they're getting double-digit increases every single year whether they have a claim or not, and they're worried about it. The majority of folks that don't have health coverage or are underinsured either work for a small business or have a spouse that works for a small business.

Sixty-five percent of small businesses that don't have health insurance coverage say that they would gladly buy it if they could get access to affordable health care. So the President has proposed Association Health Plans. That is legislation that's currently working its way through Congress that allows small businesses to pool together, to band together the way that union employees can, the way that large corporations do, and really negotiate the best rates and the best benefits. This is something very important. It won't solve the whole health care crisis, but it goes a long way to providing those small businesses with the kind of coverage and the kind of access that they desperately need.

They need it for themselves and their families, they need it to attract, and they need it to retain, employees. The Department of Labor believes that this could save as much as 25 percent off of the cost of insurance year one. The House of Representatives has passed it and we're waiting for the Senate to take it up, and we hope that they will and that they'll pass this very important legislation soon.

Mr. Burlin: Hector, I'm sure many of your constituents have the perception that Washington is synonymous with red tape. Can you tell us what the SBA is doing to cut red tape, to streamline the processes?

Mr. Barreto: Absolutely, Tom. We're doing a lot. We're using technology more now than we ever have before. We've streamlined the time that it takes for somebody to get a loan with the SBA. We're providing a tremendous amount of information now online so that people don't have to send us a phone book of forms just to get into one of our programs or to get registered, and it's really working. Time is money, especially for small businesses, and for a lot of our partners on the lending side. We work with over 6,000 lending organizations or banks, and we're also increasing the distribution channels, adding more partners to that. So we need to make sure that we can do it quicker, better, faster than we ever have done it before, and so that's really helping. It's one of the reasons that we're seeing the kinds of increases in our loans and our technical assistance and our contracting programs.

Mr. Burlin: You mentioned earlier that every business starts as a small business, and although they're household names today, I think many of our listeners would be surprised to learn that such firms as AOL, Staples and Outback Steak House all received in their formative years help from the SBA. Can you tell us what the SBA is doing to really empower these entrepreneurs of today?

Mr. Barreto: Absolutely. We don't want to rest on our laurels, and we're very proud of the fact that we helped those companies and many, many others, companies like Nike and Intel, Sun Microsystems, Compaq Computer, Ben and Jerry's Ice Cream, Callaway Golf, and many, many others. They all were very small companies that came to the SBA at a time when they needed some help. Either they needed some lending assistance, access to capital, if you will, a loan to buy a building. Some of these businesses received venture capital through the Small Business Investment Company Program. Some of them got technical assistance through our service corps of retired executives or small business development centers.

So we're very proud of that, but we want to make sure that we're helping the next generation of those companies, and as I said, all companies start off small. Coca-Cola and Ford Motor Company started off as small businesses, and they had some trials and tribulations before they were successful.

We also want to make sure that we're helping those companies that are coming from the emerging markets, which is really the fastest growing segment of small business; from women-owned businesses, which now represent 40 percent of all small businesses in the United States. So it's critically important. The three C's is what I call it. Small businesses have always needed capital, capacity, and contracts, and the SBA can deliver and provide all three of those.

Mr. Lawrence: You talk about the assistance. SBA provides small businesses with financial assistance, I think it’s capital under your three C's. But obviously, there are many more small businesses who would like assistance, so let's go through that process. How does the SBA figure out who gets a loan?

Mr. Barreto: We want to talk to any small business who is ready to take their business to the next level. Business is evolutionary. So, for example, a lot of times, people don't realize that we can do very, very small loans, microloans, which could be $10,000. We can do working capital loans, which could be hundreds of thousands of dollars, if not a million dollars, for fixed costs. We can do real estate loans, especially right now when interest rates are so low; a lot of businesses want to buy their building, expand their building, but a new facility. We can loan for heavy equipment and machinery. This is especially important in the manufacturing sector. We can connect them with venture capitalists so that they can expand their business across state lines and go national or international. So there are a variety of different loan programs that are available.

It's very easy. They can either contact us at their local district office, and we have a district office in every state in the union by law; we're in every major city. We work also with about 11,000 retired executives. Those are our SCORE volunteers that can help them. We work with 1,200 small business development centers that are in every county in the country. We have women business centers, business information centers. A very easy way to get information on all of this is just to go online to sba.gov, which gets 1-1/2 million visitors every single week to the website. So there's a lot of information out there. They can call us on the 1-800 number, 1-800 UASK-SBA. The bottom line is if you're a small business or thinking about starting a small business, we'd like to talk to you because we want to be your partner.

Mr. Lawrence: What are the management challenges of making sure that money is used as it's intended?

Mr. Barreto: If you're talking about default rates or improper usage of money, we don't see that a lot. We have a very good underwriting program. Oftentimes when a small business gets to the point where they're going to get an SBA guaranteed loan, they've already gone through a couple of levels of preparation. They've already done their business planning, they've gotten some counseling, they've worked with their lender. So a lot of times, by the time that small businesses are getting to the point where they're going to get that loan, they're already been taken through that paces. That doesn't have to take a long time. But what we know is that when a small business is prepared, when they get this kind of technical assistance on the front end, their chances of success multiply exponentially, especially in those first few years when they're so vulnerable.

Mr. Lawrence: One of the things that I was interested to learn as we were preparing for this was that another service SBA provides is disaster recovery assistance. I wonder if you could tell us about this program and how it was used to help the victims of the California wildfire.

Mr. Barreto: I was just out in California, that's my home state, and we were able to help many homeowners that lost their residences. A lot of people don't realize that the SBA provides loans not only to small businesses in times of disaster, but we also do loans for homeowners or even renters who have lost personal property. And the California fires were a major disaster. We lost close to a million acres of land, something in excess of 4,000 residences. We're not even sure how many small businesses may have been lost or affected by the disaster yet. As of a couple of weeks ago, we had already topped $100 million in loans, and we know that's going to climb a lot.

But we've been there. We were there during Hurricane Isabel. A lot of people don't realize that we also made a tremendous amount of loans after 9/11, not just in New York and around the Pentagon, but to small businesses around the country that were affected through no fault of their own because of something that happened around 9/11. Maybe it was a business in an airport or a travel and tourism company, or a small aviation company, or maybe they were doing business with somebody in the World Trade Center. We did about $1.2 billion and helped save over 10,000 businesses and literally tens of thousands of jobs that would have been lost if we wouldn't have been able to help them.

That's something that the SBA has always done. We really are America's disaster bank, and whether it's a flood, a fire or an earthquake or a terrible disaster like 9/11, the SBA is there to help.

Mr. Lawrence: That's an interesting point, especially about the loans around 9/11.

The management focus of this administration flows from the President's Management Agenda. How is the SBA doing with the issues called out in the PMA? We'll ask Hector Barreto of the SBA to bring us up to date on this when The Business of Government Hour continues.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Hector Barreto, administrator of the U.S. Small Business Administration.

Joining us in our conversation is Tom Burlin.

Hector, can you give us an overview of the SBA's strategic management goals and how these goals were developed?

Mr. Barreto: A lot of our goals are very consistent with the President's Management Agenda. We want to make sure that we're managing our human capital. That's so critically important for any organization. Small businesses deal with it all the time. In other words, what kind of succession planning do you need to do; what does the next generation of leaders inside your organization look like. And that's critically important, especially to an agency like the SBA, where the average age of an SBA employee is 49 years old with 20 years' experience at the Agency. That's a two-edged sword. We're very happy to have so much experience, knowledge, compassion and commitment. But we also know that folks will move on. They'll retire or they may move to another agency. So we constantly have to be concerned with that.

It's also very important, as I mentioned before, that we use technology to reach more small businesses. Government is not getting bigger. We're all asked to do more with less. Technology can be a great leveler of the playing field, a great tool for us. So our e-government initiatives are very important. Eventually, we'd like our clients to be able to access all of our programs online if they choose to, and not have to necessarily get in a car and drive someplace or fill out a bunch of forms.

The financial management of our agency is very important as well. Every resource is critically important, especially in this environment. So we need to validate how we spend those resources and validate the results that we get out of our programs. Our budget needs to be integrated with those kinds of results.

We also need to look and make sure that whatever it is that we're doing at the Agency is the most efficient and effective way possible. I mentioned to you that the SBA really learned to leverage its resources. In the good old days, which I'm not sure if they were the good old days, we did a lot fewer loans because we were doing those directly. We don't do direct loans anymore. We do those through 6,000 partners. In the good old days, if you wanted technical assistance of counseling, you had to go to an SBA office. Now you can go to 1,200 small business development centers, you can get counseling online, you can get all kinds of expertise and knowledge from our retired executives that work for us. So there are lots of opportunities to think outside the box and to get better results for our customers. So everything that we're doing is really aligned with those very key President's management goals.

Mr. Burlin: Hector, you talk about measurements and results, and this administration is strongly supportive of the need to accurately measure and record that performance. Can you tell us what the SBA is doing in the way of measurements and tracking that performance?

Mr. Barreto: Absolutely. It is true that you get what you measure, and we've been measuring everything that we do. That was a commitment that we made at the very beginning. We said look, there is not going to be anything that's off the table. We need to look at everything that we're doing, and we need to hold our people accountable and make sure that they also have the tools that they need to be successful, and that's what we've done.

One of the things that we were able to do is implement an execution scorecard. That's what we call it at the SBA. It was mirrored after some of the scorecards that's taking place, again, on the President's Management Agenda, but we try to take it a step further. There was a great book that we read about a year ago called Execution by Larry Bossidy. It was a wonderful book that that opened our eyes. There were a lot of things that were very applicable to the way that we were doing business.

The net results are that because we have been doing that, we have been able to accomplish a lot of great things. For example, when I first came into the SBA, the average-sized loan was a quarter of a million dollars. We know that most small businesses don't need a quarter of a million or a million. Many businesses are capitalized with as little as $50,000. So we worked with our lenders to get that average loan size down. It doesn't mean that we're not doing large loans. We still have a great program where we do a lot of multimillion-dollar loans, which is really our real estate loan program.

We're reaching more small businesses, as I said, online. Last year, we trained 700,000 small businesses online. So many, many things that have been accomplished through creating some very specific objectives that we measure every day on our scorecard have really yielded great results. Just again to touch on the loans, because that's what we're known for, we broke a record this year. We did more loans this year than we ever have in our 50-year history. We were up 30 percent. But what was exciting to me is we were up in every single category in every single demographic group. So we had a wonderful year and we're looking forward to raise the bar again this next year.

Mr. Burlin: That's interesting, you said you get what you measure. Setting those targets and determining where you need to be has to be challenging. I'm sure there are many demands on your agency. How do you go about setting those targets?

Mr. Barreto: We try to do it in a very collaborative spirit. We work very closely with the folks that are on the ground where the rubber meets the road, which are our district offices and our district directors. We have a goals team that's constantly meeting and making sure that the goals that we have are not only consistent with our strategic plan, but that are also feasible and doable. So there is a lot of exchange. At the end of the day, the goals teams makes recommendations. They need to be ambitious and "stretch goals," and then we approve those and we hold them accountable to them.

Mr. Lawrence: At the beginning of the show, we talked about the overall mission of the SBA, which is increasing the health of small businesses in America. How do you measure the success of that goal?

Mr. Barreto: We get a tremendous amount of feedback from our customers, which are those small businesses, and we like to say that we measure our success by their success, and it's very important. One of the things that we look at, for example, are a lot of the bottom-line indicators. Are these businesses growing? Are they hiring more people? Is their business longevity increasing? Those are all bottom-line indicators. I know that when I was in small business, those are the kinds of things that I looked at. So we're measuring a lot of that as well.

Again, doing a tremendous amount of outreach, asking for a lot of input, and really listening to our customers. I learned a long time ago that you learn everything that you need when you listen to your customers versus talking at them. Your customers are always going to tell you what they need to be successful. So we've done a lot of that. But not just that. We've implemented a lot of those recommendations, and that's one of the reasons that I think that the SBA is more visible than it probably has been in a while.

Mr. Lawrence: In terms of the goals, I think longevity is great and the profitability, but is also growing into a big business one of the things you look at?

Mr. Barreto: Not every business wants to grow into a big business. Every business has different goals. Some folks are pretty satisfied at the level of success that they've attained. They just want to maintain it. They don't want to lose it, or if they can find better ways of doing business. I a lot of times say small businesses don't know what they don't know, and it's not their fault. They're busy, so that's really where the SBA can come in and I think be a very important strategic partner for them.

Mr. Burlin: Hector, we're all limited in some way in our resources, whether it's human capital or it's financial. How do you link those resources and the use of those resources to the results, to the performance that you achieve?

Mr. Barreto: Again, what we want to make sure of is that we're doing more of everything. So it's very easy for us to measure did we do more loans this year, did we do more loans in the fastest-growing communities, are the kinds of services that we're providing to those small business owners what they want. Something that's very important for a small business, they tell me all the time I need the same thing that big business needs. I need more business, so help me get more business. So we've done a lot of things around that as well, trying to create that environment that you referenced.

I think the President says it the best when he says the role of government is not to create wealth. Government doesn't create wealth, Americans create wealth; small businesses create wealth. The role of government is to create an environment where entrepreneurs who are willing to take a risk, an environment where they're willing to risk capital, an environment where they're being heralded and celebrated. So we've spent a lot of time over the last couple of years making sure that the right environment, the right conditions are there for those small businesses to be optimistic about their future, and to also take their business wherever they want to take it.

Mr. Burlin: You come from that community, and you say a lot of your results and your feedback comes from the community. Both as the administrator and having come from that community, do your old friends call you and give you a report on your results?

Mr. Barreto: Every day. Small business people are some of the most passionate people that you're ever going to meet. They're not shy. They're going to tell you, if you're doing well, they're going to tell you what you need to be doing more of, and we try to listen to that as much as we can and again apply a lot of what it is that we have learned.

By and large, I think we're making some good progress. We're not satisfied. We're not again resting on our laurels. We think that the best of the SBA is yet to come. We want the SBA to be strong and very relevant in the lives of these small businesses for at least another 50 years. So I think the kinds of things that we're doing right now are very important to plant the seeds for the future.

Mr. Burlin: You talked about change and the importance of change. The buzzword is transformation, and we know that this is across government. Can you tell us a little bit about transformation in the SBA?

Mr. Barreto: Sure. It's very important. I tell our folks all the time that small businesses are constantly changing. They know that you're either moving forward or you're moving backwards. There is no such thing as staying in place. So as those small businesses have changed over those 50 years, and they have changed a lot and there's a lot more of them, we need to change too. The good news is that SBA has been changing a lot over the last few decades. There are things now that we do that we were never able to do before, and we need to keep doing that.

One of the things that we're looking at is the way that we distribute our programs and our services, especially out in the field. One of the things that we want to make sure that we're doing is that we're freeing up those SBA employees to be out there in those communities to reach out for more small businesses. Not wait for the small businesses to come to them, but for them to go out and find those small businesses, and that's what they're doing.

What they've told me many times is we're as passionate about small business as you are, but a lot of times, our hands are tied. There's a lot of process, there are a lot of responsibilities, there's a lot of bureaucracy that we're responsible for, and if we have to do that, we can't be out there developing these new partnerships and helping these small businesses. So we're looking at ways that we can take a lot of that away from them, and we've found some ways to be able to do that. So that's one of the things that we're very excited about.

There is not a recipe or a cookie-cutter approach to every district office. They're all in different parts of the country and they all have different approaches. But we've been able to be very flexible and work with them and really find some creative strategies on how we're able to reach more of those small businesses.

Mr. Lawrence: That's an interesting point.

The SBA is celebrating it's fiftieth anniversary. What do the next 50 years hold? We'll ask Hector Barreto of the SBA when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Hector Barreto, administrator of the U.S. Small Business Administration.

Joining us in our conversation is Tom Burlin.

Mr. Burlin: Hector, you've talked a couple of times about how technology is enhancing the effectiveness of the Small Business Administration, and computer network security is a critical issue, not just to large business but small business, and probably a challenge across the digital divide to many of your clients. Can you tell us a little bit about how you're educating your constituency in this very important practice area?

Mr. Barreto: We think it's very important. A lot of this education again happens through our technical assistance providers, our small business development centers, our retired executives, but we've also done some new things. For example, we're working closely with Tom Stemberg of Staples. Tom Stemberg was one of those small businesses that came to the SBA for assistance and of course now is a great success story. He is very interested in this issue, and we've been doing some town hall meetings in Staples stores around the country, and also producing a newsletter together to give small businesses some tips on how they can protect their business from cybertheft and from other problems that they may encounter.

There's an old saying in business that no small business plans to fail, but many small businesses fail to plan. So to the extent that they can have contingency plans and really understand where they're exposed, that is going to help them a lot. We saw that after 9/11. The businesses that were prepared, that had a contingency plan, could get back on their feet very quickly. Some that didn't never made it back. So this is a very important issue for a lot of small businesses, and a lot of times they don't realize how exposed they are.

Mr. Burlin: And they're highly dependent on it. As you've talked about having more and more access to the SBA through their electronic means, it becomes even more important. In the Small Business Administration, you talked about your geographic dispersion, the district offices across the United States. You maintain several resource partnerships. Can you describe a little bit about the resource partnership and how you plan to use that to leverage your presence?

Mr. Barreto: Absolutely. We're great believers in public-private partnerships. That's the way that we're able to leverage these resources. I mentioned to you all the things that we're able to do with all these partners by having the banks. This year, we also opened up our loan programs to credit unions. We'd never done that before. Many folks go to the credit unions to get small business loans. They are working, but they also have a business on the side, so that was a great thing. We're training more people, as I said, through the small business development centers, which are independent from us. There are 1,200 of them. We provide the financing and a lot of the best practices. We work with the retired executives. That's another partnership.

We're increasingly working with more and more corporations, because corporations are also very focused on the small business community, and they have partnered with us so that we can reach them together to educate them and inform them and really develop some success stories with these small businesses. So that's very important, and that's going to keep going on in the future, because it's critically important and it just makes a lot of good sense.

Mr. Lawrence: Earlier in our conversation, you talked about the SBA celebrating its fiftieth anniversary this year. What's your vision for the SBA over the next 5 to 10 years?

Mr. Barreto: We want SBA to do more. We want to reach more small businesses. As I said, there are 23 million small businesses. Many of those businesses weren't around 5 years ago or 10 years ago. In the cases where we need to, we want to reintroduce ourselves to small businesses, especially if they think that they already what SBA does, kind of like the way I did. I thought I knew all about SBA and I really didn't. In other cases, we need to reintroduce ourselves, so we'll do much more outreach than we ever have, and we do a lot now, but we'll do even more. We'll reach more people through the Internet. That's just a great way to reach people. As I mentioned to you, we're getting about 1-1/2 million visitors to that website every single week. We'll also make that a very effective tool for them so that they can apply for our programs. I think there will come a day when small businesses will be able to go online to get their loans. They're already going online to register for our major events, to register for our contracting programs, to get forms that they download. So there are a tremendous amount of things that we can do there.

Also, we want to do very impactful events across the country. This year, we've been doing regional events. We've also been doing some major procurement events, where we actually take the buyers out of Washington, D.C., and take them to Main Street. This has enabled us to set up more than 10,000 one-on-one procurement appointments for small businesses. It really takes the needle out of the haystack when you're talking about trying to do business with the government. That's been a very effective initiative. We want to continue those kinds of opportunities for small business.

Mr. Lawrence: Have the trends in the small businesses that are your customers changed over time? Was a small business 10 years ago the same people now?

Mr. Barreto: I just think that they're in more industries. There is not a particular sector where you find all the small businesses. It really cuts across the board. You have high tech companies, you have manufacturers, you have service providers, consultants, retail, you name it. Many more businesses are getting involved in international trade. People don't realize that. Ninety-seven percent of all businesses that do international trade are small businesses. That's over 200,000 companies. That wasn't the case 5 or 10 years ago, and so you're starting to see it.

Also, the growth that you see in different communities. I mentioned that the fastest-growing segment are the emerging markets, which are the minority communities. They represent 15 percent of all small businesses in the United States. Women represent 40 percent. Those weren't the same kinds of percentages when the SBA first started in 1953. So that's exciting. That's breathing a lot of new energy and enthusiasm into the small business sector.

Mr. Burlin: Hector, let me take you to the other side of the spectrum. I'm a little bit envious actually of your day, as least as I imagine it, because I know when I get to work with small business and get to sit in front of folks, you talked about their passion and enthusiasm for their business, are some of the most reinvigorating days that I spend at work. The question is, large companies, how can they engage to be more proactive in this process of engaging small business?

Mr. Barreto: Many of them are already doing it. IBM does a great job of focusing on business solutions for small businesses, and I know that they want to do a lot more. I think that small business is really on the radar screen more now than ever before. In some cases, I think SBA had a hand in putting the spotlight on the importance of small business, and many more people have gotten involved. Obviously, the SBA would love to be a partner with any organization that wanted to reach out to small businesses, and we hope that they'll give us a call. But there are so many opportunities to do this. There are so many organizations that represent small businesses, and so there is really no excuse for those that are really committed to helping small businesses not to be involved, especially now.

Mr. Lawrence: Hector, you've had an interesting career, primarily in the private sector, but now coming to the public sector. So I'm curious, what advice would you give to somebody interested in joining the public sector?

Mr. Barreto: The first advice is it's not about you. That's the first advice. When you come here, you really need to be coming from the place of wanting to serve, to wanting to make a contribution. I think it's also important to be passionate about your work. I would say that in any activity that you're involved with with regards to your career. But when you're doing it not so much as a job but as a higher purpose, you can get so much fulfillment out of it and your days can fly by, and it's a lot of fun. It's fun to work with the level of people that we get to meet and work with every single day. It's an exciting, exciting opportunity, and it is very fulfilling.

Mr. Lawrence: Hector, I'm afraid we're out of time. Tom and I want to thank you for squeezing us into your very busy schedule.

Mr. Barreto: Thank you very much. I hope that all that listening that are interested in the SBA will reach out to us at sba.gov, or you can also call us at 1-800 UASK-SBA. Paul and Tom, thank you very much for this opportunity.

Mr. Lawrence: Thank you.

Mr. Burlin: Thank you.

Mr. Lawrence: This has been The Business of Government Hour, featuring a conversation with Hector Barreto, administrator of the U.S. Small Business Administration.

Be sure and visit us on the Web at www.businessofgovernment.org. There, you can learn more about our programs and research into new approaches to improving government effectiveness. You can also get a transcript of today's very interesting conversation. Again that's www.businessofgovernment.org.

This is Paul Lawrence. Thank you for listening.

Dr. Carolyn Clancy interview

Wednesday, March 24th, 2004 - 20:00
Leadership,Strategic Thinking, Missions and Programs, Organizational Transformation, Innovations
Radio show date: 
Thu, 03/25/2004
Intro text: 
Leadership; Strategic Thinking; Missions and Programs; Organizational Transformation; Innovations...
Leadership; Strategic Thinking; Missions and Programs; Organizational Transformation; Innovations
Complete transcript: 

Thursday, March 25, 2004

Arlington, Virginia

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

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is Dr. Carolyn Clancy, director, Agency for Healthcare Research and Quality, which is in the Department of Health and Human Services.

Good morning, Dr. Clancy.

Dr. Clancy: Good morning.

Mr. Lawrence: And joining us in our conversation is Vernecia Lee, also from IBM.

Good morning, Vernecia.

Ms. Lee: Good morning.

Mr. Lawrence: Well, Dr. Clancy, I’m curious, could you describe the mission of the Agency for Healthcare Research and Quality for our listeners?

Dr. Clancy: I’d be delighted. The Agency for Healthcare Research and Quality, or AHRQ, as we call it, is a research agency that’s part of HHS, as you noted. And our mission is to improve the quality, safety, efficiency, and effectiveness of health care for all Americans. In other words, we conduct and support research and work with partners to use the findings to make sure that health care is itself made as good as possible.

Ms. Lee: Dr. Clancy, how does AHRQ fit into the Department of Health and Human Services?

Dr. Clancy: We’re one of the 13 agencies of HHS, which is a very large department, and one of a smaller number of research agencies. So we work very closely with a number of the other agencies in the Department, particularly the Centers for Disease Control and Prevention, National Institutes of Health, the Food and Drug Administration, and we also work with the Health Resources and Services Administration, or HRSA, with their community health centers and so forth.

Mr. Lawrence: How would you describe the size of AHRQ, budget, employees?

Dr. Clancy: Our budget is $304 million, and we have just under 300 employees, so I often tell everyone that they’re a million-dollar employee.

Mr. Lawrence: And you described so many interesting things when you were going through the mission. What are the skill sets of the employees?

Dr. Clancy: Oh, a very, very broad mix. The research we support and do internally is actually multidisciplinary, so it draws on clinical science. So we have doctors and nurses and other health care professionals, including pharmacists. We also have a very broad array of social scientists, quite a few economists, sociologists, psychologists, and so forth. We also have people with a broad array of administrative skills.

Ms. Lee: What are the major areas of research currently being funded by AHRQ?

Dr. Clancy: A big, big focus for us is patient safety. You may have seen the Institute of Medicine’s first report on patient safety published in 1999, “To Err is Human.” When that report first came out, my brother-in-law had knee surgery about a month later. And he came home with “yes” on one knee and “no” on the other, and suddenly my family knew that what we did was, like, absolutely critical. Patient safety and errors I think are that tangible to members of the public. That’s a big part of what we do.

A lot of the research we support focuses on improving quality of care broadly; also focuses on promoting access to effective services. So we support a lot of data development that we use internally and that many others use as well to try to track what we’re spending on health care. Are we getting as much value as we could for our pretty substantial investment in health care services in this country? And we also focus on sort of the nuts and bolts of how to improve quality and safety in health care.

Ms. Lee: Why did you decide to even study medicine?

Dr. Clancy: A really good question. I decided when I was much, much younger than I had any idea what doctors did, and I don’t come from a medical family. But I think I had a gut instinct which is still pretty relevant today, which is that it was about bringing scientific skills to a job where you could work with people, and that’s still very much what I like about medicine.

Ms. Lee: Can you tell us about your experience as a Henry Kaiser Family Foundation fellow at the University of Pennsylvania?

Dr. Clancy: Sure. Yes, I’d be delighted. When I was doing my residency, I think I didn’t really have a clear career plan in mind. I thought I’d go into practice, but really hadn’t given it much thought at that point. Being up on call every third night, most of my thoughts were about sleep. And a faculty member came to me and suggested that I consider academic medicine. And he said if you don’t want to do that, that’s fine, but you need to make a decision, because I think you’d be really good at it. And my problem, of course, was that I thought all the subspecialties of internal medicine, like oncology and cardiology and so forth, I thought they were all great up to a point. The minute it got to bench and lab research, I was a little bit less interested.

And then I found out that the Kaiser Foundation was supporting fellowships in general medicine and, in particular, during this two-year period, you would learn more about doing research. And at that point in time, I’d gotten very interested in clinical decision-making; how do you make decisions when you’ve got a multiple array of factors, both related to the patient as well as the particular problem. Internists specialize in diagnosis, so that had a lot of appeal to me.

And in addition to that, the fellowship also gave us some time to learn how to teach. In medicine, that’s sometimes sort of assumed that you’ve watched the people ahead of you so you know how to do it automatically, but this was a little bit more focused attention to that.

So the fellowship was really fabulous. I actually got to go back to my birthplace and I met a terrific mentor, John Eisenberg, who ran the program. And subsequently, he and I worked together again at the Agency in 1997.

Ms. Lee: Can you tell us how you started with the federal government and a little bit about your progression, your career’s progression?

Dr. Clancy: Sure. When I finished my fellowship in Philadelphia, I took a job in Richmond, Virginia, at the Medical College of Virginia, which is now part of Virginia Commonwealth University, and it was great. I got to teach and do research and also see patients, and I also ran the medical clinic for the residents. Because of my interest in clinical decision-making, I became very interested in a kind of research which actually launched the Agency in 1989, which was looking at variations in practice.

There was work going on in Northern New England done by Jack Winberg and others showing that if you lived in one county, you were more likely to have surgical procedures done than if you lived in a neighboring county. So for example, you were more likely to reach age 50 with an intact uterus very much influenced by where you lived, and I thought this was quite amazing. And one of the theories underlying, trying to explain the variations in practice was that you saw the greatest variation where the scientific knowledge base was least well-developed. So it isn’t that people were guessing or flipping coins about what to do, the knowledge base just wasn’t that good. And part of the genesis of creating a new agency in 1989 was indeed to develop a better knowledge base, and to use that knowledge to help clinicians make better decisions. So that was a very good fit for my interests.

Mr. Lawrence: And then how did you get to be the director?

Dr. Clancy: I think some of my staff think just longevity. When I first came there to work in the primary care group, because that is the kind of practice I do and still find it very, very intriguing. This is when people come in and you get to translate often vaguely defined symptoms -- I don’t feel good or I’m weak or I’m tired -- and try to figure out what’s going on. And I still find that utterly fascinating. So they were starting a primary care research group. And we know very, very little about the natural history of a lot of these symptoms as well as how to make good decisions in primary care. So I thought that was terrific, and I eventually became director of that group.

And then one of my colleagues left, so I switched and ended up directing another center focusing on outcomes and effectiveness research. Now the two areas are somewhat related, outcomes and results of health care. You would think we know about that because we’re always hearing about information in health care. Oh, good, you got a lab test and you were better. These end results are really focused much more on the patient’s perspective. So for many chronic illnesses, for example, we assume that if your lab test is better, so are you. This is actually trying to figure out if that’s true and developing better measures, which are usually very short surveys to get the patient’s perspective on health care.

And then in 2002, John Eisenberg passed away very young from a terminal illness. And at that point, Secretary Thompson asked me to become acting director and, a year later, appointed me as permanent director.

Mr. Lawrence: Tell me about your own career, because as you described your progression, I saw your early years as a practitioner delivering medicine, and now you’re a director. So I’m guessing you do less of that, but more direct people who actually do the research and the like. Is that correct to say in terms of the progression from doing versus managing?

Dr. Clancy: That’s true. I started off in an academic job, so I was doing a little bit of everything: some patient care, some administration because I was the medical director for our clinic, and directed the residents education there, which was a lot of fun. And in addition to that, I also developed some early programs to try to assess the quality of care we were providing, and to put in place some strategies to try to improve that care, which is a big part of what we do at the Agency. So again, there was sort of a natural link between what I was doing then. And I spend a fair amount of time in direct patient care.

When I came to the Agency, I still continued to see patients a half a day a week, but because I had fewer distractions, if you will, from clinical -- the demands of clinical care or people calling at odd times and so forth, I had a lot more time to write. So in terms of doing research, it was a very productive time for me. But you’d be right, right now, I tend to direct more, or try to make sure that the various projects fit together, that we’re not missing pieces and so forth.

Mr. Lawrence: How would you compare the different management skills you use as a doctor versus now as the director?

Dr. Clancy: Well, it’s interesting. In some ways, particularly in my administrative role at the Medical College of Virginia, they’re very similar, trying to get people to work effectively in teams. Medicine culturally is a very individual enterprise, you know. Throughout medical school and training, the guiding metaphor is, you know, it’s you and your patient and you’re going to figure out the problems and then ride off into the sunset, so to speak. In reality, much of medical care is very much a team sport. If I see a patient who needs help, I may need to draw on other colleagues, I’m going to need to be working with nurses and others. So to that extent, there’s a lot of similarities.

Clearly, you rarely see 300 patients in an exam room at one time. It would be more like a coliseum. But many of the issues are quite generic, I think, particularly as it relates to teamwork. Most of the research that we conduct and support draws on multiple disciplines.

Mr. Lawrence: That’s an interesting point about the teamwork.

What’s the quality of care in our health care system and how might it be improved? We’ll ask Dr. Carolyn Clancy, director of the Agency for Healthcare Research and Quality, when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I’m Paul Lawrence, and this morning’s conversation is with Dr. Carolyn Clancy, the director of the Agency for Healthcare Research and Quality in the Department of Health and Human Services.

And joining us in our conversation is Vernecia Lee.

Well, Dr. Clancy, you mentioned the Institute of Medicine and the study that talked about that the current health care system has some quality problems that result in inadequate delivery of services. Given the mission of AHRQ and the current structure, what role do you see AHRQ playing in sort of redesign or working on the problems?

Dr. Clancy: Essentially, we see the Agency as a science partner to those who provide health care, and not just those who provide health care, but those who are buying health care services; for example, employers who are buying on behalf of their employees or other large purchasers. And we’re also very helpful to public programs, such as community health centers, the Medicare and Medicaid programs, and so forth.

I think most people are aware that in this country we have an embarrassment of riches in terms of biomedical knowledge, and all kinds of knowledge to help us provide the best health care in the world, and by some metrics, we don’t. And by any metric of evidence-based care is what we would call it, matching the content of that science to the care that’s provided, we often fall short. So part of the Agency’s role is actually helping develop the metrics for assessing quality of care.

In addition to that, we support a lot of studies that try to address the question why aren’t we doing a better job? Let me give you an example. Recently, we issued the first of an annual series of quality reports. It’s sort of a national report card on quality of care, and it’s about the most comprehensive report ever produced. It includes care provided in hospitals, in outpatient settings, nursing homes. And the Institute of Medicine was very helpful to us in providing recommendations about the content of the report and the framework and so forth.

But I mean, there are stunning examples in there of where we collectively could be doing a better job. So a little less than one patient in four with diabetes has had all recommended tests in the past two years. Of all the people who are admitted to the hospital and have a heart attack, about 48 percent are given advice to quit smoking before they’re discharged home. Now I’m a doctor, I know what’s going on here. Everyone assumes that this is so self-evident they don’t need to say it, or that one of their colleagues has already covered that. But the reality is if you ask patients did anyone talk to you about quitting smoking, less than half the time, this happens.

You know, a lot of people are not getting preventive care that they need. And in general terms, we’re doing well when we’re providing the right care somewhere between 80 and 90 percent of the time. Well, what’s going on here? We have a world-class scientific enterprise, we should have a world-class delivery system. And providing the scientific knowledge and providing it at a time when people can use it to make decisions, that’s where I see us being a part of the solution to improving health care.

Ms. Lee: Dr. Clancy, you just mentioned a little bit about the Institute of Medicine. They basically said that there are several ways that we could improve it, and one was through health information technology. Can you briefly describe what health information technology is and why it’s considered important?

Dr. Clancy: Very broadly, health information technology consists of an array of components of information and communications technology that can be applied to improve health care. So that can include everything from little handheld PalmPilots; there are software programs where we can beam information to doctors about the latest evidence about preventive care, for example, or information about symptoms related to potential bioterrorist attacks. So that’s one example of information technology.

More sophisticated examples are computerized physician order entry. And when I first joined an academic medical center, they had that kind of system, and it was quite different than simply writing orders in charts. Everyone could see and, more importantly, read the orders that you wrote. There are full-blown electronic medical records, which can include reminders in them so that I don’t just have to rely on my faulty memory in the article I read two weeks ago, but actually, it reminds me based on the content of the patient’s particular information. It also includes e mail between patients and doctors, telemedicine. So it’s a broad array of technologies.

Ms. Lee: Dr. Clancy, so much of what AHRQ does is around patient safety. The Institute of Medicine estimates that between 44,000 and 98,000 lives are lost annually due to medical errors. What role do you see AHRQ playing in improving patient safety?

Dr. Clancy: It’s a really important question and one that we focus on all the time because of the urgency of the problem. First, just to be clear about one point, the 44- to 98,000 number comes actually from two very large studies that were conducted in New York state and then repeated in Utah, actually looking at the malpractice problem. The question then was is bad care what leads to lawsuits? And it turned out that the overlap between poor care and lawsuits was pretty modest. In other words, a lot of people get poor care and don’t sue, and a lot of people who sue have not received poor care. So this was quite a breathtaking revelation. And when the Institute of Medicine published their report in 1999, they made those facts pretty glaringly obvious.

But the point is that that number applies to hospitalized patients. We have very little systematic information about what happens in outpatient settings in nursing homes, in other types of settings, and, very importantly, I believe, at transitions in care. It’s a lot of opportunities to not communicate information effectively at those transitions, which is another place where information technology could be helpful. So our research spans a spectrum from trying to develop better information about those other settings to realize just how far and deep the problem is, to focusing on strategies to improve health care right now.

So for example, in the latter category, we developed a campaign to help patients and their families understand what they can do right now to improve their health care, called “Five Steps to Safer Health Care”; fairly basic commonsense things that I can tell as a physician never happen or rarely happen. Always write down the names of the medications you’re taking, all of them, and bring them with you when you come to see the doctor. Now, you can always tell an internist office because you’ll see a lot of people sitting out in the waiting room with little brown bags, but those patients have been trained.

More often than not, what’s happening is patients are seeing several different doctors. For example, they might see a specialist for their heart problem and have a primary care doctor and then maybe had to go to an orthopedist because they had an injury, none of whom have an easy way to share information with each other. They tend to send each other letters, but it’s very common that one doctor makes a change in medication without taking the others. You can see that the potential for errors for adverse interactions from medications and so forth begins to multiply. So that’s, again, another point where information technology comes into play.

One new thing that we’re doing that I think is very important is that all of our priorities for research and patient safety have been guided by input from stakeholders across the health care system: doctors, the public, those who run hospitals, those who run health care organizations, and so forth. We’ve had a couple of summits to help people come testify and tell us what they saw as the most important problems facing them in trying to provide safe health care. The first time we did this, what states said to us was, you know, we have a lot of data already. What we don’t have actually is a lot of manpower or person power to help us analyze the data.

So this past year, we started a new program called the Patient Safety Improvement Corps. And every year, we’re going to be training 50 health care professionals from multiple backgrounds. Most of that is done back at this home institution where they work on very specific projects. And a lot of this includes learning and applying skills in change management. I might know what went wrong, but if I can’t persuade people to work together to develop and implement a solution to solving that problem, we’re not going to go too far. They spend three or four weeks on-site with us, and this is something we do in partnership with the V.A., because they’ve developed a very, very safe health care system. So they get to see whether their techniques can be generalized to a much more heterogeneous and fragmented health care system, and we get to take advantage of their expertise. But we think that we’re going to begin to grow a cadré of professionals who will actually understand and be able to apply these new skills and techniques on the ground.

Ms. Lee: Is there a national strategy for implementing health IT?

Dr. Clancy: That’s a really good question. It certainly feels like national excitement these days. There’s a lot of excitement on Capitol Hill. And Secretary Thompson, who is the Secretary of Health and Human Services, has been completely passionate about this. He keeps asking me when can we make health care paperless? Can’t we do it next week? Or, all right, you can have two weeks. Very, very insistent that we get this done right now.

It’s easy enough for me to say as a doctor, for example, that no one should get a handwritten prescription in the 21st century, period. I mean, I still write them, but, you know, the opportunities for errors and so forth are just all over the place. So this year, AHRQ will be investing $50 million in grants focused on the use of health information technology to improve quality and safety.

I think it’s very important to understand that information technology is not strange to health care, okay? The billing enterprise has long been electronic for the most part. What’s new is actually drawing on the power of this technology to influence the core clinical enterprise itself, and that’s where I think our investments will make a big difference. We have funded a variety of projects over the years, but they tended to be at fairly select sites that had already made those investments in the technology. So our resources were able to support projects to evaluate, for example, the use of reminders to improve the delivery of preventive care, and in one case, interestingly enough, to even remind doctors and patients to have those fairly difficult conversations about end-of-life care. Fairly simple, straightforward reminders, but because they came up at the point of care, people remember to do it even though it’s not an easy conversation to have. But now, we’ll actually have enough resources at one time to be able to build on those earlier findings, and hopefully spread the diffusion of that.

In addition to that, the Department has additional resources next year which will complement our investments very closely, which are going to focus on making sure that the information technology within health care organizations, physicians offices, and so forth can actually be shared and connected across a community. So for example, the information problem I mentioned before about a patient seeing multiple doctors, well, they could each have a fabulous electronic medical record system, but if they can’t talk to each other, you still have the same problem. Their offices are just neater, there’s less paper around. The strategy of developing programs for sharing health information in a secure and confidential way within a community is something that we’re going to be starting on this year, but will be amplified and expanded next year.

Mr. Lawrence: Millions of dollars are invested in health care research. How is the success of such an investment measured? We’ll ask Dr. Carolyn Clancy of the Agency for Healthcare Research and Quality when The Business of Government Hour continues.


Mr. Lawrence: Welcome back to The Business of Government Hour. I’m Paul Lawrence, and this morning’s conversation is with Dr. Carolyn Clancy, the director of the Agency for Healthcare Research and Quality in the Department of Health and Human Services.

And joining us in our conversation is Vernecia Lee.

Ms. Lee: Dr. Clancy, AHRQ invests millions of dollars in research to really address the issues that we talked about earlier. What types of metrics are you using to measure the success of these investments?

Dr. Clancy: Critical question, because ultimately, we don’t think that we’re successful unless we can demonstrate that the findings from our research have had a positive impact on health care, and ultimately on people’s health. You know, clearly that’s a pretty tall order when we give a check to an investigator to start their grant to say, gee, tell me how many people are better off as a result of your work. So looking across the body of work that we fund, early in the phase of research, we’re looking to make sure that the grants and other investments that we fund are consistent with our goals and strategies going in.

As the research progresses, we’re looking to the investigators to tell us how many decision-makers, and those who are going to use the work have been able to understand it and use it. And ultimately, we hold ourselves accountable for at least making sure that that information gets to decision-makers in a way that’s usable for them and useful. And what we’d like to see is that health care is actually better.

Mr. Lawrence: Could you take us through the process of, you know, funding a grant that has to do with health information technology and then turning this into a business solution that’s adopted by health care providers?

Dr. Clancy: Sure, let me give you one example. We funded a project some years ago that was not specifically about health information technology. It was actually about developing a model to help doctors understand which patients coming into the emergency room with chest pain, which might be cardiac, would benefit from getting thrombolysis or the clot-busters. Some patients come in with an EKG that’s completely diagnostic and it’s clear what to do. Other patients come in with a history, which is often more predictive of whether someone’s having a heart attack, but the EKG is sort of nonspecific.

So based on a few items of information about the patient’s history, how long they’ve had the pain, risk factors, and so forth, as well as the EKG, these investigators developed and tested very thoroughly a model that could predict which patients were more likely to benefit from this therapy. And as a result, two of the leading manufacturers of EKG machines have now incorporated that into their strips, so when a patient is rushed in with chest pain, you get the EKG. And in addition to looking at the strip, there’s also the output from this model at the bottom of it. I’ve often thought it would be a nice sort of example to put on a video. So that’s one example of a business solution.

In some cases, we’ve simply supported research evaluating the impact of a solution that was already in place. In other cases, we’re providing content from the work that we support; for example, the evidence about how to measure quality, or what’s the right thing to do for a particular patient, to those businesses that are in the business of providing information to electronic medical record systems and so forth. But it’s a series of pathways that we’re still trying to discover what’s the most efficient and effective way to do that.

Mr. Lawrence: In the example of the EKG and the strip, how long did that take from sort of start to the adoption by the manufacturers?

Dr. Clancy: There was some serendipity involved. The research itself started in the early ‘90s, and they had incorporated this into EKG strips by the late ‘90s, so I’m saying about seven or eight years; a little bit hard to put a precise date on the starting time. And there was an awful lot of work that went into making sure that this was valid. I mean, developing a model is a great idea. Making sure that it’s the right model and that you’re not misclassifying patients and the people are accurately put into the right group, that took a lot more time.

Mr. Lawrence: I was going to ask about the management challenges that lead to people adopting it. What are those and how are those worked?

Dr. Clancy: To some extent, this is I think a very good example of something that comes up to you at the point of care. So to that extent, one of the usual barriers to adopting evidence into practice is overcome immediately, right, it comes to you, you don’t have to go find it. You don’t have to think, oh, boy, do I have time to go run and find out a piece of information or where is that guideline or other source of information when I need it, it’s right there. So I think to that extent, it’s a good model.

I can’t say that it was entirely strategic. We didn’t know when the investigator started all of this work that this was going to happen. There was a fair amount of serendipity involved, which I think there always is. What we’re trying to do now, again, looking at the challenges facing the health care system, is to try both within the Agency as well as with the researchers we support to figure out earlier in the process who’s likely to take this up, how can we link these research findings to levers of change, because knowledge of itself is likely to have a very modest impact.

This is not about people getting smarter. Every Institute of Medicine report has told us that. This is not about telling health care professionals to read faster and pull their socks up, so to speak. This is about creating a system where the right thing to do is the easy thing to do. So we see that as very much within our research domain.

Ms. Lee: Dr. Clancy, again, going back to AHRQ’s mission, is there interagency collaboration with agencies like Food and Drug Administration, Centers for Disease Control, Veterans Affairs?

Dr. Clancy: Absolutely.

Ms. Lee: Can you talk to us about that?

Dr. Clancy: Yes. In fact, we collaborate with all of those quite a bit. In this country and around the world, we have a broad array of drugs to choose from for multiple conditions, which is a great position to be in; there’s not just one. So for example, the treatment of high blood pressure has been revolutionized in the past 30 years. It used to be here were your choices. You could not treat it and have a stroke young or you could treat it and take incredibly unpleasant medication. This is not a great choice to be offering to people. Now there’s a very broad array of drugs, so it’s highly likely that when doctors see a patient with high blood pressure, they’ll find a good drug that will meet their needs and treat them effectively.

Now when drug manufacturers submit a drug to be approved for the market by the FDA, most of the time, the trials that they submit compare that drug to a placebo. Of course, that’s great and the drug gets approved and that’s another option to use -- it makes it challenging at times for doctors and patients to choose among multiple alternatives. So we support a variety of research that looks at the safe use of those medications once they’re approved, and also helps people understand what are the risks and benefits of a particular agent. So it helps them understand how to customize and, you know, make the right choice based on their particular circumstances. So that’s one example of how we collaborate with the Food and Drug Administration.

We were very fortunate and excited about some work we’ve done with the CDC in Minnesota, working with an organization called Health Partners, which is a community-based -- it started off as a health maintenance organization; now, like many of those organizations, has multiple product lines. But we worked very closely with them so that we could bring the clinical sector as well as the public health sector to work together to address the problem of diabetes. And there have been some very important and dramatic improvements as a result of that partnership. So again, our work with the CDC focuses on bringing those who see patients one at a time working in partnership with those who think about community health strategies, namely the public health sector. So that’s another example.

The V.A. has a very interesting challenge because, as you know, they provide care to millions of veterans. And they have a research enterprise which is pretty much focused on meeting the needs and figuring out how their health care system can work better. But their research and evidence tends to be stronger if it’s also done in partnership with others testing exactly the same questions in a much broader population, so that when they then turn to their network leaders and so forth and say this looks like the right strategy to improve quality of care, their network leaders have confidence knowing that it’s been tested in a very broad array of populations. This isn’t just something we tried in one corner of the V.A. system and now you’re asking me to roll it out for everyone.

Ms. Lee: Can you talk a little bit about CMS and your collaborations with CMS, or Centers for Medicare and Medicaid Services?

Dr. Clancy: Sure. We work with them very closely on a lot of different projects. One way that we work with them, for example, is when they have to make decisions about should they cover a particular service, they often turn to us for something called a technology assessment. So sometimes internally -- more often, we contract it out -- what we do is review all the research on a particular topic, and we give them a very comprehensive report that gives what’s known about the benefits and potential adverse effects or harms of a particular service or intervention. They then give it to a coverage advisory committee, which makes recommendations. So we’re not making the decision for them, but, again, we’re the science partner for their efforts.

We collaborate on some types of research. Very recently CMS, because they are responsible for assessing and improving the quality of care for people enrolled in the Medicare program, has been working collaboratively with a variety of hospital organizations and others to try to improve the quality of hospital care. So we’ve been part of that initiative. And one unique contribution we’re making is that we’re developing for them a measure of patients’ perspectives on care in the hospital. Was information provided to you in a timely fashion? And it’s a short survey that asks patients lots of questions about their experience of care, because that makes a big difference in terms of making sure that patients are understanding the information that’s given to them, you know, that they’re pain-free as much as possible, that all the right things are done. So that’s another example of where we work together with them.

Mr. Lawrence: That’s very interesting. What does the future hold in terms of new health care technology? We’ll ask Dr. Carolyn Clancy of the Agency for Healthcare Research and Quality when The Business of Government Hour continues.


Mr. Lawrence: Welcome back to The Business of Government Hour. I’m Paul Lawrence, and this morning’s conversation is with Dr. Carolyn Clancy, director of the Agency for Healthcare Research and Quality in the Department of Health and Human Services.

And joining us in our conversation is Vernecia Lee.

Well, Dr. Clancy, in our last segment, you were talking about the partnerships with other government agencies. And I’m curious about, since there are so many stakeholders in the health care industry, how you work with the private sector.

Dr. Clancy: We work with the private sector in a variety of different partnerships, which have been, we think, successful and also enormously rewarding for both sides, which I think is the key to any kind of partnership. Probably the simplest type of partnership we often have is around disseminating information; the idea being that information sent out from a government agency might be helpful, but if I see it coming, for example, from the American Academy of Family Physicians if I’m a family physician or the American Academy of Pediatrics, I may pay more attention to it because that organization has deemed that it is credible.

So we do a lot of partnerships like that, some for information targeted at professionals, some for information targeted to the public. So for example, we worked with the AARP to disseminate information about staying healthy over 50. And it’s a very simple checklist based on the best possible evidence about which tests and procedures you should be getting, which is, in turn, derived from what conditions should you be worried about getting, what steps can you take to prevent those conditions or at least postpone or delay them? And so that’s one kind of partnership.

Another type of partnership is when an organization essentially says to us, you know, we’re having problems with safety and quality. Could we work together to try to do better? And we have a couple of networks that have established capacity to begin to support that kind of partnership.

We have a research network of integrated delivery systems across the country, and we also have a network of primary care practices. This is sort of doctors in practice across the country who see patients. Some of them are in small practices, some are in slightly larger practices, but who are very interested in providing the best possible care and also contributing to a larger collegial enterprise. So that’s been another type of partnership that we support.

Ms. Lee: In Fiscal Year 2000, AHRQ received $5 million to support and conduct research to improve the ability of the nation’s health care system to respond to possible incidents of bioterrorism. Can you tell us how AHRQ’s bioterrorism research differs from that being conducted by other agencies?

Dr. Clancy: Sure. You said it well. The focus of the investment and the resources we were given was to focus on the role of the health care system. At that time, which was before 9/11 and before the anthrax and other episodes, there was a great deal of interest in strengthening the public health infrastructure, but very little public resources going in to enhance the health care system’s response, but health care systems were very, very worried about this. Once anthrax hit, of course, suddenly there was a huge demand for information. So the timing of this investment was very, very helpful for us. We had determined that two areas where we could be helpful was, one, on the use of information technology to provide critical information to the public health enterprise about potential early warning signs. It’s still an area of great interest, both within the health care system as well as within public health.

In addition to that, we were very interested in learning how clinicians could be trained to potentially think about this if they saw patients with unusual symptoms. Because one of the scenarios then that people talked about a lot was suppose someone releases an agent which is not immediate and rapid-acting as anthrax was, but is slower and they release it somewhere like the Super Bowl? So you imagine all these people who are exposed who then disperse and go back to multiple communities, are being seen by multiple doctors who aren’t talking to each other, and so forth. So what could we do to help clinicians keep this in the background of their minds as to be suspicious?

So at the time, one of the projects we supported was at the University of Alabama. And in order to keep it on people’s minds, they had this idea of screensavers. They were focused on emergency department physicians and other professionals. So their idea was to have screensavers that if anytime you walked by one of the computers in the emergency department, you know, you might see anthrax or smallpox, keeping it in the back of your mind. Well, once the actual anthrax episodes hit, they didn’t need the screensavers anymore.

But the good news was that they had developed a website where clinicians could turn, and it’s not just a lot of information, although it is a lot of information, but the information is organized in a way to respond to questions that clinicians would have as they’re seeing a patient. So instead of being a textbook on anthrax, it’s actually organized in terms of the symptoms the patients might present with, what laboratory findings you might see, what the X-ray might look like. And in addition to being a very useful source of information, people can also get continuing medical education credits. So a week after the first episode of anthrax, that website was live and, needless to say, was incredibly popular. So that’s one kind of work that we support.

Another area that we’ve supported -- you’ve probably guessed that mathematical models are not a trivial part of what we do. In one instance, we were funding a team in New York City to develop a model for how would you provide mass prophylaxis? Anthrax hits and you’ve got to get antibiotics to those people who are at highest risk rapidly. So they’ve developed a model based on the best information that they had, and they were due to test it on September 12th of 2001. Needless to say, that testing was postponed a number of months.

But essentially, having developed the model, what they then worked with was the Police Academy. So they had police cadets sort of running down this pier, someone would ask them questions and would either give them a placebo or the actual drug. They weren’t giving out drugs, of course, they were using different colored M&Ms. But they then went back and refined their model, and this has been something that a lot of states and communities around the country are using.

Mr. Lawrence: Let’s look out to the future. What role do you envision AHRQ playing in the health care system, say, 10 years from now?

Dr. Clancy: The health care system is sort of slowly lurching and catching up to other sectors in terms of becoming part of what might be called the Information Age. Although we’re incredibly excited right now about the power of information technology and the investments we’re going to be making this year and into the future, we’ve begun to see, based on our prior investments, the difference that can make. The reality is that much of medical care still looks a lot like Marcus Welby. A lot of paper, literally all over the place.

So what that means is that all of our models for providing care mean that it’s rare or unusual to have the information you need literally at your fingertips. What you’ve got at your fingertips is a chart. You need to leave the room or in some way go elsewhere to get the information that you need. With information technology and the interest in making sure that the inputs to that technology are as evidence-based as possible, what I see happening in 10 years is that more and more people have the information they need, and the best and most current information at the point of care and/or be customized to what they need.

So for example, some of us use Amazon.com. Some of us ought to stop using it so much, but -- and you know that you cannot only buy books there, but periodically they send you e-mails, so when you log on it says, gee, based on your prior purchases you might want this. Well, you can imagine a smart system that knows the type of patients I see, that might even know some of the errors that I’ve made or difficult challenges or things that I’ve forgotten before, and is sending me prompts. It’s that customized. That would be one part of it.

Essentially what I see is that the growth in information technology as well as the demand for the best possible evidence to guide health care decisions means that the actual delivery of health care will not only be a lot better, but our information will essentially be the Intel inside, if you will.

Ms. Lee: Dr. Clancy, the White House announced earlier this year that it was going to expand the E-government initiatives to include grants and health case management. Have these initiatives impacted plans for the future of your agency?

Dr. Clancy: Well, some of those initiatives focus on making the business of running the Department more efficient. So for example, there’s always been a little industry in academia and other places where people track grant announcements, you know, and it’s someone’s job. It actually could be the job of several people to put out a weekly, sometimes daily, bulletin of what grant opportunities there are at the Agency or at the NIH and CDC and so forth. You kind of have to know a lot of lingo to do that in a way that’s timely and meaningful, because a lot of solicitations are time-limited.

Part of the E-gov initiative is actually going to allow for one storefront for grants. So that’s definitely going to change how we do business, although we think it’s actually going to be incredibly helpful to us. Right now, investigators send in paper applications and they all go to a central place, and then many copies have to be Xeroxed. So there’s this time window of four to six weeks where I know that someone’s submitted a grant and it may be at the Agency, but it may be somewhere in that process of the massive Xeroxing and so forth. All that will go away.

Now some of that requires, you know, the support to have authentication that it’s your application and so forth. But that I think is going to very, very helpful to us.

Mr. Lawrence: You’ve had an interesting career serving the public, and I’m curious, what advice would you give to someone considering a career in public service?

Dr. Clancy: Well, you know, the Department just launched a program two years ago called the Emerging Leaders Program. But we’re not as concerned looking at the demographic changes affecting the public workforce as they are in many areas showing that a very high proportion of people will be eligible to retire over the next few years, and also concerned that they weren’t attracting some of the best and brightest young people. This program is unbelievable. We’ve had a number of folks. We’ve had some who work at the Agency for most of their two-year rotation, sort of similar to the presidential management -- PMI program, but they just stay within HHS.

A lot more rotate and help us, and they are fabulous. And what’s been very gratifying is I think that most of them can see that the work that we do and that others in the Department do is very exciting and is making a difference. So my highest hope is that young people coming out of college or graduate school would give a government career serious consideration. There’s going to be a huge array of opportunities.

Mr. Lawrence: I’m afraid that’ll have to be our last question; we’re out of time. We want to thank you for joining us this morning.

Dr. Clancy: Thank you. For your listeners who are interested in finding out more about the Agency and, in particular, are interested in information that they can use right now in terms of making their own health care better and safer, our website is www.ahrq.gov.

Mr. Lawrence: Thank you very much. This has been The Business of Government Hour, featuring a conversation with Dr. Carolyn Clancy, director, Agency for Healthcare Research and Quality in the Department of Health and Human Services.

Be sure and visit us on the web at businessofgovernment.org. There, you can learn more about our programs and get a transcript of today’s very interesting conversation. Once again, that’s businessofgovernment.org.

This is Paul Lawrence. Thank you for listening.

Patrick Ciganer interview

Friday, February 27th, 2004 - 20:00
Patrick Ciganer
Radio show date: 
Sat, 02/28/2004
Intro text: 
Patrick Ciganer
Complete transcript: 

Friday, September 26, 2003

Arlington, Virginia

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

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is Patrick Ciagner, Program Executive Officer of NASA's Integrative Financial Management Program.

Good morning, Patrick.

Mr. Ciganer: Good Morning Paul.

Mr. Lawrence: Joining us in our conversation is Steve Sieke.

Good morning, Steve.

Mr. Sieke: Good morning, Paul.

Mr. Lawrence: Well Patrick, let's begin by understanding the mission of NASA's Integrative Financial Management Program, or IFMP.

Mr. Ciganer: Well as the name indicates, the primary mission is to develop the financial management capability that is Agency-wide, and also integrates a lot of the factors that allow you to manage more effectively. Over time, the Agency discovered that in the case of its undertakings, which are mostly projects and programs, there is more than just cost or budget data. There is human capital; there is resources; there is assets. And the ability to have access to all of that information in a fairly seamless way is what the Agency is looking for. So, although all the word "financial" is in the middle of it, the integration component is really the goal of this specific program.

Mr. Lawrence: And what is the vision of the program?

Mr. Ciganer: The vision is to provide to management and the bulk of the Agency employees the ability to access, account, track and manage information as effectively as possible. And the information is fairly broad, so therefore, we are not just focused on one specific area of the Agency. But we are looking at the institutional side, which is the administrative side and the programmatic side. So it really is to provide an overlapping umbrella and capability to all of the employees within the Agency.

Mr. Lawrence: How do you describe the size of this undertaking? Budget, people, time?

Mr. Ciganer: The current undertaking is approximately a six-year effort. The budget is $497 million. The number of people involved average approximately 300 to 400. They vary, because we broke down the program into several projects, and some projects will have slightly larger staffing requirements. But that essentially is the scope and the timeline of the project.

Mr. Lawrence: So by normal standards this would be a large project, but by NASA standards, this is a small project?

Mr. Ciganer: It's a medium-sized project. It's the cost of one shuttle launch. But from a timeline, it's a little bit shorter than some of the probes that we will build and launch. But it fits within the NASA operating parameters. People feel comfortable looking at the size of the dollars, the staffing requirements and the fact that we are touching every single center. So we are not raising eyebrows either by being too small or too large. We are within scope.

Mr. Sieke: Patrick, let me ask you a couple of questions about the genesis of IFMP. Could you start out and just give us kind of the history behind the inception of the project. And maybe you could start with what financial management looked like before IFMP, and explain why NASA decided to embark on this major undertaking.

Mr. Ciganer: NASA has been essentially aiming at developing this fundamental capability for the past decade. This is actually the third effort aiming to develop this functionality. It started in the early '90s, where the Agency took a path that looked at developing all of that software and doing all of the integration in-house, essentially soup-to-nuts-in-house development. Unfortunately, we are a scientific and engineering agency, and for several reasons, the performance that was delivered out of the early results wasn't worth the cost. So this was essentially terminated.

In the mid-'90s, the effort was started again going to an outside organization. But the thrust was again trying to develop all of the functionality using custom code as opposed to using existing functionality that you find in packages, and trying to deliver all of the capabilities serving all of the constituencies at once. In plain English, that means that we were going to have an accounting system for the accountants; budgeting system for the budgeters; an HR system for the personnel people; a project management system for the programmatic folks, all at once. Again, this did not deliver as promised. A couple of applications were developed, but due to the complexity of the Agency's structure and the wide variety of projects and programs that we're involved in, we realized by 1999 that there was way too much code that needed to be cut in order to meet all of those requirements.

So the third incarnation of this effort, which is the current IFMP, was started in late 2000. And in this case, we decided to go "COTS" -- the commercial off-the-shelf systems. Now that is a little bit of a misnomer. We are using a COTS underpinning, which is the SAP relational database environment and their core financial application, and we are using specific applications that are off-the-shelf. But the integration effort is completely discrete to the Agency. And in some of our future modules -- we don't call them applications, we call them modules -- there is also quite a bit of development. We are using tools that are off the shelf. For example, the way NASA formulates its budget is extremely specific to the Agency, and there was nothing off-the-shelf that met those requirements. So we are actually developing using COTS tools our budget formulation capability.

So the third try is, I would say, above all, a mix between off-the-shelf functionality and some custom development. But it's learning from the previous experiences two very critical lessons: One is do not try to do everything at once. And the second is to look at your business processes. Look at the functionality of the system that you are implementing and/or purchasing and try to actually make the processes fit the functionality of the software, as opposed to the other way around.

One of the many lessons-learned sessions we have had over the past couple of years with organizations, mostly in the private sector that have implemented this type of software, was focused pretty much on what went wrong. I mean, the way we decided to lead those discussions was: success is very difficult to define, but failure is a lot easier to bind. We need to understand why you failed. When we spoke to the users of SAP, which is the core software we are using, met two very large-sized organizations comparable a little bit to us, and they came and essentially out of quite a few presentations, did define three or four major drivers on why things did not go as planned. The first one was they tried to modify the software, especially when technology companies were purchasing COTS. They know they can cut code; let me go in there.

The second is you have to make sure that the system adoption goes beyond just technical success, which means -- this is such a complex environment, having the software essentially operate correctly is only part of the story. Unless there is a fundamental effort aimed at changing the way an agency operates or an organization operates and uses the software the way it is supposed to be used, you are not going to get there. And in many cases, the system dies on the vine and you go back to the way you used to do business.

And then the third element is you've got to take essentially very measured steps. And you cannot assume that previous successes are going to decrease the amount of risk that you have moving forward.

Mr. Sieke: Patrick, you had mentioned that IFMP is a kind of a medium-sized project. But it certainly is significant from the standpoint that it impacts everything at the Agency. I'm just wondering if you could share with us your roles and responsibilities specifically around the IFMP project.

Mr. Ciganer: One of the most critical elements to ensure the success of this type of project, given the fact that it indeed touches pretty much everybody that works there, is a very solid endorsement from the senior leadership. When the program got off the ground, there was a realization very early on that the changes in some cases were so significant that unless there was the perception that senior leadership was very clearly not only supporting, but also monitoring the progress, there was a possibility for some of those changes not to take place. As a consequence, the program was established in such a way that I report directly to the administrator, which means I am responsible ultimately for the implementation and the successful operation of this series of systems.

I've got a team, which is composed of program management and project management. But essentially, I am the point person on making sure that not only there is proper visibility on the program performance and progress at the senior level of the organization, but also a proper line of communication that is clearly established between the various constituencies and the senior leadership. As I mentioned earlier, we are implementing a lot of changes. And in some cases, the way we are developing some business steps is potentially not as efficient as it was in the past. As a whole, it is a lot more efficient, but specific groups, organizations, constituencies are affected in different ways, and there are cases where things are actually turning out to create more workload, rather than less. They are far and few in between, but they are still there. And we needed to develop a way for the people that were the most affected to have a link all the way up to the top of the organization.

Mr. Lawrence: That's a good point. What are the pieces of the financial management program and how is it scheduled? We'll ask Patrick Ciganer of NASA to explain this when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Patrick Ciganer. Patrick is the program executive officer for NASA's Integrated Financial Management Program.

And joining us in our conversation is Steve Sieke.

Patrick, how has your previous experience helped you in this current position?

Mr. Ciganer: Well, Paul, in a couple of ways. One of the main, I guess drivers of the Integrated Financial Management Program is obviously the ability to tie performance and financial characteristics of specific programs and projects. I come from private industry, joined NASA a couple of years ago -- 18 months ago specifically -- and previously, I was both on the technical and systems side, and more recently I was CFO of a company on the West Coast.

So I think part of the reason that attracted me to NASA and maybe interested NASA was the fact that I was able to look at this type of implementation from both a system and a project standpoint, and also as an end user. As CFOs, many organizations look at you as both the entity responsible for delivering credible numbers, but also the organization responsible for putting in place a system to generate those numbers. One of the concerns that the Agency had, based on their previous experience, was to try to be as transparent as possible in the development of the system and get the various constituencies involved, as opposed to this is a system that we are going to build and throw at you; this is a system that we are trying to build with you, and we will roll it out with your participation.

So in my case, I started my career more on the operational and systems side, mostly working for large Fortune 50 companies in the system component of financial departments, and then over time I migrated towards more of the, shall we say, the end user of the product as a CFO. In the case of NASA specifically, about 2 years ago, I was asked to look at the space station cost overruns that had been taking place. A commission had been established, chaired by John Young, and I was responsible for developing the financial management recommendations moving forward that would potentially help mitigate some of the overruns. So that was my first exposure to the Agency's inner financial works, and as a consequence potentially of some of those recommendations, I had this interesting event take place where I was asked to help implement those recommendations. And that's how I ended up at the Agency.

Mr. Lawrence: That's terrific. Can you describe, Patrick, the main components of IFMP for our listeners?

Mr. Ciganer: Gladly, yes. I mentioned earlier we have multiple projects as opposed to trying to implement all of the capabilities at once. We call them modules. We have developed and implemented roughly half of the modules that will ultimately comprise the system, the suite of applications. We started with position description and r�sum� management, partially because staffing was and continues to be a very critical element of the success of the Agency. Above all, again, we are a scientific and engineering organization, and for us, we are only as good as the people that compose our organization. So this is not so much processing specific things, this is leveraging on individual talents. So although this is an Integrated Financial Management Program, the immediate requirements were very much to support some of the staffing efforts.

So we developed and implemented the first two modules about 18 months ago, called r�sum� management and position description. This was followed by a module called Travel Manager. Again, the nature of our organization is such that we have a lot of people spending a lot of time in airplanes, going not only all around the United States, but going internationally, mostly to Russia, but also to Europe, to Australia and so forth. And a significant amount of money is spent traveling. So we needed from a financial control standpoint to develop the capability of tracking and managing more efficiently travel costs.

Now just as a quick background, though I'd like to believe most people know who we are, the Agency is actually a very decentralized organization. The Agency operates out of 10 centers that are spread across the United States. And those centers have very specific missions. They are in charge of specific programs, projects, in the sense that a lot of the work gets done there. The program management of the Agency is center-independent. Program managers in many cases will manage undertakings that are housed at several centers. If you are in space shuttle activities, you will have work being done at Stennis, at Marshall, at Johnson, eventually at Kennedy. So you need to be able to coordinate and have insight in a variety of centers.

In space science, you have work that goes on at JPL, at Goddard. So as a consequence, our organization is both distributed and also coordinated in slightly different organizational lines; the equivalent in private industry of divisions. Divisions can have multiple plants or production areas but the divisions themselves are in a certain area. In addition to that, headquarters, here in Washington, is responsible for, obviously, not only the budget but the overall policy and management of the entire organization. And their requirement for integrated data is also quite high. So this is actually comparable to a traditional distributed multinational organization. And I should mention that we also have satellite offices all over the world. So the need for something like a travel manager application is actually fairly significant if you start looking at the coordination efforts required.

After Travel Manager, the next application that just got deployed was our core financials application. That is a very traditional product. This is what you would call budget execution from a government standpoint. This is your financial accounting module from a private standpoint. This is basically the books of the Agency.

Now this was a major undertaking, because up until now, every one of the centers that I mentioned had their own accounting system. That system was autonomous, had been usually developed or contracted or purchased locally, and really was not capable of any integration with any other accounting system from any other center. There were interfaces; data could be exchanged, but there was very little capability, for example, in the traditional consolidation accounting, where, let's say a specific enterprise rolls out their information on a specific program, you look at the information at the top and you want the ability to drill back down to a specific task. That did not exist. I mean, there was a lot of data calls where the constituency needed information from another constituency and asked for the information.

But first of all, they have to ask. And second of all, it had to be extremely well-defined, because it's the old 'what you see is what you get;' in this case, what you ask for is what you get. And the analytical capabilities were very limited. So the core financial system did two things: it retired 10 family of accounting systems. It was more than just one system per center. It also put every single organization in the Agency on a single instance of the software. Which means everybody essentially operates -- puts data in, gets data out, generates reports -- out of the same environment. That is a massive relational database, and that is for us a significant step, because the ability from any angle in three dimensions to get the information out is something that the Agency has been after for a long time and is finally able to gather.

So that is the most recent module that we implemented. To date, it has been the most complex. Because literally, it was 10 separate implementations. A good friend of mine who now left NASA warned me when I first came into the Agency and said, "You know, when you've seen one NASA center, you've seen one NASA center." So the experience that we learned out of deploying in one center had some correlation to the next deployment, but it was fairly modest. What we did is we actually broke down that roll-out into three separate waves, partially because we just did not have the resources to try to get everybody up at the same time. There is a very large training component, and we just could not muster getting everybody trained at once.

Besides that, we wanted to actually up to a point create out of the first wave a semi-pilot, learn from that, and then get the second wave to address for some of the major centers the more complex conversion issues. And then the third wave would hopefully be able to close the door fairly shortly. So the core financial module which just finished implementation of its third wave on June 23 is that the future modules are as follows: there is a budget formulation module, which is the formulation of the budget as opposed to the execution of the budget. That is being developed as we speak and is slotted for complete roll-out. In this case, it is going to be a single roll-out in a single instance Agency-wide some time next spring.

After that, we have an asset management module, which for us is also a fairly critical component. Our auditors get very nervous when we are not able to track where some of our probes are. But we tell them that is sometimes fairly difficult to verify whether or not this sensor is on that probe when it is on its way to Mars. But we should be able to at least tell them roughly where it is. So the asset management module in itself is going to be a fairly large undertaking, and then following that, we are going to have an HR module, which is really a human capital management capability. It goes beyond just personnel records and employee payroll and so forth. And then finally, we are going to take the contract administration capability and move it to hopefully some of the next technological steps that are coming down the road, which is an advanced document generation system. We're discussing potentially the use of a semantic web for more efficient information retrieval. So those are the major modules.

Mr. Lawrence: All of the work just described has huge management challenges. What are those challenges and how have they been addressed? We'll ask Patrick Ciganer of NASA to take us through these challenges when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I am Paul Lawrence, and this morning's conversation is with Patrick Ciganer. Patrick is the program executive officer of NASA's Integrated Financial Management Program.

Joining us in our conversation is Steve Sieke.

Mr. Sieke: Thanks, Paul. Patrick, the implementation of the IFMP program has meant a lot of changes for NASA and its employees. Can you explain to our listeners how you are managing that change?

Mr. Ciganer: We discovered very early on that the adoption of the program is not something that was automatically performed. Traditionally, especially when you have a series of processes that are perfectly capable of satisfying your requirements, there is a reluctance to try to learn how to use a new system. I mean, something as fundamental as when we get a new system on our laptop, a new operating system, we are reluctant to see the benefits. It takes us a while to get used to it.

This was magnified, first of all, 10 times, because we have 10 separate centers, and therefore, 10 separate systems that could not even be taught to take the next step on a one-size-fit-hole approach. The second thing is, this type of implementation is only as successful as the adoption of its ultimate users. We can have a theoretical, technical success. And as I mentioned earlier, unless the system potential gets really exploited by the various constituencies, we are just not achieving the ultimate goals. We discovered that change management, which is a very generic term, is something that requires a lot of attention. It's not an afterthought; it is not the purview of the softer sciences. It is not something that automatically will come to people that are in charge of training the various new users. It is actually an activity that requires not only focus, but organization, tracking a specific set of metrics, quantifying to the extent possible how some of the changes you are trying to implement are catching on.

I think that is actually the most difficult part of this undertaking, especially given the scope of the IFM program where, as you mentioned earlier, we are touching not only the financial community, but also the programmatic community, the HR community, the average individual that works at the Agency as a whole. There isn't a facet of our program that doesn't touch every single individual. So what we've decided to do is two things: first of all, we have hired who we considered were the best outside organizations capable of leading us through those steps. And our selection process there was based on their previous experience in comparable environments, and also, their ability to understand how our agency operates.

We wanted to be very careful again, because I like to believe we are special, like every other organization. But it is not because this system works in organization X that you can take the exactly the same approaches and apply them to organization Y hoping to get exactly the same results. In addition to that, self-introspection in this type of activity is very difficult. I don't presume to be able to autonomously gauge how well we are doing in implementing change. So that is why we went and we continue to use an outside set of eyes that can gauge on our behalf how well we are doing and then additional outside resources that can lead us down that path.

Now how do we really measure that change? There is empirical methods, such as the good news is we can see how often people use the various modules of the system compared to -- when people get trained to get an ID and a password in the new system, and then we can develop some generic statistics on how many users got trained, how many users are using the system on a period of time after the training. How many trouble tickets or error messages are generated? How many system questions get logged? What we did was obviously maximize the capabilities of the system to gather that information, and also set up a competency center, which is the equivalent of an ultra-sophisticated help desk. Imagine a help desk that not only can answer questions on how do I log on, but also can get into the system and take care of specific processing issues or look at relationships, look at the way the data is manipulated, the way it is stored, the way you report it.

So one of the ways we measure change is also getting feedback from that center on the level of complexity of the questions being answered. Also, as time evolves, you will have users go up the learning curve and bump into more and more complex issues. So that's in a fairly balanced way the method that we use to figure out how change is taking place. I mean, we do have customer surveys and a series of workshops, but those are not, I would say, as hard-hitting for us as how often do we have problems cropping up when the various modules are being used.

Mr. Lawrence: Patrick, one of the key components of change management, as you know, is communication. And I was just curious how you are ensuring that effective communication of all the program efforts and changes is getting out the community?

Mr. Ciganer: One of the main drivers of the program is to make sure that we are as inclusive as possible. Unfortunately, we have to be located someplace. We happen to be at headquarters in Washington. But what we've done is in every single center; there is actually a local change management team. So the various centers dial only four digits on their phone to talk to somebody, as opposed to you know, calling those characters in Washington. So that's a big step in really developing a mechanism for effective communication.

The second component is one which is more of a generic approach, which is, we Literally, whether it is the administrator or myself or any of the enterprise leaders, will personally answer any phone call, e-mail that gets sent to us regarding questions about the overall system. In most cases, the questions fall into two categories. There are the technical questions that the competency center will handle. We wanted to make sure our folks understood there was an open-door policy if you had larger concerns, strategic concerns on the potential functionality of the entire suite of applications, on the impact of changing some of the processes. So the more generic, I would say global, questions are encouraged and literally percolate all the way to the top.

So that is also one of the communication lines we set up very early. The good news so far is that we are not overwhelmed by calls and e-mails, but we'd like to believe that throughout the organization, people understand that vertical communication is completely open. In addition to that, we have created a category of superusers, should we say, of the new modules, which means in every single group, department, organization, there are folks that volunteered to us the capability of sharing their knowledge and experience with their peers.

So in many cases -- you know, and we're all like that -- it's easier to walk to the office next door, the cube next door and ask a question, rather than pick up the phone and try to call a help desk. And we've really tried to build up this informal superuser infrastructure along with business process leads in each one of the organizations. They're for the folks that are not so much technical, but that are there to try to explain the logic behind some of the steps and the changes that take place. And dealing with, again, technical constituencies, you cannot just say do it because we tell you so. They we will ask why.

Mr. Lawrence: What are some of the other complexities of the program and how are you dealing with those?

Mr. Ciganer: One of the interesting aspects of this program is the fact that we have a lot of data that gets generated now which is accessible to a very broad spectrum of users. Before, it was much more stovepiped. One of the interesting by-products is how do you turn that data into information? And specifically, in something as simple as reporting specific information related to a program or project, an initiative, an undertaking, there is so much data that is now available at an incredible level of detail, that teaching people to look at exactly the same information when they want to discuss it is actually an interesting challenge, because all of a sudden people get inquisitive and they want to explore, "Well, what if I present the information, adding this and subtracting that, then putting a time component and doing this type of analysis so I can go and discuss it with my peers?" Well, it turns out that they did not exactly attract the information the same way, so they are not discussing exactly the same data.

So one of the complexities is, we have now a very powerful tool kit. And teaching folks to make sure they use the same tools when they are trying to obtain the same results is one of the components. It is an interesting by-product of enhanced capability. The other one is a little bit different. It has to do more with an evolution of our organizational structure. Information now can be shared and is readily available throughout a whole range of different activities. The ability to extract that information, or to even develop specific models, specific scenarios using the historical data to move forward, is a lot more present than in the past. So one of the things we are trying to incite is the ability to spend a little bit of time on getting deeper into what the information is and then developing maybe more what-if alternatives.

Mr. Lawrence: How does an Integrated Financial Management Program help NASA meet the goals laid out in the President's Management Agenda? We'll ask Patrick Ciganer of NASA to give us his perspective when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I am Paul Lawrence, and this morning's conversation is with Patrick Ciganer, program executive officer for NASA's Integrated Financial Management Program.

And joining us in our conversation is Steve Sieke.

Mr. Sieke: Patrick, how is IFMP helping NASA implement the President's Management Agenda?

Mr. Ciganer: The President's Management Agenda, the PMA, has essentially 5 components: Human capital, financial management, procurement, budget performance integration and e-Gov. I think that I have described over the past few minutes a series of modules which, fortunately or unfortunately, touch every single one of those components. Obviously, the financial management part of that is at the core of what we are doing with the IFM program. But the human capital is right there. The budget and performance integration is the cornerstone of how do you use the financial information to be more effective in managing various programs and projects.

Procurement again is separated from a PMA standpoint, but obviously is very heavily relying not only on the budget execution, but also some of the performance data. So we believe that the IFM in its totality basically will support and enhance the capability of implementing a lot of the guidance and encouragement that the PMA gives the various mentor organizations.

Mr. Sieke: How do you measure the success of the IFMP program?

Mr. Ciganer: The adoption of the functionality of the program above all is our yardstick. I mean, there is a technical success, which is something as fundamental as the ability to close our books every month and produce quarterly financial statements and produce clear, timely robust information. I mean, that is the mechanical part of the system that shouldn't be overlooked. That's easy to measure. It's binary; it either works or it doesn't. What is more complex is to hopefully see an improvement in how efficiently decisions are made and how much information is available to make those decisions on a timely basis. I mean, one of the critical elements in a lot of the work that we do in research and engineering is in some cases having very, very short timelines to make key decisions that have very long-term impact. We would like to believe that this program will allow the decisionmakers at all levels to make more educated decisions that will result in a more efficient use of what are limited resources.

Mr. Lawrence: What do you see as some of the greatest challenges facing the project before it gets completed?

Mr. Ciganer: I think there are some technical challenges over the horizon. For example, our budget formulation model, as of yesterday's latest estimate, will be manipulating approximately 140 million lines of information. This is a real-time or near real-time system. So there are some very hardcore system performance issues that we are facing in the near term. In the longer term, I would say the asset management systems that we envision coupled with the project management capability we want to give our constituencies, are looming fairly large over the horizon.

Our agency is involved in a very broad spectrum of activities, from fundamental research to near-operational activities. And they are very different. They are all categorized as programs and projects. But there is no-one-size-fits-all tool that we can offer. So the ability to build, deploy and offer systems that can support those activities in parallel is daunting. As far as I know, it has not been required by any organization so far. So we are once again in a pathfinder position. If we were only in the space science business or only in the earth science business or only in the human space flight business, we would narrow the scope of the functionality we have to offer. And unfortunately, we are doing all of it. So those are going to be interesting challenges in the next 24 to 36 months.

Mr. Lawrence: I want to ask you to put your little bit grayer future thinking cap on, and 10 years from now, when people think back and 10 years when people think about financial management or even information management at NASA, what do you want that picture to be, or that vision?

Mr. Ciganer: It's interesting. Driving up, I was actually thinking about information management and information science, partially because it is something that permeates pretty much every facet of what we do. And taking a step back from just the IFM, what this organization is above all into the business of doing is turning information into knowledge. We are in the business of gathering information, whether it is planetary information, cosmology -- I mean, it is information. We are trying to in some case validate specific theories. In some cases, we are trying to empirically prove some of the designs that we are coming up with.

But above all, what one of our objectives is is to generate and make information as available as possible to as broad a constituency as possible. As part of that, we actually have a lot of very interesting initiatives going on in supercomputing, in nanotechnology, in intelligent networks, in smart machines -- man/machine integration. Ten years from now, I'd like to think that some of the more mundane undertakings -- and I'm not saying they're not important -- but some of the more mundane undertakings we are involved in right now with the IFM program will also benefit from some of the leading-edge information science research we are doing.

As I mentioned, in one case, we are asked right now to manipulate a massive amount of information in real-time. Although it is for budgeting, not for processing cosmic microwave background information, it is nevertheless fairly daunting. And I'd like to believe that we are back on the path where possibly we, in a decade, will be leaders on manipulating the visual display of information in something that everybody is after. And maybe in a few years from now, this system will help bring into the fold those two communities that have been running on parallel paths but not crossing that much.

Mr. Lawrence: You've had an interesting career, albeit a short one in serving the public and government. I am curious, what advice would you give to someone considering public service?

Mr. Ciganer: First of all, I would say do it. One of the things that is incredibly rewarding in working in the public service is first of all the nomenclature. It is public service. But also, you are faced with, usually, issues that are of a magnitude that is not seldom encountered in the private sector that quickly. And when we are talking about young people, when I see some of the young folks that we bring in-house and they get exposed to issues, to undertakings, to initiatives that are truly beyond the traditional corporate world, unless you happen to work for an extremely large organization.

So one of the benefits of public service is literally the ability to be exposed and to learn how to operate and eventually manage in very complex situations. There's a lot of constraints. Now, you know we are a public organization, which means we don't have to show our bottom line. On the other hand, we have to maximize the effective use of the dollars that are entrusted. The stewardship of those funds is something that goes beyond buying the most cost-effective widget. It is what is the most effective way of making those choices. And there are tradeoffs. It is not an unlimited source. And bringing young folks into an environment where those tradeoffs are consistently discussed I think prepares them not only for -- should they desire so -- a continuous public service career, but when they reintegrate to the private sector, or integrate to the private sector, they will have been exposed to a series of situations that very seldom younger or more junior folks in the private environment get exposed to.

Mr. Lawrence: Well, Patrick, I'm afraid we're out of time this morning. Steve I want to thank you for joining us.

Mr. Ciganer: Steve and Paul, thank you for having me, and should anybody be interested on following up how the IFM program is doing and what our progress is to date, we've got a link, which is www.hq.nasa.gov, so thank you again.

Mr. Lawrence: This has been The Business of Government Hour, featuring a conversation with Patrick Ciganer, program executive officer of NASA's Integrated Financial Management Program.

Be sure and visit us on the web at www.businessofgovernment.org. There, you can learn more about our programs and get a transcript of these very interesting conversations. Once again, that's www.businessofgovernment.org.

This is Paul Lawrence. Thank you for listening.

Ken Blackwell interview

Friday, December 12th, 2003 - 20:00
Ken Blackwell
Radio show date: 
Sat, 12/13/2003
Intro text: 
Ken Blackwell
Complete transcript: 

Friday, October 31, 2003

Arlington, Virginia

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

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is Ken Blackwell, Ohio secretary of state. Good morning, Ken.

Mr. Blackwell: Good morning.

Mr. Lawrence: And joining us in our conversation is Glen Graham. Good morning, Glen.

Mr. Graham: Good morning.

Mr. Lawrence: Well, Ken, you’re almost a year into your second term as the secretary of state of Ohio. Can you describe your roles and responsibilities for us?

Mr. Blackwell: The secretary of state is the chief election officer of the state, and he or she is also the primary keeper of business records and the protector of intellectual property in the state of Ohio. So we -- the secretary of state protects corporate identities, makes sure that corporate histories and records are properly maintained, and is generally the person that is responsible on the -- in a broader sense, for encouraging civic engagement in our state community.

Mr. Lawrence: How big is your team? Could you describe what it takes to get all those done?

Mr. Blackwell: We have a team of about 160 employees and the majority of those employees are assigned to our business services sector. And so it’s where I spend most of my time concentrating on the reinvention of how we did business in that area.

Mr. Graham: And since you became Ohio secretary of state one of your projects was starting the Ohio Center for Civic Character. Can you share with us the mission of the project and describe for us the history behind the inception of the project?

Mr. Blackwell: Well, the history is -- it sort of transcends my tenure as secretary of state. I started to conceptualize this notion of using character development in a way that not only enhanced the everyday life of a citizen in his or her community, but how we could apply the a character development strategy as a way of transforming the culture of the workplace where we could improve the way people communicated and related to one another as a way of building a team and building a common language of respect. And so we hit the ground running when I became secretary of state in January of 1999. And we pulled together the entire workforce and said we want to really begin to build a true community and it started with a common language. We said we want to take some words that are frequently used, like “fidelity” and “honesty” and “trustworthiness,” and to make sure that we all had a shared sense of what these concepts and these principles were in our everyday life.

And so we developed what was called uncommon sense and it’s 20 character-building principles that sort of evolved from the workplace and out of genuine dialogue with one another so that we began by creating that language. And we started out with the assumption that character was the cornerstone of citizenship. A free people, a self-governing people had to have internal compasses by which to govern themselves if they didn’t want big government on the outside external to their family, their community governing their lives. And so we went back to some basic understandings.

You know, James Madison, the chief architect of the U.S. Constitution, was fond of saying that American civilization didn’t turn on the power and reach of political institutions. Instead, he thought that the future of American civilization rests, and these are his words, on the capacity of each and every one of us to live in accordance with the Ten Commandments of God, you know. So as far as Jefferson was concerned, the ground rules, the protocol of good living took place when Moses received the Decalogue at Mount Sinai. And so we started to build from this concept that the character was, you know, essential not only to a self-governing people, but to a free people and that applied to the workforce, you know. You had genuine relationships and you had genuine belief in the workers that they were the driving force behind an enterprise, an organization, or a workplace, that you probably were going to get better performance from that community of workers.

Mr. Lawrence: You’re the 51st Ohio secretary of state, as I understand it, and you have a long history of public service. Could you tell us more about the previous positions you held in Ohio before your current one?

Mr. Blackwell: Well, I grew up in Cincinnati, and I grew up in a public housing community. When my father came back from World War II there were still vestiges of segregation. There was a housing shortage and so we first lived in some old Army barracks and then we moved into the Laurel Homes, which was a public housing community.

Coming up through the Cincinnati public schools I went to Xavier University on a football scholarship, graduated from Xavier, and got involved more deeply in my community. My first effort was to become a member of the Cincinnati School Board; lost on my first time out. I was, you know, in my mid-20s and I missed by 500 votes, but I captured about 58,000 votes. And lo and behold, folks thought, hey, there might be a political future with this young man. And so 2 years out, I ran for city council and won on my first race for city council. And I served 12 years at the local government level, years as -- terms as city council member, vice mayor, and ultimately the mayor of my hometown, which was just quite a privilege and honor for me, you know, someone who had grown up in a public housing community that was literally no more than 6 blocks from city hall to ascend to being able to be mayor of my town.

And I tell people all the time I was mayor of Cincinnati after Jerry Springer. (Laughter) You know, and so I kid Jerry all the time. I say, Jerry, you know, that goes to prove that sometimes the sublime does follow the ridiculous. (Laughter) And so we both get a big kick out of that.

I then went on to HUD. I was the undersecretary of HUD with Jack Kemp, who was a long-time friend. And we went into HUD in an interesting period when we were coming in after HUD had been in the headlines for some suspected and some actual scandals. And so as we used to say we had to go in and sort of drain the swamp.

I moved over from HUD after being with Jack Kemp to the State Department where, in working with Jim Baker, I was the U.S. ambassador to the United Nations and I handled the human rights portfolio. I was the U.S. representative to the Human Rights Commission and did most of its business in Geneva. And it gave me an opportunity to travel the world and go into some of the human rights hotspots across the globe.

After doing that and doing that for a bit into the Clinton Administration, I had been working in Somalia, working in Bosnia, and I had led the U.S. delegation to four preparatory meetings for the 1993 Human Rights World Meeting in Vienna that year. I moved on to the University of Cincinnati where former Governor John Gilligan and I were the only two non-lawyers teaching at the University of Cincinnati Law School. When one day I got a call from a friend of mine, George Voinovich, who had -- he was the present and seated governor at that time, but he had been the mayor of Cleveland when I had been the mayor of Cincinnati. And George asked me if I would take an appointment to the post as treasurer of the state of Ohio and then stand for election in November of 1994.

So I took about a year’s appointment, became the chief fiduciary of the state of Ohio. We had under management in terms of custodial work and direct investment work, about $122 billion of assets, which included the assets of the five state pension funds. I did that for -- because I won election in 1994, so I did that for a full term.

And then 1998, I was asked to -- by the Republican Party to run for secretary of state because every 10 years the secretary of state takes on an added dimension of importance. The secretary of state is a member of the Apportionment Board that redraws the legislative map. And in Ohio, the Apportionment Board is controlled by the party that has either the governor, the auditor, or secretary of state, two of those three offices. And in this case, Republicans won all three offices. And so we redrew the maps and those maps met the constitutional test and challenge.

And it brings us up to my second term that I ran for in 2002. So I’ve had an interesting run at local, international, and state governance.

Mr. Lawrence: That’s an interesting point. Why should citizens care so much about character and what should government’s role be in its development? We’ll find out more as we continue our conversation with Ken Blackwell, Ohio secretary of state, when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I’m Paul Lawrence and this morning’s conversation is with Ken Blackwell, Ohio secretary of state. And joining us in our conversation is Glen Graham.

Mr. Graham: Good morning. Ken, you had the extraordinary opportunity to serve at the federal, state, and local level as well as diplomat. Can you tell for us a little -- can you explain for us a little bit about the difference you’ve seen in management styles and culture and personnel on those different areas?

Mr. Blackwell: The difference is generally driven by scale in terms of not only the size of the organization, but the comprehensiveness and depth of the constituency or constituencies that are served. In local politics a mayor, you can feel him, touch him, get at him, so accessibility is much more a dominant factor in local governance and management and leadership considerations. When you’re a governor, when you’re a secretary of state, or a treasurer and you’re in Columbus and you’re, you know, in a huge state, constituents have considerably less access to you. And so you don’t have that same relationship feel as a mayor or county commissioner or a township trustee might have.

One of the things that runs through all of those levels of government and affects management and leadership style is the ability to communicate and the ability to not only communicate a vision, but an ability to communicate the essential results that the organization must achieve. Let me just give you an example. Max Kappelman (phonetic) was one of my mentors at the U.N. and at the U.S. State Department. And, you know, I told Max I was thrown into the United Nations and he told me don’t worry about it. He said let me just explain something to you. The U.N. is, the United Nations, a city hall with interpreters. (Laughter) You have to have the same sort of communication ability. You have to be able to knock on doors. You have to be able to sit down and engage people in conversation. You have to be able to articulate what it is that you want to achieve. And then you have to be able to get people -- you have to be able to pull people together with sometimes conflicting interests to get something done. And he made a connection for me. You know, I could take my skills as a negotiator in labor management issues at the local level and sort of scale up to the international level, but it was those same basic skills.

When we were at HUD it was fascinating to me because we went in and what we had to do was sort of rationalize the system. Within that organization there were probably 77 different and often confusing management systems. And so the big challenge within that bureaucracy and given the scale was to get in and try to rationalize a system, a system that was operated and influenced by two personnel systems. For instance, you had the career civil servant and you had the political appointees. And when I was there, and I’m not sure that it’s not unchanged today, the average shelf life of a political appointee was 18 months. And so the career, you know, civil servants used to say and they shoot and they, too, shall pass, you know.

So it was -- and that was complicated when you went over to the State Department and you saw not only career civil servants, political appointees, but career diplomats, folks who were in the foreign service professionally and it just made for interesting interrelations and interaction. And the key management strategy and feel was still communication and being able to pull people together. And so what I’ve found at all levels of government is that an effective leader, an effective manager has to be able to, you know, inspire with their -- through their personal example of people can’t see a hypocrite, they can’t see duplicity. They have to see you walking the talk and not just talking the talk.

The second thing is that you have to have an agenda, an action agenda that creates results and creates opportunity or that inspiration has a short shelf life. But the big challenge in the workplace today at all levels is to be able -- is the ability to pull together a diverse workforce, to pull people of divergent interests and backgrounds into a team. And I think that those things are all related. And it’s been interesting to see, you know, just how as time and technology has influenced -- sort of reduced the time flow on how those things sort of impact you on a day-to-day basis.

Mr. Lawrence: Well, it’s interesting you mentioned an agenda because in our last segment you talked about the Center for Civic Character and you described the Guide to Uncommon Sense. Could you tell us more about this guide? And as you were describing it briefly in the last segment I was wondering after I read it what do I do?

Mr. Blackwell: Well, after you read it we have a constant internal discussion and feedback mechanism where we not only work it at our staff meetings across the agency, we evaluate it in our annual performance evaluations. Are people actually living it or are they just giving lip service to it?

On the outsides of the organization we have the Better Business Bureau of Central Ohio that uses Uncommon Sense as a way of measuring effectiveness and performance. And they actually use it as a criteria upon which they judge the awards that they give called the Integrity Awards to businesses. We have about 18 universities that use it in their student development programs. And so for all of those external groups it’s a customized mechanism.

The center’s actually a virtual center, you know. There are about four or five employees that are dedicated to it and these are folks who are expert at training and communicating and facilitating group discussion. And they will go in and they will sit down and they will -- whether you’re talking about a business leader, a leader of a student group at the university, or folks that also use it are Jim Trusso and the Ohio State Buckeyes, they use it in terms of their leadership and team-building process -- we go in and we customize for them and help them facilitate their own game plan around these principles. There is no cookie-cutter approach here. We tell people that they have to get their own buy-in and then work their own strategy. Because what’s really key is the authenticity, the sense of genuineness that people perceive in the operation.

About 18 years ago, I read a book called Habits of the Heart, written by Robert Bellah and three or four other people, and in that book they advance a principle called moral coherence. And moral coherence is when you get your behavior to line up with those things you profess to believe. You have moral incoherence when you talk one way, but you walk another. And so we try to tell people that what’s essential to a culture of an effective organization is that sort of moral coherence within the organization and particularly moral coherence in how the leadership is perceived. You can’t, you know, say do what I say, not as I do in the world today because people take their key off of the leader’s behavior.

So we go in and we go in and we preach and teach, you know, that sort of principle. Because what is at risk today in business organizations, government organizations, higher education, people believe that there is a disconnect, that there is a bankruptcy of ethics. And so we go in and say the key to making this work in any culture is leaders how live it and believe it and pass it on.

Mr. Graham: Ken, what are you -- what’s the feedback you’ve received from other public officials?

Mr. Blackwell: It’s been fascinating. We now use it in our effort to tell people how important it is that their campaigns be guided by these uncommon sense principles. People are looking for character-based leadership. But from my standpoint as the state’s chief election officer, I want to give people a renewed sense of faith in the dignity and the integrity of the political process. And it’s an easier sell for me today because, you know, ranked below politicians today are corporate leaders, you know. (Laughter) And so now I have corporate leaders’ attention. You have college coaches who are coming in and saying, you know, this is important to the character development of my teams. And so we believe that it is building the moral authority to lead that is so essential in transforming or for leaders or managers to transform their organization.

Mr. Lawrence: That’s an interesting point. In Ohio, the secretary of state is also responsible for running elections. What’s the state of election administration in Ohio now? We’ll ask Ken Blackwell, the Ohio secretary of state, to tell us more about this when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I’m Paul Lawrence and this morning’s conversation is with Ken Blackwell, the Ohio secretary of state. And joining us in our conversation is Glen Graham.

Mr. Graham: Ken, during the 2000 presidential election there were many questions regarding the voting system and election process. What do you think of the Florida recount and what are your thoughts on the punch card ballots that were used?

Mr. Blackwell: I was in Florida for the controversial 35, 36 days where, you know, things were going back and forth around the final tally of votes. And I was there and I watched in an up close and personal way the tables where the recount were taking place. And so you could see somebody at one table, you know, holding a ballot up to the light and saying, oh, I see light around this chad so, therefore, that’s a ballot -- I mean, that’s a vote. And then you had the pregnant chad, the hanging chad, the dimpled chad, you know, you-name-it chad. And there were no statewide standards that said that no matter where you are in Florida, if you use a punch card system this is what constitutes a legitimate vote.

Contrast that with Ohio. We had statewide standards and so we have -- at that time, we had 70 counties that were using the punch card system of our 88 counties. And so whether you were in the Northeastern corridor or the Southwestern corridor, if you were voting on a punch card machine in Ohio, you didn’t have a question about what constituted a vote because you had the statewide standard.

So it was the absence of a statewide standard which drove the whole notion of equal protection under the law that opened the door for federal intervention and consideration there was a problem. So you saw a lot of focus on the punch card system as being the culprit in that situation. It probably was a combination of an antiquated and outdated technology and the breakdown of architecture built around that technology that would have included standards and a professional oversight that would have eliminated some of the controversy.

But we did focus on the punch card system. And recently the -- well, last year, in October, the President signed the Help America Vote Act, which basically targeted the punch card system for elimination across the country. In Ohio, we have started to implement the Help America Vote Act and we are now waiting on the flow of federal dollars to be complete so that we, in the next year, can eliminate the punch card system. What we’re looking for is a system that is more reliable, more accurate, and easier to use, and this new technology provides us with that capability.

Now we’ve had a hiccup in July of this year. Johns Hopkins University researchers started to raise some serious questions about the vulnerability of electronic touch pad systems, which are the dominant systems in the new technology. And that has caused us to have to construct a very robust security validation testing and evaluation process, which we’re now running the vendors who have made it through our process, we’re running them through this robust validation, the security validation process. We think that by the end of the year we will have sufficiently kicked the tires on the new technology and then we know that it’s very, very important to protect against and give people the full confidence that they are protected against voter fraud and that the final counts actually reflect the voters’ will. We will have to make sure that our architecture around this new technology, the procedures, policies, and personnel are tight and well-trained.

Mr. Graham: Ken, you mentioned the Help America Vote Act. Were you involved in any of the legislative discussions around that and do you think that that sweeping reform was necessary?

Mr. Blackwell: I was deeply involved. Luckily for me, the chairman of the committee on the House side that dealt with election reform was Bob Ney. Bob Ney is not only a colleague and an outstanding leader, he’s a friend. And so I was intricately involved in working with Congressman Ney and his staff. And then Steny Hoyer on the House side, but on the other side of the aisle, and I worked -- and his staff worked many hours together. On the Senate side, Congressman Dodd and his staff worked tirelessly and we also worked with Senator Mitch McConnell. So I was involved.

I went up and I spoke to the committees on both the Senate and the House side about what I thought had to be in this bill. And I’m deeply appreciative that some of my ideas were incorporated in the final bill that was passed.

Mr. Graham: Ohio recently approved a list of vendors to supply Ohio counties with new voting machinery. Can you talk about the process and the challenges that the Help America Vote Act provides your office?

Mr. Blackwell: Unlike some other states, like Georgia, our state legislature said that we could only embrace this election reform if the federal government was going to pay for it. And so the Help America Vote Act became essential to us in Ohio. And the dollars associated with it became even more essential because without those dollars we can’t get it done. But we set up a very elaborate evaluation process of the vendors that wanted to supply this service to the people of Ohio. And we ended up with four vendors and we ended up with them initialing preliminary contracts, which would provide Ohio with not only four providers, but two systems: the electronic touch pad system; and what is called the optical scan precinct count system, which is the optical scan is like the old SAT test where you color in the oval and then it’s electronically scanned and gives you quick results.

But the difference is, one, there is less paper involved with the voter and the optical scan still involves paper. And a lot of people feel just more comfortable with being able to see how they’re voting as opposed to this or the electronic touch pad system.

We feel real good about our ability to deliver. We got the best price in the country. We brought in a team of experts, computer science experts, and trained negotiators to complement my internal staff and we negotiated the best price in the country. One of the deals that we were able to negotiate is that if, in fact, these companies go out and give any other state a better deal, we get their price. So we feel real good about what we were able to do and the comprehensiveness of our package in terms of training, of election officials, of public education component, the maintenance and warranty components, and Election Day service.

We have one of the best packages ever put together. And the National Association of Secretaries of State and other election -- associations of elected officials have used this and actually made sure that these -- our plan was -- and contracts were distributed to others so they could use them as models.

Mr. Graham: What type of changed management processes are the vendors suggesting that you put in place to help voters use these new machines?

Mr. Blackwell: The first and more interesting thing is that we had to make sure that people understood that you can have all the modern technology that you want, if, in fact, the election officials didn’t understand it and couldn’t convey confidence to the voting public, then there was going to be a breakdown. And the essential ingredient in the election process in a free democracy is the belief that the final vote actually reflects the will of the people. And so it is understanding that you can’t manage elections from -- and administer elections from Columbus, Ohio, or any state capital, that you’re still dependent on the execution of a well-managed election at the local level.

And so that goes back to setting objectives, making sure that people understand the anticipated results, and then making sure that they are sufficiently educated at the local level. It doesn’t do me any good to be able to be the world’s most articulate secretary of the state on these matters and I haven’t been able to communicate that at the point of execution, and that’s the local level. So we put a lot of emphasis on working with our 88 county boards of elections, making sure that they are well trained and most -- and well equipped.

You’d be surprised at the politics of it all. And I say that in a sense that county boards of elections have to get most of their resources from county commissioners. And these county commissioners in Ohio basically are saying, look, we were not Florida. We didn’t have a fiasco and what is this new technology going to cost us, you know? And so you only have -- you just don’t have the confidence issues, you have the cost issues that people perceive as being problematic.

But when -- my job as a person who has been in the position of being a fiduciary and a locally elected official, I had to go down and talk to those county commissioners and say, look, just basically understand something. We now have a punch card system and we have a rule in Ohio that says each election you have to print up 102 percent of the number of registered voters in your county. And when you have elections for only 19 percent, 36 percent, you have enormous waste of printing and paper costs. With these new technologies you don’t have that waste. And so there are repurposed dollars that you can put against the maintenance, professional training, public education. And once you sit and work people through it they begin to get a better understanding and they embrace the technology. People resist change and, unfortunately, a lot of people, you know, are 21st century Luddites. (Laughter) They want to just smash the new technology before they tackle it and attain it.

Mr. Lawrence: What does E-government mean in Ohio? We’ll ask Ken Blackwell, Ohio secretary of state, to give us his perspective when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I’m Paul Lawrence and this morning’s conversation is with Ken Blackwell, Ohio secretary of state. And joining us in our conversation is Glen Graham.

Well, Ken, in the last segment we talked a lot about the logistics of elections, but you’ve also been outspoken about the need for campaign finance reform. Could you describe your thoughts and also tell us about campaign finance reform efforts in Ohio?

Mr. Blackwell: People understand that money is the mother’s milk of campaigns. But the question that always arises is what is the influence of money and can you follow the money? And so transparency becomes a driving issue in all campaign finance reform discussions. And in Ohio, we’ve placed a priority on moving towards full disclosure.

I happen to believe that every dollar that’s involved in the political process should be fully disclosed. I don’t get so caught up on how much money one contributor or a group of contributors contributes if I, in fact, as a voter and as a taxpayer can understand how much money they’re giving. But when they can hide that money and have an impact that is not fully disclosed I think what you do is you drive voter confidence down because they begin to believe that that money has a greater influence than their particular level of participation. And so you’ve seen a tremendous falloff in civic engagement and voter participation not only across the state of Ohio, but across the nation.

And so campaign finance reform, driving for full disclosure, is a way of making that whole process more transparent for the purpose of building voter confidence and encouraging broader participation.

We in Ohio were recently a part of a study, a joint study done by the California Voter Foundation, the Center for Government Studies, and the UCLA Law School. Ohio ranked as the fourth best state in the Union for campaign finance disclosure laws and practices. And we scored number one for our electronic filing program, which we feel real good about because it allows participants and observers of the political process to get information quickly about the impact of money and who gave what to whom. And then we ranked third for public accessibility to campaign finance data. So we’re going to drive from third to number one there and from fourth to number one in the country.

Mr. Graham: Ken, earlier this morning you mentioned your Business Services Division. Can you detail some of the changes that have taken place since you’ve taken office?

Mr. Blackwell: It’s a great example of how you use modern technology to transform a unit or an organization. When I became secretary of state one of the great challenges was that I understood that my office was sort of the gateway to business opportunity. It all started with our office. That’s where you got your corporate identity and you incorporated your business. And when we took office in 1999, it was taking about 15 weeks to incorporate a business in the state of Ohio. Today, we’ve moved that through the use of E-mail and Internet technology and toll-free telephone numbers and we’ve been able to reduce that to 1 to 3 days and, in most cases, you can get it done in 1 day.

What we had to do there was make some major changes in the infrastructure and in the technology infrastructure. For example, when I went in I sort of managed by walking around. And so I was starting on my first day to get flooded with complaints about how slow the office was moving on incorporations. I asked people some simple questions. How many phone lines do we have? We were getting about 125,000 calls a month and we only had 11 phone lines, you know. And so I knew instantly we had to get more phone lines. And so we instantly moved up and went over and had them make the case to the legislature to get about 102 phone lines.

We then started to look at Internet technology and said how much of this can move towards a 24/7 operation and move to the consumers through the use of the Internet? And then we really found that the people who didn’t like standing in line saw the E-mail communication as a way that they could communicate more effectively with us in a more time-efficient way. So by using these technologies we were able to radically reduce the time that it took to incorporate a business. But we made people understand that we were part of an operation, part of a state that wanted to be more inviting to business and make it easier to start and to do business in the state of Ohio.

But it also had to -- that transformation involved changing the way that we did things with our people. We had a relatively high absentee rate. People were not cross-trained. And so we, in fact, had to create incentives and sanctions and expectations that we expected people on the job and that the job could actually be fun. But what we found out was that it was so taxing and so exhausting because they didn’t have the training and the technology to make it easier, they were swamped and they were burnt out. And instead of, you know, just taking it day-in and day-out, in some units there was an absentee rate of, you know, upward to 20, 25 percent a day. So we changed all of that through our Uncommon Sense Program, making people understand that they matter, that they were part of a team, but that they had to actually live the change that we were advocating from the top of the organization all the way to the base of it, and we were able to get that done. And now people actually feel good about what we’re doing.

We were able to move our entire operation, reduce our dependency on general tax revenue by 64 percent over a 5-year period. We are now operating on an enterprise model where we -- our dominant revenue comes source of revenue comes from user fees that are based on the real cost of delivering a service, not one penny more. People actually, when they can see the value of those user fees, they pay it with a smile. And that’s what we’ve been able to accomplish. We drove a cultural change, which actually changes the way we do business and the way we embrace technology.

Mr. Lawrence: I thought it was interesting as you described that you described both the technology and people. So I’m curious, how would you summarize the lessons learned from that experience for others?

Mr. Blackwell: Any technology in and of itself can give you efficiency, but not necessarily give you effectiveness if you don’t bring people around to, first, embracing the technology and then mastering it, and so that’s been our key. And so in a cultural sense what we say is that competency and character standing alone or good traits in and of themselves, you fuse competency and character. And not only do you get, you know, a better workforce, you get better results and you have people who enjoy delivering those results.

Mr. Lawrence: Ken, you’ve had a very interesting career that’s rich with experiences. What advice would you give to a person interested in a career in public service?

Mr. Blackwell: I think, first, probably would be what I tell people with any professional development aspirations, know yourself. Be comfortable in your own skin. Understand that, you know, if you want to be a self-starter and a self-manager and a leader that it really starts with your internal compass; that people read your behavior more so than they hear your words, you know. So live what you say that you believe. And if you do that you have a chance of inspiring others just through your example. And that applies to anyone in a public service career or a private sector career, people who aspire to be leaders.

And I guess my grandmother gave me some good advice when I was growing up. She said, you know, there are three books that you need to master and if you master them you will have mastered the art of good living. She said the first is your datebook or your calendar. It tells how you spend your time and with whom you spend it. And I found out that effective leaders and effective people tend to spend their time with other effective people and people who are of strong character.

She said the second book is your checkbook. She said how you manage your resources actually will indicate what’s important to you. And in government, you know, we can do a lot of things with the resources that we have, but we can’t do everything. So we have to make some tough public choices about what it is that we do, what our competencies are, and how we do those things well.

She then told me that, you know, in my family we were a strong Christian family, but it could have been a grandmother in a strong Muslim or Jewish family or, you know, Hindu family. My grandmother said it was the Bible. And she said this, in fact, will help you choose the path of conviction over the path of convenience. And for me that’s been the key, to understand that, you know, my leadership is not only character-based, but faith-based and that there is a roadmap for me.

And those three books, you know, how I -- am I a steward of people’s money as if it was my money? Who do I associate myself with? And, you know, what is my internal moral compass, my character development driving force that allows me to live the change that I, in fact, advocate?

Mr. Lawrence: Well, Ken, Glen and I want to thank you very much for joining us. I’m afraid we’re out of time. Thank you for squeezing us in your very busy schedule.

Mr. Blackwell: Well, thank you all. I -- if there are listeners out there that want more information, please go to www.ohiospirit.org.

Mr. Lawrence: Thank you very much.

Mr. Graham: Thank you.

Mr. Lawrence: This has been The Business of Government Hour featuring a conversation with Ken Blackwell, the Ohio secretary of state. Be sure and visit us on the web at businessofgovernment.org. There you can learn more about our programs and research, and also get a transcript of today’s very interesting conversation. Again, that’s businessofgovernment.org.

This is Paul Lawrence. Thank you for listening.

William Campbell interview

Friday, October 31st, 2003 - 20:00
William Campbell
Radio show date: 
Sat, 11/01/2003
Intro text: 
William Campbell
Complete transcript: 

Monday, August 18, 2003

Arlington, Virginia

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

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation this morning is with Bill Campbell, Assistant Secretary for Management, and Chief Financial Officer of the Department of Veterans Affairs.

Good morning, Bill.

Mr. Campbell: Good morning, gents.

Mr. Lawrence: And joining us in our conversation is Steve Watson.

Good morning, Steve.

Mr. Watson: Good morning, Paul. Good morning, Bill, thanks for joining us.

Mr. Lawrence: Bill, let's start off by finding out more about the Department of Veterans Affairs. Could you tell us its purpose and its mission?

Mr. Campbell: Well, the mission is one of the most succinct I've ever seen. It comes from President Lincoln's second inaugural address. And the quote is -- and it's on the outside of our building and practically every document that we print for publication -- "To care for him who have borne the battle and for his widow and his orphan." The purpose, quite frankly, for VA is to provide outstanding benefits and services to our nation's veterans.

Mr. Lawrence: How do we do that? What are the programs of the Department?

Mr. Campbell: Well, we basically have nine programs. Not necessarily in order of size, but: medical care and medical research, compensation, pension, education, vocational rehabilitation, housing, insurance and burial.

Mr. Lawrence: As I understand it, the Department is the second-largest in the federal government. Could you give us a sense of how you think about the size, employees, budget?

Mr. Campbell: Well, the size of the agency is somewhat deceptive. We have 225,000 full-time-equivalent employees. Our budget right now is about $60 billion per year. But you have to put it in somewhat of a broader context. For instance, we have 162 hospitals or medical centers; we have 137 nursing homes; 43 domiciliaries, 850-plus community outpatient clinics and facilities; 57 regional benefit centers and 120 cemeteries. We are a very complex business, as you can tell by our business lines, and we are located all over the United States and in a couple of overseas locations.

Mr. Lawrence: How about the skills of the employees? I began when you first started going through the hospitals and I thought, 'Lot's of health care.' But then you began to move into different lines - businesses, as you say.

Mr. Campbell: We have just about every type of employee that you can think of. From medical researchers who are doing work in Alzheimer's disease, diabetes, spinal cord injury. We have the people who provide the direct care, medical care, doctors, nurses. Our largest number of employees is actually nurses -- people that do housekeeping, accountants, contracting officers. We use just about every single type of employee that you could use in the federal government. Civil engineers, mechanical/electrical engineers. We are indeed a very complex business.

Mr. Watson: Bill, what are your roles and responsibilities as the Assistant Secretary for Management and Chief Financial Officer?

Mr. Campbell: Well, I have several. As well as being the Chief Financial Officer, I am also the senior procurement executive. And my organization basically has several key roles. One is to formulate the budget. As I said, we have a 60-plus billion dollar budget that goes over nine missions. Once the budget is formulated, I am responsible for the actual spending of the money, and therefore, I am in charge of financial management and accounting. Then I am responsible for all of the assets of the corporation, the agency, so I have a treasury role. And then I am responsible for contracting as the senior procurement executive to make sure that all laws and regulations are properly applied, and that we buy goods and services at the best price. Then I also am in charge of logistics. I am the chief logistician. It's a business, and I have it from the very beginning of the business cycle to the very end. So getting the money to buy something, contracting at buying it, receiving it, using -- the people that use it don't work for me necessarily, but then the disposal of it in the end. So I run the business.

Mr. Watson: Could you tell us a little bit about your organization that you manage to accomplish those functions?

Mr. Campbell: Well, I have staff here in Washington. And I have business centers in different parts of the country. For instance, in Austin, Texas, I have a financial services center. I have a debt management center in St. Paul, Minnesota. I have a distribution center for prosthetics and hearing aids in Denver. I have a national acquisition center in the suburbs of Chicago. So I have about 1,000 people that work directly for me. Then I put out policies and exercise oversight to about 8,000 people that do those functions, but do them for one of the administrations like Veterans Health Administration, Veterans Benefits Administration, or the National Cemetery Administration. So I have several roles; I run my own businesses, and I promulgate policies and exercise oversight over people that do those kinds of functions that don't work directly for me.

Mr. Watson: Do the administrations at VA have similar functions?

Mr. Campbell: Yes, and the three large administrations have a Chief Financial Officer so that the policies and guidance that comes down from my organization goes into theirs, and then they have somebody there that will make sure that all of the policies are complied with.

Mr. Watson: Bill, can you tell us a little bit about your career prior to joining VA?

Mr. Campbell: Well, it's been strange. In the federal government, I started off as an engineer, and then I fell in with bad company about 12 years ago, and first became a contracting person and then became a Chief Financial Officer with the Coast Guard. I was actually drafted. I was conscripted; I didn't volunteer for the job, but I was told that I had the skills that they wanted and I had enough time left before I could retire that I'd have to do it, or else they would be able to reach me. So I spent seven years working very hard as the CFO at the Coast Guard, and we finally got a clean audit opinion for fiscal year '99. The Coast Guard is the first and only military service ever to get a clean audit opinion.

Mr. Watson: And then you moved from there to VA?

Mr. Campbell: Yes. As I said, I had been working for seven years to become an overnight success at the Coast Guard, and I was interested in doing additional work. The Coast Guard was very happy with the clean audit opinion and was quite content to continue on the way they were. I thought that I'd like to do some more things, particularly in bringing in information technology into the accounting arena and logistics. I was approached by the then-Assistant Secretary for Management and Chief Financial Officer for VA, Ned Powell, and he asked if I would like to come over as his Deputy CFO. So I came over in the fall of 2000 as the Deputy Assistant Secretary for Finance and the Deputy CFO.

Mr. Watson: Bill, how did you move from deputy to CFO at VA?

Mr. Campbell: I'm not really sure. I was asked if I would like to be considered for the job, I said yes. I was interviewed by the Deputy Secretary and the Secretary of Veterans Affairs, Mr. Principi, the next thing I knew, I was being vetted at the White House, and after an eight-month process to be fully vetted and nominated and then confirmed, I was confirmed last November 29.

Mr. Watson: Bill, how have your prior experiences at Coast Guard and even prior to that prepared you for your job at VA?

Mr. Campbell: I think having such a broad background, being an engineer and a logistician and a contracting specialist and a financial manager, because of the complexity and the size of the business at VA, I didn't know it at the time, but it was the right kind of training, so that I can sit down and talk to the civil engineers over construction projects, and I can talk to people that need to buy goods and services and can understand what they are going through, trying to get their statements of work prepared and get their contracting actions on the street and finalized. I never would have thought that way, but it really did work. And when you look back at the original concept of the senior executive service in the government, it was to have broadly experienced generalists managing the government, and not necessarily subject matter experts. In my case, I think it has worked out pretty well.

Mr. Lawrence: You've spent a lot of time at the Coast Guard, and they have their way of doing things, their culture. And now you're at VA and they have their own culture. How would you compare the two in terms of, say, the management styles?

Mr. Campbell: Absolutely completely different. I've been with the Navy; I've been with the Coast Guard three different times, for a total of 18 years. I was with the National Transportation Safety Board for three years, and I was with the Department of the Navy for six years, and now VA almost three years. Every government agency is completely different. They all have their own cultures. And one of the things that you have to do upon coming aboard is learn how the culture works if you are going to be effective. If you have a particular mindset that it only works one way, the way you grew up with and the way that you are familiar with, I don't think you are going to be very successful. You cannot force change in a culture that you don't understand. You have a difficulty forcing change anyway. So the more you can learn about the new culture, the more you can learn about the key decisionmakers who are involved, the better off you are going to be.

Mr. Lawrence: That's a good point about forcing change.

What are the challenges of running a business when both the costs of care and the number of people requiring care are increasing each year? We'll ask Bill Campbell of Veterans Affairs when for his insights when The Business of Government Hour continues.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Bill Campbell. Bill is the Assistant Secretary for Management, and Chief Financial Officer for the Department of Veterans Affairs.

And joining us in our conversation is Steve Watson.

Bill, can you tell us about some of the highlights from VA's most recent budget request?

Mr. Campbell: Well, the President's 2004 budget request asked for a total of slightly under $64 billion for our programs. This is a 7.7 percent increase over the previous year, 2003. This is the largest percentage increase of any Cabinet agency. So we are doing pretty well in the budget regard, as far as getting the money to do our programs.

Mr. Watson: Bill, for the fiscal year 2004 budget, I understand the VA implemented a new budgeting structure. What are the major features of this budget account restructuring and how has it changed the VA budgeting?

Mr. Campbell: One of the things we have tried to accomplish in the last couple of years is to have full costing of all of our programs to identify the total cost of ownership for all of these programs. When you have an agency like ours that's been around for quite a while, you end up with a patchwork quilt of programs, and their costs are held in different pots. What we wanted to do, what we have been striving to do, is to identify fully the costs. Two years ago, if you'd asked me, "Bill, how much does VA spend on burial?" I would have said, 'Paul, let me look in the budget document, and looking under our budget document, I'd find $142 million for the National Cemetery Administration. However, that would have been erroneous. If you look at all of the little pots of money that have anything to do with burial: markers, headstones, so forth, benefits that go to dependents and survivors, and you added it up, it was $355 million. So what we're trying to do, to help us manage our programs is to get a better handle on what they actually cost.

So this year, for 2004, we have restructured our budget submission; we also are working on having the same budget submission for 2005. For 2004, because it is brand-new and you have to be able to work with the people on the Hill for your appropriation, we have a crosswalk so they can see what it would be under the old budget structure and what it is under the new budget structure. We are still negotiating with the Congress, Congressional staff and OMB as to how this is all going to work out.

Mr. Watson: Bill, I also understand that most of the VA budget is mandatory spending and only a small portion discretionary funding. How does that affect your budgeting process?

Mr. Campbell: Well, actually, it is not as small as you would think. Mandatory are our big programs like compensation and pension, burial and so forth. That makes up 53 percent of our budget. So the discretionary part, which is medical care and some other things like medical research and general administration, makes up 47 percent.

But it is remarkable that you have these two different types of creatures living in the same -- you have to pay attention to the mandatory programs. There is no negotiation on them; they are what they are. We use very sophisticated actuarial models to come up to tell us what the benefit should be. Then we spend the majority of our time, of course, refining and negotiating a discretionary budget. But the discretionary budget is still rather large, and because of the increases in health care costs, it is quickly making up the gap, and I would think in the next five or so years, it might be a 50-50 split.

Mr. Watson: Tying in there and digging a little deeper, how have the rising medical care costs and the number of older veterans impacted your budget?

Mr. Campbell: A tremendous impact. It isn't so much the money, but everything gets back to money so that you can pay for the services and the benefits that you are giving the veteran. But the money would allow us to hire the staff and make sure that our facilities and our equipment are up to snuff. We have had such a rapid growth in the last few years in the number of veterans using VA for medical care, it is unbelievable.

In 1996, when we opened enrollment to all veterans, we were treating about 2.9 million people at our medical facilities. This past year, we treated 4.5 million, and we have an aging population of veterans. Our information shows us from statistical modeling that when medical care recipients reach age 65, their cost of care goes up remarkably. Right now, the average age for all veterans for all benefits is about 58. But for medical care, it is 63. They are approaching almost a year-for-year increase in age that they are approaching the point where in probably a couple of years, those things that get more critical as you become geriatric are going to just drive the price of health care and the number of people we will need to treat our patients through the roof.

Mr. Lawrence: Isn't longevity also affecting how long they are in the system as well as the population getting older?

Mr. Campbell: Yes. The population is getting older and the longevity is increasing. So we will have older, sicker patients for a longer period of time.

Mr. Watson: You mentioned a large increase in the number of veterans serviced. What is driving that increase?

Mr. Campbell: Well, there are many things. One is the longevity. My grandfather was a World War I veteran; he died in 1950 at the age of 51. My dad died six years ago at the age of 74. He was a World War II and Korean War veteran. The longevity is certainly increasing, and we don't have a lot of programs that give medical care to people. So veterans naturally look to wherever they can get their care, and that would be the Veterans Administration.

Mr. Watson: We recently had Deputy Secretary Leo Mackay on our show, and he mentioned the Capital Asset Realignment for Enhanced Services, otherwise known as the CARES program. Can you tell us a little bit more about the CARES program and how VA is allocating its capital investment resources?

Mr. Campbell: Well, first of all VA, as I said earlier, because of all of the medical facilities and so forth that we have, has a tremendously large capital plant. Every square foot of grounds and buildings that we have cost something to keep and maintain. There is no free property. Just because it was paid for years ago doesn't mean it's free. You still have to keep it in decent shape and you have to make sure that no harm comes to it. That is a tremendous bill that sucks resources that could be applied to improving the healthcare for veterans to let something less productive -- keeping an empty building, or a building that is not completely full, up and running.

What we are trying to do is to reduce the footprint and put those facilities where we need them. If you look at the typical veterans, most of them, or a good deal of them, have moved away from the northeast where we have a lot of facilities, to what you could call the Sunbelt. If you look at three states, California, Texas and Florida, they have together about 23 percent of all the veterans. Those are the big three. States that we have traditionally had a lot of veterans, the more populous states like New York, they seem to be losing veterans as the veterans pass away, and as many of them move into retirement in Florida or Texas or California.

Mr. Watson: How are you using CARES for decisionmaking at VA?

Mr. Campbell: Right now, we are not, because CARES is not finished. The process is ongoing; the Veterans Health Administration had worked on proposals to give to the Secretary. The Secretary has approved those proposals and has given them to an independent commission called the CARES Commission. The CARES Commission has started its deliberations, and I believe that in the first quarter of fiscal year 2004, we will present the Secretary with recommendations on which facilities to close, which ones to realign and which ones to expand. It's not a zero sum game. We are trying to free up resources to put the care to the veterans where they are located. That's why we have over 850 community-based outpatient clinics. A building by itself provides no care. You need to have -- whatever facility -- needs to have a trained and professional staff and it needs equipment. To spend money to keep empty buildings erect and watertight is not a very good use of the money, in my opinion.

Mr. Lawrence: What are the management challenges of the kind of reallocations you are talking about?

Mr. Campbell: There is always a concern by the community. When they have had a facility for a long time, it is difficult for them to believe that they are going to get the same care, or even a greater amount of care -- and that's what CARES is -- to enhance the delivery of medical services and care. It is not merely to cut the budget. But as I said, we don't want to leave these resources fallow when we have a tremendous backlog of patients. At the beginning of this year because of the increased use in VA medical facilities, we had a backlog waiting list of over 300,000 veterans. I would rather see the money be used to hire staff and reduce the waiting times down to 30 days for primary and specialty care than to have a building in a place that we don't have any staff to adequately man it.

Mr. Lawrence: It's an interesting point about the community.

Competitive sourcing is part of the President's Management Agenda that generates much interest and emotion. What's the VA doing in the area of competitive sourcing? We'll ask Bill Campbell of the Department of Veterans Affairs to bring us up to date when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Bill Campbell. Bill is the Assistant Secretary for Management, and Chief Financial Officer for the Department of Veterans Affairs.

And joining us in our conversation is Steve Watson.

Bill, VA has one of the largest challenges in the government when it comes to the President's Management Agenda and the competitive sourcing initiative. Could you tell us more about what the Department is doing is this area?

Mr. Campbell: Yes. Of our 225,000 employees, 195,000 of them are in activities that are predominantly commercial. So they are called commercial activities. They would be targeted for studies to see whether those functions should be done by a contractor or should be done by government employees. We were going to do studies on 55,000 of those 195,000 positions over the next couple of years. However, we have run into a snag. We have found that there is a prohibition in our appropriations language from many years ago that doesn't allow us to use medical care money, which is by far the largest segment of our discretionary funds, for these types of studies.

So we've gone back to our committees in the House and the Senate and asked for appropriations to be given to us in 2004 and 2005 to do these studies. We are not completely dead in the water. We had been looking at laundry services, which we have many. We'd done a study on laundry services, and we have a non-appropriated fund activity called the Veterans Canteen Service. They run stores and cafeterias in our medical facilities for patients and their dependents who bring them. So that's about 3,000 jobs. So we are going to have a very, very small group of studies done, and it will affect very few positions until we can appropriate funds to increase it.

Mr. Lawrence: Have there been any lessons learned from just the conduct of those studies? You know, it is a lot of emotion, it takes a long time, and it's very unclear and people lose jobs. Are there any --

Mr. Campbell: I think that you have to put it in the proper context. One, the public should get the very best service at the very best price. We need to look and see if things should be done within the government with our own employees, or done by contractor support. I don't have an answer in saying at all times it should be contracted, at all times it should be our own employees. But it is remarkable, though, when you look at the long history of similar studies under A-76 and the Fair Act, usually, two-thirds of the time, the government employees win the competition. So I think as the President has said, it is good to have competition. And it is good to look at it fresh every once and a while to be sure the public is being well-served.

Mr. Watson: Bill, another aspect of the President's Management Agenda is budget and performance integration. What is VA doing in the area of budget and performance integration?

Mr. Campbell: We were one of the first agencies to become part of what is now known as PART (?). And last year, which was the first year, we had three of our programs reviewed: medical care, compensation and burial. It was the first year and there were some growing pains, I would say, some teething pains, and it was difficult to figure out whether the programs were as effective as they needed to be. So in the first year, our medical care program was marked as not demonstrating its benefit, as was compensation, and burial was marked as moderately effective.

This year, for 2003, we are taking another look at medical care, we are looking at medical research and we are looking at education. We have not gotten our mark from OMB yet; I understand that it will be coming out around February. But I think there has been a great deal of improvement with the process; it is running much smoother. I applaud looking at PART, because these things should not be on automatic pilot. You should evaluate all programs from time to time to see if they are really effective and if they are worth the money that the public wants to spend on them.

Mr. Watson: Moving down the agenda, Bill, to financial management, it is my understanding that the VA has had a clean opinion for a number of years. What direction is VA taking in the area of financial management?

Mr. Campbell: This is the area that drew me to VA, because I've been a Chief Financial Officer now for over a decade and -- a lot of exciting things. We have had clean audit opinions for the last six years. And that's not really static. When you look at it, the bar for financial stewardship is continuously being raised. It is more and more difficult to maintain a clean audit opinion. You have to work harder and smarter and do better things. In that time, we have gone from having an annual audit. We now submit quarterly unaudited statements. We will eventually be going to audited quarterly statements and then down to monthly statements.

We are negotiating right now with the Office of Management and Budget on how to do component-level audits. We have three large administrations - well, the National Cemetery Administration is not very large. We are having discussions with OMB, and I think that medical care, the Veterans Health Administration will probably have its own component audit, as will the Veterans Benefit Administration, and then perhaps the rest of the VA in a consolidated audit. This makes the work much more difficult. You have to have greater sampling, but the levels, the limits for materiality reduce significantly so that you have to be much more careful about your bookkeeping. I think that this is the right direction to go.

In addition, when I came 2-1/2 years ago, we had 10 material weaknesses outstanding. We have gotten rid of eight of them in the last 2-1/2 years. The two that remain are: one is that we do not have an integrated financial system. We hope to fix that. We are in the process of testing for deployment a large, new financial and logistics system called CORE-FLS. We've been very happy to date. We've had three years; it is a five-year project. We are finishing up our third year. We hope to have CORE-FLS completely deployed to over 1,000 locations, and 110,000 people trained in it by March of 2006. So far, we are on track.

The other remaining material weakness is cybersecurity, which is a weakness across the board at the agency; it is not limited to finance. The Chief Information Officer has a very good plan, and I am sure that if that goes according to his plan, we will have that material weakness taken care of in 2005. So we are eating down our list of deficiencies; we don't have any new ones coming in. So I would say that we are doing a very, very good job.

Mr. Watson: Bill, you spent a lot of focus there on more timely reporting, and with quarterly audits, more accurate reporting, and getting even to monthly financial statements. How has that changed the way the Department manages its business, using that financial information?

Mr. Campbell: We are actually managing it as a business. In the past, I think, looking back at my beginning career in the government almost 30 years ago, I think there was more of a view on are we doing what the statute says as far as delivering our program. There was very little interest in managing the projects better, even some things that are relatively small. When I first came to VA three years ago, I don't know for sure what we were paying in late interest penalties, but it was at least $3 million, because that is what we reported. It was probably much worse than that, probably up in the neighborhood of $5- or $6 million, and we were getting virtually no discounts.

By concentrating on improving our billpaying process, this year, we will finish the year, two years after we started making improvements, we will finish the year paying less than a million dollars, around $900,000 in late interest penalties, and we will have collected discounts of about $2.2 million. Now, that means that we are able to spend more money -- over 1 million bucks -- over what we are losing on our veterans. Every dollar we save is a dollar we can spend serving our veterans better. And that is just a small example. There are numerous other examples where we have looked at how we are conducting business, whether we are being good stewards of the public purse, and how we can make improvements. And we are doing a much better job.

Mr. Watson: Another area of the President's Management Agenda of course is strategic management of human capital. What problems are VA facing in terms of human capital, and how are you addressing the issues?

Mr. Campbell: I've become much more interested in this as of about a month ago. About a month ago, I was made the acting Assistant Secretary for Human Resources and Administration, so I am double-hatted, and also the chief human capital officer. And I've been working with our administrations to look at the strategic problems that they have in their own workforce. Up until then, I have been concentrating on my own workforce of budget people, contracting officers and accountants. And it is pretty stark. Although I have read a recent article in, I believe, The Government Executive, saying that there really isn't a human capital crisis, there is.

It isn't the numbers of people. It is the quality of the people that is of interest. Eighty-three percent of my senior financial managers in VA GS-13s and above can retire in 2005, including me. Fifty-six percent of all our senior contracting people can retire in 2005, and I don't see a cadr� of well-trained replacements coming along. For a long period of time, the workforce had been shrinking.

Under the National Performance Review from the last administration, there were series, job series, that were targeted: the 200-series, which was human resources and EEO; the 500-series, which was finance and accounting; and the 1100-series, which was business and contracting, were targeted for 50 percent reductions. Although in many cases, we didn't see the 50 percent reduction, we saw better than a 25 percent reduction.

This did two things. One, the tribal elders that knew all of the lore and taught the younger people, many of them saw that this wasn't going to be the kind of work that they wanted to do. It wasn't going to be fun. They are retired; some of them took early retirements and buyouts. And young people that were coming into those jobs looked at it and said, 'I don't think I want to get into this.' So they became program analysts or management analysts, or whatever. And so we didn't have an influx, and so we have an unhealthy situation where we have an aging population that weren't completely trained who are now in charge of many of these programs.

And it makes it extremely difficult, particularly in HR, that's what I see, where we are not as effective in human resources as we want to be. I am one of the most senior people in VA, and when I ask for information on what kind of pension am I going to get and how are my benefits, I have to doublecheck now, because I'm not sure that I've gotten the right answer.

Mr. Lawrence: That's an interesting point.

What does the future hold for VA? We'll ask Bill Campbell, the Assistant Secretary for Management, to give us his perspective when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Bill Campbell. Bill is the Assistant Secretary for Management, and Chief Financial Officer for the Department of Veterans Affairs.

And joining us in our conversation is Steve Watson.

Mr. Watson: Bill, in the last segment, we talked quite a bit about financial management at VA, which being CFO of course is one of your roles. As CFO, are you a member of the Chief Financial Officers Council? And can you tell us a little bit about the Council and your involvement in it?

Mr. Campbell: Yes, I am; I am a member of the Council. The Council is headed by the comptroller for the Office of Management and Budget, Linda Springer, and it has membership from each of the 24 CFO agencies. So all of the 24 largest agencies, their Chief Financial Officer is a member. It is one of the best successes I've seen in Washington with inter-agency committees. We get together, we discuss common issues and problems, and come up with ways to combat them. One of the things that I talked about earlier was human capital issues, and we've come up with attributes that we would like replacement employees in the financing and accounting areas to have.

We are working on issues that cross-cut government agencies, such as information technology and new accounting systems, and so forth. Things like consolidating payroll. It's been a wonderful venue to get difficult ideas on the table, have the very best minds in the government, because all of these people got where they are because of their hard work and their intellectual capacity, and come up with solutions that can help us all. I think it has been very helpful to me to be on the committee.

Mr. Lawrence: We talked a little bit about this when you were talking about the need for an integrated financial system, but how has technology changed the way VA does business?

Mr. Campbell: It's a completely different organization. If somebody would come back -- before the Chief Financial Officer Act, there was a comptroller at VA. I think if the comptroller for the old Veterans Administration could come back and look, they would not recognize what has happened. Earlier, I mentioned that we have 225,000 employees. We pay between 234,000 and 258,000 people every 2 weeks. On average, we only mess up four checks. We have the processes in place so that we can immediately get them out a replacement check or an electronic funds transfer, which is -- most of our people have direct deposit, about 95 percent of them. So that's one thing.

You look at what we are doing with things like purchase cards and travel cards. I remember one time having to go to London, England in June of 1978, this was before travel cards, and being on a weekend before ATMs, going around and scrounging money from all of my relatives. Going to London -- I don't remember exactly how I flew over there - but going to London and living for two weeks on basically saltines and peanut butter because I didn't have a travel card, and it took me two weeks before I could get the embassy to give me any money.

So now our people can travel on a moment's notice to do their job. They can get the types of accommodations that they require. About 85 percent of all our simplified acquisitions are now done with purchase cards. Not only does this reduce the cost of handling the paper; I don't even know what it would cost to handle a purchase order, but it is not insignificant. We are talking about millions of dollars when you look at the number of actions that we have. And probably about 800 and 1,000 people would be needed just to handle this paper.

So there have been tremendous improvements because of the use of technology. I see that we are probably going to do even more of that in the future. It won't be too long in the future before we use existing technology and we can limit access to specific locations based upon a smart card or some other technology. So that people that need to get into a space can, but others can't. Access to computer records; one of the things that we are most concerned about is HIPAA information not getting out. And making sure that people don't take resources or money that they are not entitled to. So I look at it in the not-too-distant future when you will have one identification card, which will grant you access either to computers or to spaces. It will be your purchase card if you are entitled to have one. It will be your travel card, and it will probably have a lot of your pay and personnel records on them.

Mr. Watson: Bill, looking beyond travel cards and personnel cards, what do you envision VA will look like 5, 10 years from now?

Mr. Campbell: That's a very difficult question, because we are so large and because we are still mired in 19th Century technology; that is records for veterans. Until that becomes electronic -- and we are working with the Department of Defense -- we have a joint executive committee; Dr. Chiu for Defense is a co-chair and Dr. Mackay, our Deputy Secretary, is the other co-chair. Until we get automated or electronic records directly from DoD, even when we do that, we are still going to be mired with many old records.

We still have about 600,000 veterans that are 85 years or older. So we still have a lot of records. I don't think in five years, it's going to change, but I think in 10 years, you're going to see a profound change. You're going to find that we'll have one entry point into VA. Instead of now going to a Veterans Health Administration Hospital and registering there and then having to go to a separate benefits office and registering there, and maybe go to NCA for burial benefits. Then if you move right now, you would have to re-register at the new hospital you went to and the new benefits office.

So I would see where we are going to be much like these kiosks that people talk about for e-business, a portal where one-stop shopping, a veteran would be able to come in, register and be universally registered for all things. I think that's going to be the biggest help. And then they can also have access to their records electronically. It will greatly cut down on the amount of time that is taken up right now in mailing things back and forth. And just as people are used to electronic banking now where they can call up their records on their PC, it would be nice if you could call up and see what the status of your appeal on a rating, or when your next appointment is going to be for the ophthalmologist or for the audiologist. I think in 10 years, but five years is a little short because we have this huge mountain of old paper records.

Mr. Watson: Bill, again focusing on the future, what do you see as the biggest challenges facing VA?

Mr. Campbell: The biggest challenge in my opinion is personnel, human resources. People do work. Wiring diagrams and organizational charts, telephone books, they don't do work. It's the people. I'm very concerned, because I've seen over my years-- almost 30 years with the government -- I've seen that there is a general tendency now not to come in and serve the public. For whatever reason, negative publicity about how boring and demeaning some government jobs are; I've never found that. I've had a wonderful career. I've done some tremendous things. I've been fortunate because I've gotten around to lots of different agencies and done a lot of different jobs. I've never been bored, and what I would like to do is to make sure that the next generation of employees has the skills, and that there are enough of them to give the services and benefits to the veterans that they deserve.

Mr. Lawrence: Well, let me pick up on that. As a person with a long history in public service, what advice would you give to a person interested in a career in public service?

Mr. Campbell: I know that there is a great deal of misgiving about coming in to public service and how difficult it is to get a job, and so forth. I would say that we are stuck with some 19th Century rules on employment. Most young people getting out of college, they would like to get a job offer, say, within 72 hours. Unfortunately, because of the patchwork of statues and regulations that we have dating back to the Civil Service Act of 1883, it is a little bit more difficult than that.

You have to go and have your background checked. You also have to have your skills and education verified by somebody to make sure that you are among the best-qualified for a job. And so it takes longer. What I would say, though, is you need to be persistent. When I first came into the government, I put out over 200 applications, I got two interviews and two job offers. When I went to get promoted from a GS-13 to a GS-14, I put out 200 more applications; I got one interview and one job offer. And the same thing with the senior executive. I put out about 200; I got two interviews and one job offer. It is a lot of work, but if you want to come into this type of work, hopefully it will get better in the future. You just have to be persistent.

But I will say that I have had some wonderful opportunities. I have had what then turned out to be the Fuji Blimp for a year and seeing how we could use it to do maritime patrols out in the ocean with the Coast Guard. I've been an accident investigator with the Safety Board. I mean, all kinds of interesting work. It's not the dull, clerical work that is so often attributed to the government.

Mr. Lawrence: Bill, that will have to be our last question because we are out of time. Steve and I want to thank you for joining us this morning.

Mr. Watson: Well, thank you.

Mr. Lawrence: This has been The Business of Government Hour, featuring a conversation with Bill Campbell, Assistant Secretary for Management and Chief Financial Officer of the Department of Veterans Affairs.

Be sure and visit us on the web at www.businessofgovernment.org . There, you can learn more about our programs and get a transcript of today's very interesting conversation. Again, that's www.businessofgovernment.org .

This is Paul Lawrence. Thank you for listening.

David Wennergren interview

Friday, September 26th, 2003 - 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, 09/27/2003
Intro text: 
Technology and E-Government...
Technology and E-Government
Magazine profile: 
Complete transcript: 
Friday, July 18, 2003

Arlington, Virginia

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

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation this morning is with David Wennergren, Chief Information Officer of the U.S. Department of the Navy.

Good morning, Dave.

Mr. Wennergren: Good morning, Paul.

Mr. Lawrence: Joining us in our conversation is Tim Connolly.

Good morning, Tim.

Mr. Connolly: Good morning.

Mr. Lawrence: Dave, let's start by talking about the military. Could you tell us what's the role of the Navy?

Mr. Wennergren: The Department of the Navy is a large organization, and of course it includes both the United States Navy and the United States Marine Corps. Its mission is to project force and protect the sea lanes around the world, which makes it a very unique organization to work in: 800,000 people deployed in virtually every time zone, tens of thousands of them literally on mobile offices, ships, deployed Marines, and to be able to be connected around the world in real-time is one of the great challenges of that organization.

Mr. Lawrence: Tell us about the activities and the programs of your office.

Mr. Wennergren: As the chief information officer, I am responsible for information management and information policies across the Navy and the Marine Corps. It's a fascinating opportunity because it's a very big organization. We have an information technology budget of over $6 billion a year, and as I mentioned, hundreds of thousands of people, and to try to bring those people together to work your way through the entire range of information technology work, networks, knowledge management, e-business, security transformation, is a wonderful opportunity.

Mr. Lawrence: What types of skills would your team have? You just described a whole range of functions, and I would have thought they would have all been computer science folks doing that sort of stuff.

Mr. Wennergren: We certainly have some excellent computer scientists in the mix, but it is really a broad range of people, because a CIO's responsibility spans the gamut from making sure that you're giving the right oversight to your systems, all of your systems, weapons systems, information systems, because of course, they all have to work together. To the other end of the spectrum, caring about your work force, making sure your work force is changed and IT proficient. So we need people with lots of different skills in the IT business.

More and more, we see folks with a strong bent towards business, towards management, towards understanding the missions of the Department and how those missions could be improved. Business process reengineering is a very important element of the work that we do in the CIO organization. We have a small cadr� of folks that actually work in the headquarters organization. CIOs have to report to the Secretary of the agency, or in our case, the Secretary of the Navy. So we have a small team there, but then we draw upon the resources of technical experts from throughout the Navy and Marine Corps teams, so there are literally hundreds of thousands of folks who are really adept at being network engineers and being software developers, and then all the other skill sets that you need to actually run a business as big as this.

Mr. Lawrence: When people ask about the budget for technology in the Navy, is there a way to describe it to give people a sense of the size?

Mr. Wennergren: Yes, it's big, and the way that we track the budget the way that OMB and Congress asks us to is kind of interesting because it covers a very broad range. So the Department of the Navy's information technology budget is $6 billion, with a B, and that's a lot of money. The biggest single initiative that we have is our Navy-Marine Corps Intranet, which is over a billion dollars a year.

It also includes a lot of very significant national security systems, the E-2C Hawkeye and other programs that are heavily IT-oriented that make up that bill. So it is not just $6 billion spent on back office functions, it's $6 billion spent on command and control systems and command support systems and all the things that go into running the business of the Navy.

Mr. Connolly: Dave, can you tell us a little bit about your roles and responsibilities as chief information officer of the Navy?

Mr. Wennergren: I work directly for the Secretary of the Navy, and my job is to provide advice and counsel on the mission of the Department. I'm part of the leadership team for the Navy and the Marine Corps, where, of course, my responsibility would be making sure that we do our information systems and our information management correctly. So I have a responsibility for policy development, for oversight, for ensuring that we have a trained work force, ensuring that our systems are operable, that we have a robust enterprise architecture structure, that we're complying with the President's management agenda, and working your way through that whole portfolio of IT initiatives that happen in the world today. We are big proponents of electronic business and the web and wireless technologies.

Again, it's about having a small team of change leaders that can work with all of the commands across the Navy and the Marine Corps to help them as they do their jobs, because one of the things that we learned early on in this adventure as we were walking through the Y2K days is that IT is everywhere. It's embedded in every plant floor, every weapons system, and almost nothing works by itself anymore. So it really is all about the difference business lines of the Navy and the Marine Corps, and we view our job as intergrators.

What we want to do is to help you understand that you can use technologies in the work force, but in the end, it's your business process, your mission area, and so the E in e-business is just get people excited that there is a need to change away from paper processes to electronic processes, but the key part of that word is business. It's not about me doing your business for you; it's about me helping you to see a way to reinvent your business to take advantage of the digital age.

Mr. Connolly: So it sounds like you have pretty broad responsibilities on both the business side as well as on the technical side. Can you tell us a little bit about your previous career and how that prepared you for your roles and responsibilities today as the CIO?

Mr. Wennergren: I've had a varied career, I guess you'd say. I've spent my entire government career with the Department of the Navy, right out of college into the Navy as a young management analyst and kind of worked my way up through the organization.

I've had a lot of different kinds of jobs. I used to do outsourcing work, the A76 program, private-public sector competitions. I was involved in the base closure rounds of the 1990s. After the base closure rounds, I had the job of working in the installation management world and restructuring all of the shore establishment that didn't close.

Then I came to the CIO world, and my first adventure was Y2K there. So sometimes people say you must wander from one program of hate and discontent to another, but I'm a hopeless optimist. So I think that the thread there is complex organizational issues, so I think both me and my predecessor, Dan Porter, the last CIO of the Department of the Navy, shared this r�sum� of having worked complex issues and having to work issues that require integration and a good understanding of the mission of the organization.

So while I have had some technology-related responsibilities in my career, clearly my selection as CIO was driven by the idea that we need people that can lead change and integrate it across complex organizations.

Mr. Connolly: Based on that, how do you see that those experiences have really brought you to today to the visionary role of CIO of the Navy?

Mr. Wennergren: The common thread, again, I think is integration. The Navy and Marine Corps is very big and very decentralized. In fact, we have a culture of over 200 years of independent ships at sea and being the captain of the ship and the captain of your destiny. That presents tremendous opportunities for innovation. Having the wherewithal to manage your own resources and go make your own choices gives smart people great opportunities to think of new ideas, and our organization is just full of smart people.

The challenge that comes in this world of being so connected is that pieces have to work together. So the premise of sending a ship out and it will come back some day and you'll have entrusted the captain to have done the right mission is a little different in a world where you're constantly in contact from sensors to shooters to logistics support and those sorts of things. So now there's a great need to take this very decentralized organization and make sure that it's integrated. Integrated doesn�t always necessarily mean centrally controlled or centralized, but that the pieces work together.

One of my responsibilities is the critical infrastructure assurance officer, of the CIAO. I always get a kick out of that acronym. The critical infrastructure assurance officer is responsible for critical infrastructure protection, so physical security, security of our key infrastructures. It's not a job that you would necessarily have associated with being a CIO, the information officer, but we're finding more and more organizations starting to get their CIO that responsibility because protecting all of our physical infrastructures has a lot to do with integrating the efforts of numerous organizations, in our case organizations like our force protection people, our antiterrorism people, our investigative service people, our computer forensics types and those sorts of organizations. So bringing all these pieces together to actually work towards a common good is the resounding theme that we see in CIO work.

Mr. Connolly: Have you seen that the role of the CIO in the Navy has evolved then over the last 10 to 15 years from being much more technically focused to being much more organizationally focused and focused on taking the Navy to the 21st century?

Mr. Wennergren: Yes, I would have said it just slightly differently, because CIOs are kind of a new concept for us. With the Clinger-Cohen Act passing in the 1990s, the first Department of the Navy CIO only arrived on the scene in the late 1990s, the 1996-1997 time frame. If we look at the last 10 or 15 years, I think your point is right-on. While they weren't called CIOs, the CIO predecessor organizations were clearly focused on technical- and acquisition-related issues, and as we stood up a CIO organization through the Clinger-Cohen Act and a lot of the other pieces of legislation, the E-Gov Act, the Federal Information Security Management Act, the Paperwork Reduction Act, and the list goes on and on, there's a recurring theme in both the intent of Congress and the intent of the administrations that CIOs are there because information, knowledge, the intellectual capital of the organization, has to be managed effectively so that it's available.

As the most classic case, a statistic from Gartner, I believe, about how over 70 percent of an organization's information lives on a C drive, and in a world where you're imagining people thousands of miles away from each other trying to get work done together, that just doesn't cut it. The intellectual capital, the wonderful knowledge and learning that we each have and can bring to the table, has to be available for people to share.

Mr. Lawrence: That's a good point, especially about the C drive.

What's NMCI and what lessons have been learned? We'll ask David Wennergren of the Navy to tell us about this when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with David Mr. Wennergren, Chief Information Officer of the Department of the Navy.

Joining us in our conversation is Tim Connolly.

Mr. Connolly: David, the Department of the Navy has been pretty much a pioneer in outsourcing. With the Navy-Marine Corps Intranet, affectionately known as NMCI, can you tell us a little bit about the background of this effort, and what is NMCI?

Mr. Wennergren: NMCI is a fundamentally important part of our transformation. It is the foundation of much of the IT transformation that's going on in the Department of the Navy.

I sometimes tell folks a story about a place called the Winchester Home, which is out in San Jose, California. If you're familiar with it, you know the story about it, but you've probably near heard it as an IT analogy. The Winchester Home was built in the late 1800s by the heir to the Winchester Rifle fortune. There's a whole story about why she built this monstrous house, but she built it for 30 years. It has hundreds of rooms and tens and thousands of square feet. It's one of the biggest houses in the entire United States. There were hundreds of builders involved in building it and no architect, no orchestra conductor, if you will. Lots of builders with lots of money to spend built lots of really cool stuff. There are patents associated with this house, innovations in the 1800s that had never before been seen in homes in America. If you translate the $5-1/2 million price tag to today's dollars, it was a $160 million job building this house.

But because they each worked independently, some odd things occurred. There are doorways that open into a wall; there are stairways that lead to nowhere; there are skylights embedded in the floor of the ceiling above; there's a chimney that starts in the basement and rises up four stories, only to stop three feet short of the roof. So without that common infrastructure, architecture, enterprise vision, big organizations tend to build lots of little things. Each little thing might be innovative on its own, but they don't work together so well, and that was the environment that we found ourselves in in the Navy and the Marine Corps team.

We found two apparent problems. We had organizations that were haves, and organizations that were have-nots. Some organizations, because of the way money flowed, had pretty robust networks, and some of our organizations had pretty pathetic networks. Unfortunately, a lot of the organizations that were not wired properly were our operational commands, which clearly needed to be.

We also found ourselves with a problem of not being able to refresh technology well enough. It takes government sometimes a long time to buy stuff, and of course you know the way technology is. I remember several years ago buying myself a 450 MHz computer and thinking that was a real hot machine there, and six months later it was who cared because technology changes so fast, and having refresh rates that take years and years and years will leave you always behind.

So we reached the point where we imagined in our minds that it was probably a couple billion dollar job to actually bring the Navy's infrastructure up to a level where you could be a really seamless enterprise network. So we have a hundred disparate networks, they didn't talk together very well, they had different security structures. We had a work force of network managers and network engineers that we were having trouble retaining. They come and they'd get trained by us, and they'd go for more lucrative salaries in the private sector. So we had to do something different.

So we landed upon the concept of the Navy-Marine Corps Intranet, which is a performance-based contract approach to buying IT as a service. This was basically a big seat management contract. There are lots of seat management contracts in industry, but this was a big deal for the government. It's the largest IT contract in federal government, it's the largest seat management effort in federal government history. So it really was a change of course as it was this basic premise that said electricity, the outlet here in this room, I plug my plug into it and if the light comes on, I get billed for the electricity of using that light. If the light doesn't come on, I don't pay a bill for it. I don't really care about what kind of transformer, what kind of stuff is on the other end of that power line out there, Virginia Power or something.

I care about service being delivered. I care about performance. So that was the path we embarked upon. It really was a novel path, because the beauty of the Navy-Marine Corps Intranet contract is that the services that it provides are the computer on your desk, the software that runs that computer, the help desk support, the long haul connectivity, to bring that enterprise network together for almost 400,000 people, 400,000 seats. It basically encompasses the entire United States and a couple of our overseas locations. Bringing that together into a performance-based contract has provided us with a world of wonderful change management experiences that we'll probably talk more about in a few minutes.

But getting that basic premise across that you could have somebody do this work for you and do it by providing a service, and the best way to take care of that would be to have a fixed price contract in terms of seat price. I'll have a menu, I'm a command and I'd like a laptop, I'd like a desktop, I'd like these kind of additional services and those sorts of things, and I understand the price and I'm willing to pay that. Then the contractor team is motivated for success by a lot of incentives. So the contract is really a wonderful novel contract vehicle because it's based on the premise of numerous service level agreements that are measured. So what I want is lots of access; I don't want latency. I want a good refresh rate, I want good security, and I'm going to measure you on that. If you exceed my expectations, then you get incentive payments.

Over half of the potential incentive payments that the contractor can get are based on customer satisfaction as measured by the individual users. What a novel concept for all of you that have relied on help desk support before, that you actually get to grade your help desk team, and that's part of how they get paid is that they've responded well to your needs.

It was an interesting adventure to go on. We're a couple of years into it now and we're making great progress now, but the early days were really a challenge because we had a fascinating dynamic. We were able to explain to people that this idea of seat management and this idea of performance-based contracting was really important and the right way to go. But you'd have this interesting dynamic when you would explain this to members of Congress, the Office of Management and Budget and the Office of the Secretary of Defense. We would almost consistently get back the answer that would say, yes, this sounds like a really great idea. You'll want to do this very quickly. You'll want to do this over a two-year period. Isn't that like awful fast for something this big and this different?

Then we would go to audiences like the Naval Postgraduate School, where we have young officers who are working on their master's degrees and are really savvy on technologies, and of course the postgraduate school is out in Monterey, not far from Silicon Valley, so they had a lot of exposure to the Internet age, if you will. So they would go, this really sounds like the right thing to do, but you're going to take two whole years to do this? Why can't you do it in months?

So it was an interesting set of dynamics, and it took us a long time to get the project actually started. We awarded the contract, and EDS is the prime contractor. Then there's a pretty august group of subcontractors: Microsoft, Dell, Raytheon, MCI. So it's a robust group of teams. But again, the important point was that we didn't say we wanted Dell computers, we didn't say we wanted Windows 2000 as the operating system. What we said to the bidders was we want good service, we want to be able to measure it, and we want service delivered well to all of these places with these service level agreements, and then you pick the teaming arrangements that you want to have to make that happen, so I don't have to be the one that goes out and buys all the servers and routers and worries about every computer and every help desk, every network operations center. I worry about getting service delivered well to me and being able to measure that service being delivered well to me.

Mr. Connolly: Tell us about the timeline. The idea began in the mid 1990s. Walk us through the big things. We're two years into it. Then what's out there?

Mr. Wennergren: We did a lot of thought work about this in the late 1990s. The contract was awarded at the end of 2000. From there, it took time. Again, it got back to this idea about seems like a good idea, but we're very nervous, it's very different. I probably shouldn't say this, but we tested this thing like it was some nuclear submarine. We were talking PCs. They only cost hundreds of dollars each now. We're talking about Microsoft Office. We're not talking about nuclear power plants. So there was a lot of initial testing and a lot of initial turmoil to get the thing up and rolling.

This year has really been the year that made a difference. You go through a two-phase process, of course, as they come in. The first thing that happens is the team comes in and assumes responsibility for your existing network. Of course then, after they assume responsibility for the network, they cut over to the new equipment and the new processes. So you assume responsibilities and then you cut over.

We've cut over about 88,000 seats at this point. We have assumed responsibility for over 200,000 seats, we, the contractor team, and our hope is by the end of the year, we're up to about 300,000 seats, assume responsibility, and a couple hundred thousand seats cut over.

So this is the year now that we're actually seeing the power of it. So had we all been having this conversation a year or so ago, I would have told you about this vision about interoperability, access, greater security, but now I can actually talk to you about the results, and there are some wonderful examples of the results.

After September 11th, in addition to the tragic loss of life at the Pentagon, the Navy also lost 70 percent of its office space there. So we had literally hundreds of people that had no place to go to work. We were able to leverage this information strike force, this EDS team, to help us reconstitute that capability literally over a weekend. By Friday after the event on Tuesday, we had found an office building in Crystal City that had been vacant. It was pretty gutted, and the EDS team had tractor-trailers full of Dell computers and Sisco routers and everything on the road. They arrived in town, and virtually over the course of the weekend, put together the network and the infrastructure inside that office building for hundreds of people. If you think about it in the old view of the world what would have had to have happened, we would have had to have people buying computers, buying software, buying telecommunications services, buying servers, and installing all those things, and integrating all those things together would have taken days, weeks, months.

The other place where we've seen dramatic improvements is because you're moving away from this idea of a hundred disparate networks with different kinds of security strategies, seeing a significant improvement in our security posture, it really is beginning to pay dividends. But it also really is the foundation of transformation, and that's the thing that oftentimes confuses people, because they think NMCI is the whole IT game for the Department of the Navy, and it's really not. I often use the description of a highway system, local story right here, just interstate 95. I've got a great superhighway now, and NMCI is that superhighway. On the interstate heading down to Richmond, I don't have to get stuck in traffic. Maybe I picked a bad example. I don't have to stop at stoplights all along the way. But all the cars and all the drivers of those cars are still fundamentally important to the success of your organization. So imagine NMCI as the big superhighway we just built, so that where you are is connected to where you need to be, and wherever you are, you have the power of reaching back to the intellectual capital of the organizational team. But you also have to then focus on all the things that have to ride on that highway system if you're going to be successful.

Mr. Lawrence: The Department of the Navy includes both the Navy and the Marine Corps. How does the CIO make decisions for the entire department when it consists of these two unique groups? We'll ask David Wennergren of the Navy to tell us about this when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with David Wennergren, the chief information officer of the Department of the Navy.

Joining us in our conversation is Tim Connolly.

Mr. Connolly: David, we spent the last segment talking a lot about NMCI. Now as we look forward, if you had a choice of starting over again, what would you change about NMCI to make the process more effective and more efficient?

Mr. Wennergren: I wouldn't change a thing about the performance-based contracting concept, and I wouldn't change a thing about the team that we have. We have a great team working with us on the project.

How we began the implementation both from our side and from the contract's team, we learned a lot, because it really was something different for us. People really enjoy personal control, and federal agencies don't always do a good enough job of public relations work. So I think we probably could have done a better job of selling the value proposition to our individual organizations so that when they went through the pain of having to give up something that they used to control, to allow somebody else to do the work for them, although I don't know how much you could ever stop some of those cultural change issues from happening. So there was a lot we learned about how you could do the implementation smoothly. But I think that's really the only place that you probably could go back and have done it better.

What I really have seen happening out of this is that it was an amazing opportunity for us because it proved to be this wonderful forcing function. If you don't build yourself an enterprise network, you have no idea how many applications you own. I remember in the Y2K days, we were keeping track of our mission-critical and mission-essential applications and systems. We were looking out for a couple thousand of them. Then when we put into place the Navy-Marine Corps Intranet, we said to these hundreds of commands that had their own local area networks and had built the stuff to run on it, just give us your applications, identify them by name, we'll check them out to make sure they're complying with security rules and they work on Windows 2000 and we'll put them on the network, and those couple thousand mission-essential applications grew to almost 100,000. A hundred thousand applications, what could you possibly do with that many? Somebody told me they were at the Gartner conference last year in Orlando, I think it was somebody from Disney was there, and they were talking about their 4,000 legacy applications that they were trying to work their way through. Somebody from the audience stood up and said, how could you have allowed that to happen? I thought I'm glad I wasn't the one up on stage there. I would have had a hard time explaining tens of thousands of them. But because you didn't have that central visibility, that ability to do configuration management, you didn't know.

So NMCI has been a wonderful forcing function to get us to do things like designate functional area managers, functional leaders for business lines in the Department of the Navy that are now responsible for looking at all the logistics applications that these different commands have built and says this is the supply chain management program we're going to use, this is the online purchasing solution we're going to use, and we're going to get rid of these other ones. It's a phenomenally complex problem. We've done a great job of working our way down from that first initial list of 100,000 to several thousand now. But you wouldn't have been able to do that, nor would you have been able to achieve the significant cost reductions that you will get by not having to build each one of these solutions over and over and over again unless you have built this enterprise network.

We used the NMCI as the fulcrum point for bringing on board infrastructure and SMART card technology. Every computer is going to show up with a SMART card reader and Middleware. You'll be able to use your PKI digital certificates. Those kinds of changes wouldn't have happened if you didn't have this forcing function of building the enterprise network to get you going.

Mr. Connolly: You talk about NMCI as a transformation, and transformations are about change. What change would you say occurred in your own roles and responsibilities as CIO, and how do you see that continuing to change going forward with the implementation of NMCI?

Mr. Wennergren: I think we've greatly benefited from a really strategic leadership team in the late 1990s as this whole vision got created that recognized that there is a road map of transformation that you had to do, and you had to start with your infrastructure. If you couldn't get your infrastructure right, you had no hope of doing things like digital marketplaces and knowledge-sharing and those sorts of things. But having the NMCI network now being implemented is allowing the Navy and Marine Corps team to turn attention away from those network tasks, to focus on the rest of that transformation agenda.

The NMCI contract is a really big contract. Like I said, it's over a billion dollars a year, but it is just that superhighway system. There is a whole bunch of other really important work that is being focused on, and that needs industry participation and working together, creating knowledge management structures, business electronic government, web enablement of our legacy applications, building of an enterprise portal, greater security, all those pieces of work are the rest of that transformational agenda that actually gets you to be that interconnected organization that's secure and a learning, knowledge-sharing community.

Mr. Lawrence: The Navy includes both the Navy and the Marine Corps. How are decisions made for the entire Department?

Mr. Wennergren: We've gone through a significant restructuring over the last year, and I think that one of the great benefits of that restructuring was a tightening of those organizational relationships. So in our new vision of the world, as the CIO, again, I report directly to the Secretary of the Navy, I have a deputy CIO for the Navy. That's Rear Admiral Tom Zelebor, who is the command and control leader for the Navy chain of command. I have a deputy CIO for the Marine Corps, who is General John Thomas, who is the director of C4 for the Marine Corps. So there's this wonderful match-up now of the person who is responsible for the command and control and computer systems for the operational chains of command now has a working relationship with me and a very close relationship in terms of dialogue and problem-solving together to make sure that the information management agenda is working in synch with those chains of command. I then have a third deputy, Rob Kiery, who works in my office, who is the deputy CIO for policy integration, who works with me to help shape and integrate those transformation efforts along those two chains of command.

We then said that each of our major commands, or what we call echelon 2 commands in the Navy and major subordinate commands in the Marine Corps, imagine business units under the Chief of Naval Operations and the Commandant of the Marine Corps, each must have a command information officer, and that command information officer must have a working relationship with Admiral Zelebor and General Thomas. We sort of leveraged some of the things that we learned from visits to GE about the way that they managed IT, this idea that if you're a business unit or a command information officer, you really need to make two people happy if you're going to be successful. You need to make that business unit leader happy, and clearly our command information officers in the past did that. They worked for the commander of the Naval Air Systems Command, and if you didn't make the Naval Air Systems Command's mission work, then you weren't getting a good CIO for that command.

The second piece of that puzzle that the folks at GE realized a while back was you also have a reporting relationship with the agency CIO, because otherwise, you'll suboptimize because you'll build great systems for -- I need an online small purchase system at NAVAIR and so I go out and build one. But I'm over here at the Naval Supply Systems Command and I say I need an online small purchase system so I go build one, and I'm out at the Pacific Fleet and you see how it goes, and each one of those cost me millions of dollars. So if you only focus on that command, you miss the important point, that we are an enterprise. Up until a couple of years ago, enterprises for us were organizations like the Atlantic Fleet, the Pacific Fleet, because that's the way the money flowed and that's where your responsibility flowed. So this new set of organizational relationships really kind of helps everybody think a step up, to say that the enterprise is the Navy and Marine Corps team, because if you don't think that way, you can't build a Navy-Marine Corps Intranet, you can't build a Navy-Marine Corps enterprise portal, you can't align yourself about interoperable single authoritative data sources, et cetera.

Mr. Lawrence: One of the things driving management is the President's management agenda, and it calls out specific items. One of them is e-government. What are you doing in the area of e-government?

Mr. Wennergren: Absolutely. E-government is so crucially important to us. There were some terminology things we had to work our way through first. I have a PowerPoint slide whose title is �a constantly changing world� that goes e-commerce, e-business, e-government, e-war fighting, because you go out and talk to an audience in the Navy and they go we're not business. What do you mean e-business? We don't do that kind of stuff. We're not selling products. And you're like absolutely, you're a business. Your business is national defense and you still have labor-intensive, cumbersome paper processes that you do and that's eating our lunch, and you need to find ways to leverage technology and get with it, and get with the web, and get with wireless technologies and develop E kinds of solutions. So we have done a lot of work to really take the President's management agenda, and even before the President's management agenda, to build ourselves organizations that will help us achieve that goal.

We established a Department of the Navy E-Business Operations Office that is a single innovation center for the Navy and Marine Corps team. There's a small cadr� of government folks with a number of private sector partners that basically helps you. If you're a command and you say I need some help trying to figure out how to do this e-business stuff, they'll bring out consultants, they'll come work with you and help you develop solutions.

They actually operate a pilot fund. We put aside $20 million and say let's go find great ideas and pilot new ideas. What classically happens in large organizations in I think government or the private sector is that you have this great idea, it's going to save us a million bucks a year, I need $100,000 to make it go. The controller says feel free to use your savings. I don't have those yet. Well, I don't know, I guess you're going to have trouble getting started. So we have found there is tremendous power in planting these small seeds of change.

I can tell you one quick story. A hospital, the Naval Medical Center in San Diego, California, a neonatologist and a CIO for that hospital came up with an idea regarding a very cumbersome process about how a patient goes from visiting a general practitioner to getting a specialist's appointment. It was bad. It was just really cumbersome. You didn't know whether the person actually made the appointment or whether they kept it, your general doctor didn't know if the person was getting treatment, whether he was well until he saw the person again in six months. They said what a great way to leverage web technologies and wireless devices to change this experience. So they developed this wonderful solution where the doctor sits in the room with the patient, he's got a little wireless device in his hand and he's saying you have a problem but Mary is really good at this and she has an opening next Wednesday at 9:00, can we lock you in for that, and he just pushes a button on his wireless device and locks the patient in for the appointment right there. Here come your lab results, and all the while maintaining that face-to-face contact as they work through this issue; $100,000 they needed to do this.

I have to tell you, $100,000 is not a lot of money for the Department of the Navy, but it's an incredibly large amount of money for a hospital. So the e-business operations officer comes and brings the $100,000, brings the private sector partner in for the solution. The neonatologist and the CIO, which I get a kick out of because when they both talk, you really can't tell who the IT person is because the neonatologist can talk babies, he can walk web. They build the solution; they love it so much. They, not us, they the hospital folks, take it to the Department of Defense Health Affairs Board, the surgeon generals for the Army, the Navy, and the Air Force, and say you can implement this solution DoDwide for $2 million. The surgeon generals say we were about to do something like this that had less functionality and was going to cost $20 million. We can take this idea and put it across DoD and avoid spending $18 million. That's a powerful example about how planting that $100,000 seed will help the Department of Defense avoid spending $18 million.

I have the benefit of being the best practices co-chair now for Federal CIO Council, so I'm able to start to take these ideas and the ideas that are going on in lots of other federal agencies and build this portfolio of best practices that are going on that tie directly to all parts of the President's management agenda.

Mr. Lawrence: That was an interesting point about the collaboration between the doctor and the CIO.

What role does IT play during a military conflict? We'll ask David Wennergren of the Department of the Navy when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with David Wennergren, the Chief Information Officer of the U.S. Department of the Navy.

Joining us in our conversation is Tim Connolly.

Mr. Connolly: David, we spent a lot of time this morning talking about change. The real question I have is, what do you see as the CIO's role in not only delivering change in programs like NMCI, but really in creating and leading change as the Navy progresses toward the future?

Mr. Wennergren: I think the measure of an effective CIO is the ability to lead change. You have to understand technology, but I believe firmly that technology is only a percentage of the answer. I may spend 20 percent of a day worrying about some technology issue and 80 percent of the day worrying about the cultural change issues that go along with actually making an organization transform. There is so much that you can learn from that. I could have spent the whole hour talking about that, but there are some important nuggets that you pick up.

Change takes on two forms. There are evolutionary types of change. When we go and do knowledge management, it's a real grassroots kind of thing. You go to a command and you say you could do this kind of stuff, you'd be a learning organization, that's great. They all get excited about it and they go off and do it. The beauty of evolutionary change is that it has great consensus and support. You can build a great little solution there. The problem is that evolutionary change on its own doesn't do sweeping enough change. So while we've embraced this theory of teaching people to fish, we've developed tools. We have tools about how you do knowledge management, how you develop a work force, how you do critical infrastructure protection/vulnerability assessments, CDs or web-based tools, and we give these tools to commands.

If you think about it, if each command takes that tool and uses it to do knowledge management, they all end up doing knowledge management in a consistent way, and I get the same kind of answer that I would have gotten if I had just mandated that they all do knowledge management, but of course, they all did it willingly.

The problem is they may not all do it, and so sometimes in order to get broad, sweeping change, you have to embark on a revolutionary change. We would not have a Navy-Marine Corps Intranet if we had not just said you will do it. We would not have 2-1/2 million access cards, SMART cards, in the hands of DoD people if we had not just said we're going to go to a single SMART card. So you have to couple these evolutionary change approaches with revolutionary change approaches.

Of course, the challenge with revolutionary change approaches is I didn't get each of your buy-in. So I have to then deal with the personal/cultural issues of change is coming to you, and there's a book about managing transitions that's out now. Or the guy makes an interesting point about we don't like change, we don't like transitions because in order to have a new beginning, you must have an end, and people tend to not like endings. So every time I do something that's sort of forceful, you have to worry about how you're going to deal with those cultural change issues. But you have to embrace them, because the world is changing at such a fast pace, if you don't think about change which means accepting some risks, you really do risk irrelevancy. So we've learned a lot.

We've learned about moving with speed. The solutions that are working best for us right now are those that we do in months. Take an e-business pilot like the one we talked about, put it in a place in three months, leverage industry best practices and go. The things that are not working well for us are the things where we try to build this perfect solution, build it to death, and two or three years later try to deliver it. Because in our world, over two or three years, technology changes, military people rotate in and out, political leadership comes and goes, and you never quite close the deal. You have to move with speed. You have to look for forcing functions. You have to say if you're going to change a little, you might as well change a lot. There is no point in just getting a few computers. At the moment that you're going through that stress of a change in a computer, I'm also delivering you new processes and those sorts of things.

You need to think about how you change the status quo. We had a culture where once you're in the budget, I'm a legacy application, I got approved, and now I get $5 million a year, and next year I want $6 million. So people go why do you need an extra million, but you're basically in the game. Of course, with those legacy applications that are the old mainframe client-server kind of solutions, they're not my web services view of the future of the world, so it's the new stuff that is going to be wireless and web-based that really is where we need to focus, but of course they're new and so they get tortured to death. Where is your testing plan? Where is your business case? Where is your this, where is your that, before you ever get to the place where you say let them go or let them try because that's where I want to spend my money.

That's why our legacy application process is so important, because that's where we're going into each of those people with the baby and saying that's not a web-based thing, that's not PKI-enabled, that's not available on the enterprise portal, you are not part of the future vision. The status quo stuff needs to go in favor of the new path.

I think finally and most importantly, it's this idea about the Indiana Jones movie, "Indiana Jones and the Last Crusade," and he's on the search for the Holy Grail. This is another IT analogy, because he's got the little book and he knows what his vision is. His dad has been shot and he has to find the Holy Grail to save his dad. He gets to that chasm and he has to get across and the book says it's a leap of faith. His reaction is don't you hate that? But of course, he eventually takes the step and there's a pathway and he gets across. That's what this is about for all of our commands. There is that moment when you do have to take that leap of faith. So you need to give people as much confidence that they should be trusting to take that leap of faith, but in the end, you have to find some way to encourage them to take it or you'll never get this change in.

Mr. Connolly: Can you tell us a little bit about web enablement means to the Department of the Navy? And can you expand on the role of the Department's new portal policy in achieving this objective?

Mr. Wennergren: We've been getting it for a while. We have a senior leadership course that we teach at our Naval Postgraduate School where we send our senior flag officers and general officers, and they go spend a couple of weeks talking to folks in the Silicon Valley and elsewhere about what's going on in the world, and they come back very energized. They get it. They understand the power of the web, the power of the web in terms of access, the flow of information, better security structures, all the things that go into being web-enabled. But then you turn around and look at your organization and you still have a lot of old legacy systems that aren't that kind. So we've embarked upon a lot of work to try to change that.

We created a task force web team whose job was to go encourage and push for web enabled solutions, and Monica Sheperd and her team of folks that have been doing that for the Department of the Navy have been doing an outstanding job.

In order to have a web strategy work though, you have to have a place for that stuff to hang. So we've just released our policy for the Navy-Marine Corps portal, our enterprise strategy that says we're going to have a constituent portal structure where you really will have a single front portal that you get to do work whether you're aboard ship, you're ashore, you're in a hotel, you're at your wireless device waiting for the bus, whatever kind of channel delivery you need, you have a common access to the intellectual capital of the Department. That will again be like the legacy application process where we have hundreds of portals. Portals became cool, so everybody wanted to build one. I don't really need the Surface Warfare Officer's School in New England to be the 505th place to build another portal. What I need them to do is to focus on content. They may have content they want to deliver to students. You find that content, we'll give you the portal to hang it on as a database, as a transaction. I don't need you to be the next person to worry about a customized look and feel.

So with this portal strategy linked with the Navy-Marine Corps Intranet, linked with this web-enabling path, what you see is this change now. In the past, you were the aircraft maintenance technician out on an aircraft carrier thousands of miles from home in the Pacific Ocean and all you had to go by was your knowledge, your tech manuals, your engineering drawings, the knowledge of your supervisor, and you had to fix the plane. Now through a distance support portal, you can reach back to the engineer in Crane, Indiana who actually designed that part that you're trying to work on and have like a voice/video/data whiteboard exchange with him. So now these young men and women that you would be so proud of deployed far from home in harm's way have the power to reach back to the literally hundreds of thousands of people that are back here in the United States. And all that expertise, all that knowledge, all that intellectual power is now available to them, and that's compelling.

Mr. Lawrence: Could you tell us about your role as the chair of the Defense SMART Card Senior Coordinating Group?

Mr. Wennergren: I have a lot of great jobs, and that's another wonderful one, being the chair of the SMART card effort across the Department of the Navy. We talked about NMCI being a big change management issue because it's going to touch 400,000 people's lives. The SMART card program is touching 4 million people's lives across all of DoD. So everybody has an opinion about that.

We're really thrilled. I think there are great kudos that go out to Mary Dixon, who runs the access card office for the Department of Defense and is my partner in crime in this adventure, and the folks at the Defense Manpower Data Center who actually do the programming and such that makes this program happen, because this is truly a testimony to the power of industry/government partnerships. We knew we needed a SMART card. We knew we needed them for millions of people. We couldn't afford to build some government-only solution, and we really did get it. We worked with industry and we came up with standards where there weren't any and we leveraged standards where they were, and we did the right things. PKI digital certificates were going to live on this card, x509 version 3, standard base certificates, Global Platform, the security structure that Visa and others use, JavaCard, using all the common approaches that would make this thing be affordable and that we wouldn't have to build all the things that make it work. The x509 version 3 certificate is recognized by Microsoft Outlook. I don't have to build special stuff into every commercial product that I want to have touch this SMART card. So I think we really got it right, and we got it right because of the work of people like Mary, Ken Shefflin, Robbie Brandaway and all the other folks who do this kind of work.

We have 2-1/2 million SMART cards out there now. It is one of the largest SMART card deployments in the world, and it really is changing the way we work and live. So if you followed me around today when I go back to the office, I'll use this SMART card to get into my office as my physical access badge. When I get up to my computer, I'll use the PKI digital certificates on the computer chip on the card to get on my computer and do a cryptographic logon, much more secure than user IDs and passwords. I'll use the digital certificates to launch myself to secure websites, again getting past the idea of about 50 websites I need to go to, so I have 50 passwords I'll keep on a yellow sticky. I use the digital certificates to do digital signatures, which of course are the key to electronic business. So I'll file a travel claim this afternoon and digitally sign it. Then when I leave to go to lunch, I'll pull the card out of the computer, the screen will lock up and nobody else can be me, and off I go. So this power of having a digital key in the hands of every sailor, every Marine, every airman, every soldier, every civilian, every contractor that works on our facilities is really a key part of this vision. It's the way that we'll get PKI in the hands of everybody, and it's the way that we really get this idea about e-business and digital signatures in place.

Mr. Lawrence: What advice would you give to someone considering a career in public service?

Mr. Wennergren: I think it's a wonderful calling, and you have to want that. As I said before, I look around the nation and I see young men and women doing phenomenal things on behalf of all of us in defending this nation, and it just makes your heart glad and you feel really proud.

There's a wonderful team spirit. I think it's particularly true of the military departments. There's a wonderful team camaraderie about being part of this together. So there are some great opportunities, great opportunities for public service, and it is that idea about service to the nation that is so important. So if that's the kind of stuff that turns you on, there's are such opportunities now. The work force is aging. People are retiring. The skill sets that are needed are different. We need people who are web-savvy. We need people who are Internetmeisters. So the skill sets that we need are the skill sets that the people coming out of high school and college have and live this kind of multitasking kind of work. So there are phenomenal opportunities for those that feel that calling to help serve the nation.

Mr. Lawrence: Dave, thank you very much for joining us today. That has to be our last question, but Tim and I want to thank you for squeezing us into your busy schedule.

Mr. Wennergren: Thank you, Tim. Thank you, Paul. It's been great being here with you. I guess I could point out that if you liked anything you heard today, www.doncio.navy.mil is our CIO website and has more information about everything we talked about today. So thank you again.

Mr. Lawrence: Thank you.

This has been The Business of Government Hour featuring a conversation with David Wennergren, chief information officer of the Department of the Navy. Be sure and visit us on the web at businessofgovernment.org. There, you can learn more about our programs and research and get a transcript of today's fascinating conversation. Again, that's businessofgovernment.org.

This is Paul Lawrence. Thank you for listening.

Cameron Findlay interview

Friday, August 15th, 2003 - 20:00
Mr. Findlay is the Deputy Secretary for the Department of Labor
Radio show date: 
Sat, 08/16/2003
Intro text: 
Mr. Findlay is the Deputy Secretary for the Department of Labor
Complete transcript: 

Arlington, Virginia

Tuesday, February 25, 2002

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

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation is with Cam Findlay. Cam is the deputy secretary of the U.S. Department of Labor. Good morning, Cam.

Mr. Findlay: Good morning.

Mr. Lawrence: Joining us in our conversation is Fred Fagerstrom. Good morning, Fred.

Mr. Fagerstrom: Good morning.

Mr. Lawrence: Cam, let's start by talking about the mission and responsibilities of the department. Can you give us an overview?

Mr. Findlay: The Department of Labor is the principal government agency that is involved with protecting workers in the work place. We have several agencies within the department such as the Occupational Safety and Health Administration which is known as OSHA, the Mine Safety and Health Administration, the Office of Labor and Management Standards which regulates the relationship between union members and their unions, and the Office of Federal Contract Compliance Programs, or OFCCP, which prevents work place discrimination. So with the worker protection focus we have several agencies.

We also are the federal agency, which protects your employee benefits. Your health care benefits if you're in the private sector, of your pension benefits, we regulate those under a law called ERISA.

We operate about $11 billion worth of job training and employment service programs to help get dislocated people back to work. Then finally, we operate the $45 billion a year unemployment insurance system, which helps people when they are between jobs.

Mr. Lawrence: You described some dollar numbers, the size of the budget. What about the number of people in the department?

Mr. Findlay: We have about 17,000 employees at 570-plus locations around the country. Our budget varies considerably year to year because it's dependent quite a bit on the unemployment rate. The budget last year, I believe, ended up being about $70 billion because the unemployment rate was relatively high. The proposed budget for fiscal year 2004 which we've just submitted is for about $56 billion. That's not because we're cutting $14 billion out of our budget, it's just because of projections as to what the unemployment rate will be, which means that there will be fewer unemployment benefits paid.

Mr. Lawrence: You described a wide range of activities going on in the department. Could you give us a sense of the types of skills the employees have?

Mr. Findlay: We have a very highly skilled and well-educated work force. We have agencies like the Bureau of Labor Statistics, which is composed of economists and statisticians. We have what used to be called the Pension and Welfare Benefits Administration and is now called the Employee Benefits Security Administration. This is the agency that protects your pensions and health benefits. That is composed of a lot of actuaries and highly trained professionals as well.

Then, of course, our OSHA inspectors, our inspectors in the Office of Labor Management Standards, and our inspectors in the Wage and Hour Division which I didn't mention before which regulates wages, overtime, and things like that, those tend to be law-enforcement types that get out there in the field and protect workers.

Mr. Fagerstrom: What are your responsibilities and duties as the deputy secretary?

Mr. Findlay: The job of deputy secretary is always a slightly undefined one because it depends somewhat on the relationship with the secretary. I feel like I have a very good relationship with the secretary, and I spend a lot of time dealing with the boring day-to-day issues that we don't want to trouble her with.

But I think formally my role is to run the budget process. As I said, we have a budget in the tens of billions of dollars, and we begin putting that budget together in the early summer, we submit it to OMB in the fall, and then work with OMB from the fall to the introduction of the budget in February.

I am in charge of our regulatory process at our department. We have a body that we call the Policy Planning Board that is all of our agency heads. We bring them together once a week, and every regulation that comes through the department, every major new policy initiative, has to come through this Policy Planning Board. I chair that board along with our assistant secretary for policy.

Then I think broadly I guess I'm in charge of the management of the department. I am the person that is supposed to be watching over the implementation of the President's management agenda, issues like financial management, competitive sourcing, human capital, e-government, those sorts of issues.

Mr. Fagerstrom: As deputy secretary, you are also a member of the President's Management Council. Could you tell us about the council and your role within the council?

Mr. Findlay: Yes. This council was an innovation of President Bush who it's often been said is the first MBA president. It brings together all of the chief operating officers of all of the departments and smaller agencies throughout the government. It's a forum to exchange best practices amongst each other on management issues, to press for management changes on things like e-government, program evaluation, and financial management. It's really been a great catalyst for this administration to take management issues very seriously.

As to my own role on the council, I'm one of probably 20 or 30 COOs on the council, but I happen to chair the E-Government Committee of the President's Management Council. What we've tried to do with this committee is to bring some focus and coherence to all of the vast amounts of IT spending and planning that is going on throughout the federal government.

In particular, there are 24 e-gov initiatives, things like govbenefits.gov which is one site where you can go and look up all the benefits that might be applicable to you. There's recreation.gov where you can register to stay at a lodge in Yellowstone, or you can get a permit for some other federal facility some place else in the country.

We have these 24 e-government initiatives, and it frankly was kind of a hodgepodge at the beginning because they were all off doing their own thing. They were being forced to beg departments for money and to plead with departments to shut down duplicative investments. So this committee was formed in order to bring some order to this process.

Mr. Lawrence: Just to follow-up on that, how would they do that? As I understand it, they have no real authority to do the kinds of things. So how would actually some of those things get done?

Mr. Findlay: All we've got is moral suasion backed up by the President's great desire to see this work. It was tricky at the beginning because what happened was that OMBs in past years would approve budgets, and they would say to the Department of Veterans Affairs here is your X million dollars for a project to do this IT investment. Then after we set up the e-government initiative that was supposed to say put all government benefits on the same site, we were in the position of OMB having to go back to the Department of Veterans Affairs and saying, you thought that was your money. It's actually money we're going to use for this e-government initiative. So please give us the money back. And by the way, please stop the spending that you were planning to do. You can imagine that that caused a lot of friction amongst agencies and between the agencies in OMB.

So what we've tried to do is to get all the involved parties in a room together and agree that a cross-agency project is a good one, and then agree as the President's Management Council on how it's going to be funded and how we're going to shut down duplicative investments. So far it's actually worked pretty well.

It is still a work in progress, and I would be lying if I said it's been absolutely smooth sailing, but I think the formation of this E-Government Committee has made a big difference.

Mr. Lawrence: Tell us about your career prior to coming to the department.

Mr. Findlay: Well, I graduated from law school in 1987. I came to Washington to clerk for a judge at the D.C. Circuit, and then I did a second clerkship at the Supreme Court. When I came off that clerkship, all of my colleagues were going off to law firms, and I decided to enter public service. So I went to work as the special assistant to the secretary of transportation who at that time was a guy named Sam Skinner. I was in that job, or actually I became counselor to the secretary. Then in 1991, Sam Skinner was named White House chief of staff, and I went over with him to the White House as deputy assistant to the President and counselor to the chief of staff, thereby proving the rule that the longer the title, the less important your job.

I was at the White House through the very difficult year of 1992 when we were trying to get President Bush reelected. Then like everyone else that worked at the White House, had to look for a job in the private sector in 1992.

So I have been trained as a lawyer, and I went back to Chicago and went to work at the law firm of Sidley & Austin and spent almost 9 year there until I got the call to come out and be deputy secretary of labor.

Mr. Lawrence: It's time for a break. We'll stop on that point. Stick with us through the break and come back as we continue our conversation with Cam Findlay of the U.S. Department of Labor. What are the different programs at the department and how are they changing? We'll ask Cam to tell us about these programs when The Business of Government Hour continues.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Cam Findlay, the deputy secretary of the U.S. Department of Labor. Joining us in our conversation is Fred Fagerstrom.

Cam, let's find out a little bit more about the Department of Labor. We know the department is organized into major program areas. Could you tell us more about the Employment and Training Administration?

Mr. Findlay: The Employment and Training Administration, or ETA as we call it, is our largest agency. Its principal goal is to help dislocated workers. It does this by running $11 billion or so of job training and employment service programs that are operated throughout the country through one-stop employment centers. Then it also runs the unemployment insurance system.

ETA has some dog and cat roles. It also has a role in labor-based employment programs, things like that. But basically it runs our training programs and the unemployment insurance program.

Mr. Fagerstrom: Speaking of that, what about the Employee Benefits Security Administration, what does it do? And why was its named changed recently, last February, from the Pension and Welfare Benefits Administration?

Mr. Findlay: We changed the name of the Pension and Welfare Benefits Administration to better reflect what its actual duties are. When people heard the name welfare, they assumed that it was an agency that somehow dispensed government benefits. But in fact, this is an agency, as I mentioned earlier, that regulates the security of employee benefits, principally pensions, 401(k)s, plans like that, and then also all private-sector employer-provided health plans. So we thought the idea of the Employee Benefits Security Administration better guided what the role of that agency is.

This agency, EBSA as we call it now, is really a terrific agency. They do a great job of protecting Americans' pensions and health care benefits with a fairly lean staff. They routinely recover $6- or $700 million a year in pension benefits for workers, and they are going to be beefed up in the next couple of years to do an even better job. We've asked for a 10 percent increase in their budget for fiscal year 2004 so that they can have more people on the ground investigating pension plans and health plans.

Mr. Lawrence: Are there any management challenges with changing an organization's name?

Mr. Findlay: Principally, business cards and stationery, I think. It was something that we were able to do just a secretarial order, we didn't need legislation to do it, but we were happy to be able to better get the message out about what this agency does.

Mr. Lawrence: In your opening description you talked a lot about what the department does in terms with regards to occupational injury and illness. I wonder if you can take us through the different organizations and how they all work together, how you pull that together.

Mr. Findlay: Yes, there are some synergies, particularly between OSHA and the Mine Safety and Health Administration which regulates employee safety in mines, and both agencies have done very well in the last couple of years.

As for OSHA, the most recent statistics show that employee injuries and fatalities have continued to decline for several years under our stewardship. As for the Mine Safety and Health Administration, or MSHA, we had a record low number of fatalities last year in mines in the United States. And of course, we had that very dramatic rescue of nine miners at Quecreek in Pennsylvania where MSHA really lead the effort along with the Commonwealth of Pennsylvania. So we are very proud of those agencies.

Our other worker protection agencies are perhaps less well know, but we have the Office of Labor Management Standards which enforces requirements that unions file financial statements with the government, and also regulates union elections and has other functions like that. Its basic function is to ensure that union members' rights are fully protected within unions.

Then we have the Wage and Hour Division, which is responsible for ensuring that people are paid the minimum wage and that people are properly paid overtime. Then we have this Office of Federal Contract and Compliance Programs, which enforces the executive order that requires nondiscrimination in the work place of all federal contractors.

Mr. Lawrence: One can't help but think that when you describe those missions of a time in our history, say 50 years ago, when many of these were very pressing and important issues. One senses that over time the work place has gotten safer or there is less effort to bypass the law. Is that perception true, or are these things still aggressively out there?

Mr. Findlay: I think that is true, Paul, and it's one of the things we're trying to do at our department. We have to recognize that our department was established in 1913 and many of the laws that it enforces were enacted in the '30s, '40s, '50s, or '60s. The work place has changed so much since then, so our constant challenge is to update all of our laws, our regulations, our policies, and our programs to take account of the changes in the work place.

You mentioned OSHA. I think it is true that most employes want to protect their employee's safety. It's in their interests to do that. So OSHA wants to add to its enforcement activities what we're calling compliance assistance. We want to get the word out to employers to help them understand how to avoid injuries before they occur rather than fine employers for injuries after they occur. So OSHA has been very aggressive in getting its information up on the web, in holding seminars around the country, in entering into partnerships with trade groups and employers, and the proof is in the pudding: we believe that injuries and fatalities are going down.

Mr. Fagerstrom: Another whole area within the Department of Labor is the Bureau of Labor Statistics. What is that responsible for, and how do those activities fit within the department?

Mr. Findlay: The Bureau of Labor Statistics is one of the jewels of the federal government. It's an agency that is responsible for compiling a whole number of statistics about what is going on out in the work force. Most famously, on the first Friday or every month, the Bureau of Labor Statistics issues the unemployment rate. One of my duties as deputy secretary is to have the Commissioner of the Bureau of Labor Statistics come to my office every first Friday of the month at 8 o'clock and walk me through the latest employment statistics.

Sometimes it's good news as it was this past month, and sometimes it's less good news, but it's always interesting to guess at what the unemployment rate is going to be before everyone else finds out.

The Bureau of Labor Statistics has a whole number of other programs. It measures the consumer price index, the producer price index, productivity, things like that. It's a terrific agency that does excellent work.

Mr. Lawrence: One of the things we noticed when we were studying the department is you have the Center for Faith Based and Community Initiatives. I wonder if you could tell us about that?

Mr. Findlay: Yes, the Department of Labor is one of five or six federal agencies that was required by executive order to set up a Center for Faith Based and Community Initiatives. The mission of this center, which we're very excited about is essentially to remove barriers to faith based and community organizations to participate with the federal government and to participate in the federal government's programs.

At one level, this is just a matter of eliminating unnecessary and artificial restrictions, say, in grant proposals. We don't want to shut out faith based groups simply because they're faith based groups, and we've had a lot of success in that and have been able to get out some grants.

Then the second part of the job of this center is to get out there and gin up interest in the faith based community in our programs. We have a lot of pilot programs around the country. We've got one called Ready for Work in Jacksonville, Florida, that is linking returning offenders coming out of prison with our employment and training system. We've got another program with public-private ventures that teams up with our Job Corps Centers which are job training centers to do mentoring in Job Corps Centers. So we're very excited about the work of this part of our department. And we were very proud that we were the first agency to get out some grants to faith-based organizations.

Mr. Lawrence: When you think about the broad range of programs we've been talking about, how do you manage them all in terms of the scale? Let's take something like communication. How do you get a relevant message out to all of these people?

Mr. Findlay: It is a challenge in a department as big as ours with so many employees and so many locations. One of the things we always hear from our stakeholders is that we may be saying one thing in Washington, but at the district office in Pocatello, Idaho, they're not hearing the message. I'm making that up. I don't want to say anything bad about the district office in Pocatello, if we do have one there.

But we have undertaken a considerable effort to communicate with our employees. The secretary sends e-mail messages all the time to employees on issues of concern, and any major new initiative she'll make sure to announce them to that way. We do web-casts that all of our employees can pick up so that if we're holding an event in the Francis Perkins Building, our headquarters in Washington, many times all of our employees all around the country can log on and watch the event.

Several of our assistant secretaries and deputy assistant secretaries and I have made it a point to try and get out and hit every regional office so that our goal is that every regional office will have a senior department official visiting every quarter.

Mr. Lawrence: It's time for a break. Rejoin us in a few minutes as we continue talking about management with Cam Findlay of the U.S. Department of Labor. How is Labor doing with the President's management agenda? We'll ask Cam for his insights when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Cam Findlay, deputy secretary of the U.S. Department of Labor. Joining us in our conversation is Fred Fagerstrom.

Mr. Fagerstrom: Good morning. Can you tell us about the department's four strategic goals?

Mr. Findlay: Yes. When I arrived at the department we had three strategic goals, a prepared work force which reflected our mission of training dislocated workers, a secure work force which involves our mission of providing unemployment insurance principally to workers, and the third was quality work places. That meant safe work places, work places free from discrimination, work places where you were paid a fair day's wage for a day's work. Those are obviously very important goals, and we are working very hard to achieve them.

But we also decided to take a look when we were required to develop a new strategic plan at a new goal, and the new one we came up with after a lot of semantic back and forth amongst the senior staff of our department was a competitive work force. The idea there is to deal with the changes that are taking place in the global economy.

It's not enough to be trained once, you may have to be retrained to deal with the dynamic global economy. We didn't want to leave in place particular regulations, laws, or policies if they weren't really relevant to the 21st century economy. So the idea of this last goal was to force our department to ask itself on a continual basis, Is this the best way to be carrying out the mission of the department? Could we regulate in a different way? Could we protect employee safety in a different way? Could we protect employee benefits in a different way? So that was the idea behind adding this fourth goal, and we're very with how our strategic plan has worked out, and we intend to vigorously go after all four of our goals.

Mr. Lawrence: Could you tell us more about the department's Management Review Board?

Mr. Findlay: Yes. We set up something we call the Management Review Board soon after I arrived to put in place a sort of coherent and across-the-board approach to the management issues facing our department. The Management Review Board is chaired by our assistant secretary for management, Pat Pizella, and it brings together all the agency heads within our department. We deal with issues like IT, information technology, issues, common human capital issues, competitive sourcing. It's really a department tool to implement the President's management agency and to deal with all the management issues that arise in a department like ours.

Mr. Lawrence: Does it have the authority to make decisions, or is it more of this moral suasion of getting people on the same page?

Mr. Findlay: I think it has the authority to make recommendations to the secretary. Ultimately, the secretary is the final decision maker on all these things. I'll give you an example. We have a variety of e-mail systems at our department, an almost preposterous variety of different systems, different name conventions and so forth. So one of the things we decided to do early was to convert to a single e-mail system that would make it secure, it would make it easier to communicate in the department, and it would take on a name convention so that it will be easy to figure out what someone's e-mail address is.

A part of our department, the Employment Standards Administration, which has the Office of Labor Management Standards and a couple of other departments, Wage and Hour, and they have this hilarious name convention, that you use the initials plus the word fenex2 (phonetic) at dol.com or something. So you could never figure out how to e-mail somebody in that part of our department.

So we took the issue to the Management Review Board after a lot of vigorous discussion, a lot of very interesting issues, for instance, BLS, the Bureau of Labor Statistics, wanted to keep its own separate e-mail system because it used it to collect information from the field. After all that discussion, we decided to go with a common e-mail system and we made the recommendation to the secretary to essentially implement it throughout the whole department.

There were, frankly, parts of our department that did not want to implement a common e-mail system even after the discussion was over. But imprimatur of the Management Review Board really did help seal the deal.

Mr. Fagerstrom: You mentioned the President's management agency. How has the department done in achieving the goals of the President's management agenda?

Mr. Findlay: I'm proud to report that the Department of Labor has the best scores in the federal government on the President's management agency. There are five initiatives under the President's management agency, and on status we have got yellows on four and red on one. On progress we have green on four and yellow on one. The outlier in each case is competitive sourcing. It is an area where no department in the entire federal government has gotten a yellow score for status. So we're in good company on that area, but we still want to do better.

Mr. Lawrence: Any particular highlights or things of note through the scorecard?

Mr. Findlay: Yes, I think the places where we made improvements are worth mentioning. In financial management, we had had a red score when the OMB management scorecard was first developed. We asked OMB why did we have red, and they said you don't have a good plan in place for preventing erroneous payments in the unemployment insurance system and it's costing the federal government billions of dollars a year.

So I came back to our CFO, Sam Mock (phonetic) and our head of the Employment and Training Administration, Emily Deroko (phonetic), and said let's put together a plan for dealing with this erroneous payment problem. We were able to put together a plan that assisted states in ferreting our erroneous payments by getting access to various databases, and with that improvement, OMB took us from a red to a yellow.

We've had similar successes in some of the other areas. We're one of the leaders in e-gov because we have been the managing partner of perhaps the most successful e-gov initiative, govbenefits.gov. I would encourage all our listeners to log on. It's a really great site. It is a citizen-centered site in the sense that you don't have to guess at what government department to go to find out what benefits you're eligible for. What you do is you go to the site, it asks a series of questions about you, and then after you've gone through three screens, it will tell you all the government benefit programs that you might be eligible for, how to apply, and who to contact.

That was one initiative that we led, and we were very proud of it. So we've made a lot of progress in the e-gov area as well.

Mr. Lawrence: When you think about moving the scores from red to yellow, what are the management lessons learned in terms of the energy needed to effect those changes?

Mr. Findlay: I think it varies. There are some problems that are almost insoluble in the short-run. We have financial systems that were developed many years ago and really are past their prime. So if we decide today we want to upgrade those financial management systems - or a better way to put it is we decided last summer to do that when we were putting together the fiscal year 2004 budget. So we sought $20 million in the fiscal year 2004 budget to get that work done.

It will be a 3-year project, so it's something that will not be done until 2006, 3 or 4 years from now, and only then will we really have the financial system that we need to manage the department the way the private-sector enterprise might be managed. There are real obstacles in that area.

As I mentioned, the erroneous payment issue under UI was just a matter of asking the question, How can we solve this problem? They came up with some fairly simple fixes pretty quickly. I think it varies initiative to initiative.

Mr. Lawrence: One of the things we were noticing in the department is the Center for Program Planning and Results. I'm curious about that, especially as you think about performance-based management initiatives.

Mr. Findlay: In this past year we set up this new Center for Program Planning and Results in the office of the assistant secretary for management. This center is in charge essentially of two things, the GPRA process, the Government Performance and Results Act, and then also our progress on the President's management agency. This is the part of our department that goes out to the agencies and encourages them to make their GPRA goals much more outcome oriented as opposed to input oriented. It's the part of the department that tries to come up with good information and good measures for all of these metrics.

Then it's also the part of the department that puts out our annual report. Every 6 months or so I work with that center to sit down with each of our agency heads and assess their progress towards their GPRA goals and their President's management agency initiatives. I think it's been a very useful thing to do because in the day-to-day work of government, it's very easy to get fixated in what was in the "Washington Post" that morning, and you need to have the long-term focus on management issues.

Mr. Lawrence: That's a good stopping point. Some back in a few minutes as we continue our conversation about management with Cam Findlay of the U.S. Department of Labor. What does the future hold for the department? We'll ask Cam for his perspective when The Business of Government Hour continues.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Cam Findlay. Cam is the deputy secretary of the U.S. Department of Labor. Joining us in our conversation is Fred Fagerstrom.

Cam, can you tell us more about the mission of the secretary's 21st Century Work Force Initiative?

Mr. Findlay: Yes. One of President Bush's and Secretary Chou's biggest initiatives since we arrived at the Department of Labor is to focus all of our efforts on the work force of today rather than the work force of the past.

I mentioned earlier that our department is almost 100 years old, and many of the statutes that we administer are decades old. Many of the things that we do have not fully taken account of the way the work place has changed in recent decades. The work place is much more diverse than it used to be. We have a different workday, a much more 24/7 orientation. As I mentioned before, many employers have stepped up to the plate already and begun to protect their workers on their own, so we wanted to take a look at everything we do and see whether it's relevant to the 21st century.

So President Bush's executive order set up in our department an Office of the 21st Century Work Force to focus a spotlight on these kinds of trends, and it has done a great job in highlighting some of the trends out there. I mentioned before that there is diversity in the work force.

Another thing is that there's a skills gap out there. There are a lot of people out of work still, but there are a lot of jobs that are being advertised in the paper every day that there aren't enough good people to apply for, so we want to close that skills gap. So this 21st century office has held a number of events such as a 21st Century Summit that the President and Alan Greenspan and a number of leaders came to address. It sponsored the Saver Summit, which was intended to focus on the need for all employees to begin think about. And it held a Women Entrepreneurship Conference last year at which the President spoke that was intended to focus on the issues that face women small-business owners, which are an increasing segment of the economy.

More recently, the office in conjunction with the American Enterprise Institute held a conference on productivity and how we can increase productivity. This is in line with that final strategic goal that I mentioned, a competitive work force, because ultimately the way we increase our incomes and we increase jobs is to make workers more productive.

So this 21st century office has really been there to act as a catalyst for us to all examine our premises as to whether we're doing our jobs in a way that's relevant to today's workers.

Mr. Fagerstrom: Would you reflect on the recent rescue of the nine miners and any lessons learned from that?

Mr. Findlay: That was probably the most emotionally satisfying thing that's happened since I came to the Department of Labor. I got a call from the head of the Mine Safety and Health Administration late one night and was told that nine miners were trapped underground, and while he was optimistic as one should always be, he made clear that this was a very difficult situation.

Then we got about 50 people from the Mine Safety and Health Administration out there to Pennsylvania very quickly. They were able to move very unique equipment out there very quickly. But even with all that effort, I think there was always some doubt that we would get those people out alive.

When I woke up that weekend morning and saw the pictures of the miners being hauled out of their mine in that yellow capsule, I was happy as I can remember being since my marriage or the birth of my children. It was very exciting.

We've had the miners and their families to our department, we brought the yellow capsule that you saw on TV in for the event, and it was very, very special. I think what it does show is that the sort of partnerships that MSHA was able to form with the states can be very effective. MSHA provides grants to states for training, and then it has this operational role of miners. Ou people really came through, and we were as proud of them as we could possibly be.

Mr. Lawrence: When you look out to the future, what are the next challenges on the horizon for the department?

Mr. Findlay: I think out biggest legislative challenge is to obtain reauthorization of the Work Force Investment Act. This is the law that authorizes all of our training programs. It expires this year, so we've got to reauthorize it.

The President has just put forward his proposal which would eliminate some of the silos in the programs, change the governance structure that has prevented money from getting to people that need it, and try to increase the role of employers in the work force investment system. We think that latter point is very important. Employers are the people that provide jobs. That's a tautology, but we have to always remember that because if employers are not part of the system, then we're not necessarily training people for the right things, we're not aware of what jobs are out there, and we're not making the connection between employers and dislocated workers.

Regulatorily, we have a very full regulatory agenda. We are updating the white color exemption rules under the Fair Labor Standards Act. These are the rules that determine whether you're a blue collar worker that gets paid overtime or a white collar worker that doesn't. These regs were last significantly changed in the '40s and early '50s, and so they're badly in need of change. They still provide detailed guidance on jobs like Linotype operators, straw bosses, gang leaders, and leg men. I don't know what any of those things are, but we don't need rules that apply to them anymore.

Then we have several other regulations. We have proposed to update the forms that unions use to file their financial statements with us. We have put out a rule that would enhance the integrity of the unemployment insurance system by withdrawing permission that was given out a few years ago that states could use money from their unemployment trust funds to pay maternity leave, and we've got a couple of other major rules out as well.

Then I think more broadly, we want to continue the management reforms we've been pursuing at the Department of Labor. We have a lot of work to do in the financial management area, a lot of work to do in competitive sourcing, and still a lot of work to do in human resources. We we'll be pursuing those things.

Mr. Fagerstrom: You've talked about a number of things and challenges for the next few years. What's your vision for the agency over the longer term, the 5- and 10-year horizon?

Mr. Findlay: I hope that we will be very bold in terms of thinking about how our agency relates to the 21st century work force. I know I've said it a couple of times, but this is a very old agency. Unlike most of the other domestic agencies, we are not a "Great Society" agency. We're not even a "New Deal" agency. We're really a turn-of-the-century agency. Many of our laws, the Fair Labor Standards Act was passed in 1938, even recent laws like the Occupational Safety and Health Act are a generation old now. I hope we will be bold in terms of looking to see if there are any changes that need to be made to those laws, to the regulations under the laws, to opinion letters and things like that, so that we can really make our department relevant.

I've often remarked that the Department of Labor seal reflects the anachronism of some of our programs and policies. It shows as the symbols of our work force an anvil, a plow, a mill wheel, and a steamship, and those are really 19th century symbols, they're not 21st century symbols. We've got to make sure that our department is more up to date than its seal is.

Mr. Lawrence: I'm curious, as you think about your career, what advice would you give to a person interested in a career in public service?

Mr. Findlay: I think the main advice I'd give people is that it's important to be nimble and flexible, and that it's impossible to plan your career in a linear way. I think my career offers a good example of that in that I started out of law school as a law clerk, and it's the sort of job where typically would go be an appellate lawyer some place, and found myself with a great opportunity to work for a cabinet department that I didn't know much about. I went there, and then through pure chance found myself at the White House.

I couldn't have planned that progression, but I just did things that were interesting to me, and somehow things have worked out reasonably well. I guess I would just say to people don't try to look 25 years ahead and plan everything out. Be flexible, because in today's economy people don't stay in jobs for their lifetimes anymore.

Mr. Lawrence: Cam, I'm afraid we're out of time. Fred and I want to thank you for being with us. Throughout the conversation you mentioned a couple websites. Did you want to remind the audience?

Mr. Findlay: Yes, let me first give the Department of Labor's website which is www.dol.gov. That would be a good place to learn more about our department. But I also mentioned the govbenefits.gov website. It's just as it sounds, it's www dot g-o-v-b-e-n-e-f-i-t-s dot gov.

Mr. Lawrence: Thank you. This has been The Business of Government Hour featuring a conversation with Cam Findlay, the deputy secretary of the U.S. Department of Labor. Be sure to visit us on the web at businessofgovernment.org. There you can learn more about our programs and get a transcript of today's conversation. Once again, that's businessofgovernment.org. This is Paul Lawrence. Thank you for listening.

Samuel Bodman interview

Friday, August 8th, 2003 - 20:00
Samuel Bodman
Radio show date: 
Sat, 08/09/2003
Intro text: 
Missions and Programs; Leadership; Strategic Thinking; ...
Missions and Programs; Leadership; Strategic Thinking;
Complete transcript: 

Arlington, Virginia

Friday, January 31, 2003

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

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation this morning is with Samuel Bodman. Sam is the Deputy Secretary of U.S. Department of Commerce.

Good morning.

Mr. Bodman: Good morning, sir.

Mr. Lawrence: And joining us in our conversation is Tom Romana (phonetic). Good morning, Tom.

Mr. Romana: Good morning, sir.

Mr. Lawrence: Well, Sam perhaps you could give us some context. Let's begin by finding our more about the Department of Commerce. We know it's made up of a number of bureaus that have a wide range and functions. So, perhaps you could describe the overall mission.

Mr. Bodman: As you have already suggested, the Department's mission is broad and the responsibilities set that we is very diversed. Secretary Evans, my boss, and I really see our role as stewards for the free enterprise system. That's how we think of it. We both come from the private sector and that's how we think of this job.

Our mission is quite simple. To be an advocate for and a facilitator of business in the United States and between the United States and the World.

Our priorities include promoting free and fair trade practices. Encouraging economic development in distressed communities. Protecting intellectual property at the Patent Office which is part of our responsibility. And improving the quality of life and productivity of our economy through research. There is as we will cover later on, there are the research activity of the Department is a very important part of it. We have a varied web site, www.commerce.gov that is consistently one of the top three web presences across all of the Government.

Mr. Lawrence: Can you give us a sense in prospective in terms of the number of employees and the size of the budget in the Department of Commerce?

Mr. Bodman: We have a budget of about $5 billion dollars which in the non-Washington world is a great deal of money. Among the departments here in Washington it's on the smaller size. But we have 40,000 employees, close to 40,000 employees that many of whom are here in Washington but a significant number are scattered throughout the United States as well as around the World.

Mr. Lawrence: Is there a history of how the Department came to have so many varied functions?

Mr. Bodman: Well, I guess the best way to answer that is to go back and look a bit at the history of the Department. We began as the Department of Commerce and Labor. Both departments were together. It was formed in 1903 almost a hundred years ago. In fact, this month will be, the month of February will be our hundredth anniversary. And, we're going to be celebrating that during the next few weeks. Labor and Commerce became separate departments ten later in 1913. Commerce and labor were the seventh department formed as the Government was taking shape at that point in time.

The Patent and Trademark Office was formed outside but was transferred to the Department of Commerce from Interior in 1925. The Economic Development Administration, part of our work with the outreach to communities in the U.S. was created in 1965. NOAA which is almost now half of our budget, National Oceanic and Atmospheric Administration was formed in 1970. And, that joined the Department. And, TIA which is our activity for overseeing the telecommunications spectrum within the Government. We represent the Government in discussing the management with the FCC was created and developed also during the 1970's. International Trade Administration formed in 1980. So, all of these components which are thought of as activities of the Government which aid the development of free enterprise of business and the (inaudible) of Commerce were all added in over this century.

Mr. Lawrence: Sam, can you tell us a little bit about your roles and responsibilities as the Deputy Secretary?

Mr. Bodman: Tom, I'm the really thought of I think it's fair to say as the Chief Operating Officer. In fact, earlier in our tenure all the deputies were summoned over to the White House. The President met with us in the Roosevelt Room. And, he instructed us that you are the Chief Operating Officers of your department and your job is to keep the day to day activities of the department running effectively and smoothly thereby liberating the Secretaries of the various departments including Commerce to spend on in speaking out in working with the President on his priorities.

The Chief Operating Officer, at least as I think about it, kind of defines his job as the compliment of the things as the Secretary wants to get done. Our Secretary, for example, has concluded that he wants to spend a large part of his time the International Trade than on the economy. So, he works extensively with Secretary O'Donnis (phonetic) in the International Trade Administration. I tend to spend most of my time with the many other bureaus within the department whether its NOAA or the Patent Office, EDA, and so forth. And, so, it's a matter of splitting up the load. I also spend time working with my counterparts, the Deputies of the other departments in implementing the President's Management Agenda.

Mr. Lawrence: Could you tell us a little bit about your career before coming into this position and maybe think a little bit about what in your past best prepared you to take on the job?

Mr. Bodman: I'm a chemical engineer, Tom. My training -- I was educated first at Cornell then I got a doctorate at MIT. And, I spent the first seven years of my professional life as a teacher. I was a professor of engineering at MIT. I started doing some consulting work in the venture capital industry in those days which was a brand new field. That led me to leave teaching in about 1970 and I resigned my professorship and took a job with what was then a very small company in Boston with 15 employees.

That company became Fidelity Investments which now has tens of thousands employees and is spread around the world. I was there 17 years. Over time I became President and Chief Operating Officer of that company and oversaw the management of neutral funds, the brokerage business, pension fund management and the like.

In 1986, I left Fidelity and became Chairman and Chief Executive Officer of Cabot Corporation, a Boston based Fortune 500 company engaged in those days in oil and gas and chemical manufacturing and specialty materials. We spun off the oil and gas business and Cabot continues as a chemical and specialty material business.

As to what prepared me best for this job, I would say first being a Chief Operating Officer at Fidelity which I was for almost a decade helped me take on this assignment here because I understood the need to conform my responsibilities, to conform my activities, perhaps I should say to those of the Secretaries, in that case, the Chairman at Fidelity, so as to best provide for a unified and effective partnership.

At Cabot, I spend much of time there as a Chief Executive looking at and visiting other nations and making investments in countries around the world were Cabot had never operated. Cabot operates today some 45, 46 chemical plants in 25 countries. Five or six of those countries were new or done on my watch. So, I spent a lot of time negotiating terms of new plants and new facilities abroad and that's helped frankly in my role in the department in dealing with the ministers of trade and commerce from foreign who visit and sometimes the Secretary, if she is in town, sees those and in many instances I see them because I tend to spend more of my time here in Washington while the Secretary is on the road.

So, that one at Fidelity learning the ends and outs of being a Chief Operating Officer helped in to understanding how to deal with foreign governments was something I learned a lot about at Cabot.

Mr. Lawrence: You're working in the public sector but it's clear that you have a great deal of private sector experience. How would you contrast the two sectors in terms of culture and management styles?

Mr. Bodman: Well, there's much greater diversity in the private sector as to culture and management style. Some companies are quite formal and structured. Other much more informal. Cabot was a company that I worked hard on changing during the time that I was there. The company I inherited was a very formal high structured one. I felt we could make better decisions and run the company more effectively by decentralizing business activities causing decisions to be made locally and to make it a more informal organization.

The people operating, for example, on a first name basis. The government is a much formal place to do business and work. I account for that for two reasons. One it is a large, a very large organization. Millions of people working in the government. Therefore, it's important I believe to have a certain degree of structure to maintain an effective organization. And, a big fraction of government employees are military folks. And, obviously the military has its own very structured way of doing business, a way of functioning. The President is the is in effect the Chief Executive Officer of not just the civilian government but of the military. And, so, I think some of the formality of the military spills over in the way we do business. People are addressed by title and by position much more in the government than my experience in working the private sector.

Mr. Lawrence: This is a good stopping point. We got to go to a break. Rejoin us in a few minutes as we continue our conversation with Sam Bodman with the U.S. Department of Commerce. Do you know what the American jobs and American values initiative is? You'll find out when we ask Sam when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence. This morning's conversation is with Samuel Bodman. Sam is the Deputy Secretary of the U.S. Department of Commerce. Joining us in our conversation is Tom Romana.

Mr. Romana: Sam, could you tell us more about the American jobs, American values initiative at the Department of Commerce?

Mr. Bodman: Sure, Tom. The phrase "American jobs, American values" is a theme that we developed with the intention of capturing all that the Commerce Department represents and promotes. There are five component ideas that are associated with the theme: opportunity, innovation, entrepreneurship, trade and stewardship. These are really the core principals of the Commerce Department. These are the things that we believe in as I mentioned previously we view ourselves as the home of private enterprise within the government. And, this theme "American jobs/American values" is intended to really reflect those principles.

Mr. Romana: You mentioned earlier the involvement of the Department in our economic system. What's the Department doing to promote economic development?

Mr. Bodman: We undertake economic development in a whole variety of ways. A major priority is promoting job creation in trying to grow the economy. Especially these days, both the President and Secretary realize that we've got too many people out of work. And, that jobs are really at the heart of the President's economic growth plan that he has proposed to Congress. That's exactly why the President pushed for extended unemployment benefits just a couple of weeks ago. That's why the President proposed the innovative reemployment accounts concept for helping those who are out of work find -- develop ways of both training themselves for new jobs and helping pay some of the expenses to help them get new jobs.

The economy is growing but just not fast enough to produce the jobs that the Administration would like to see. And, we believe that the President's plan will put money back in the tax payer's wallets and will encourage small business to grow to hire the people who are looking for work.

Just a week ago today, I as in Seattle and while I was there visited a center that they run in the city of Seattle. Actually in Belleview, outside the city of Seattle that's state run. And, I met with two different groups of about 35 folks who were looking for work. And, talked to them about the President's plan. Listened to them to understand what their problems were and it was quite a fascinating experience.

The Secretary spends these days reading the bulk of his time traveling our country and listening. So, this is one experience I had. I tend to spend more of my time in Washington looking after the day to day operations while he's on the road. But, when you get out of here and you get out and talk to people who are really feeling the pain of the levels economic uncertainty that we're hearing about, reading about, it's revealing and an important process.

Mr. Romana: How does the Economic Development Administration factor into this part?

Mr. Bodman: We believe that successful economic development investments attract private sector capital. EDA as we call it, the Economic Development Administration's job is to foster a positive community environment where the private sector will risk capital investment to produce goods and services and to increase productivity thereby providing high skill, high wage jobs for the citizens in that area. In other words, their job is to invest sometimes in infrastructure, sometimes in other kinds of facilities that will in turn lead to investment from the private sector. We have a very capable person running that department who has done this job on a local level in Arlington, Texas. And, he came up to look after this and he has applied many of entrepreneurial principles that he put in place down there across the country and it's had quite an effect.

Mr. Romana: Can you tell us more about the National Oceanic and Atmospheric Administration and the work that they do and how that fits into the overall mission for the department?

Mr. Bodman: Well, the National Oceanic and Atmospheric Administration are NOAA. NOAA as we call it, is dedicated to enhancing economics security in our national safety by doing a lot of research, by doing weather prediction, working on forecasting other climate related events and by monitoring and protecting our Nation's marine assets. Both coastal resources as well as marine resources out in the deeper waters.

NOAA, from a budget standpoint, and we tend to look at things from a budget standpoint often here in Washington, is something over half of the department's budget. So, it's close to $3 billion dollars that spend in these activities.

The National Weather Service is part of NOAA. The National Marine Fisheries Service is part of NOAA.

NMFS as we call it, National Marine Fisheries Service is responsible for studying and understanding the fish population, the various fisheries, setting rules and regulations that govern the way fisherman are allowed to exploit these resources. So, fishing is about a $50 billion dollar business in America. And, so, you can see that it has direct impact on a very important economic sector.

The weather affects everybody. So, the NOAA really covers a very wide range of activities. Among other things is the center the government's work on global climate change or so (inaudible) issues related to global warming. That's undertaken in many departments. But, the center of it is within NOAA.

So, this activity covers a whole range of things and all of them bear on the economy although almost all of them are also very in a varied important dose of science and research that are part of it. I might add that as a fill-up that the website that they have www.noaa.gov which is part of Commerce, is really -- that has extraordinary level of activity. Parts has the weather service on it and its measured by the number of hits per day. It's one of the business websites that exists.

Mr. Romana: Earlier when you described the various functions of the Department, I couldn't notice emphasis on technology, patents and trademarks, technology administration, the National Telecommunications and Information Administration. So, I'm curious in thinking about things like the internet and wireless technology. What's the relationship between those things and those parts of the Department of Commerce?

Mr. Bodman: Because the Department of Commerce is so heavily devoted to science, to engineer, to research, the Secretary really had sought me out to take on this job because of my background in science and technology. You'll find that research is a major part of the vast bulk of things that we do at Commerce. I have just spoken about NOAA and the research activities there.

We have responsibility also for the National Institute of Standards and Technology or NIST as we call it. Together NOAA and NIST make up about two-thirds of our budget. So, you get a sense of the importance that we place on research. Both of these are very heavily research oriented activities. NIST, scientists develop and promote measurement. NIST use to be called the Bureau of Standards back when I was in the university. And, it's a major source of physics and chemical research carried out in the public interest. NIST scientist set the standards. They set the technology to enhance productivity, to facilitate trade, to improve our quality of life. And, this is really, I would use the term this is big league science. We have had two Nobel Prize winners in physics who worked for NIST awarded in the last five years.

Mr. Romana: Sam, can you talk a little bit about some of the programs and goals of the International Trade Administration?

Mr. Bodman: International Trade Administration or ITA as we call it. The first part of ITA's activities that I would mention is the U.S. Commercial Service which is an agency within ITA that helps U.S. companies particularly small and medium size businesses make export sales. That's really their mission.

The Commercial Service is a worldwide network of some 18,000 employees. Those employees work throughout the United States in 105 different export assistance centers throughout the United States. We also maintain and operate 151 international offices in 83 countries. Each export assistance office and each Commercial Service office is operated by Commerce employees. And, they together represent in these 83 countries some 96% of the world's market for exports. So, we have people out covering all manner of business activities.

Last year the agency, that agency, the Commercial Service facilitated as we calculated over $22 billion dollars in exports.

The import administration, on the other hand, deals with the negative side of things. It deals with the times when there -- we believe, they believe there are unfair foreign pricing or government subsidies for foreign companies that are exporting to our country. And, so, the import administration makes judgments, enforces the laws that we have on the books for dealing with these issues. And, is -- has been very effective during this past year, for example, in the steel area where there have been steel tariffs put in place. It was really the input administration that did and is continuing to do the work in analyzing and work in steel markets.

And, lastly, Market Access and Compliance or MAC works on specifically opening markets for American firms and workers and accesses the degree to which foreign nations are complying with the trade laws. We find that at times, for example, in some countries there pirating going on of CDs or of other software types of products. And, our folks of MAC are there and on the spot, evaluating it and working hard. Our leader in that area, Secretary Lash, Bill Lash, is in visiting a country where he felt there were unfair practices. So, we've been -- the post government argued with him so he went out to the local shopping mall at his own expense and bought up 20 to 30 CDs. Brought them back. Made a big deal about it in the newspaper. The government got so upset that they introduced a bill in their legislature to prevent Bill from coming back in the country. So, we have to say we're proactive might be an understatement.

Mr. Lawrence: Well, that's a good stopping point. Rejoin us in a few minutes when we continue our conversation about management with Sam Bodman with the U.S. Commerce. How is Congress handling the issues of the President's Management Agenda? We'll ask Sam when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence and today's conversation is with Samuel Bodman. Sam is the deputy secretary of the U.S. Department of Commerce. And joining us in our conversation is Tom Romia.

Mr. Romia: Sam, let's spend some time talking about the department's management initiatives. Could you tell us about the department's response to the President's management agenda and the department's red and yellow light scores?

Mr. Bodman: Sure, Tom, I'd be happy to. First, the President's management initiatives are five in number. First, the management or strategic management of human capital, of the human resources we have, secondly, efforts on competitive sourcing, outsourcing those parts of governmental activity that might more appropriately be done in the private sector. Improving financial performance is the third area of responsibility, expanding electronic government or e-Gov as we call it, and then lastly integrating budget and performance measures, so those five areas. There could be others that the President might have initiated but he chose to focus on those five.

OMB has developed a two-tiered scorecard to monitor how the agencies are doing in implementing the PMA. They have progress ratings. That is to say are we meeting our goals along the way that we said we would meet in terms of improving things. And then status ratings, how are we doing overall? The status ratings tend to be lower than the progress ratings because OMB I think correctly found when they came in and assessed the situation that in these five areas the government was really falling short of where it should be.

With respect to how we're doing the Commerce folks have made significant progress. I'm quite proud of what we've accomplished. In the most recent scorecard in the so-called progress ratings we've received green ratings. By the way, the evaluations are done in colors, green meaning things are going well or acceptably, yellow a mixed bag, and then red you're failing to do what you said you would do. We've gotten four greens in progress and one yellow where they've deemed that we have some problems. That happens to be in the e-Gov area but there's substantial room for improvement in that, looking at the status of where we are, we have three reds and two yellows in the most recent one.

So I'd say we're probably somewhat above average for the departments if you look at the way all the departments are being evaluated but, more importantly, it's been a useful tool inside the department to help all of us identify what the issues are and try to make progress. And it's a bit of an imprecise and imperfect measure of how we're doing that OMB is using but I think it's an effective one.

One example is in the financial area. The department received an unqualified opinion just this last week on our 2002 financial statements and we're close to completing the implementation of an integrated financial management system. That should be fully deployed by October of this year and we think we'll see a follow-on to that in terms of the way we're evaluated.

Financial management is a real problem for the government as a whole. The government as a whole does not have an unqualified financial statement and we have significant problems in squaring up the financial measures of just how well we're doing. The Commerce Department itself, as I said, I'm proud that we've continued to make good progress but the reason that the President has this as an objective is that it's a problem that permeates the whole federal government.

Mr. Lawrence: In addition to financial management another issue that gets called out often is human capital management.

Mr. Bodman: Right.

Mr. Lawrence: Could you tell us about your work force restructuring plans and the human capital issues at the department?

Mr. Bodman: I'd be happy to, Paul. We completed in the last year a so-called work force restructuring plan and that's really the cornerstone to implementing the human capital initiative that I mentioned under the President's management initiatives. The plan identified three Commerce-wide human capital challenges. First, looking at the high turnover that we have in some mission-critical occupations. Second, we like many parts of the government have an impending wave of retirements and this is particularly among the Senior Executive Service, so-called SES, our senior career employees, who are approaching retirement age and we need to have a plan to respond to that and to be ready for those retirements. And then thirdly we have the need to reshape the work force competencies as the world has changed.

For example, one of our specialists in the international trade area is retiring. His expertise happens to be the shoe industry and he's one of the world's great experts on the shoe industry. Well, the shoe industry in the United States has declined in its importance. And so when he's replaced it probably makes more sense to bring in somebody with expertise in e-business or some other activity. So that's an example of the sort of planning we're doing.

And we're taking steps to respond to these issues. We revamped the SES candidate development program. People enter into this when they wish to become part of the SES and we've established new performance measures for our senior executives. We've acquired an online training system, enhanced our web-based hiring system. We've revitalized the employee safety program throughout the department; that's been something of particular importance to me personally. And we've improved diversity recruitment efforts throughout the department.

And lastly several Commerce bureaus on their own have done their own restructuring plans. These would include EDA, the Economic Development Administration, Patent & Trademark Office, and MBDA, which is our Minority Business Development Administration, a part of Commerce focused specifically on the challenges of working with the minority business community. Each of these has restructured themselves and is working with Congress to get approval of their plans, which in general call for a decrease of the number of generals, if you will, who are in the headquarters and having more sergeants and privates out in the field working in the field offices with our clients, the American public.

Mr. Romia: How are you ensuring accountability for implementing your management agendas?

Mr. Bodman: Much of that, Tom, is personal. Accountability is really focusing on delegating the responsibility to individuals and holding them accountable. I meet periodically with the bureau managers of each of the activities within the department to review their progress. We discuss some midcourse adjustments to their plans and programs. We have regular budget and operational oversight meetings that also keep me abreast of the improvements that are being made.

Additionally the Secretary and I meet with senior managers from all of our bureaus every Monday morning at what we call the Executive Management Team, EMT, meetings. And we meet for an hour to an hour and a half and we go over issues such as the President's management agenda. We deal with also any of the priorities that the department happens to be focusing on at that particular point in time.

Our chief financial officer who I work with directly every day, our chief information officer, also oversee day to day activities and, as I mentioned before, we've revised the annual performance agreements with our senior executives so that we can ensure individual accountability. Like any other management job, in order to ensure accountability it really takes shoe leather, if you will. It takes personal time, face time, with the employees and that's really what my job is.

Mr. Lawrence: What are the management challenges or maybe what's the slice on the answer you just gave for the department that has to coordinate and manage such a wide variety of programs?

Mr. Bodman: Well, there are challenges because of the great diversity of what we do. We have a large number of employees all over the country, all over the world, as I mentioned before. We try to ensure that we don't overlap with the services of other government agencies which is very important. And we try to make sure that we coordinate with federal programs, with states, with local governments and work closely with our friends at OMB and on the Hill. Those are some of the challenges.

It's a formidable task and, as I mentioned before, the only way that I know how to do this and the way we're working at it is to try to hire quality people, try to empower them, to delegate responsibility to them to run their operations, and then to hold them accountable. Communication with them is key. So we spend a lot of time walking around talking to people and trying to understanding what they're doing.

Mr. Lawrence: How do you walk around when you have so many employees all around the world? How do you communicate to such a large group?

Mr. Bodman: Well, we do it electronically. That's certainly part of it. The Secretary travels the world a great deal. I do some of that since I tend to spend more of my time here in Washington. But it's a formidable task. As I say, each of the bureaus with people who are officed and function around the country and around the world are run by very capable people who travel an enormous amount. The woman who runs our Foreign Commercial Service, I, frankly, hardly ever see. If she attends, and is welcome always at the EMT meetings on Monday morning, if she's there a quarter of the time it's unusual. She's just gone. She's on the road working with her people. So it involves a lot of effort. It's a very management-intense organization.

Mr. Lawrence: That's a good stopping point. Rejoin us in a few minutes as we continue talking about management with Sam Bodman of the U.S. Department of Commerce. What really takes place at the President's Management Council, the PMC? We'll ask Sam, who's one of its members, to give us the inside scope when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence and today's conversation is with Samuel Bodman, the deputy secretary of the U.S. Department of Commerce and joining us in our conversation is Tom Romia.

Mr. Romia: Sam, as deputy secretary you're a member of the President's Management Council. Could you tell us a little bit about the council and its purpose, activities, and goals?

Mr. Bodman: I'd be happy to, Tom. The council is made up of my counterparts from each of the departments as well as the head of, if you will, the service agencies that serve the various departments and serve the President. So we would have there the deputies from the 20 or so operating departments that are members of the council as well as the head of GSA, the head of the Office of Personnel Management as well as the deputies from OMB. And in particular that the council is managed by the deputy for management from the Office of Management and Budget, Mark Everson.

And the PMC meets monthly and it provides really a forum for the deputies to discuss progress being made, challenges, barriers, obstacles for the implementation of the President's management agenda. In other words the PMC is really about management and about what we're all collectively trying to do within our individual departments.

There are subgroups that worry about many individual initiatives, Kay Coles James, who runs OPM, is in charge of the subcommittee on human capital. We have a subcommittee on e-Gov that I happened to spend time on. So we work also at the subcommittee level. There's also an executive committee of the PMC, a group of five or six of us that meet also roughly once a month in order to set agendas and make sure that we're dealing with all the issues that we should be tackling.

It also, I might say, has served as a very effective social organization in the sense the deputies have gotten to know one another. And so if I have a problem in an individual agency I know my counterpart there, I've spent time with him or her, and it's easy to pick up the phone and talk to somebody that I've worked with and come to know a bit personally. So that's also been a very effective outcome of all this.

Mr. Lawrence: Well, that's interesting you bring that up because I was going to ask you about a number of the initiatives you described would seem to be broader than just the Department of Commerce. What are the management challenges working across the agencies?

Mr. Bodman: I can tell you this, that the President insists upon running a unified team and he has encouraged us to work together. As I mentioned, early in the game he got all the deputies there and gave us some marching orders. He has, I think, a very interesting way of phrasing it. In addition to that in his view, and I believe he's right, the typical American citizen does not differentiate between a political appointee and a career employee in the government. From a citizen's standpoint everybody's the same. And I think that's correct.

So we work very hard on trying to integrate and run the entire government in an effective way. The PMC plays a very active role in that regard. A good example might be thinking a bit about the climate change research carried out throughout the government. The President has a very specific results-oriented vision that he has for protecting our environment and he has a program that he wants us to carry out to meet the challenges and goals that he's set forth.

We have over 12, I think either 13 or 14, federal agencies that are working together on the science of climate change. Now think about that, 13 different agencies. It's a real challenge and they are working under the leadership of a Cabinet-level committee that is headed by Secretary Evans and Secretary Abraham from Commerce and from Energy to set priorities for where we ought to make additional investments in climate change. And then below that we have a series of other committees.

I happen to chair these days the so-called Interagency Working Group on Climate Change Science and Technology where we have representatives of all these 13 different departments, everybody from NASA to NOAA to Energy Department, Agriculture, and so forth, all of whom have research going on on the climate change and different aspects of it. And I alternate that, the chairmanship, up until the end of last year. Bob Card over at Energy was the chairman and then I took it on for him during this calendar '03.

So that's how we go about it. We try to get people together and try to be inclusive. And there again it's a little bit similar to the answer when we were talking about managing international. It just takes time and it takes face time and it takes effort.

Mr. Romia: On that same topic of interaction with other agencies one agency that's on most people's minds today is Homeland Security. What will the Department of Commerce's role be in homeland security?

Mr. Bodman: Tom, that's a very good question. Obviously it's on the minds of both our citizens as well as those of us working in government. A number of Commerce bureaus is working actively with the new department on homeland security issues and I would expect this kind of cooperation between these two departments will continue in the future.

One of our bureaus is the Bureau of Industry and Security or BIS, which is responsible for licensing exports of sensitive dual-use items and technologies. These are items that they have perfectly legitimate civilian uses but they also could be used as chemical weapons or nuclear weapons or biological weapons or advanced conventional weapons, some computer systems, for example. They have been working with Homeland Security. They in turn have a subsidiary activity involved in looking at critical infrastructure. That activity's actually been moved from Commerce over to the Homeland Security Office but we continue to work closely with our former colleagues there.

NOAA has observation systems and forecasting ability. So if we were attacked with some kind of microbe or chemical that was dispensed in the air we've got the skills and the capability of doing micrometeorological forecasting so that we would know where and when and how to deal with such an attack. NOAA also does monitoring of harbors. And we have a lot of expertise, a lot of data, on what the floor of harbors and entrances to harbors look like and so we can go in and check. Has something been changed? Do we have items, perhaps explosives or something, that have been put in a harbor that weren't there before? And so NOAA is very active in that.

And then lastly, NIST or the Institute of Standards and Technology is really expert on setting standards. And they certified, for example, the radiation dosage that was necessary to irradiate the mail following the anthrax attacks. They're conducting the investigation on the structural causes for the collapse of the two World Trade Center buildings. We've got samples out in Gaithersburg and they're doing the work on it. They also are experts on biometrics and some of the new technologies that might be used in screening people and keeping databases of individuals. So there are all manner of activities and we would expect the continuation of a good relationship with the new department.

Mr. Lawrence: Our final question, Sam, today is what advice would you give to perhaps a young person interested in a career in public service?

Mr. Bodman: That's an interesting question for someone who's spent almost all of his time in the private sector. First, bear in mind that when you work in public service you really do have an additional component, I think, of your motivation, that you're here for the good of all. I think having individuals remind themselves of that and understand that when you come into federal service that you are working in an immensely large organization and any immensely large organization is going to be imperfect in the way it manages itself. So you will find at times as a public service employee in the federal government, in any event, and I imagine it's true in the state and some local governments as well, we have gone to such lengths to make certain that we provide for checks and balances in our system that at times it makes the going very slow on getting decisions made.

I was used to in private sector a situation, especially when I was the chairman and I could make a decision, when I made a decision it didn't always get done but usually it did. When you come to the federal government even the President's not in charge of many decisions because the President can recommend but it's really up to Congress to appropriate the money. And so it's very important to bear in mind that you're in a large, complex organization that is in fact here for the greater good but it is likely to be slower going than you would like it to be and so therefore having patience is a very important component of it.

I would add that one of the things I found since I came here is an enormous number of highly skilled, highly dedicated, highly capable career employees who are really here for the right reason. They're here to serve our country. And that's been a very heartwarming and very positive part of my experience in government.

Mr. Lawrence: That's a good ending point. Thank you, Sam, for joining us today. Tom and I want to thank you for fitting us into your very busy schedule.

Mr. Bodman: I'm delighted to be here. I would remind any listener that I've given the websites, the worldwide web commerce.gov is a very active website. It covers all manner of activities, including NOAA's activity, or you can go directly to the NOAA website, which is quite a dandy place to explore and is the place that I like to go for actually a little recreation. They have a lot of interesting and scientifically challenging jobs there that they do and they're described well on that website.

Mr. Lawrence: Thank you. This has been The Business of Government Hour featuring a conversation with Samuel Bodman, the deputy secretary of the U.S. Department of Commerce. Be sure and visit us on the web at businessofgovernment.org. There you can learn more about our programs and get a transcript of today's very interesting conversation. Again, that's businessof- goverment.org. This is Paul Lawrence. Thank you for listening.

Dr. Linda M. Combs interview

Friday, June 27th, 2003 - 20:00
"In the financial management line of business, one of the things I've learned is whether you're using procurement vehicles, systems implementation, or schedules, make it clear, make it consistent, keep it simple."
Radio show date: 
Sat, 06/28/2003
Intro text: 
Dr. Linda M. Combs
Complete transcript: 

Arlington, Virginia

Tuesday, February 11, 2003

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

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

Good morning, Linda.

Ms. Combs: Good morning.

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

Mr. King: Good morning, Paul.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Lawrence: It's the opposite.

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ms. Combs: Thank you.

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

This is Paul Lawrence. Thank you for listening.