Originally Broadcast August 22, 2008

Washington, DC

Mr. Morales: Welcome to another edition of The Business of Government Hour. I'm your host, Albert Morales.

Making our nation more secure by vigorously and fairly enforcing immigration and customs laws is what defines the efforts of the U.S. Immigration and Custom Enforcement for ICE. ICE performs this mission by focusing on the dismantling of criminal organizations that threaten national security, protecting borders, and investigating groups who exploit weaknesses in legitimate trade, travel, and financial systems.

With us today to discuss the organization which he leads is our very special guest, John Morton, Assistant Secretary for U.S. Immigration and Customs Enforcement.

John, welcome to the show. It's a pleasure having you.

Mr. Morton: Thank you very much. It's a pleasure being here.

Mr. Morales: Also joining our conversation is Dave Abel, IBM's Homeland Security Practice Leader. Dave, welcome back, it's good to have you, as always.

Mr. Abel: Thank you. Al.

Mr. Morales: John, let's start by providing our listeners with some context about your organization. Tell me a bit about the mission and history of the U.S. Immigration and Customs Enforcement?

Mr. Morton: We're a relatively new Agency within the Federal Government, and we were created in the wake of the attacks of September 11th. We got our start in 2003, and we are a combination of parts of the former Customs Service and the Immigration and Naturalization Service.

And, in particular, we are a combination of the investigative authorities of those two predecessor Agencies, and the internal immigration enforcement authorities of the Immigration and Naturalization Service.

Mr. Morales: So with the combination of these two organizations, tell me a little bit about the scale of the operations now within ICE, and perhaps tell me a little bit about how you're organized, the size of the budget to the extent that you can describe that, things like number of fulltime employees, and your reach across the geography or the globe?

Mr. Morton: We're a very large organization. We have 20,000 employees, a budget of roughly $5.7 billion. Many people don't realize this but ICE is the second largest criminal investigative agency in the United States, the largest being the FBI.

We are divided by operational function. We have five main operational components -- the Federal Protective Service, Investigations, the Office of International Affairs, the Office of Intelligence, and then the Office of Detention and Removal Operations. And then we have a large number of support functions surrounding those. But we've grown considerably in the years since 2003, and we're now at 20,000 strong.

Mr. Morales: And field offices across the other world?

Mr. Morton: We have field offices throughout the United States, and we have offices in over 50 countries overseas. We have a very large international presence, one of the largest in the Government.

Mr. Abel: So let's go from the broader perspective of the worldwide coverage of ICE, and talk a little bit about your responsibilities. Can you tell us a little bit about your official responsibilities in the organization?

Mr. Morton: My principal responsibility is to set the overall focus and policy of the Agency, to see to it that we carry out the policy directions of the President and the Secretary, and to see to it that we faithfully and efficiently enforce the laws and responsibilities that are assigned to us by Congress.

When you're the leader of a relatively new organization you also have very significant responsibilities to further the seasoning process and to be a champion for the employees that are in the field trying to do good work every day, and I take that role very seriously.

Mr. Abel: Can you elaborate a little bit on how ICE supports the overall mission of the Department of Homeland Security and how those pieces fit together?

Mr. Morton: We are the principal investigative arm of the Department, and in sort of layman's terms, we're the detectives of the operation. And so we carry out a great deal of criminal investigation across a wide scope of responsibilities.

We enforce all of the criminal immigration laws, all of the customs laws, many laws relating to border security, child pornography, sex tourism, sex trafficking. We do a lot of work in international money laundering and, as many of you listeners may be aware, we also conduct a great deal of any narcotics work. We're very involved in efforts to support the new President in Mexico, Mr. Calderon, in his efforts to bring a more stable society in Mexico and to take the Cartels on.

The other big part of our work within the Department of Homeland Security is providing for serious immigration enforcement, that we share that responsibility with Customs and Border Protection. They are the inspectors and the principal line of defense at the borders and in our airports, and we are the formal removal authorities, and we identify and remove criminal aliens from the United States, people who have come here without papers or in violation of their visa. We run the nation's immigration detention system. We generally are charged with maintaining the integrity of the overall immigration of border controls.

Mr. Abel: So what I think is apparent in that is the long list of things that ICE has responsibility for doing, a long list of enforcement activities. And from the question that Al asked a little while ago, the geographic dispersion of where you have to do those things.

So one of the things that is obviously important as you have entered into this new role is to be able to quickly identify top priorities in the organization. Do you have some ideas about the top three priorities, the top three issues that you're facing right now?

Mr. Morton: From the very inception of the organization and, indeed, the Department in which we fit, a top priority has been the prevention of another terrorist attack on the United States. From our immediate perspective at ICE, that generally means the prevention of the entry of terrorists and others who would do us harm to the United States.

Second, we're about securing the borders. That means we're about investigating the smuggling of people, narcotics, guns, money, making sure that free and legitimate travel and trade happens in an expedited manner, but at the same time that sort of organized crime is kept out.

Finally, we have a strong focus on making sure that we have tough but fair immigration enforcement. That's an area of great debate in our country, and it's an area where the president wants to see substantial reform, and it's an area where we play a very critical role and we take it very seriously.

We have an immediate focus on criminal aliens. In a world of limited resources we focus first and foremost on those people who are creating active harm in the community, and that means identifying and removing people who've committed crimes and shouldn't be here and are in OUR state, and Federal, and local jails.

Mr. Abel: So although you're relatively new in your current role, you're certainly not a stranger to Federal law enforcement. Can you tell me a little bit about your career path and how you got started?

Mr. Morton: Well, I started out actually as a Peace Corp volunteer, got a taste for Government service at that point. And I guess at the end of the day I was rule oriented by nature, so I went off to law school and I became a prosecutor.

I started out, first, with the now defunct Immigration and Naturalization Service, and I held a variety of jobs in the field and then in headquarters. And then I went to work for the then Deputy Attorney General of the United States, Eric Holder, who as fate would have it would turn around and ultimately become the Attorney General now.

And I spent several years in main justice, and then I became a prosecutor in little old Alexandria, Virginia, right across the river from here, and spent many years as a Federal prosecutor, and enjoyed every minute of it, and then went back to main justice where I became a Manager in the Criminal Division, ultimately ending up as Acting Deputy Assistant Attorney General of the Criminal Division before the President nominated me for this job.

Mr. Morales: So as you reflect back on your experiences, both say at the Peace Corp and with the Department of Justice, how have these experiences prepared you for your current leadership role and perhaps shaped your leadership style and your management approach?

Mr. Morton: Those experiences have shaped I think me professionally in very dramatic but good terms. I am all about trying to get it right. I've been a career Government employee my entire professional career. As a prosecutor you feel a great weight and responsibility. You feel a great obligation to pursue things on the merits and in light of the law, and I don't intend to pursue my duties any differently as Assistant Secretary.

In terms of leadership, I'm not a yeller and a screamer. I try to lead by example. I want to motivate the people that work for me. I want them to feel proud of the work that they do, to recognize that Government service is a great honor and a privilege, particularly law enforcement.

And I try to lead very much in that spirit, motivate the people around me to recognize the great responsibility that they've been entrusted, and to get the most out of those people through energy and innovation, and not through fear and hammering people over the head.

Mr. Morales: What about ICE's border enforcement efforts? We will ask John Morton, Assistant Secretary for U.S. Immigration and Customs Enforcement, to share with us when the conversation about Management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales. And with us today in this segment discussing critical border enforcement efforts, is John Morton, Assistant Secretary for U.S. Immigration and Customs Enforcement. Also joining us from IBM is Dave Abel.

John, before we tackle specific initiatives, perhaps you can give us a sense of the enforcement approach or the underlying principles that inform your approach to Federal law enforcement as you begin to transition an Agency under your new leadership? What's your strategic vision for ICE as it continues to evolve?

Mr. Morton: Well, we need to establish clear enforcement priorities. As we discussed in the first segment, ICE has tremendously broad authorities and responsibilities. And it's very important that we focus our resources on the immediate task at hand.

Securing the border is critically important. Going after serious organized crime is critically important. We live in an environment in which it's not so much mom-and-pops crime at the border, unfortunately, it's serious organized criminal syndicates operating outside of the United States in many instances, seeking to violate our laws on a daily basis, and they're making a lot of money in it, they're serious about it, and they're causing us a great deal of sustained harm as a country and we've got to get serious about trying to stop that.

And there are many ways to do that, but one of them is to investigate them, prosecute them, and put them in jail, and that's one of our main responsibilities.

We also have to restore basic integrity to our immigration, customs, and border controls. We just can't have a serious system if it is marked by lawlessness or gross inefficiency.

And so that's a major focus for me, a major philosophy, and for our organization we basically want to be a first rate criminal investigative agency and a first rate immigration enforcement agency.

Mr. Morales: Now, you've been clear with border enforcement as being one of the key components of your mission. Could you tell us a bit more about ICE's Border Enforcement Security Task Force, I believe it's referred to as BEST? To what extent does this Task Force represent an innovative model for collaborative law enforcement?

Mr. Morton: I tell you, it's one of the, been one of the more exciting parts of this job, is to come to something from the outside and see a good idea in practice, growing and working well. That is our BEST Task Forces.

What is innovative about them is that they are truly interagency collaborations, not only interagency, international. We have partners from all across Federal, state, local, travel law enforcement, coming together with us in our BEST Task Forces to focus on serious organized crime along the border.

And we all come together, we bring all of our various authorities together, which are considerable, we combine them, we involve officials from other countries, for example, Mexico. We have a number of Mexican officers in our BEST.

And we all try to set our respective badges aside, come together, and really tackle the serious crime that's occurring along the border, the concept has worked extremely well. We've expanded it to the northern border. We've expanded it to ports.

We have a number of port BESTs focused on maritime security. As you know there are a number of very large ports in the United States in which an enormous amount of commerce, goods, and trade occurs through, and we've expanded there.

It really is exciting to see this level of collaboration work, and work well. We're having our second annual BEST Conference, very excited about that.

Mr. Abel: Governor Napolitano and then Secretary Napolitano highlighted and noted that violence along the southern border with Mexico is a bi-national threat, and you've highlighted the work that you have with law enforcement organizations in Mexico to address that threat. Can you elaborate a little bit on efforts to combat southwest border violence and, in particular, its relationship with the secure border initiative?

Mr. Morton: I'd be happy to. Well, you have got it right, the Secretary is very focused on securing the border and the troubles along the southwest border. Obviously, as a border Governor she brings a tremendous amount of experience and knowhow to the problem. She gets it, she's a strong supporter of law enforcement. She understands the challenges along the border, she understands how law enforcement can be a very positive solution to some of the challenges. And she understands that working with Mexico is critical.

In light of that, ICE, under my leadership, has really strengthened its relationship with Mexican law enforcement authorities. The first foreign trip I took as Assistant Secretary was to Mexico, and the second one I took was back to Mexico.

We have a number of very substantial bilateral enforcement initiatives underway in Mexico. They are facing a number of very, very serious internal challenges from organized crime, not the least of which centers around the trafficking of narcotics to the United States, but also people smuggling, sex trafficking, money laundering.

And many of the problems that they face are exacerbated by the flow of illicit contraband and money, not from Mexico to the United States, but from the United States to Mexico.

We need to recognize that this is really a shared problem and one that we have to tackle as partners, and that's very much the approach I have taken with Mexico. There has been a C change in attitude among Mexican law enforcement with regard to cooperation with the United States, the present Administration in Mexico, the Calderon Administration, is really serious about this.

We are engaged in real law enforcement cooperation in a way that I have never seen before in my nearly over now 15 years in Federal law enforcement. It's a very exciting time. It's a challenging time but it's an exciting time.

Mr. Abel: So you mentioned the danger, not only of things that move north across the border from Mexico to the United States, but south across the border from the United States to Mexico.

I'm interested in particular on the threat of the movement of weapons that come from the United States into Mexico and, in particular, an initiative within ICE called Operation Armas Cruzadas. Can you tell us a little bit about what that is and how it addresses the flow of weapons southbound?

Mr. Morton: It is an initiative in which we teamed up with our partners in Mexico and our partners at Customs and Border Protection to investigate the flow of illicit weapons from the United States to Mexico.

Mexico has very different laws when it comes to firearms, the possession and use of firearms, than we do here in the United States and their importation is closely controlled and regulated.

And what Armas Cruzadas does is it leverages the resources of our BEST Task Forces, our ICE Offices in Mexico, and the resources of Customs and Border Protection along the border at ports of entry doing southbound inspections, and the resources of our partners in Mexico to intercept, identify, trace, and investigate firearms that are seized in Mexico and that were upon further investigation determined to have been smuggled across the border from the United States into Mexico.

And we try to match every seizure, whether it be at our border as we catch things coming across or in Mexico with an investigation to try to determine how do these guns make their way from the United States into Mexico.

Mr. Morales: So we talked a little bit in the first segment about the support of ICE from the Department of Homeland Security. In something like this operation or when we're focused on the illegal flow of money, can you tell us a little bit about the relationship between ICE, a little bit more about the relationship between ICE and CBP, Customs and Border Protection, and how relative roles and responsibilities are balanced between those organizations?

Mr. Morton: Yes, in very broad terms, Customs and Border Protection is responsible for the inspection process along the border and primarily responsible for interdiction of contraband and illegal entrants.

The Border Control classic example, along the line, they are primarily responsible for first line immigration enforcement along the border. The same is true of the inspectors, the CBP inspectors at the airport, who inspect you when you come in and if you don't have your documents in order they will detain you. That's not a ICE function, that is a CBP function.

Where we come in is we have the criminal investigative authority. So they inspect, they interdict, we investigate the wrongdoing that is uncovered. And we also have a very important and complementary authority to run the basic formal removal process, the detention facilities, the -- we have all of the immigration prosecutors, the hearings, that's us.

Where we come in is we have the criminal investigative authority. So they inspect, they interdict, we investigate the wrongdoing that is uncovered. And we also have a very important and complementary authority to run the basic formal removal process, the detention facilities, the -- we have all of the immigration prosecutors, the hearings, that's us.

Mr. Abel: So going back to your description of the best task forces, tell me a little bit about some of the efforts around partnering with state and local enforcement agencies, around locating and removing criminal aliens. And more specifically how does the 287(g) Program enable these partnerships and to what extent does it provide a force multiplier? And are there plans to expand this program?

Mr. Morton: The 287(g) Program is very poorly understood, so let me give you a two-second version on what it is. 287(g) is named after a provision in the law that allows the Department of Homeland Security, through me, to delegate certain immigration enforcement powers to the state and local law enforcement.

The Program has been in existence for several years. It's entirely voluntary. The state and local law enforcement have to apply to ICE for authority to carry out immigration enforcement and ICE has to agree.

In the past there's been criticism, particularly from the general accounting office, that ICE did not exercise sufficient oversight over the Program or give state and local law enforcement clear enough priorities in the administration of the Program.

The Secretary and I have just issued new guidelines for the Program and, in particular, we have created a standard 287(g) template that will govern all future activities under the Program, both in response to our own sort of management concerns and some of the issues that are raised in the GAO report, we've decided to focus the program first and foremost on the identification and removal of criminal aliens. In a world of limited resources we need to focus on the worst of the worst first.

So the 287(g) agreements and Programs going forward are going to be very focused on the identification and removal of people who pose a threat to public safety. That's the way the Program has traditionally operated and practiced, anyway. Most of the state and local law enforcement agencies that come to us want immigration powers in the context, for example, of their local jails. They, sheriffs, city police chiefs, run the vast majority of the nation's jails.

And they arrest a large number of people who are here unlawfully or otherwise deportable for committing crimes and they want authority to deal with those people, and it makes perfect sense for us to collaborate with them, to join together and to use our collective resources to try to identify and remove as many of those people as possible.

The same is true with trying to work together to identify immigrant gang members on the street, MS13, for example, a clear danger to the community. These people are often here unlawfully, they're committing crimes.

And I'm more than willing to extend delegation to the state and local law enforcement interested in tackling those kind of problems and working closely with us to do it in a way that's professional and has transparency for the general public.

Mr. Morales: So, again, it's about collaboration with the other organizations and agencies?

Mr. Morton: Absolutely, it's all about how can we leverage additional resources in state and local communities to attack problems of mutual concerns, namely, people who are here unlawfully and are committing crimes.

Mr. Morales: How is ICE combating such problems as human trafficking? We will ask John Morton, Assistant Secretary for U.S. Immigration and Customs Enforcement, to share with us when the conversation about Management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales. And with us today and in this segment, discussing critical border enforcement issues, is John Morton, Assistant Secretary for U.S. Immigration and Customs Enforcement. Also joining us from IBM is Dave Abel.

John, according to the U.S. Department of State an estimated 800,000 men, women, and children are smuggled across international borders every year. Many of these victims are subsequently trafficked into prostitution or other forced labor situations.

What are ICE's efforts to fight human trafficking and smuggling, and to what extent has ICE made significant progress in fighting these forms of modern day slavery?

Mr. Morton: I think that human trafficking and the related problem of abusive and indifferent alien smuggling is one of the great challenges of our time. It's a very serious problem. It occurs on a grand scale. It occurs outside of the reach of Federal law enforcement in many, many instances. We have a problem here in the United States, and there's an even bigger problem elsewhere.

The good news is that ICE has very robust investigative capabilities here and very important authorities. It's one of our central criminal responsibilities on the immigration side. We work very closely with the Department of Justice to investigate and prosecute these cases. We also work well with the FBI, with the other principal investigator in this area. We do a lot of work in the related areas of child exploitation and child sex tourism. These things all tend to come together

And because we are the nation's principal investigators, indeed, almost exclusive investigator of international alien smuggling, we come across these problems regularly, and we have the skills and expertise to tackle them.

What are we doing? Well, we have the Human Smuggling and Trafficking Center. ICE is the Chair of that Center, that's devoted to trying to identify the groups and routes that are used to traffic people to the United States.

We're working very closely with the Civil Rights Division in the United States. We're working increasingly with our international partners. We just conducted training for foreign law enforcement and foreign non-Governmental organizations interested in this issue. We're going to do some more.

The new Ambassador for Trafficking, Lou DeBaca, also a Prosecutor, and now he's been appointed and confirmed to the position of Ambassador at the State Department, and I think we're going to have a much closer relationship with the State Department as a result.

And I'm hoping that we're going to really be able to bring the combined resources of the Federal Government together in a way that builds on, frankly, the good work that was done in the previous Administration on this score, and just to go after this pernicious illegal activity.

Mr. Morales: So I was reading an article the other day around a massive black market that has emerged around fraudulent identification and travel documents. And I would imagine that this is a relatively big issue in your mission. To what extent does the Document and Benefit Fraud Task Force play into your Agency's overall response to this issue and this phenomena?

Mr. Morton: Well, first of all, you're right, it's a big problem. Fraudulent documents are all too common. They're of great concern as we try to secure the borders and prevent criminals and terrorists and others from entering the country.

If we are going to have good border security, if we're going to have serious worksite enforcement, if we're going to have good immigration and customs controls we need our identity documents to be secure. We need secure passports, we need secure licenses, birth certificates, all of the things that are used to engage in interactions with the State.

The problem is significant enough that we long ago recognized that ICE trying to do this alone was not going to get the job done, and so that's where we came up with the concept for the Document and Benefit Fraud Task Force.

As it turns out, the very first one was in the Eastern District of Virginia, where I happened to be a prosecutor, and I was the prosecutor assigned to that Task Force.

And we did a number of very, very large cases in Virginia. It worked well. We brought together Federal law enforcement agencies, the FBI, ICE, with a number of state law enforcement agencies, local police departments. Fairfax County, for example, was a critical member of our team, did much of the work.

And we married that with the considerable power of the United States Attorney's Office. We did a number of very sophisticated investigations involving undercover operations, and we brought a lot of people to justice, and that model worked well.

And so as an agency, ICE, long before I ever got there, began to replicate the task force concept elsewhere, and it's been successful. I intend to continue to support it, you know, particularly where you have large organized assaults on the integrity of the system.

For example, major visa frauds or major passport frauds, we absolutely have to have a firm response. The integrity of the system falls apart, if you don't.

Mr. Abel: The opportunity to work, it's a powerful magnet that draws many people to our country illegally. DHS recently released workforce enforcement guidance to your agents in the field. Can you outline this new strategy for us and its goal, and just tell us a little bit about what it emphasizes?

Mr. Morton: Sure, my view is that if we are going to make any sustained headway when it comes to restoring our borders and dealing with illegal immigration we are going to have to have a serious worksite enforcement.

And so our aim, my aim, the Secretary's aim, is to develop a truly national program to deter the unlawful employment of individuals. How are we going to do that?

Well, we're going to do that by marshaling all of the statutory authorities that are assigned to the Department of Homeland Security, mainly through ICE. To, on the one hand, investigate and deter those who are knowingly violating the law, and on the other to work with and encourage the many, many employers who want to do it right, and want to comply voluntarily with the requirements imposed by law.

That's changing, and we are going to be in a situation where we're back to exercising our civil enforcement powers and levying significant fines against those employers who don't comply, we're going to conduct I-9 audits.

As you may know, we just launched around over 650 I-9 audits, more in one single operation than was done all of last year. We're doing that to signal in open, transparent terms that we're serious about this, that there is a requirement for employers to verify that their employees have work authorization, and that extends to everyone, citizen, lawful permanent resident, or immigrant on other status, and that we expect people to play by the rules and fill out the I-9s, and we're going to come and we're going to check.

At the very same time, there is no one in the country who will be a greater supporter of voluntary compliance by employers. I want employers who are trying to comply with the law to look upon me as a partner, and E-Verify is an important part of that. That's the Electronic Verification Program that allows employers to verify whether someone whom they are hiring or employing has work authorization.

I want to reach out to those employers who want to go above and beyond E-Verify, to work with us to make sure that their employees are here lawfully and have work authorization.

The country is better served the more voluntary compliance we have. It makes much more sense for the taxpayer, it makes much more sense for ICE for compliance to come voluntarily rather than as a result of special agents going out and visiting people, executing search warrants or bringing charges against them.

The reality of the situation is there's a sustained group of people who want to violate the law, and we're going to continue and investigate them, and we're going to continue to seek to prosecute them if they do so, particularly if they do so on a large scale or they engage in abusive employment practices.

I'm not -- I don't mean to suggest in any na�ve way that there's not going to be a need for ICE to engage in aggressive investigation. I think there always will be, but the point is that we want to be good partners to the overwhelming majority of employers who want to play by the rules.

Mr. Morales: It's interesting that we've talked significantly about physical things. We've talked about people and money, we've talked about weapons, but one of the areas that we haven't touched on yet is the internet, and the internet provides a tool for interconnectivity across borders. It also provides a tool for exploitation for cyber crime and for other types of crime. Can you tell us a little bit about what ICE is doing through the Cyber Crime Center, or C3, to combat cyber crime?

Mr. Morton: Yes, obviously, the internet is one of the great innovations of our time, and I say that in a very positive way. It's transformed all of our lives and generally for the good.

But there is a darker side to it, and it has facilitated a whole host of crimes, and many things that have occurred in the mail now occur on the internet. Child pornography is a classic example. Thirty or forty years ago it would have been magazines with pictures transmitted through the mail between people. Now, it's all done over the internet by e-mail exchange, et cetera.

So it's the same kinds of crimes, just done in a different forum and a very powerful forum, and a forum that exists simultaneously at once all around the world.

And which poses unique challenges for us at law enforcement. We're very fortunate as a law enforcement agency to have the Cyber Crime Center, it's a specialized Center that focuses on computer forensics, internet analysis, and it enables us to follow much of our traditional crime from the street and now into the internet and to investigated just the way we might otherwise have in the past.

It's particularly helpful to us in the areas of child pornography and exploitation, but it's equally useful in other areas. For example, we were just talking about document and benefit fraud. That occurs with regularity on the corner of Fourth and Main, but it also occurs with regularity in cyber space. People are openly selling stolen and counterfeit documents on the internet, and we need a sophisticated means like we have at C3 to sort of investigate those crimes and try to bring the perpetrators to justice.

Mr. Morales: John, we've talked about your roles in investigation, capture and prosecution of violations of immigration customs laws, but I also understand that ICE is responsible for one of the largest, most transient, and diverse detainee populations in U.S. custody. What are your plans to reform the immigration detention system to make the system and removal process more efficient, effective, and humane?

Mr. Morton: I have fairly strong thoughts on that matter. I have fairly aggressive plans. You're right, we run a very large detention system. On any given day we have about 32,000 people in custody. On average it works out to about 400,000 people a year.

We detain those people in over 350 facilities throughout the United States. Most of those facilities are actually city and county jails or private contract facilities that we use by contract.

Immigration detention is a civil function, it is not a penal function. Over the years, however, the system has largely become dependent on excess jail space, and so you have not had a detention system that was designed to meet the immediate statutory responsibility and powers of the Agency, and this is a problem that has not been in the making for the last two years, it's been a problem that's been in the making for decades.

And I want to use my time as Assistant Secretary to deal with that problem in a very open and forthright way. Given the amount of money that the Agency spends on detention, in my view we ought to have detention facilities that are designed for the particular populations that we detain, which are sometimes the same population as the penal system, but often not.

We detain everybody, you know, people all the way from someone just coming at the airport with bad documents whose a serious risk of flight, to hardened criminals who are coming out of jail and need to go home.

And we need our facilities to recognize that variety, recognize that people don't always need to be detained in the same setting, and to have facilities that provide for good medical care and custodial care for a population that is generally held for much shorter periods than people who are incarcerated, who are held for long periods of time.

So I'm going to spend a lot of time working on that. Just to be clear, this isn't about not detaining people. ICE is going to continue to detain people on a large scale. It's a very important power of immigration enforcement, it's a necessary power. Many, many of the people that we encounter as part of our duties are either a serious risk of flight or a real danger to the community.

We're increasingly detaining very serious criminal offenders who are coming out of state, local, and city jails, and those people who need to be detained.

So this is about designing a more efficient and well designed civil immigration detention system than it is about not detaining people.

We're going to continue to detain people, we're going to continue to detain them on the same levels that we have before, we're just going to do it differently in better designed facilities, and we're going to try to have more efficiency and thought for the taxpayer and those people involved.

Mr. Morales: So it's really about better matching the system to the mission that you have at hand?

Mr. Morton: Absolutely, and doing it in an efficient way. And right now, as I said before, we've got over 350 different facilities that we use. It's not clear to me that we need to have quite that many.

Mr. Morales: What does the future hold for the U.S. Immigration and Customs Enforcement? We will ask John Morton, Assistant Secretary for ICE, to share with us when the conversation about Management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales. And with us today and in our final segment, discussing the future of U.S. Immigration and Customs Enforcement is John Morton, Assistant Secretary for U.S. Immigration and Customs Enforcement. Also joining us from IBM is Dave Abel.

John, would you elaborate on the collaborative efforts your organization has with other DHS components, as well as other Federal agencies or bureaus around the areas of sharing information, intelligence, and border security efforts?

Mr. Morton: Yes, we have very close working relationships with many of the components within DHS and many of our sister law enforcement agencies outside of DHS.

And this is, I think, been one of the silver linings to 9-11 is that there have been, there's much greater collaboration between Federal law enforcement agencies than I have seen in the past. And, as I said earlier, I've been in this business quite a long time, and there's been a noticeable improvement.

I'm personally committed to that, having been a prosecutor I just take a dim view of turf wars, and I continue to have that dim view even though I'm now the Assistant Secretary of ICE.

And so I took immediate steps to resolve some of our outstanding differences with our sister law enforcement agencies, and in particular the Drug Enforcement Administration and the ATF.

We signed first an MOU with the DEA to resolve some differences we had over the enforcement of the narcotics laws. And we came to a much better understanding about when I should investigate what is known, or what are known as Title 21 offenses, Title 21 is part of the United States Code and deals with serious narcotics offenses, and we agreed that there's, mutually agreed that there's an important role for ICE at the border and at ports of entry.

And you're going to see ICE and DEA work much, much more closely when it comes to combating international narcotics smuggling.

The same is true with ATF, we signed a similar agreement, recognizing their authorities, recognizing our authorities, and committing the two Agencies to join effort to combat the international trafficking and firearms. Very important in Mexico. ATF is going to be our partner every step of the way in Mexico.

The new Acting Director of ATF, Ken Nelson, is again a longtime professional colleague of mine. In fact, was in ASUA in Eastern District of Virginia. This part of the world seems to have produced a lot of Government leaders out of one little office across the river in Alexandria. But Ken is a first-rate professional, so.

Mr. Morales: John, earlier in the show you used the word integrity, and I would argue that integrity is the soul of any law enforcement agency. Could you elaborate on this strategy and the importance of individual integrity in order to have success in an organization, such as ICE?

Mr. Morton: I think in law enforcement the integrity you have as a person is your calling card. I think that's generally true in Government, and it's particularly true in law enforcement.

You exercise tremendous power, you have enormous responsibility on behalf of the sovereign, in our case the United States, and your job is to protect the community at large but to do it in a way that protects our civil liberties and recognizes that Government has to be carried out in a very transparent and honest way.

So law enforcement is not a good place for hard partisans. It's about trying to get things right on the merits, balancing things, being fair, recognizing that you have to be firm but fair, that compromise is part of the process.

And so I've just tried to do that throughout my career. I see that throughout law enforcement, and I just think it's critical, and if we didn't have that kind of approach we would not have the very strong law enforcement system that we do.

I've traveled the world many times over, in my days on this earth, and I will tell you one of the things I do take great pride in as an American is that our system of justice is I think really one of the very, very best that you can find anywhere. It really does try to get it right.

Mr. Abel: So we've talked a lot about what the organization is, where the organization as been. I'd like to just spend a second on the future. What trends are coming, what kind of impact are they going to have on the trajectory that you'll take the organization over the course of the next couple of years?

Mr. Morton: Well, the big challenge out there right now is obviously comprehensive immigration reform. And the President is committed to it, the Secretary is committed to it. I'm committed to it.

We'll see how that plays out. There are many different actors. There are difficult issues. And there are a lot of competing interests that need to be considered. But that is going to be an important barometer for the future.

I think in more narrow terms for ICE the future is bright, and you have a young agency that went through a difficult transition, where the parts of two different agencies were merged into one.

We have really turned the corner, the glass is half full. We have exciting responsibilities. Our mission is a good mission. I have traveled a lot in my time as Assistant Secretary, and I can't tell you how pleased I am every time I go somewhere. We just have good people working for our Agency, and as a career employee I really like to see that.

So I'm excited. The challenge for us is we've got a lot of good work out there, we need to make sure that we're focusing first and foremost on the priority areas that need to be addressed, and we need to do it professionally, we need to do it in a way that is transparent.

We need to help educate the public that, you know, about what ICE really is and does. There is a tendency to view ICE in terms of the articles, you know, on the front page of the New York Times or the Washington Post, and those tend to focus on the more difficult parts of immigration enforcement, and that tends to dominate the public focus and the media focus.

When ICE, as we said before, it's the second largest criminal investigative agency in the country. It's investigating money laundering, narcotics investigations, going after the Cartels, gun trafficking, sex trafficking, child exploitation, alien smugglers, and on a huge scale of 6,500 special agents out there, trying to protect the American public every day. You don't see as much of that in the paper as you should.

That's part of my job is to let people know what a good organization they have in ICE, that their tax dollars are being well spent, and spent on things that are important to this country and need to be done and done well.

Mr. Morales: John, we're nearing the end of our time. You clearly have demonstrated a clear passion for your work and for our country, so I'm curious what advice might you give a person who is out there, who may be considering a career in public service?

Mr. Morton: If you want to get rich look somewhere else, but if you want a lifelong reward I would think about public service. I have found it so personally satisfying to work on behalf of the United States. It's just a lot easier to get up every day and to know that you're trying to advance the common cause. I think that's particularly true in law enforcement, where your job is public safety.

And I'm extremely excited to be the Assistant Secretary. That's what our job is. When I was a Federal prosecutor there was no greater honor than getting up in court and announcing that I represented the United States. And the truth of the matter is you do represent the United States, you really do represent the United States.

And you're putting people in jail, and that's good work but it's also awesome work. I mean your actions lead to somebody going to jail.

So I think, you know, the way to look at Government service is as a great honor and privilege. I feel so fortunate to have the -- had the opportunities to do what I've done, to have the job that I've done, and there's no other place you can get that but in the Federal Government.

And it, also, and I think one of the beauties of it is that you don't have to represent a particular interest to an extreme. You get to do, to try to do what's right.

As a Government employee, balanced perspective is critical, trying to reach the common good is critical. You're not an extreme advocate. Your job is to try to get it right, and that's a very rewarding and satisfying position to be in.

Mr. Morales: John, it's a very powerful perspective. Thank you. We have reached the end of our time. I want to thank you for taking time out of your busy schedule to join us here but, more importantly, Dave and I would like to thank you for your dedicated service to our country across your time at the Department of Justice and now at Immigration and Customs Enforcement.

Mr. Morton: Well, thank you very much for having me. Thanks for having this kind of show. I think that your taking the time to interview me instead of Justin Timberlake or somebody else like that is good. I think Justin gets far more requests for interviews than I do.

What I would just say to your listeners is if you want to learn more about us go to the website, www.ice.gov or to DHS' website named DHS.

But I think at the end of the day if most people were able to look inside of ICE and DHS they would be pleasantly surprised to see that there are a lot of very, very good people, just trying to do good work and to get to a good result. So thank you.

Mr. Morales: Great, thank you.

This has been The Business of Government Hour, featuring a conversation with John Morton, Assistant Secretary for U.S. Immigration and Customs Enforcement.

My Co-Host has been Dave Abel, IBM's Homeland Security Practice leader.

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

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

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

Originally Broadcast April 26, 2008

Washington, D.C.

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

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

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Small business ownership can be the gateway to opportunities for all Americans. In fact, in just over four years, two-thirds of the eight million new American jobs were created by small businesses. These entrepreneurs foster an economy driven by innovation and their passion, along with the organizations dedicated to serving them, clearly reflect the American spirit of ingenuity and opportunity.

With us this morning to discuss his department's effort in support of American small business is our special guest, Steven Preston, administrator of the U.S. Small Business Administration. Good morning, Steve.

Mr. Preston: Good morning.

Mr. Morales: And joining us in our conversation, also from IBM, is Paul Kayatta, partner in IBM's Public Sector General Government Practice. Good morning, Paul.

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Mr. Kayatta: Good morning, Al. Hello, Steve.

Mr. Morales: Steve, let's start by taking a moment to provide our listeners with an overview of the Small Business Administration, or sometimes referred to as the SBA. Can you tell us a bit about the history and the evolution and its current mission today?

Mr. Preston: Sure. And I think, Al, you did a great job of sort of giving us a sense of the importance of small business in our country. Roughly, they're half of our economy. They're most of our job creation and a lot of the innovation that drives our economy. And because of that, the SBA was created in 1953 as an independent agency to support small businesses in any number of ways.

Now, what that means today is that we provide guarantees for private loans to small businesses. That helps our banks and other lenders reach a little bit harder to reach small businesses who need capital to grow. It means that we train and counsel small businesses around our country. Every year, we have programs that touch about a million entrepreneurs a year to help prepare them for ownership or help them through issues they face as a small-business owner. We also help small businesses if they want to sell their goods or services to the federal government. We help prepare them for that process and learn how to bid on contracts.

And then the other thing we do, which is a little different than our primary small business mission, is we are America's government bank for disaster victims -- not only small businesses, but homeowners. So, for example, today we have over $6 billion with homeowners and business owners in the Gulf of Mexico, helping them rebuild their lives after the 2005 hurricanes.

Mr. Morales: That's great. That's a broader mission than I had thought. So can you provide us then a sense of scale and tell us a little bit more about how the SBA's organized, perhaps the size of its budget, number of full-time employees, and your geographical footprint across the country?

Mr. Preston: Sure. Right now, there are effectively two parts to the agency: the disaster side and the non-disaster side. The non-disaster side has slightly over 2,000 employees. Now, the disaster side, the size of the employee base depends on what we're dealing with. So, for example, today we've got about 1,200 employees, but after Hurricane Katrina, we had over 4,000.

In addition to that, in our training and counseling operations, we fund third parties that provide those services for us. They have about 13,000 counselors around the country. And then we work with about 4,000 banks and non-bank lenders. So we have a large base of employees, but we also have a large network that is not employed by us, but works with us to deliver that mission.

Our budget, it takes somewhat over $800 million to run the agency in any given year, but many of our programs are actually self-funding. I think the other thing to note is when you look at all of our guaranteed lending programs and other programs we have to get capital to small business, there is about $85 billion worth of capital in people's hands around our country that is supported by the SBA. So we're a very significant part of getting capital to small-business owners.

Mr. Kayatta: Now that you've provided us with a great sense of the organization, perhaps you could tell us a little bit about your role as the administrator of SBA. Could you describe for us your specific roles and duties?

Mr. Preston: Yeah, well, you know, as head of the federal agency, my duties are fairly broad. But I look at them really probably in a couple of baskets. First of all, I think I need to be the point of accountability for high-quality service delivery by our agency. At the end of the day, we're a service organization that helps Americans. And I feel like I need to make sure that every penny that's spent on the agency is a penny well spent and that we are a high-quality organization delivering that service. We've had a lot of challenges along the way, but I think we've made a lot of progress.

As such, I need to be an important advocate for our employees, and the work that they do. And I also think I need to be a very visible advocate for small businesses in our country. We are consistently facing policy issues, like health care, like tax policy, like export policy, that are very relevant to the small businesses in our country. So as head of the agency, it's important for me to understand what's taking place on the legislative agenda and the regulatory agenda, and ensure that we're doing everything we can to make sure the voice of small business is heard.

Mr. Kayatta: So you've gone over several of the challenges that you're addressing. Could you tell us what you think your top three challenges are, and how are you addressing them?

Mr. Preston: Well, you know, when I came into the position, I came in about 11 months after Hurricane Katrina. And we provide loans to disaster victims, and those are low-interest loans on very favorable terms, and we had just a tremendous backlog at that point. So job number one for me when I came into the agency was to ensure that we got those funds into the hands of disaster victims and then that we ensure that we could reform the agency in a way that would ensure that we could support disaster victims in the future. As people say, hope for the best, but plan for the worst. So we have dramatically changed the process of making a disaster loan at the agency, which has required extensive reengineering of processes, bringing more technology to the table, coordinating with federal and state and local groups much more effectively.

And the other thing we did is we're trying to move our disaster operation -- we actually already have -- from feeling like a large bureaucracy to a friendly organization. So everybody who applies for a disaster loan right now is going to get a case manager, somebody they can talk to about how to submit their loan, the person can help them through the process. We want to be a helpful, responsive body. So that was the big challenge and I'm thrilled with the progress we've made there.

I'd say, secondly, we face similar operational challenges that have made it difficult for us, I think, to deliver the service that we do with the type of quality that we need to. And so we've applied many of the same learnings to other areas in the agency to become a much more customer-friendly organization in our lending programs, in our procurement programs, and in all sorts of other things.

And I'd say the other thing is, you know, when I came into the agency I think we had some real employee morale issues. The government surveys on employee satisfaction indicated that the SBA had a lot of challenges in that area. So I've been very focused on ensuring that our employees are trained to do their jobs effectively, that they have the tools to do their jobs effectively, and that they have a work environment that really makes them look forward to coming to work every day. And we've made a lot of progress on that front as well. A couple months ago, we got results from an employee survey that was roughly a year after we brought the new team in, and we saw very dramatic improvements. So we're thrilled with the progress we're making there as well.

Mr. Morales: Steve, I understand that prior to coming to SBA, you were an executive in the private sector. Could you describe your career path for our listeners and perhaps let us know how you got started in government?

Mr. Preston: Yeah, it's probably more of a zigzag than a straight line. You know, I came out of business school with a finance MBA and went to work in investment banking. I worked on Wall Street for a number of years, from sort of the mid-'80s to the early '90s. It was very exciting. I learned a tremendous amount. It was, I think, just a great place for a young person to be who wanted to learn about financial services and the markets and dealing with corporate issues. But I really decided I wanted to be part of building something in a different way. I always felt that my clients were having more fun than I was by being part of building an organization, so I became the treasurer of one of our clients. And it was a very large company with a lot of very complex financial challenges. And then I ultimately moved from there to become the chief financial officer of a Fortune 500 company, and then ultimately an operational leader there.

So my pathway has sort of gone from being a provider of financial services to companies to working as the financial and strategy person within the company on to roles where I actually was focused on improving the operations of the company to help it provide better service, to help it do that more efficiently, and to improve the growth of the company. When the opportunity to come to the SBA, which, as I mentioned earlier, is a large service organization that has had some operational challenges, when that opportunity came up, it made a lot of sense to me to take it.

The mission, also, made it, I think, particularly compelling. Like a lot of Americans, after Hurricane Katrina, you know, I watched the footage from my living room and, you know, I prayed for those people and I, you know, sent money and just wished I could do more to help. And sure enough, the opportunity came up to really pour what I had built over almost a 25-year career in financial and operational roles into an agency that directly impacted those people's lives. So I just felt like if I was looking for a sense of mission I couldn't have gotten a better one.

Mr. Morales: So, Steve, as you reflect back on these experiences, how have they prepared you for your current leadership role as administrator and perhaps shaped your management approach and leadership style? And if I may, what management lessons have you learned and brought to the SBA culture from these private sector experiences?

Mr. Preston: Okay, great. Well, I think I can probably wrap all of those questions up in a handful of thoughts. First of all, if you're leading an organization and you want it to go somewhere, you have to really paint a compelling vision of where you're going to take that organization. And that compelling vision is something that has to live and breathe within the organization. And so, when I very first came into the role, I spent a lot of time understanding what we needed to do as an organization, who we needed to serve, and how we needed to serve them, and working closely with the employee base, listening to them, and the customer base, listening to them, in bringing that forward.

Then I think once you paint that compelling vision for people, you need to make sure that everything you do in the organization lines up behind it: launching major initiatives to support that vision, tracking the progress, fervently supporting the progress in those initiatives; every month or periodically, whatever, looking at the progress and making sure that things don't get off track; looking at compensation programs and reward programs that support that; and then continually being up front in front of the organization reinforcing where you're heading and why you're heading there.

The other thing I've learned over my career that I've definitely employed at the SBA is if you're going to have an effective service organization, you need to have motivated employees that care about what they're doing and you need to provide those employees with the training to do their jobs and the tools to do their jobs. Because if they're motivated employees and they care about what they're doing, the last thing you want to do is put them in an environment where there's poor morale, where they're not trained to do their jobs, or they don't have equipment or whatever. So you really need to focus on the employee base and their ability to serve the mission as sort of square one in being an effective service organization.

Mr. Morales: That's fantastic. What about SBA's reform agenda? We will ask Steven Preston, administrator at the U.S. Small Business Administration, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Steven Preston, administrator at the U.S. Small Business Administration. Also joining us in our conversation, from IBM, is Paul Kayatta.

Steve, from my conversations with government executives, anytime you drive broad organizational change you need this compelling vision that you talked about earlier and you need to drive it through your teams. Now, applying that back to SBA, can you give us a brief overview of SBA's actual strategic plan and can you describe the vision that underlines and unifies your strategic goals?

Mr. Preston: Yeah. I think there are a handful of things that we're very focused on right now. First of all, we've really worked very hard, as I mentioned a little earlier, to ensure that we're prepared to handle whatever disaster might affect our country and, in doing so, get capital to people to help them rebuild their lives. It's not very difficult, frankly, to get people within the agency to see that as a heartfelt mission that they care about deeply. And the people in our disaster operation really want to serve well. And so I think an important thing to do there has been to help them understand how what they do in their jobs helps us deliver that mission effectively.

The other part of the mission, which I often refer to as our "reform agenda," is to look at all of our programs and services and make them easier to use, more customer-friendly, more compassionate in how they're delivered, and much more efficient, frankly, because there's a tremendous opportunity for us to improve the efficiency of the organization. And what I tell people often about that portion of the vision is, look, we can have the greatest product or service in the world -- whether it's guaranteeing loans to help people get capital, whether it's a program that helps them with procurement -- but if they're extremely difficult to use, if there is a ton of paperwork to fill out, if it takes us very long to make decisions or get back to people, if we're overly bureaucratic, people will not use the program. It might be a great service, but if it's too tough to use, they won't come to us and they won't seek our help.

I was talking to somebody about this recently and I said, gee, you know, when you look at opening a bank account do you look at the interest rate or do you look at the ease of use? You know, is there a branch nearby you? Do you like the electronic banking? Is that easy to use? Can you get information on your account? If they forgot to send you your statements every month and you had to drive six miles, getting another, you know, half a percent on your savings account may not make a big difference. So it's very important for us to understand that ease of use, simplicity, and responsiveness is a big part of quality service in helping America's small businesses because these people have big jobs that consume a tremendous amount of their time. They need us to respect that as we're delivering the service.

Mr. Morales: Now, Steven, I have to admit here that I cheated a little bit by doing some research on your plan and it seems like it's guided by four core pillars. Could you elaborate on these pillars along with your vision that complement the reform agenda that you described? And in so doing, could you give us a brief introduction to the reform agenda for SBA?

Mr. Preston: Yeah. What I found not long after I came to the SBA is it was important for us, in setting the vision and in establishing initiatives to fulfill that vision, it was important for us to agree on what we needed to talk about. What are sort of the guideposts for making decisions? And we came up really with four key things.

First of all, we decided our agenda had to be outcomes-driven. It couldn't be about how many loans we processed or, you know, how much paperwork we shoved. It had to be about the value we created to people. And so what are the outcomes we're driving? Are we helping people get back into their homes? Are we helping small businesses get capital ultimately? So not let's just talk about the process, let's talk about the value we're creating, so outcomes-driven.

Number two, everything we needed to do had to be customer-focused. What I talk to people about is, when we look at a new opportunity, I say we have to start with the customer and work back from the customer because that's the person we're serving. And our customer is a taxpayer, whether it be a small business or a disaster victim.

The third thing we talked about is being employee-enabled. We need to enable our employees to deliver that service because, if we don't, we won't be able to do it effectively.

And the fourth thing, we couldn't figure a pithy or short term to come up with, but it gets to the notion of having an agency that's transparent around what we're doing. We're a government agency. We've got to be open and transparent about how well we're doing. If we're not doing well, we have to be honest about it. We have to be accountable and we have to be efficient. It all gets to the concept of stewardship and openness in management. So outcomes-driven, customer-focused, employee-enabled, and then the last one we kind of call transparent, accountable, and efficient.

Now, as we look at applying that to sort of the reform agenda, we can use those guiding principles and we can look at each one of these programs to say do we know what outcome we're driving and are we set up with our initiatives to improve that outcome? Does that outcome really affect the customer the way we want it to? Do we have programs in place to support our employees to deliver that service with a high quality or are we disabled at that level? And finally, are we really accountable in how we're delivering the service? Are we measuring it right? Are we driving toward the right goals? And are we honest about how well we're performing?

So that's kind of how the four pillars apply to the reform agenda.

Mr. Morales: That's great. Now, you know, earlier in the first segment, we talked a little bit about the growth of small businesses over the past several years. What's interesting is, over the last three decades, the number of employees at large Fortune 500 companies has actually been declining. Could you elaborate a bit on your efforts to improve the economic environment for these small businesses?

Mr. Preston: Certainly. There are a number of things that we focus on in that regard. Right now, obviously, we are seeing somewhat of a challenging time in our economy, and one of the things that we are concerned about is the ability of small businesses to get capital. So we are working very hard to meet with hundreds of banks around the country to make sure that they understand our programs fully, that they're using them in a way that will help them get capital to small businesses, and that if they have any problems in working with us that may discourage them to use our services, that we're taking care of those issues, that we're being a good partner with them. So it's very much about outreach and improving our service quality to the banks so that they, in turn, will adopt our programs and get capital to small businesses.

Now, the other thing that's very important during this period of time is often small businesses, they're facing something that they haven't faced before: potentially a decline in sales or, in this case, in the current environment, higher energy costs, or challenges like that. Our network of counselors can sit down with those small businesses and actually help them think through how to address those issues. Should they be thinking about an adjustment to their prices? Are there strategies that they can have to bring down their energy costs? We're also about to launch a program that will help small businesses learn how to become more energy efficient because it is an increasing cost for them.

Mr. Kayatta: In rural areas, small businesses account for two-thirds of all jobs and in inner cities, small businesses provide 80 percent of all the employment. So entrepreneurship can be a very valuable vehicle in these communities. Could you elaborate on SBA's efforts to develop new products and to serve these underserved markets?

Mr. Preston: Yeah. This is a very, very important focus for us because in areas of our country where we see higher poverty and higher unemployment, we want to make absolutely sure we're doing everything we can to support entrepreneurship. And the reason for that is very, very simple. If new businesses can get a foothold, if small businesses that are existing there have the resources and the support to grow, they will create jobs, they'll bring investment, they'll improve the physical face of neighborhoods and in a way that is sustainable and lasting and, in many cases, growing. So we are working very hard to drive our services to areas of our country that need it the most so they can get lasting change.

Now, how are we doing that? First of all, we're providing goals for all of our offices around the country to increase our presence in those areas, and those goals have shown real fruit.

Secondly, we are rolling out products that are specifically designed to help people in those areas. For example, many small community banks are reluctant to use our services, our guaranteed lending services, because they're concerned about dealing with the government bureaucracy, and it can be challenging for them if they don't have a lot of staff. So we're rolling out an entirely new program for them that has a simplified application; they can do it online. We give them a customer support desk if they have any questions. And we promise them that we'll turn around their loans in a few days. We want to make it easy and supportive for them, and we'll be signing up small banks that reach many rural areas as a result.

And another thing that I would mention is a very exciting initiative we are launching right now called the "Emerging 200." We've chosen 11 cities in the country for a pilot called the "SBA Emerging 200." These are cities that have experienced job loss in the inner city. We are going to those areas and we're bringing in 15 to 25 small businesses that have a profile of a growth company. It looks like they've got an idea that could really ramp, but it looks like they also need a lot of help. So we're putting them through an intensive program for six to eight months. They'll get classroom training. They'll get one-on-one counseling if they want it. We'll give them business connections in the community. We'll provide them with introductions and support with lenders and investors. But we want to make sure that these companies in our inner cities that have potential to grow dramatically have every bit of support from us to become successful. And if they're successful, if you have 20 companies, for example, in Baltimore, which is one of the cities, or in Memphis, which is one of the cities, and they begin creating new jobs, that abets more economic activity. Hopefully, next year, we'll have another class of people coming in. And it can begin to change the face of neighborhoods and communities around our country. So we're very, very excited about the launch of the Emerging 200.

Mr. Kayatta: As you mentioned earlier, the SBA manages a loan portfolio in the range of $85 billion. To that end, OMB's Improved Credit Management Initiative requires agencies to strengthen the way that they award and service loans, manage portfolios, and collect debts. Would you tell us about the department's management and strategy for improving its credit management capability?

Mr. Preston: Certainly. This is a very important initiative and I'm thrilled that OMB has focused so heavily on this because the federal government does have a lot of financial resources out there and it's critical that we're managing those very tightly. Really what it requires is a focus to make sure that you have the right policies in place to manage those portfolios and that you are being very diligent about following those policies. And so in our case it's required us to really look at the whole pathway, the life of a loan, to make sure of how we're servicing loans, how we're managing the portfolios, how we're collecting the debt, that those things are all managed tightly, that we're tracking them, and that they're done in compliance with the OMB directives.

Now, over time what we're doing in addition to that is we're rolling out new systems to be able to support us so that we can do it much more efficiently and in a way that allows us to kind of get all of our information and all of our management processes in one place.

Mr. Morales: Steve, you've been talking quite a bit about your work in the area of disaster recovery. What lessons has your organization learned in the aftermath of the Gulf experiences? But more importantly, what are some of the major improvements to SBA's disaster operations that you've made that ensure the agency is stronger in the face of any future national emergencies?

Mr. Preston: Well, we've learned a number of things and I think these are the areas where we really have focused on improving. First of all, on a very base level, I think it's important to realize that when somebody has gone through a disaster, in many cases they're absolutely shell-shocked. It is a very, very difficult situation. I've been in many of our disaster recovery centers after a tornado or a flood. Sometimes people come in, they look entirely dazed because they're just in shock. We need to be a compassionate, helpful face and voice to them when they come into our process because they need help in getting through the process of doing a disaster loan when they've lost so much.

Some people will say to me, how can it be efficient to give people that kind of support? Isn't it expensive? And what I typically say is, no. A, it's the right thing to do but, B, it is efficient because if you invest 15 or 20 minutes with an individual, taking him through the process, helping them understand what they have to do, it saves all of us a tremendous amount of time in getting the documents correct. Before we were frequently shipping documents back and forth because they're weren't filled out right or we didn't have enough information. So helping people at the front end the compassionate way can also be more efficient. That's number one.

Number two, I think we have to have a system in place that allows us to ramp our capacity very quickly in a major disaster. That means that we have to have a way to hire people very quickly. It means that we have to have a way to ensure that we have systems in place to handle high volume. And it means that we need to have facilities to put those people in those systems. So we have a very detailed surge strategy in place. And, in fact, we'll be testing it in a simulation to test all of our disaster capacity in various events. And we have thousands of reservists around the country right now that are ready to be called up, and that's very important.

And the third thing I would highlight is we're not alone when something like this happens. There are many people out there to support us and there are also people that we have to coordinate with so that we can both do our jobs more effectively. So we've dramatically improved our coordination with other federal agencies. We have put in place protocols to improve our coordination with local groups. And we've also, believe it or not, we have a field network around the country that delivers non-SBA disaster services. It delivers lending and all the other services which is separate from disaster. We haven't always coordinated between those two, but we have a wealth of resources with almost a thousand people in the field that know their local chambers, know the local banks, and know the local media outlets. So we have protocols in place now to coordinate with our other SBA resources on the ground to leverage their resources. And that is very important because in a situation like this, everybody needs to lock arms and work together closely if they're going to effectively deliver the services to the disaster victims.

Mr. Morales: That's great. That sounds like you're taking a very proactive position against any future occurrences. Steve, another critical area is our country's veterans. Could you tell us more about your efforts to ensure that veterans receive fair access to federal contracts and that veterans get the capital and technical assistance they need to be successful as small-business owners? What are some things that you do in this area?

Mr. Preston: Well, this is a very important area to us and it's an area that we've invested a lot of focus. Because not only do we all feel a heartfelt commitment to the people that have served us in the military, it's also important to remember that these people, men and women who've served us so well, have learned critical skills that make them great entrepreneurs. They've learned disciplines, they've learned hard skills. In many cases, they've learned how to sacrifice to build something. Those are all great things to pour into a small business and veterans make very successful small-business owners. So we've got a number of programs that provide training and technical assistance to veterans. We have veterans centers that specifically focus on delivering those services around the country. And we also have partners that have special veterans programs, whether it be through small business development centers or our SCORE partners, which some people know.

The other thing we've done is we've designed specific lending programs to reach members of the military community who need capital to grow. First of all, last year, we launched something called the "Patriot Express," which combines the best elements of all of our loan products into one. And the thing I love about the Patriot Express is it's not just for veterans. It's for reservists, it's for National Guard members, and their spouses. Military service is a family affair. Small business ownership is a family affair. And we're supporting the entire military family in doing this. Since our launch last summer, we've made over $100 billion in Patriot Express loans around the country, which is very exciting.

The other thing is a great program we have, but, very frankly, we've had a hard time telling people about it. It's something called the "Military Reservist Economic Injury Disaster Loan," maybe because it has such a long title. But effectively, what we say is this: If you're a reservist and you work for a small business and you get called up for active duty, if that small business is in some way injured economically by the fact that you were called up for active duty, that small business can apply to the federal government through the SBA for a 4 percent business loan. And on those loans we can go out as long as 30 years. So this is a great loan product for small businesses that are disrupted by the sacrifice that our reservists are making for our country.

Now, Congress just passed a bill and the president signed it earlier this year that allows people to pre-apply for these loans before they get called up. So if you're a reservist and you work for a small business, you should give us a call and pre-apply for one of these loans, so that if the small business is impacted somehow by your being called up, your paperwork's in place and we can kick in and support the challenges that the small business faces as a result of it.

Mr. Morales: That's a fantastic program. How is SBA ensuring accountability and managing for results? We will ask Steven Preston, administrator at the U.S. Small Business Administration, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Steven Preston, administrator at the U.S. Small Business Administration. Also joining us in our conversation, from IBM, is Paul Kayatta.

Steve, it's my understanding that in an effort to increase the transparency and accountability in small business contracting, SBA and OMB issued a small business procurement scorecard. Could you tell us a little bit more about this scorecard and what it tracks? But more importantly, could you elaborate on the overall federal performance in this area and what lessons are you learning?

Mr. Preston: Well, you know, just by way of background, the federal government has a mandate -- it's not a requirement, but it's a strong mandate -- to purchase at least 23 percent of what they buy from small businesses. We're the largest buyer of things in the world and so this is an important part of providing an opportunity to small businesses. But as I always say, it's not just about fairness, it's about good business. Because small businesses are often more flexible, they're often cheaper, they give everything they have, so it's good business to do business with small business.

But what we did was the following. We wanted to make sure that we were doing everything we can to help the other federal agencies meet their small business procurement targets, but also hold them accountable and to be honest about how we're doing. And so what we did is we launched a scorecard. Every one of the larger federal agencies has a small business goal: a percentage of their goods and services that they buy that should come from small business. And for also some different types of small businesses, we also have goals. For example, businesses owned by service-disabled veterans, they have goals for that. We were just talking about veterans.

What we do now is we rank every federal agency against their goals and then we also rank them based on the progress they're making to improve their performance. And then once a year, we issue a scorecard. And some people get green if they're doing well and hitting their goals, some get yellow, and a lot of them have gotten red. All of our views are that, you know, if somebody's not hitting their goal, we have to be honest about it. We're the federal government and this is a mandate. Let's be honest about it and if we're not hitting the goal, then let's put a pathway in place to achieve that goal.

Mr. Morales: Now, Steven, we talked earlier about reform and accountability. So specifically, what types of reengineering efforts are you embarking to address some basic operational issues such as reducing error rates, reducing backlogs, and reducing decision-making bottlenecks within the organization?

Mr. Preston: Well, you know, I think probably a very good example of that would be in our lending operations. As I mentioned before, we guarantee bank loans and credit union loans and other private lenders. If we need to make good on that guarantee, effectively what happens is the bank sells the loan back to us and we buy it and then we make good on it. Well, there have been many challenges in that operation. The backlogs at one point were very, very long. Our policies were confusing. It was difficult for the banks to interact with us, and so we did a number of things.

First of all, we made sure to clean up our policies, to make sure that they made sense, and then we rewrote all of our standard operating procedures and sent those to the banking community. It doesn't sound very exciting, but in a process like that you've got to make sure that the rule book is clear and the rule book wasn't clear. And the banks were asking us to make sure that we were crystal clear on how we did these things.

Then we actually took a look at how we do the process of purchasing a loan. It's almost like a little manufacturing operation except, you know, you've got a loan going through it. There were a lot of issues there that needed to be cleaned up to make it more efficient, to make it more consistent, to improve the processes. And then in addition to that, we needed to improve the technology so that we could support the improvement of that process.

The next thing we did is we instituted a customer service desk in our processing centers, so that the banks would have a place to call if they needed help or had questions.

And then the last thing we did was we undertook a very significant retraining program, not only for the people processing the loans, but for people in our field offices. And the reason for that is this: The banks are out there in the field and our people are out there in the field, and we wanted to make sure that we could have our people go physically to a bank if they were confused about our process, sit down with them, and help them work through it.

When we analyzed the bigger problems we had here, one of the biggest problems we had was a lot of the banks were sending in information that was incorrect or incomplete or they didn't understand the process. So we decided we had to train our people in the field to sit with banks and help them get it right the first time.

The other thing we do now is everything is tracked. I know what the backlog looks like. I know how old it is. I know which banks we're having challenges with. I know how much production we're doing. We have metrics on all of these responsiveness and efficiency measures, which we never had before, so that we can actually manage it effectively.

And the last thing we did is we told banks that we were going to make the process easier. And if they complied with the new process, we would deliver a promise to them of getting them their money in 45 days. Well, we have done that and right now we're getting them their money on average in about 25 days.

Mr. Morales: Wow, that's fantastic.

Mr. Preston: We're hitting the bank promise and we're getting tremendous kudos from the industry, so we're very excited about that.

Mr. Kayatta: Steve, could you tell us about some of the most critical issues that face small businesses today and what you're doing to assist them through those issues?

Mr. Preston: Well, right now, based on what we're seeing in the economy, I mentioned a little earlier that a lot of small businesses, especially those that have vehicle fleets or large facilities, are hurting from the increase in energy costs. Another thing that small businesses have been facing for a number of years, which is so difficult, is the increase in health care costs. Many people don't think of the health care challenges we have in the country as being a small-business issue, but many statistics would show that 70 percent of our uninsured workforce works for a small business. And the smaller a business is, the less likely they are to offer health care. So we have to make sure we understand how to work to improve the health care system to allow small businesses to offer it to their employees or for those employees to be able to buy it directly on a reasonable basis.

So for businesses that are specifically impacted by this economy or these costs challenges, we offer a lot of counseling services to help them think through how to address them in their business, how to manage their costs more effectively, how to manage their labor more effectively, how to manage cash flow more effectively, for example.

The other thing we're doing right now is making sure that we're doing everything we can to help them get capital they need. If they need working capital to grow or help through a challenging time, to make sure our guaranteed lending operations are getting to those people and supporting them.

Then the last thing I'd say that we're doing probably more so now than ever is making sure that we do everything we can that the voice of small business is heard on the policy front. We need to make sure that we're advancing the health care policy improvements that I mentioned. Right now, exports are very much on the agenda. A lot of people don't realize that almost 30 percent of our country's exports come from small- and medium-sized businesses. So we're working very hard to help people understand that because many of the trade agreements that are being contemplated right now are very good for small business, will open up those markets for them, add new jobs, and help them address the issues they face in the economy today.

Mr. Kayatta: So there's certainly a lot of opportunity in the whole world of international trade, and you talked about collaboration as well. Could you describe the Resource Partner Program and how it's working to fulfill the mission?

Mr. Preston: Yeah. And specifically in trade, our resource partners in the small business development centers and women's business centers and our partners at SCORE, which is a network largely made up of volunteers, many of those people have specific expertise in foreign trade. And they will sit down with a small business and help them think through what they need to do if they're looking at foreign markets to expand.

We also, in conjunction with the Department of Commerce, work very directly with small businesses on exporting to specific countries. So if somebody comes in the door, they can go to a U.S. Export Assistance Center and get help with respect to a particular country. For example, if they want to export to Portugal, we can help them understand it and then the Department of Commerce actually has resources in Portugal that can help them.

The last thing I would say right now is we are kicking off a series of trade symposia around the country. Just recently we had one in Miami, in a town outside of Miami actually called Hialeah, and we had 400 small businesses come to learn more about exporting. We brought small businesses that were successful exporters to speak in a roundtable to share their experiences. I talked about the value of free trade agreements in exports. We had a number of service providers that explained what services they could provide to help them out. We had a number of banks there to help them with their financing issues. It was a very, very exciting day for those businesses. And many of them were really encouraged by the opportunity they have to reach foreign markets.

We also do provide financing through our guaranteed programs for small businesses who need to build working capital to support their exports or if they export financing for the actual shipments.

Mr. Morales: So many people may not know that some of SBA's former clients, if you will, included such notables such as Intel, Apple, Amgen, Ben & Jerry's, and Federal Express, just to name a few. Given such success stories and these American icons, could you highlight perhaps, if you can, some up and coming success stories that you see in the near future?

Mr. Preston: Yeah, there's a great one. I mentioned Miami just a second ago, our trade symposium there. I had a chance to visit with an exporter down there who ships products all around the world for installation into industrial kitchens. And he has installed kitchens throughout Asia, in Latin America. Sometimes you really don't even know what's out there until you actually start seeing these small businesses and what they do. But, you know, he had a familiarity with China 20 years ago, and he set up an operation there and began installing kitchens in hotels that were being built and other industrial kitchens. Then he took it to a number of other countries, and now he's exporting to countries around the world.

A couple of months ago, I was in St. Louis, and there were two ladies who had started a business that develops software that blocks hackers from foreign countries who are trying to get into government computer systems. I mean, an incredibly valuable service to our country to protect our security infrastructure, and it was a small business with, you know, 10 or 20 employees that developed this software that's doing so much for our country.

So we forget how varied and valuable and innovative so many of these companies are. When you start hearing the stories, I got to tell you, it's just so encouraging. And that's, you know, actually one of the great things about this job is I get to go around the country and meet many of them.

Mr. Morales: That's exciting. It must give you a great sense of pride to see some of these organizations starting up and doing so well with what is seemingly a very small set of resources.

Mr. Preston: Well, you know, one of the other things I had the opportunity to do is speak with my counterparts around the world, who either lead commerce departments or small business departments in other governments. And frequently, people will say, well, how do you do it in America? You know, how come your small business culture is so energetic and so rich and it drives your economy? What should we do?

And I tell them about our programs and I tell them about our policies, but then, you know, I stop and I say, but small business is in our DNA. That's who we are as a country. We are an entrepreneurial culture. Kids grow up many times thinking about owning a business. They join Junior Achievement. They go to college and they take courses on entrepreneurship. Many of our best known Americans started out as small-business owners that they built into big businesses. And so it's so important that we have policies in our country that support the small-business owners, that support the people that have a dream and want to build that dream because it is the backbone of our economy. It drives innovation and competitiveness for our country around the world.

Mr. Morales: That's fantastic. So what does the future hold for SBA? We will ask Steven Preston, administrator at the U.S. Small Business Administration, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Steven Preston, administrator at the U.S. Small Business Administration. Also joining us in our conversation, from IBM, is Paul Kayatta.

Steve, I'd like to transition now to the future and talk a little bit about what you see as some of the major opportunities and challenges that your organization will encounter in, say, the next two to three years, and how you think SBA will need to adapt to meet these challenges.

Mr. Preston: There's a lot in that question. One of the things I'd say is we have to be ready for whatever changes might happen because some of them will be unexpected. And one of the things we're doing right now is to work throughout our employee base to put in place tools to help people address challenges, known or unknown, help people learn how to manage change, to envision positive change, and then to actually sponsor it and manage it. And so it's important for an organization to have a flexible mindset. That's a lot of what we're doing.

More specifically, things that we know that are coming down the pike, we have a significant population that's eligible for retirement, and it's not only unique to the SBA. Much of the federal government faces that issue. So what we are trying to do is actually look at that as an opportunity for our people. Because as people retire, we understand that we're losing a lot of talent and a lot of knowledge, but it also creates opportunities for other people for promotion. So we're rolling out very extensive training programs to ensure that people have the skills to do the jobs that they're in today, but also to prepare them for the jobs that may arise in the future.

We're also rolling out a process where every employee who elects to can do an individual development plan with their manager. That individual development plan looks at their strengths, opportunities for improvement, and then puts in place a pathway for them to be able to address those areas for improvement. We're then taking all of that information and building employee development programs designed around specialized training, potentially internship-type programs that would help these employees along their development pathway.

Mr. Morales: So along those lines, Steven, could you tell us a little bit about some of the major training initiatives, such as SBA University? And how do you ensure that your employees have the appropriate training and skills to meet some of these upcoming challenges that you described?

Mr. Preston: Well, training is so important and I think it's the easiest thing for an organization to cut when there's a budget challenge, but it's one of the most important things, I think, for any organization to protect. What we have done is, this last year, we designed something called SBA University, which was a one-week, off-site experience for employees to ensure that they had the fundamental skills to do the jobs that they're in as well as the tools to be more effective in addressing opportunities going forward. And we worked very extensively throughout our network of experts to design a curriculum that was very relevant to our programs and very relevant to the challenges we face. At this point, our entire field organization of almost a thousand people have been through at least one week of SBAU. People in our processing centers have been through it. And this summer, people in our headquarters operation will be going through SBAU.

The other thing it's designed to do is to ensure that people in management positions have the skills to manage their people effectively. We want to make sure that we have a management culture that fosters development and growth as well as productivity, as well as service quality. So those are the kinds of things we're doing there.

Now, through the individual development plan process, we will then use what we learned from our people in terms of their development needs and design a much longer term, much broader training strategy for the organization that will, I believe, provide a sustainable quality culture for the organization for many years to come.

Mr. Morales: So, Steven, to take advantage of this moment on radio, what advice could you give to a budding entrepreneur who may be out there listening to this show?

Mr. Preston: What I'd tell a budding entrepreneur is a few things. First of all, understand what you don't understand. Think about what it's going to take to be successful and understand where your challenges are going to be, and then get out there and get help. Make sure you've thought about your markets, you've thought about the capital you're going to need for that business, you've thought about what it's going to take to be successful. And then when you're honest about where you're strong and where you're not strong, make sure that you fill in your blind spots. Because we want to take all of that excitement and all that energy and all that commitment that you're going to be putting into that small business and make sure it's successful.

The other thing I'd say is it takes a lot. You know, I've often said every dollar of equity an entrepreneur puts in their business is matched with $10 of sweat equity. That's going to be very important to be a small-business owner. You really got to give it all you have and be realistic about the challenges.

I was interviewed recently by somebody who said, gee, you know, if somebody wants to have a more relaxed life and more free time, wouldn't you recommend their getting into a small business and owning a business? And I said you know what? That's just the opposite. It takes blood, sweat, and tears. But you know what? That's why our small-business economy is so powerful. It's because we have people who give it all that they've got.

Mr. Morales: And I've got to believe the rewards are even greater on that side.

Mr. Preston: They're terrific. And it's not just a job for people. It's their lives and it's their passion, and that's what makes it so exciting.

Mr. Morales: So, Steve, as a follow-up now, what advice would you give to a person who perhaps is considering a career in public service, whether that be at a local level or at a federal level?

Mr. Preston: Well, the advice I would give is based on the fact that I just think it is an incredible honor to be able to serve in a capacity that helps other people, that serves Americans in either delivering services to them or doing, you know, so many things that our government does for people that's valuable. I think it's very easy to get a sense of mission and a sense of value in work if you go into public service. And so what I would do is say, think about what you can give. Think about how you can move the needle. Think about how you can provide value to other people through that. And think about, you know, the skills that you build in the private sector or someplace else, how they can be effective in doing that.

Mr. Morales: That's great. Steven, unfortunately, we have reached the end of our time. More importantly, Paul and I would like to thank you for your dedicated service to our country in supporting the small business community.

Mr. Preston: Great. Thank you very much. And certainly, if there are any potential entrepreneurs out there or any small-business owners that have any challenges that they'd like us to help them with, please come to the Small Business Administration. You can find us at sba.gov.

The other thing I would like to encourage small-business owners out there to do is to look at some of the provisions in the stimulus package that was passed earlier this year. There are many tax advantages to investing in your business in 2008 that you may not be aware of, that could be very good for you and very good for our economy. So thank you very much.

Mr. Morales: Great. Thank you, Steven. This has been The Business of Government Hour, featuring a conversation with Steven Preston, administrator at the U.S. Small Business Administration. My co-host has been Paul Kayatta, partner in IBM's General Government Practice.

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

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

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

Monday, November 1, 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 ways to improving government performance. Learn more about The Center by visiting us at businessofgovernment.org.

The Business of Government Radio Show Hour features a conversation with a government executive who is changing the way government does business. Our special guest this morning is Dr. Ron DeHaven, administrator of the USDA's Animal and Plant Health Inspection Service.

Good morning, Dr. DeHaven.

Dr. DeHaven: Good morning. Thank you for having me on your show.

Mr. Lawrence: And joining us in our conversation, also from IBM, is Mike Wasson.

Good morning, Mike.

Mr. Wasson: Good morning, Paul. Thank you for being here.

Mr. Lawrence: Well, Dr. DeHaven, let's start by learning more about APHIS. Could you tell us about the Animal and Plant Health Inspection Service, and its role within USDA?

Dr. DeHaven: Certainly. Our motto within APHIS is "Safeguarding American Agriculture," which I think really speaks to what we do. We're responsible for ensuring safe and healthy agricultural products, both on the plant and animal side. Indeed, Secretary Veneman at one point had made reference that if she were starting to rebuild the USDA all over again, she would start with the foundation, that being APHIS. We have several program units within the agency -- veterinary services, plant protection quarantine, biotechnology regulatory services, wildlife services, international services, and animal care -- all of which speak to the specific roles we have in a very broad mission area.

Mr. Lawrence: How do you describe the size? I mean, you've gone through a wide range of programs. Could you tell us about the budget, and even the skills of the people on your team?

Dr. DeHaven: In terms of the budget, it's actually grown quite dramatically. In Fiscal Year '01, we had an appropriation, or appropriated budget, of $445 million. The President's budget for Fiscal Year '05 is $828 million. That, taken along with the frequent apportionment of monies for emergency purposes, which in the last few years have averaged at about $250 million a year, we're basically a billion-dollar agency.

In terms of numbers of people, there again, the numbers vary depending on what you're looking at. In terms of full-time permanent employees, we're somewhere in excess of 4,000 employees, but when also including Foreign Service national employees around the world and temporary employees that we hire, we're in excess of 7,000 people.

Mr. Lawrence: And the skills of these folks?

Dr. DeHaven: Wide variety, as you might guess, given the program units that we have in the agency. On the plant side, we have plant pathologists and botanists. On the animal health side, veterinarians and epidemiologists. We employ wildlife biologists, biotechnologists, program analysts, economists. We have a public affairs staff with several public affairs specialists and writer/editors, and then also, because of the monies that we involve, contracting specialists and financial managers.

Mr. Wasson: Well, Dr. DeHaven, can you share with us your roles and responsibilities as administrator for APHIS?

Dr. DeHaven: I look at my job as providing the vision and leadership for this agency; ensuring that we have the resources, both human and financial, to carry out our mission; and then represent the agency in a variety of situations, both internally and externally.

Mr. Wasson: In April of 2004, you became administrator of APHIS. Can you tell us a little bit about the background before you became administrator?

Dr. DeHaven: Well, I graduated from veterinary school, Purdue University, in 1975, and actually went to school with the intent of being a small animal, dog and cat practitioner. I did four years with the Army Veterinary Corps, which I found very rewarding, and during that period also gained some clinical practice experience. But at the end of my tenure in the Army, I was intrigued by government service, and actually then took my first job with the government in APHIS in 1979. I spent the first six years of my career, which I think was very valuable, in the field as a field veterinary medical officer dealing with primarily livestock disease issues.

From there, I moved into a middle management position as the assistant area veterinarian in charge in our state of Mississippi. And then, four years after that, started a 12-year stint in our animal care program, overseeing administration of the Animal Welfare Act and the Horse Protection Act. It was then about four years ago that I came back to our veterinary services unit as the deputy administrator of that organization and, of course, have been the administrator now for two years.

So I think what I find most interesting is that I went to veterinary school with the intent of being a dog and cat practitioner, now find myself as a Washington bureaucrat with far more reaching implications and responsibilities when it comes to both animal and plant health, and enjoying myself as a Washington bureaucrat, something that back in 1975, I would never have imagined happening.

Mr. Wasson: You have an interesting background, where you have both a doctor of veterinary medicine and an MBA. How did you combine your two degrees for maximum effectiveness in the work environment?

Dr. DeHaven: As I mentioned with my veterinary degree, I think that degree has opened up a wide array of opportunities, both from clinical medicine to being a Washington bureaucrat. The master's in business administration came at a time when I had made the career decision that I wanted to stay with government and focus on management of programs and people. I realized at the time, and actually fully came to realize during the course of obtaining that degree, that we need to market ourselves and run our government agencies like business runs itself. And so I think through both degrees, the doctor of veterinary medicine and the MBA, I've had the technical background, the technical experience, but also now the management experience to provide oversight and leadership for a government agency and focus on running government like a business.

Mr. Lawrence: I'd like to pick up on that point where you talked about getting an MBA, when you began to understand the importance of management. What was it like as you were transitioning from a doer, when you were describing, you know, providing services to animals as a veterinarian, and to becoming a manager? Could you take us through that?

Dr. DeHaven: I think before that, Paul, I even realized that while the private veterinary practitioner certainly has some strong and influential impact on families and individual animals, by working with a government agency, we actually have tremendous impacts on population of animals. And so that's where I wanted to take my career was in veterinary medicine, but looking at a broader picture, recognizing that animal agriculture has tremendous implications for our economy and for the health and well-being of a large number of animals as well as the basis for employment of many people in this country. So I recognized the potential there; had also had a taste as a middle management of managing people and managing programs and enjoyed that as well.

Mr. Lawrence: Well, tell us about some of the differences in terms of your training as a veterinarian and then what you began doing as a manager. One of the things I'm drawn to is sort of the size of the groups of people you dealt with. I imagine, from having animals, that a veterinarian experiences one-on-one, and generally, the customers don't complain very much, I imagine, and now you're with much broader teams of people that you have to influence. Tell us about some of the differences in the training.

Dr. DeHaven: You know, ultimately, Paul, it comes down to dealing with people one-on-one and having interpersonal skills, whether you're dealing with that pet owner or a herd owner whose herd of cattle has just been recently diagnosed with brucellosis. From there, you take it to my current position, where typically, I'm working one-on-one with individuals who represent larger, broader constituencies. At the end of the day, it's interpersonal skills and working one-on-one with people. It's just the stakes on different -- whether we're talking about an individual animal or an individual herd of animals versus populations of animals. At the end of the day, it's a matter of employing good common sense and having the interpersonal skills to explain your situation and your position.

Mr. Lawrence: And how about the speed of decisions and the things you can make an impact on? I imagine it must have been very rewarding to you to work one-on-one in a small setting and solve a problem with an animal, and see that work its way out, and now to think about solving something in a population seems much hard and would take more time.

Dr. DeHaven: I think that for the most part is very true. When you're dealing with an individual animal, oftentimes, it's life-and-death situations and decisions need to be made very quickly. On the other hand, when you're dealing with populations and diseases and disease programs that have broad implications for a large population of people and a larger population of animals, typically that decision-making process is much slower, requires a transparent and open process that allows the public and all stakeholders to have an input on that decision. That's how government does work and should work, and we certainly emphasize having an open and transparent process.

Not everyone is cut out for that kind of work. Bureaucracies are intended to be somewhat inefficient, so that they provide that opportunity for everyone to have input. It's something that you develop a skill and ability to work within our system, which, again, by some accounts is intended to be somewhat inefficient in that it does provide for broad constituencies to have input.

Mr. Lawrence: That's interesting. As I think about you getting an MBA and your point about, you know, making government act more like a business, and you talked about the need for inefficiencies, are there any other places that you've noticed where it almost shouldn't run like a business?

Dr. DeHaven: Well, we don't have a bottom line, per se, to worry about in government in terms of having to generate revenue. Rather, making the best use of taxpayers' dollars that are appropriated by Congress or otherwise made available to us. But whether you generate a revenue or have an appropriation, it's getting the most bang for your buck, making sure that how you use that money is used efficiently and effectively. In our case, it's for the public in general as opposed to private business, where you have that customer that you're trying to give them the most benefit for their dollar spent.

Mr. Lawrence: That's an interesting point, especially about the need for openness and transparency.

We're all aware of mad cow disease. How are we tracking and testing for this disease? We'll ask Dr. Ron DeHaven of the Animal and Plant Health Inspection Service to tell us about this when The Business of Government Hour returns.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Dr. Ron DeHaven, administrator of the USDA's Animal and Plant Health Inspection Service.

And joining us in our conversation is Mike Wasson.

Well, Dr. DeHaven, let's talk about mad cow disease. And with the scare of the disease entering in the United States, how is APHIS able to track and test cattle for the disease?

Dr. DeHaven: Well, we have actually been testing cattle for bovine spongiform encephalopathy, or BSE, since 1990, increasing every year the number of animals that we test. In 2002/2003, we tested some 20,000 animals. And these are animals for what we consider to be the high-risk or target population, meaning that if we do have the disease, these would be the animals that would be most likely to test positive, some 30 times more likely than the average adult cow in our population.

Because of the recent cases in North America, both of them native born in Canada, but one found in the U.S., we have entered into an enhanced surveillance program beginning June 1st of this year. Since June 1st, we have tested somewhere in the neighborhood of 98,000 animals in this high-risk or target population. And of course, all of them thus far have been negative.

Our goal is, during a 12-month period, we want to test a statistically significant number that would, if we have the disease in the U.S., even at a prevalence as low as 1 animal out of 10 million that's positive, that we would find the disease. So our goal is, during this 12-month period, to test somewhere in excess of 250,000 animals, and then can say with some degree of statistical significance whether or not we have the disease, and, if so, at what prevalence.

Mr. Lawrence: Take our listeners through the process of testing. You describe statistics, so I have a picture in my mind of sampling, much like we would anything else, and then running the tests. And so I'm curious, is that right? And just what does the test entail?

Dr. DeHaven: That is correct, Paul. We, unfortunately, don't have any live animal tests available to us at this point in time. There's no blood test. In fact, the test involves getting a piece of tissue from a very specific section of the brain, in the brain stem. So we're collecting these samples from animals that have died on the farm, have gone to slaughter, or otherwise would be animals that have died or are destined to be slaughtered.

We're picking these samples up off of animals that die on the farm. Typically, they're sent to a rendering plant, and we collect the tissues at rendering. Some animals that become nonambulatory at slaughter, they go down, if you will, and are not allowed into the human food chain, we test those animals as well, but also animals that are going to public health laboratories and state diagnostic veterinary laboratories, animals that are showing some central nervous system disorder.

So after the animal dies or is otherwise selected for testing and is euthanized, this portion of the brain, a small piece of tissue, is taken from that section of the brain and then it's subjected to one of half a dozen different tests that we've approved for this purpose. These are rapid screening tests.

So the samples are collected at slaughter plants, rendering plants, diagnostic laboratories, and then that sample is shipped to one of seven laboratories around the country where this testing is done. If any of the animals or tests come up anything other than negative on one of those screening tests, then it goes to our national reference laboratory, that's our National Veterinary Services laboratories in Ames, Iowa, for confirmatory testing.

Mr. Lawrence: Are there steps to implement measures and risk assessments for better effectiveness of tracking disease? As we were preparing, I was reading about the animal registry program.

Dr. DeHaven: The animal registry, I assume, Paul, you're talking about our National Animal Identification System, which is the system that we are currently developing that would provide for some kind of electronic identification on every animal, livestock species of animals, in the country. It's almost ironic in that because of the recent finding of the BSE case in the state of Washington, we're on an accelerated path to implement this national animal identification. And ironic in that BSE is a non-contagious disease, so it's one that we have the luxury of a matter of days or even weeks to trace animals.

On the other hand, if we were to have a highly contagious disease enter the United States, such as foot-and-mouth disease, we would need to be able to track animals in a matter of hours in order to be able to contain and, hopefully, eventually eradicate that kind of disease that might be introduced into the United States. So while certainly animal identification on every animal in the country would be useful for a number of domestic disease programs that we have ongoing, certainly in terms of our BSE testing program, it would be critical to have that kind of system in place were we to have the introduction of a highly contagious foreign animal disease.

he system that we're implementing would then involve electronic identification on the animal, and there's a number of different technologies that can be used, such as radio frequency, ID microchips. But the idea would be that in a maximum of 48 hours, we could trace animals that were infected or had been exposed to infected animals.

Mr. Wasson: Well, Dr. DeHaven, recently APHIS partnered up with the Food and Drug Administration and the Environmental Protection Agency on developing a single portal on agricultural biotechnology regulations, which is usbiotechreg.nbii.gov. Can you tell us how this came about and what this site offers?

Dr. DeHaven: Well, the three agencies that are involved in regulating agricultural biotechnology APHIS, Food and Drug Administration, or FDA, and EPA, the Environmental Protection Agency all have very distinct and different roles. But the public really wants one site where they can go to to answer all of their questions, regardless of which agency might have specific regulatory authority. So we worked with our colleagues at FDA and EPA as well as the White House's Office of Science Technology Policy to develop this website. As with all of our regulatory programs, our goal is to be open and very transparent in the process so that we can have a coordinated and risk-based approach.

I think biotechnology represents some unique challenges, in that we walk a very thin tightrope in terms of ensuring that we have adequate regulations to ensure protection of the public and the environment, but, at the same time, not over-regulating to the extent that we unduly restrict growth in an industry that has so much to offer to society.

Mr. Wasson: Well, earlier this year, USDA and APHIS will prepare an evaluation of its biotechnology regulations and several possible regulation changes, including the development of a multi-tiered risk-based permitting system and the enhancements of the deregulation process to provide flexibility for long-term monitoring. How is this process coming along, and what impacts does this have on the stakeholders?

Dr. DeHaven: Mike, you're right. In January of this year, we published a notice of intent in the Federal Register and said in this notice that we plan to prepare an environmental impact statement, or EIS, to consider possible changes to our biotechnology regulations. Through the EIS and a change in regulations, it would provide for a multi-tiered system that would provide some flexibility in the commercialization process for biotechnology products, genetically engineered products, and provide for new policies in field testing, for example, for pharmaceutical plants, plants that are genetically engineered to produce pharmaceutical compounds or other industrial compounds, as well as providing a mechanism for dealing with adventitious presence. That would be the presence of genetically modified organisms in organisms that are thought to be or expected to be non-genetically modified.

Before even starting this process, however, we met with stakeholders and got their input and, through this notice of an intent to prepare an environmental impact statement, received over 3,000 public comments. We've reviewed and considered those comments, and we are currently in the process of writing this environmental impact statement, the impact that new regulations might have. The public will once again have an opportunity to comment on this EIS. And then ultimately, we would be publishing a proposed rule, once again for public comment. So again, emphasizing our open and transparent process in developing any new regulations.

Mr. Wasson: In the wake of terrorist attacks against the U.S., bioterrorism has been of a great concern. For instance, the Bush Administration passed the Agricultural Bioterrorism Protection Act of 2002 and the Homeland Security Act of 2002. What is APHIS's part against bioterrorism?

Dr. DeHaven: It's been part of our responsibility in APHIS to respond to the introduction of foreign animal, plants and plant diseases, and pests as well as animal diseases. So we have considered ourselves for several decades to be first responders when there is an accidental introduction of a plant disease or a pest or an animal disease.

What has changed obviously with the recent times, most notably since 9/11, is the recognition or realization that we not only are vulnerable to an accidental introduction of pest or disease, we've vulnerable to an intentional introduction, an introduction that could have far-reaching implications for the economy of the United States. So we have renewed and emphasized our role not just in dealing with domestic disease programs, but in terms of response to the introduction of a foreign animal disease or a plant pest and disease, recognizing that that could be an intentional introduction.

We have worked closely with FEMA to develop what's called an emergency support function for agriculture, ESF-11. APHIS has the lead in that, meaning that just like FEMA has a responsibility to respond to natural disasters like earthquakes or hurricanes, the FEMA function would also apply to an agricultural emergency such as an unexpected or intentionally introduced foreign animal disease or a plant disease. So through this emergency support function and working with FEMA, APHIS would have the lead in responding to an agricultural emergency, but through FEMA would have all of the resources of the federal government at our disposal to deal with that kind of situation.

APHIS is also the lead agency for the agricultural component of the Bioterrorism Protection Act of 2002, where we have worked very closely with CDC in coming up with a program to ensure that university laboratories and private laboratories that are dealing with agents that could have a bioterrorist use, that there are proper controls and inventory of those kinds of agents. We refer to them as select agents.

We actually have a liaison person with APHIS who works at CDC, who works with them on issues that would affect both animals and plants, zoonotic disease, if you will, as well as any bioterrorist agent that would have not just human health, but also animal health implications.

Mr. Lawrence: How is e-government being used to streamline processes at APHIS? We'll ask Dr. Ron DeHaven, its administrator, to tell us about this when The Business of Government Hour returns.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Dr. Ron DeHaven, administrator of the USDA's Animal and Plant Health Inspection Service.

And joining us in our conversation is Mike Wasson.

Well, Dr. DeHaven, the scope of APHIS's protection has expanded beyond pest and disease management. APHIS has assumed greater roles in the global agricultural arena. What management challenges has this presented for the leadership of APHIS?

Dr. DeHaven: Paul, thank you for the question. And we're realizing more since 9/11 than ever before that our first line of defense, speaking from an agricultural perspective, is not at our ports and borders, but rather overseas. We don't want to wait until potentially harmful diseases, agricultural diseases, or pests are at our borders to exclude them, but rather have people offshore who realize and are our eyes and ears in terms of what threats are out there, and keeping those kinds of things from ever entering our ports and borders. That's our first line of defense, is offshore.

But APHIS is always walking a tightrope in terms of safeguarding American agriculture, but also facilitating trade. Agricultural trade is critical to the economy of our country. So our role is to ensure that those products that we import from abroad as well as our agricultural exports are safe and don't represent any risk to our trading partners. As we enter into more and more trade agreements with our trading partners where historically trade has been restricted by quotas and tariffs, now what's becoming a limiting factor is what we call the sanitary/phytosanitary issues, those issues that represent potential health and pest risks.

And so APHIS is becoming front and center in terms of -- it's those technical issues, the issues that are involved in safeguarding American agriculture, are the same ones that are limiting trade. So there's increasingly more and more emphasis and pressure on APHIS to resolve those technical barriers so that trade can continue unrestricted, but doing so in such a way that we don't jeopardize the health and safety of agriculture in the United States.

Mr. Wasson: Well, Dr. DeHaven, in the last segment, we have learned that APHIS has worked with many different agencies to develop informational websites and protecting U.S. agriculture. Are there any lessons learned and advice you would give on working and managing interagency?

Dr. DeHaven: I think there's one overriding thing, and that is that the administration, our Congress, and, probably more importantly, the public expect there to be interagency cooperation. They're not really concerned with whether there are two or three or four agencies that are involved in some area of oversight. They want to make sure that government agencies that have a role are working together and that there's a coordinated approach.

I was talking a minute ago about trade issues. And so APHIS has a critical role in facilitating trade, to the extent that there are technical issues, to make sure that we don't unintentionally export or import disease or pests. But to do that, we work very closely with the Foreign Agricultural Service, an agency within USDA, in establishing those trade policies and working with our trading partners around the world.

I think the BSE, or mad cow, situation is an excellent example of the need for interagency coordination. APHIS has a role in terms of surveillance of our live animal population. Food Safety Inspection Service, another agency within USDA, has a responsibility to ensure that the food produced from those animals is safe and wholesome. And our colleagues in FDA have some responsibility as relates to animal feed as well as cosmetics and other products that would be made from those animal products. The public, the department, indeed the Congress expect us to work very closely together in dealing with those issues that cross agency boundaries.

Mr. Wasson: Well, early in 2001, APHIS launched an e-gov initiative that streamlined its permit process and application online. What are some of the challenges with this launch?

Dr. DeHaven: In the context, Mike, of ensuring that we are user-friendly to our public, we want to provide the option for that public to request our services either through the traditional paper methods or electronically. For example, both our plant protection quarantine and veterinary services units have a permit process where one can apply for a permit that would allow for the movement of otherwise restricted materials into or out of the United States. Our biotechnology regulatory services unit also receives requests for permits for permitting the use or testing, field testing, of potential biotechnology products.

The challenge for us was to develop one coordinated system that met the needs of all of these different purposes and do so in a way that is user-friendly and not create a three separate system. So we have that traditional bureaucratic issue of getting the funding, getting approval for the system that we're developing, selecting a contractor, and then working closely with that contractor. But all of those things are coming together, and we would hope to pilot a project for this permitting system early next year.

Mr. Wasson: Are there any other e-gov initiatives on the way within APHIS?

Dr. DeHaven: Actually, there are several that we have underway, and our intent is to provide an electronic mechanism of any interaction that we would have with our public. Another example is that we license and register facilities under the Animal Welfare Act. This is primarily facilities that are involved in research or exhibition or the commercial sale of animals, and those types of facilities need to be either licensed or registered with us under the Animal Welfare Act. So rather than, here again, submitting a paper application for that kind of license or registration, we're developing a system to do that all electronically.

Mr. Lawrence: This naturally leads into a discussion of the President's Management Agenda. And could you tell us about APHIS's plans to action to implement the agenda? For example, one area of interest is the integration of performance and budget information.

Dr. DeHaven: Our mission goals in APHIS, Paul, are safeguarding American agriculture and facilitating trade. And as I've alluded to, those two goals can be a little bit of a conundrum in terms of competing interests; in terms of safeguarding agriculture, but at the same time facilitating trade and, in doing so, potentially running the risk of accidental introduction of pest or disease. So having said that, our pest and disease programs very readily lend themselves to a cost-benefit analysis. What's the program going to cost? What's the potential export or market that might be out there, or what is the value of that commodity to our own economy? And then doing a cost-benefit. Is the cost of that program going to yield potential benefits that will exceed those costs?

Here again, we also know that by instituting various plant and animal disease programs, we can improve our export markets. We can improve the exportability, if you will, of certain markets. And so is that potential market from a cost-benefit analysis greater than what the cost would be of implementing some of our programs? APHIS has actually scored very high within the Department on the OMB process to review program assessment, if you will, where we have scored high in terms of the value of our programs versus the return on that investment.

Mr. Wasson: How is APHIS making the adjustments on the move of its port-of-entry inspectors to the Department of Homeland Security?

Dr. DeHaven: We've gone through a very difficult transition. It was in March of last year that we transferred somewhere in the neighborhood of 2,600 agricultural quarantine inspectors to the new Department of Homeland Security. These 2,600 inspectors are the people at our ports and borders whose job it is to ensure that we don't inadvertently allow into the country prohibited products that might also harbor plant diseases or animal diseases. So it's been somewhat of a difficult transition for us to lose those inspectors while at the same time ensuring that they continue to have a very active role in performing that agricultural mission at our ports and borders.

We found newfound friends with our colleagues in the Customs and Border Protection, one of the major units within the Department of Homeland Security. And we think that through the creation of this new department and overseeing all of the inspection activities at the ports and borders, not just agricultural, but Customs inspections and immigration inspections, that there is ample opportunity for improvement, and at the end of the day, having a far better system. Our role is to continue to provide the policy and training for those inspectors at the ports and border, making sure that the agricultural mission remains very high on their priority list. And in order to do that, we've had a couple of initiatives underway.

We're working with our colleagues at DHS to have a quality assurance program to ensure that that inspection is happening as it should, but also that we've got good communication. Current issues, is there a new outbreak or a new situation that would cause us to send an alert to the ports and borders to be on the lookout for a particular commodity or a disease that might be presenting itself? Changes in policy -- and we continue to, again, provide the training for the agricultural inspectors, including the new agricultural specialist within the Department of Homeland Security. So we're developing a newfound friendship and relationship with our colleagues at DHS. And, again, I think that at the end of the day, there's a potential to have a much more effective system.

Mr. Lawrence: That's interesting, especially all the technology described that underpin the programs.

With all the technology being used today, how are skilled IT professionals being recruited and retained? We'll ask Dr. Ron DeHaven of APHIS to tell us about this when The Business of Government Hour returns.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Dr. Ron DeHaven, administrator of the USDA's Animal and Plant Health Inspection Service.

And joining us in our conversation is Mike Wasson.

Mr. Wasson: Well, good morning. Dr. DeHaven, in the future what changes of shifts do you see in APHIS's role in protecting U.S. agriculture?

Dr. DeHaven: Mike, I think we're already seeing some of those shifts. We're seeing more new and emerging diseases in the last few years than we've ever seen before, and I think that's reflected in the apportionment of monies that we've received to respond to some of those new emergencies and emerging pests and diseases. During the eight-year period from 1993 to 2000, we spent some $475 million in responding to those kinds of plant and animal emergencies. In the last four years, that number has soared to $1.1 billion. So in half the time, we've spent twice the amount of money responding to some of the new and emerging plant and animal pests and diseases.

We've touched base already on the fact that as we enter into more trade agreements with our trading partners around the world, some of the technical issues to safeguard American agriculture are becoming those issues that are limiting trade, and so increasing pressure on APHIS to resolve those technical issues in a way that applies appropriate safeguards, but doesn't unduly restrict trade.

And then as we mentioned before, with the events of 9/11, the anthrax situation here in Washington, D.C., with the recognition with the foot-and-mouth disease in Europe that we, too, are vulnerable, we have an increasingly important homeland security role within USDA in general and APHIS in particular. I think we're realizing as an agency that emergencies are part of our norm. As we go about our day-to-day business, that's going to include responding to whatever the current emergency is, either on the plant or animal side or, heaven forbid, both of them.

Mr. Wasson: How does APHIS plan on integrating and protecting its science and technology infrastructure?

Dr. DeHaven: Mike, I think the credibility of our whole agency is that we are a science-based organization. We need to stay science-based and keep that as part of our roots. We have expanded, in fact, that science base in our agency, and I'll give a couple of examples.

Within our plant protection quarantine unit, we've created a Center for Plant Health Science and Technology. So as we're dealing with the domestic disease programs and coming up with new science-based ways of dealing with them, or have a trade issue that requires a science-based resolution, it's those scientists at CPHST, Center for Plant Health Science and Technology, that are responsible for coming up with those kinds of science-based resolutions. And on the animal side, a similar organization is called the Center for Epidemiology and Animal Health.

Clearly, when it comes to regulating biotechnology, we have to be science-based there. It's an evolving industry; the potential benefits are huge. We have to understand the science and ensure that our regulations are science-based.

Our wildlife services unit has gone from an organization that managed damage control on livestock to one that is really a wildlife disease management organization, employing a number of wildlife biologists to ensure that where there is interaction between wildlife and domestic livestock, we're appropriately managing the disease concerns there. So we are science-based, and our future credibility is dependent upon ensuring that we're employing the best science in our programs and activities.

Mr. Lawrence: Throughout our conversation this morning, you've talked an awful lot about very complicated programs: technological, statistical, and scientific. So let me ask you just about the employees who support you. Let's start with technology. How is the agency recruiting and retaining skilled IT workers?

Dr. DeHaven: Indeed. With all the program activities I've talked about, Paul, we couldn't carry out all those activities if we didn't have an excellent support staff, and we do, and that runs the gamut from our IT specialists to our financial managers. On the IT side, especially in the last couple of years, actually recruitment of good quality IT specialists has not been an issue for us. Typically when we put out an advertisement for a vacancy, we get a good number of applicants. And so I'm proud of the caliber and expertise of our IT specialists within the agency.

Having said that, I think that there is a couple of things that we can do, or several things that we can do if that becomes an issue in terms of providing financial incentives to attract some of those IT specialists. But I think even more fundamental than that is within APHIS, we have an organizational culture that values our employees and places high value on family values. So I think we're a family-friendly, employee-friendly organization, but we can also provide those kinds of financial incentives if need be.

Mr. Wasson: How is APHIS supporting agriculture trade between the U.S. and its trading partners?

Dr. DeHaven: Within our international services unit, we have a separate team we call the trade support team, which is really the interface between APHIS, our Foreign Agricultural Service, and the U.S. Trade Representative's Office, where we are collectively working on agricultural trade issues. I think especially in the last decade, trade has become increasingly important as we enter into all of these trade agreements. And the technical barriers to trade that APHIS is responsible for are becoming increasingly important. So we have this team of individuals with geographical responsibility around the world that deal specifically with those issues from a technical standpoint, but also serve as our liaison between other parts of government that are dealing with agricultural trade issues.

But we're also expanding our presence overseas. We have APHIS employees in 29 countries that are working on not just facilitating trade, but being our eyes and ears in terms of the agricultural threats that are out there in terms of what potential threat might be coming to us from different parts of the world because of the animal and plant disease situations around the world. So I think we have an increasing role, and we certainly have had over the past decade an increasing role in trade, and I don't see that doing anything in the future except expanding.

Mr. Lawrence: Dr. DeHaven, if I've done my math right, you've dedicated your career to public service, almost 30 years if I remember the dates from our first segment. So I'd like to ask you to be reflective and talk to a person who's maybe interested in a career or just starting out in public service. What advice would you give to them?

Dr. DeHaven: I think one of the most frustrating experiences of my 30-year career in government was getting that first job. There was no good process to tap into the system, get your questions answered, and effectively compete. So while I think we've made some tremendous inroads and are much more user-friendly today than we were in the past in the perspective, and there's ample opportunity to get information from the Internet, I would encourage folks to be patient and persistent.

I would also say, at the end of the day, certainly for me it's been worth it. Certainly don't come to work for government if you just want to draw a paycheck and sit back and look forward to a retirement. Plan on working, working hard, but also plan on the rewards being substantial. I think the impact, for example, that APHIS has on American agriculture is tremendous. And so while the work is hard, the hours can be long, the rewards are equally as large.

I would also encourage those that are interested in coming to work for a particular agency learn what you can about the agency before you go for a job interview. I can't tell you the number of people that I've interviewed for prospective jobs that know next to nothing about the agency. And indeed if you are truly interested in working for that agency, it just makes common sense that you would have done some background and know what that agency does and what kind of position that you would be interested in.

Mr. Lawrence: Well, I'm afraid we're out of time. That'll have to be our last question. Dr. DeHaven, Mike and I want to thank you for squeezing us in your very busy schedule this morning.

Dr. DeHaven: Well, thank you, Paul, it's been my pleasure, and Mike as well. I appreciate the questions and the opportunity to explain to the public the wide variety and important functions that the Animal and Plant Health Inspection Service plays. We've got a great group of dedicated employees who work hard day-in and day-out.

And for those of you that are interested in knowing more about our programs, I would encourage you to visit our website. That website is www.aphis.usda.gov. And we've got a comprehensive website that will explain to you more about what we do in our various programs as well as provide mechanisms for you to get answers to your questions if you need services from our agency.

Again, Paul and Mike, thank you very much for having me on your program.

Mr. Wasson: Thank you.

Mr. Lawrence: Thank you, Dr. DeHaven.

This has been The Business of Government Hour, featuring a conversation with Dr. Ron DeHaven, administrator of the USDA's Animal and Plant Health Inspection Service. 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. Once again, that's businessofgovernment.org.

This is Paul Lawrence. Thank you for listening.

Tuesday, August 17, 2004

Arlington, Virginia

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

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

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

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

Mr. Prow: Good morning, Paul.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(Intermission)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(Intermission)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(Intermission)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This is Paul Lawrence. Thank you for listening.

Thursday, May 20, 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 approach 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 conversation this morning is with Mark Krzysko, the Deputy Director of Defense Procurement and Acquisition Policy e-Business in the Office of Undersecretary of Defense for Acquisition, Technology, and Logistics.

Good morning, Mark.

Mr. Krzysko: Good morning.

Mr. Lawrence: And joining us in our conversation, also from IBM, is Linda Marshall.

Good morning, Linda.

Ms. Marshall: Good morning.

Mr. Lawrence: Well, Mark, let's start by getting right to it. Could you tell us about the modernization of DoD's acquisition process?

Mr. Krzysko: Yes, I will. What I'd like to talk about is over the past several years, we've been moving forward and modernizing the acquisition business process. Last year, we took a major step within the Department of modernizing the acquisition process, and that is the 5,000 processes we call it there. This year, we're working on the defense acquisition regulation and attempting to streamline our regulations to make it easier for people to do business. That modernization is to remove a lot of the regulatory aspects of what we're trying to do so we can become more commercialized in the way we do business as a department.

Now, certainly, we can't be perfectly commercial as an entity because we are a federal government and have rules and regulations. But to ease that pain and move forward in the regulations through those two major initiatives, as well as other initiatives, that principally being what I have to do is work with the business modernization program on how we would reengineer the business process for the acquisition community, and that, too, is also another significant effort.

Mr. Lawrence: How do you ensure that what you're doing is supporting the war fighter?

Mr. Krzysko: I believe we begin and end always with the war fighter, because it's not about the business process; it's how we improve the business process and support the war fighter. Quite simply, it's getting goods and services to the war fighter in the field, and that's what our role is. We do that within the Department of Defense and we try to measure that in our goals of being sure that we meet the role of the war fighter, because in purchasing goods and services, it's the significant aspect of what we do.

Ms. Marshall: Mark, to give our listeners a sense of the magnitude of business that flows through DoD, could you tell us the amount of contracts awarded daily, monthly, annually by DoD?

Mr. Krzysko: I pulled to metrics, one from '02 and one for '03 in the fiscal year. In '02, we awarded 5.4 million actions that account for almost $180 billion worth of business. In '03, we had 5.9 million transactions for almost $220 billion. I did the math with that, and that's about 15,000 transactions daily, amounting to almost $500 million a day.

Mr. Lawrence: Is there an equivalent that people could think about in another sector in terms of the magnitude of those transactions?

Mr. Krzysko: I have not been able to find the one that can amass that amount of transactions. When we look across the federal government, the Department of Defense accounts for about 60 percent of the business either in transactions or in dollars.

Ms. Marshall: Can you describe the kinds of skill sets of the people that work for the Office of Defense Procurement and Acquisition Policy?

Mr. Krzysko: I'd like to answer that two ways: one within the Department and one within my directorate, as well as what we do within the acquisition community, because if you look at the acquisition community as a whole, we span the gamut, everything from systems engineering and engineers, logistics, contracting, financial management to the broad skill set even with the e-Business Directorate, which are principally programmatic skills, acquisition management skills, contracting skills. In the e Business Directorate we also had the other aspect of that. It's information technology and what that means to us. So it's connecting all the business process with information technology skill sets for us to move forward.

Ms. Marshall: What is your role as the Deputy Director of Defense Procurement and Acquisition Policy in e Business?

Mr. Krzysko: My role, as I see it, is to, one, lead and coordinate the services and components with leading the transformation to e-business, because it is about delivering technological solutions to our people, men and women and the field, that support the war fighter. The Army, Navy, Air Force, and the other components do the purchasing for the Department, but they need to find a place to look for, in terms of business processes, what systems we need to employ, how we need to employ them. So we really have that leadership coordination role for the Department as it relates to the acquisition business process.

Ms. Marshall: Can you tell us about your career and the positions prior to your current position?

Mr. Krzysko: My career really came in two segments. I worked in the private industry for about 11 years. I worked in retail. I started at Woodward & Lothrop, the department store that's no longer here in the city, and then I moved to Lord & Taylor. I worked at everything from a dock supervisor through the store comptroller to the operations administrator at Woodies at Chevy Chase, and then I moved on to Lord & Taylor, where I was the assistant managing director, and I was responsible for all the operations aspects of that as well as human resources.

I decided I wanted to move on with my career so I went back to school and I got a job with the government, and that job was with the Naval Air Systems Command, and I started again, my career, in my early 30s at the Naval Air Systems Command as a contracts specialist. I was a contracts specialist for the Unmanned Aerial Vehicle Department, then I moved over where most of my career was, as an F18 PCO. I was the foreign military sales PCO for that, moving on to F14, finally leading a BPR effort as it related to partnering with industry before this job, and my position there was the e-commerce solutions manager. My role there was to bring ERP. We were implementing an ERP and standard procurement system together, so I functioned as the business process manager for that effort.

Mr. Lawrence: You began in the private sector and then were drawn to the public sector. I'm curious, what drew you there?

Mr. Krzysko: Well, at that time it was 1990, and, if you realize, that market was pretty flat for middle management, and it was very difficult in the private sector. I thought when I wanted to grow up I was going to be a consultant in fact, and IT was drawing me at that time but I needed to move on with my career, and Naval Air Systems Command offered me an opportunity and I decided I was going pursue graduate school at the same time, so I landed a job in the public sector, didn't think I'd stay here, but loved it ever since.

Mr. Lawrence: Is there any particular experience that best prepared you for your present position?

Mr. Krzysko: I thought about that question for a while when I my answer is every one of them did, because I wouldn't be able to represent myself cross-functionally if I wasn't in a function involved in the Naval Air Systems Command. I wouldn't be able to understand finances and logistics as I did if I didn't work in an operation as a dock supervisor in receipt and acceptance, and I wouldn't understand the business process for reengineering if I didn't lead those efforts. So, bringing them all together I think has lead to the culmination of the skill set I have today, and I think it's important that if I didn't have that I wouldn't be able to function as well in this environment.

Mr. Lawrence: Leaders often have this moment in their careers where they move from being the doers of work to watching over people who do the work. I'm wondering about that point in your career and how you think about that.

Mr. Krzysko: Well, in moving forward with my career, I still believe I am a doer, and I think leadership is a doing position because you can't just talk about it; you have to do it. And you have to operationalize what the vision and what transformation needs to occur, and you have to oversee that in some fashion. I take a lot of pride in empowering the staff and empowering the people that we work with to go make that transformation happen. So, it's not only oversight. You have to participate, because leadership is not a distant position.

Mr. Lawrence: You've been around some, I'm assuming, very strong leaders in your career, and I'm curious, what were the characteristics of good leadership?

Mr. Krzysko: I've had the mantra for quite a long time, "It's vision along with detail." And that's understanding the direction you want to go as well as understanding what you need to do to get there. So often the leaders that have been successful not only had the vision but had an operational background to go make that transformation happen. Detail without vision or vision without detail makes you unsuccessful at both.

Mr. Lawrence: I'm sure as part of vision, one of the key things probably left unspoken is the need to communicate the vision. I'm just curious how you communicate how you communicate your vision in a large organization.

Mr. Krzysko: Communicating a vision at a large organization is you communicate it at a local level as well. You have to participate and build alliances with the members of your community so as you move forward they can help you realize that vision. You have to it's, quite frankly, a lot of selling techniques to ensure what you're doing, because no vision is perfect and execution is always lacking, so as you move forward you have to adjust and be sure that you're pursuing that correct direction. And you do that through partnerships, both organizationally, internally, with industry so as you move forward that vision becomes more real, more crystal every day.

Mr. Lawrence: What's the difference between acquisition and procurement? We'll ask Mark Krzysko, the Department of Defense, when The Business of Government Hour continues.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Mark Krzysko. Mark is the Deputy Director of Defense Procurement and Acquisition Policy e Business in the Office of the Undersecretary of Defense for Acquisition Technology and Logistics.

And joining us in our conversation is Linda Marshall.

Well, Mark, let's define some commonly used terms in the defense acquisition and procurement workplace for our listener. How would you differentiate "acquisition" from "procurement"?

Mr. Krzysko: That's a great question, and I think oftentimes we use those terms synonymously. In some cases we can; in some cases we can't.

Acquisition, the way we think of it in the Department of Defense, is a much broader construct for us to deal with. It deals with everything from buying major weapons systems, from concept to development, to the delivery of the systems, to sustaining it, all the way through disposal.

Procurement is a subset of that process. The interesting aspect of that is that at any given point of that process, whether you're in concept development, delivery, or sustainment, you're utilizing procurement to realize what you're trying to acquire, so procurement is much more the transactional, the contractual base where acquisition is a much deeper concept for everything from science and technology to systems engineering all the way through the disposal of those systems in the workplace.

Ms. Marshall: What is meant by the acquisition domain, Mark, and can you tell us about its current transition in the future?

Mr. Krzysko: Well, before I tell you what the acquisition domain is, let me tell you where the acquisition domain fits. The acquisition domain is one fit in the business management modernization program. We have other domains human resources, installation environment, strategic planning and budgeting, logistics, and accounting and finance as well as acquisition. This represents the leadership of those business process owners within the Department to realize the enterprise architecture of what we're trying to achieve. The acquisition domain is a subset of that, but a huge subset nonetheless. It is intended to govern the acquisition enterprise both the systems, the process, the technologies at an enterprise level. It's to enable data interoperability at the Department to realize a data structure for the Department of Defense for the acquisition domain.

Our goals are also to modernize and streamline the acquisition business process, manage our IT portfolio, and build a collaboration workspace for us to move from. And that's not only with us in the Department of Defense but that's at a federal level as well as our industry partners.

And finally, but certainly not least, what it does is that it represents the change management component of how does it touch our people, because with the institution of technology in business process reengineering, what will we do to affect our people and how will we train them in the future and what skill set will we need.

Ms. Marshall: Can you discuss the operating environment and the influences that impact the acquisition domain?

Mr. Krzysko: The operating environment is extremely complex. What we've tried to do, and I'll borrow a common phrase used around here, is connect the dots. The operating is very complex because we have everything from the President's management agenda to the Secretary of Defense's initiative to the business modernization program, balance score card; we have GAO audits. We decided, through our acquisition domain, that many of these things had an awful lot in common and how could we realize the synergy from all of our operating environment to realize what we were trying to achieve a simpler, less redundant IT infrastructure supporting the Acquisition Department. So, what we were doing was bringing this together, and we've aligned all the major initiatives within the federal government as well as the Department, in our view, from the acquisition community, so we could grapple with each one of them or report as efficiently as we possibly could to each one of them.

Ms. Marshall: The Acquisition Governance Board is an important component of what you do and work with. Can you describe the role of the Acquisition Governance Board?

Mr. Krzysko: The Acquisition Governance Board is a critical aspect of what we have been trying to achieve. It is comprised we began this about a year ago, and we began with the senior procurement executives from all the services and components. This past few months, we've changed that to move to the broader acquisition and involved all the component acquisition executives so we can tackle procurement as well as acquisition. We realized we were part of a major community. It is a collaborative body where we have the most senior leaders of the Department of Defense represented and working to establish the strategic vision for us as a department to move forward. It was important for us to have that collaboration environment not only dictate from above but realize where we could have opportunities to move forward.

The Governance Board is really at two levels the AGB, or the Acquisition Governance Board as we call it, is the most senior level, and then we take the next tier down, which we affectionately call the JBOB, the Joint Acquisition Business Oversight Board, one tier down from the senior leaders to make things happen.

We're not naive to believe that we live in a stovepipe in the acquisition community, so we've also invited and we have participated in the CIO, the CFO, as well as other components as necessary to help support our decision making as we try to move forward with the transformation.

Mr. Lawrence: You've described the governance structure that allows you to work with other parts of the organization, but let me ask you more about the management process. How do you go about collaborating with the folks like the CFO and the CIO?

Mr. Krzysko: We participate with the CFO, the CIO in their forums, as well as inviting them to our forums. I use the technical term of "managing in the middle," because you have to move to the middle of many of these initiatives because they are either technological or they're financial or they're acquisition so you have to bring the bodies together. Frankly, it's about putting yourself in that space to participate, to represent yourself and represent the interests of the Department and your business line as you move forward. If you could do that, you could find the correct balance between financial goals, technical goals, as well as acquisition goals to come out with a workable solution that you can implement very quickly.

Mr. Lawrence: What are some best practices or some lessons learned from actually going about and making that work?

Mr. Krzysko: Participate, participate, participate. It takes a lot of time, it takes a lot of energy to move forward in that. We moved out our business lane into many of those lanes whether it be in CFO forums or CIO forums or logistics forums to help and assist and bring our value from our side and bring our perspective so we could maintain a balance across the Department. Personally, I view that as one of the most critical aspects for success for any initiative. Oftentimes we forget what we need to go do when we become so focused on solutions that without that balance they fall short in many aspects because we failed to consider some of the important things that need to be considered from other viewpoints.

Mr. Lawrence: What are some of the other management challenges in trying to make the collaboration you described work?

Mr. Krzysko: It becomes a function of time. We have a very small staff within the Defense Procurement and Acquisition Policy e-Business Group, and they're very hard worked and participating in all those forums. Very early on when we were first standing up the office about a year and a half ago, we listed all the actions and forums and things we needed to participate in, and we listed eight, and the first challenge was what do we take off our plate, what do we go do? And the answer was "nothing," because everything was critically important, and my staff have been critically important in moving forward in each one of those lanes because as best we could you need to participate to make the difference, and we linked that back to it is important for us to execute our jobs in the most reasonable fashion, because we are trying to make a difference and transform the acquisition procurement community, because it is so critical to supporting the war fighter. We see that on the news every day, so that is a backdrop. It becomes our mantra to move forward.

Mr. Lawrence: Are the knowledge and skills of the employees changing? For example, as you're describing the collaboration, you're going through, I imagine sitting in my silo only having to be a specialist in my area. Now at any one moment I'm working with the CIO and the CFO and I'm going to have know a much broader range of information and, you know, capabilities. I'm curious, sir, are the employees changing the way I'm describing?

Mr. Krzysko: Certainly on our team, I think we have. I think we need to permeate that throughout the organization as we move to a more enterprise view of business processes. You have to be sensitive to financial opinions. You have to be sensitive to technological opinions. We get criticized a lot because sometimes we go in too far into those lanes and speak different languages from an IT perspective or from a CFO perspective, but you have to understand that to understand the trades and the points of view of others. And it's critically important that those skill sets are there. With the staff it is difficult for them because we joke, we find few people in those lanes, and they work through that. The come from it from a program management or a contracting background or an acquisition background. They really need to kluge all those skills together and understand the disciplines and why people are so concerned about business processes from their perspective. Bringing all them together is a difficult task, and it represents actually a promise for many of the employees because they love the dynamic because it's a continual learning environment and they can try to make a difference and learn more while they go.

Mr. Lawrence: That's very interesting, especially about the collaboration.

One of the biggest management challenges of any organization is dealing with the functional silos that exist. How are those being addressed in DoD? We'll ask Mark Krzysko for his perspective when The Business of Government Hour continues.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Mark Krzysko. Mark is the Deputy Director of Defense Procurement and Acquisition Policy e Business in the Office of the Under Secretary of Defense for Acquisition Technology and Logistics.

And joining us in our conversation is Linda Marshall.

Ms. Marshall: Mark, can you describe the process of developing a solution that was started within the Defense Department and then transferred to the civilian sector?

Mr. Krzysko: We've had a lot of solutions that have been transferred to the civilian sector, and it's principally under the integrated acquisition environment in the lane of procurement. A few of them that come to mind are the Central Contract Registry, CCR; the Past Performance System. We've also had FEDTEDS move up to a federal to provide services to that environment. Mark Foreman, when he was here, initiated the Quick Silver to try to find the low hanging fruit of initiatives that we could deploy federallywide. The Department had a few of them, and we were able to elevate them up and work them in the integrated acquisition environment.

Ms. Marshall: Is the federal technical data solution, commonly called FEDTEDS, a good example of this? You mentioned that.

Mr. Krzysko: Yes, FEDTEDS is a great example of that. FEDTEDS was developed out of the Air Force out of the Logistics Center. We found post-9/11 that the solution when we would put solicitations out on the street for bid, that information that we were putting out on the web was sensitive but not unclassified. We would have drawings of the Hoover Dam. We would have drawings of security systems that we wanted industry to provide solutions for. And we realized all of a sudden it was on an protected environment. Very quickly in the Department, what we initiated was to move that forward to protect that information, to control who and when they received that so we would understand who was getting that level of information on security.

The Department of Homeland Security was the first to pickup on this, and they tremendously led the effort in deploying it within the Department of Homeland Security. Since then, we've also extended that all the way through local governments in terms of New York City is employing that solution set. So, there we found a solution that was very small and very home-grown within the Department at the Air Force that could fill a capability gap within the procurement community very quickly and deploy nationally, and we're working on implementing that throughout the federal government now.

Mr. Lawrence: I understand the Department wants to organize the strategic acquisition at enterprise level and not a single system or component. Could you explain to our listeners what you mean by the enterprise level and why this is important?

Mr. Krzysko: Well, I think we need to recognize first that an enterprise level, what that really means, because in many cases in procurement it's what we spend our money on. We talked earlier about the magnitude of the money, and we have a tremendous amount of people that want insight as to what we spend our money on whether it's transparency for the citizen, whether it's transparency for the management of that, whether it's for the oversight communities to understand how and where we spend the money. It's critical information for the individual to understand where they're buying and what they are buying.

I have two good examples at an enterprise level that I think will crystallize this. One is we've initiated a spend analysis pilot within the Department of Defense. Based upon existing infrastructure, we're going to pilot the capability of pulling enterprise spend data from systems that are currently in place. The Army has the lead for us. The Air Force and the Navy are partnering on that to move forward and pull spend data.

Another initiative comes out of the federal solution side, out of the integrated acquisition environment. It's the federal procurement data system next generation. We are required to report all our contractual data to a system. In the past we would report it to the first generation FBDS, but this directly would move all of our business systems at an enterprise level so that a federal level we would understand who and what is spending their money on, and it would all be located in one system. It's critically important for us in the Department to do that. It's important for us in the federal sector to do that. But it's difficult to manage the transition because the technical infrastructure in the systems supporting those. When you establish single points, you have to actively manage the transition to those systems, and it's important for us to remember that it is not easy.

Ms. Marshall: What processes do you have to eliminate silos of information that may have existed, and also how does the department manager cross these processes or systems?

Mr. Krzysko: Well, silos of information we generally find that they come based upon the solutions and the technical infrastructure that's out there. We've created them because of our technological implementations. I really have a three-step process of how to think about that, and the first step of that is understanding what the process is and understanding what the business process, what the data and the information are. The way we're manifesting that in eliminating the silos is developing an enterprise architecture. Once you develop an enterprise architecture you've really managed yourself to the direction of where you want to go because you've settled on a process, you've settled on data; you've settled on the information that's needed. The next step is to assess the infrastructure and see what systems are meeting that architecture, because that will help eliminate the silos.

Eliminating the silos in and of itself is not the answer. You have to have a structure and disciplined approach because from assessing where your infrastructure is, you begin to transition your systems. In transitioning your systems, you decide whether you're going to retain them, retire them, refresh them, fix them. And you need to move forward in that lane.

We can realize, in many cases and that may sound like a long-term project but it doesn't have to be quite as long term as some would like us to believe you can realize quickly where you can implement technologies to homogenize the data, so to speak, now, but ultimately you want to have fewer, more capable systems and develop your transition plan off of that.

Mr. Lawrence: What performance metrics are you using to see how you're doing compared to those steps?

Mr. Krzysko: When I think of performance metrics at the highest level, it's always about saving time and saving money, and if you can't demonstrate that, you really don't have performance metrics. We think of it in three lanes. I think, one, we measure ourselves to see how well we're doing in terms of developing our business process, our data models, our transition plans and are we doing what we said we would do on time. We also need to assess the services and components and help them realize the transitions that they're trying to measure. So, you need to measure their progression to how well they're doing and how fast they are achieving their transformation goals because they are the supporting infrastructure by and large that are transitioning in support of us.

And, finally, you have to measure it at a process level. We need to move faster in terms of how we measure process, but we need to be careful to look at it in an enterprise level, just not at a typical segment of business. A good example of that in the past we used to measure procurement action lead time, and that would be from the moment you had a procurement request generated to the moment you executed. Oftentimes we wouldn't enter into the procurement request till we were ready to execute, so the metric always looked good, but did we really achieve the savings. You have to take a holistic measure and you have to measure as we mature, because we're not all there yet, so you have to keep moving forward and measuring yourself, measuring the process, and ultimately measuring what your technological footprint looks like. Fewer systems are, by and large, better because of the technological footprint and you can save yourself time and money.

We measured this and we had some very quick wins in the acquisition domain within our community because we were the first to step up. We moved FEDTEDS to the federal arena and didn't have a DoDTEDS anymore so we didn't need that capability internally. And we also retired the feeder system to FedBizOps. We had the Department of Defense Federal Business Opportunity system. We took that system down very early on.

I mentioned the Federal Procurement Data System. Moving to that, the measurement there culminates in two things. By our move to passing procurement data from our procurement systems to FBDS, the next generation, we not only will retire five business systems we had five feeder systems within the Department of Defense but we also business process reengineered the process because the contracting officers or the contract specialists would be passing the direct data from their contract award directly to FDBS, thus eliminating all the oversight and all the data movement within the Department. So, there you could see you measured the business process reengineered while we were reducing our technological footprint.

Ms. Marshall: Mark, I'm going to switch gears on you for a minute if you don't mind. I know your office is committed to integrating not just systems and technology but the people in the processes as well. Can you tell us why focusing on the people to achieve this vision of transformation at DoD is an important issue and what the main obstacles of achieving this are?

Mr. Krzysko: The main obstacles of achieving that and I'd like to I think you have to take all three. It's not that we solely focus on the people. You have to focus on technology, the process, the policy, the people all at the same time. Too often in the past we only focused on one, the technological aspects or the process aspects or just the people aspects. Taking as an entity, you can manage change faster if you accommodate for all three because technological solutions are not people and you need all things to change in the same fashion. The obstacles of that are principally communicative.

You need to get the communication out to the people of understanding what's changing from the technology or process perspective so you can lead them and teach them where we're going as a community. Moving as a community, the obstacles generally are that we can't reach everybody fast enough, and as the environment moves faster we will be challenged in the future to getting information out to the people to understand how the transition's occurring, what are we changing in terms of what systems we have providing solutions; how did we reengineer the process; how did we change the policy. Within the Office of Defense Procurement and Acquisition Policy, one of the things is that when we change, we get to the people and change them and inform that what we did, why we did it, and how we can help them complete their transformation.

Mr. Lawrence: Interesting, especially the integration.

Rejoin us in a few minutes when we continue our conversation with our guest, Mark Krzysko, of DoD.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Mark Krzysko. Mark is the Deputy Director of Defense Procurement and Acquisition Policy e Business in the Office of the Under Secretary of Defense for Acquisition Technology and Logistics.

And joining us in our conversation is Linda Marshall.

Ms. Marshall: Mark, how do you envision the Department conducting business with private contractors, including small companies as well as the large corporations?

Mr. Krzysko: Well, Linda, there's really two parts to that question. There's one, and everybody always wants to know how to do business with the government, and in the Department of Defense, one of the services that is offered is procurement technical assistant centers that help industry understand how to do business with the federal government. It's partially funded by the DoD, and I've participated in many forums where they help very locally of understanding how to do business, what steps you need to do, how you should prepare yourself to do business with federal government. But within the e-business world, there are also solution sets that directly tie to industry. Federal business opportunities, the single point of entry to understand what business opportunities exist in the federal government.

We have the Central Contract Registry where industry can register and must register to do business with the federal government. That's to ensure that they can get paid on time and that they could do business with us.

We have a new initiative out there, online reps and certs. We require representations and certs and a new tool is being stood up that industry can do that once and apply that to all the procurements, and that's being deployed now.

Finally, there's a solution within the Department of Defense that we're trying to permeate throughout the Department of Defense, and it's called Wide Area Workflow Receipt and Acceptance, and it's our intention to have that as the single invoicing point to the Department of Defense and hopefully at some point, maybe at the federal level, as a solution for how to take invoices from both the major contractors as well as small contractors. It's a web-based tool that will allow them to get paid and go through our processes faster and more efficiently.

Ms. Marshall: Can you tell us about your current relationship and future plans with the Defense Acquisition University?

Mr. Krzysko: Our current relationship with DAU is actually a great relationship. My former deputy for a year, Dr. Jim McMichael, has moved back to DAU and we have a great relationship working together, and I talked earlier about how people are so important. In our training, we need to realize that we need to train for the future here, and training is not just a component of how to do something but how we need to strategically think, how we need to move forward as a community. So, we need to train different skills. Any business that's not only training them on the system solutions but how to do business. Our goal is to become strategic acquirers or business brokers. So, what do you need to train individuals to do in the acquisition profession?

We're working with DAU to influence the curricula as it's developed. I participate monthly in one of our senior contract courses and go down and talk about e-business in everything we're doing. We really need to touch the people and tell them why and where we're going and what's going to affect them. So, we've had a great relationship with DAU and that will mature as we move on.

Ms. Marshall: What will the modernization of the DoD's acquisition process look like 5 to 10 years from now?

Mr. Krzysko: I think as technology solutions become more evident and we realize web-based services, we will be interconnected to work through the environment. Our acquisition process will be perfectly transparent to the entire community from the citizens all the way through the people doing the business. We'll be able to do business anywhere in the world. We will be able to connect with industry in a very efficient fashion. Not all the services of the technologies will be based within our home-grown organization. We will rely in a service-based architecture of others that provide those services, whether it's industry or whether it's someone else that interconnects, because as we realize the acquisition process and the data and what we need, we can better interconnect to cross that environment. The contracting officers will be able to work from their homes and supply the goods and services in the future.

Ms. Marshall: You mentioned strategic acquirers a few minutes ago. Can you explain to us what you mean by that?

Mr. Krzysko: Yeah, that's another great question. The strategic acquiring we sat down at one point and analyzed the skill sets of what a strategic acquirer would be and what that is. Much of that is found in data. We've realized that our environment is changing very rapidly. We're no longer local. We're global. We're no longer buying for someone down the hall, we're buying for someone across the world. We've realized that technology systems are not our own local systems. It's someplace else. We've realized that we need to work across teams and with teams. There's a variety of skill sets and services we provide, whether we buy them from GSA or get our goods and services through their instruments or contracting instruments or whether we buy them through ourselves. It is a global environment, but the real core of strategic acquiring is in realizing the information, and that's information at our desktop level which will help us make better decisions, that ultimately flow up to management decisions where they can, too, in turn make better decisions.

Mr. Lawrence: You had a significant career in the private sector, then you came to the public sector and you've been there ever since, and I'm curious, what advice would you have for somebody interested in a career or joining the public sector?

Mr. Krzysko: I have found I have been with the public sector for 13 years now. I have found it the most exciting place that I have ever worked, and I wouldn't have traded it for the world. It's given me the opportunity to make a difference, not only for myself but for the federal government to move forward. I've found that I have been empowered and working in cross-discipline opportunities, which I may have not otherwise had in the private sector. It's a very exciting time, and you can feel like you contribute very early on in your career. The training has been great, the environment, the people have been great. It is just a tremendous place to work and drive change home. The advice is to manage what you do. Do it well. Get good grades. Be sure you come with skill sets, and we can help make you better and apply those skills very quickly within the federal government to make a difference in a large scale.

Mr. Lawrence: Well, that'll have to be our last question, Mark. Linda and I want to thank you for being with us this morning.

Mr. Krzysko: Okay, thank you. It's been a pleasure to be here. One of the things I'd like to mention is we are up on the web in all of our information. We try to connect, so those who want to understand what systems are out there, what we're trying to achieve, our website is www.acq.osd.mil/dpap/ebiz/. It's the e business single point of entry and we're working on connecting it so everyone can understand what we're trying to achieve.

Mr. Lawrence: Thank you, Mark.

Mr. Krzysko: Thank you.

Mr. Lawrence: This has been The Business of Government Hour, featuring a conversation with Mark Krzysko, Deputy Director of Defense Procurement and Acquisition Policy e-Business in the Office of the Undersecretary of Defense for Acquisition Technology and Logistics.

Be sure and visit us on the web at businesofgovernment.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.