Originally Broadcast October 27, 2007s

Washington, D.C.

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

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

And now, The Business of Government Hour.

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

Healthy and productive individuals, families and communities are the very foundation of the nation's present and future security and prosperity. The Administration for Children and Families within the U.S. Health and Human Services Department partners with state and local governments, for-profits and nonprofit organizations, faith- and community-based organizations and Native American tribes to design, administer and promote programs that strengthen children, families and communities.

With us this morning to discuss ACF's efforts is our special guest, Curt Coy, Deputy Assistant Secretary for Administration at the Administration for Children and Families within the U.S. Department of Health and Human Services.

Good morning, Curt.

Mr. Coy: Good morning.

Mr. Morales: Also joining us in our conversation is Tom Romeo, IBM's general government industry leader.

Good morning, Tom.

Mr. Romeo: Good morning, Al.

Mr. Morales: Curt, let's start by talking about the Administration for Children and Families, otherwise known as ACF. Could you share with us a sense of the history, mission and activities of your organization, and how it supports the overall mission at HHS?

Mr. Coy: I most certainly will, Al. We like to think of ourselves at ACF as the social services of HHS, the Department of Health and Human Services. We're the human services piece of the HHS. Back in 1991, ACF was two different agencies, and they merged into one organization. And since then, as your introduction alluded to, we're principally responsible for those federal programs that promote the economic and social well-being of families and children and individuals.

We have a number of relatively well-known programs, one of which is the Temporary Assistance for Needy Families, commonly known as welfare, and other things like child care, child support, child support enforcement, community services. And we also have subagencies like the Administration for Native Americans and the Administration for Developmentally Disabled folks.

Mr. Morales: Now, this is certainly a very broad mission. So can you give us a sense of scale of the organization, how is ACF organized, the size of its budget, number of full-time employees and its geographic footprint?

Mr. Coy: In round numbers, ACF has about 1,250 federal employees, and a probably close to equal number of contractors, maybe a few less. And we are split essentially equally between Washington, D.C., or the central office, and 10 regional offices throughout the country. Depending on how you count them, about 120 different programs, social programs that we administer. And they're made up of all kind of programs; discretionary, mandatory, entitlement programs, research and development. Every kind of grant-type program there is, we manage at ACF.

Our current budget is somewhere around $47 billion, which makes ACF the second largest agency within the Department of Health and Human Services after Medicare and Medicaid folks within HHS. Our budget, just to put in some degree of context, is bigger than the National Institutes for Health, the Centers for Disease Control and Prevention and the Health Resources Services Administration combined.

Mr. Morales: That's a lot of money and programs to manage with a seemingly modest number of resources.

Mr. Coy: We like to pride ourselves on being able to manage these programs. In reality, ACF is about 2.1 percent of the entire HHS population, but we're managing probably more programs and more dollars than any agency within HHS.

Mr. Romeo: Curt, thanks for providing us with that sense of the organization. Perhaps now you could tell us a little bit more about your area and specific role within ACF. What are your specific responsibilities and duties as the Deputy Assistant Secretary for Administration? And maybe you could tell us a little bit about the areas under your purview.

Mr. Coy: I sure will, Tom. The Deputy Assistant Secretary for Administration, for all intents and purposes, is the chief operating officer of the agency. And you can well imagine all of those sorts of things that come underneath that: resource management, human resources, acquisition, contracts. I also wear the hat of CIO for the Administration for Children and Families. I also wear the hat of CFO, chief financial officer, and the chief grants officer. It's one of the largest grant-making agencies within the federal government. Within my specific office, we have about 220 folks. That's about 100 people here in Washington, D.C. and about 120 in the 10 regional offices that we have throughout the country.

Mr. Romeo: Regarding your responsibilities and duties, what are the top three challenges that you face in your position, and how do you address those challenges?

Mr. Coy: I don't know if these will be in order, but they're the ones that come to mind: first and foremost is the human resource or human capital, and the resource management of how we do our work in ACF. And that's a combination of factors of federal employees, contractor employees, support employees and so on and so forth. ACF's workforce, the demographics of that workforce, is clearly a challenge. It is a maturing workforce. And so getting in good folks and doing good succession planning is a real big challenge.

Most certainly is grants. But we do a lot of grants in ACF, and being able to mange that function effectively, to be good stewards of the taxpayer money, is critically important. On the other side of that fence is the chief financial officer or financial role that I play in ACF. And, again, that's ensuring that we are good stewards of the taxpayer money. But on a practical level, that's the CFO audit, that's all of those things that go with being the CFO.

That's three. And I would add probably two others: the technology challenge. That clearly is critically important as we go down the road and start looking at how we best utilize both our people and our contractors in our systems work.

And then finally, probably one that's more near-term in the next 18 months to two years is sort of stability. And what I mean by that is clearly, the election cycle is upon us, and looking at those challenges as we go down the road and ensuring that we have a stable senior leadership within ACF, and that stable leadership is comprised of both political appointees and career senior managers.

Mr. Morales: Curt, you and I have had the pleasure about 10 years ago of crossing paths, and I know you have a very interesting background. So I'm curious, can you describe for our listeners your career path and how you got started in your career?

Mr. Coy: It's probably one of the stranger career paths. I started out as an enlisted person in the Air Force. For some strange reason, I was accepted into the Naval Academy, graduated from there. Spent the next 20-some years in the Navy as a naval officer; first as a, if you will, a ship driver, and then the last 10 or 15 years as a supply corps officer. Supply corps officers in the Navy are generally considered the business and financial managers of the Navy.

After that, I went to work for Coopers & Lybrand, which then morphed into PricewaterhouseCoopers. I was there for about seven years. I was hired in 2000, in the fall of 2000 to be the director of the HHS Program Support Center, which is about a $400 million fee-for-service organization.

Two years later, I was asked by the new Secretary, then-Secretary Thompson, to become the Deputy Assistant Secretary over at ACF.

So that's the condensed version.

Mr. Morales: That's the Reader's Digest version.

So with all these broad ranges of experience, how has your career, both in the Navy and later on in the private sector, prepared you for your current leadership role and shaped your management style and approach?

Mr. Coy: I don't think any one thing shapes or makes a person what they are now. But there's a lot of background that goes with that. Folks have asked me similar-type questions. My background of being a naval officer is accountability. And that accountability leads to lots of other things.

Probably one of the characteristics that makes a good leader is curiosity. Why do these things work this way? Why do people do things the way they do it? And then probably, I've given a number of lectures at HHS about leadership, and one of the things I tell people is leadership is about taking care of folks. And there is a difference between management and leadership. And I often tell people that management is managing things and leadership is leading people.

Mr. Morales: Great. Thank you.

How is ACF integrating budget and performance information? We will ask Curt Coy, Deputy Assistant Secretary for Administration at the Administration for Children and Families, 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 Curt Coy, Deputy Assistant Secretary for Administration at the Administration for Children and Families. Also joining us in our conversation is Tom Romeo, general government industry leader for IBM.

Curt, let's talk for a moment about the President's Management Agenda, or the PMA. In the last OMB scorecard, about half of the federal agencies, including your department within HHS, received a red rating in financial performance. Could you tell us from your perspective why this is such a challenging area for federal agencies? And second, what has your agency done to contribute to your department's progress and improvement over the last year, so much so that OMB has provided a green rating in progress?

Mr. Coy: Well, that's a long question and an interesting one. In ACF, we've been very successful in the PMA overall. Each quarterly progress rating since 2003, ACF has gotten about 105 out of 109 green progress rating.

With respect to the financial management challenges, just set the stage very, very quickly. The Department of Health and Human Resources is 65,000 employees. In round numbers, their net cost of operations is about $623 billion. HHS also has about 12 operating divisions, of which ACF is one of them, National Institutes for Health is another, and so on and so forth, and about five major accounting centers.

HHS has been working very, very hard to implement a systems-oriented approach to financial management. We have a system called the Unified Financial Management System, but having said what I said about HHS and their budget and the number of divisions, you could say the same thing about the Department of Defense and Homeland Security. The complexity of these organizations is clearly a challenge.

What PMA does is they assign scorecard ratings of red, yellow, and green. And then they divide that further every quarter into progress ratings and status ratings. Right now, HHS is green in progress and red in status. The red in status is in large part due that we're not finished with our UFMS implementation.

The challenge of implementing the state-of-the-art sort of systems environment is exasperated by the size and complexity of what HHS does, or the other federal agencies that are red. But the good news is, as you look at HHS, the progress ratings -- and what progress does is says you're moving toward and doing the right things. And what's exciting about that is HHS has been receiving these green progress ratings. In other words, we're hitting the milestones.

So financial management is not just the CFO audit. It's also looking at how do we develop and adapt a world class financial management system and practices, and use that information on a daily, weekly, and monthly basis.

Mr. Morales: Now, could you talk a little bit about budget and good practices? Budget and performance integration lies at the heart of ensuring both strategic allocation and the efficient use of funds. Many organizations are working to implement the budget and performance integration aspects of the PMA.

But can you tell us about your agency's efforts to get to green and sustain for the budgeting and performance integration? And how has your organization expanded the use of financial data to inform the management decision-making process?

Mr. Coy: Our President's Management Agenda scorecard with respect to budget and performance integration is we have a green in status and we have a green in progress.

First and foremost is probably our PART success. And the PART is the Program Assessment Rating Tool. We are also using financial data to inform management on a number of things, such that we turn things around and use financial data to make decisions.

And I'll give you two or three examples. We use financial data to look at or improve program oversight, debt collection, implement actions resulting in cost savings to the agency. And some of these things are as mundane as prioritizing site visits to grantees, decreasing the number of open or active grants.

I will tell you, in ACF, we have a real success story with respect to grant audits. We've closed over 7,000 grant audits in the last three or four years. We've made a concerted effort to use that financial data to close out a number of our grant audits. We also improved our single audit compliance supplements and a number of our internal controls. Our Child Support Enforcement folks use the information out of UFMS almost on a daily and weekly basis to do forecasting, to take a look at actual expenditures, to take a look at how we prioritize conference spending and travel, and the list goes on and on and on.

The good news is, in all honesty, the use of financial information in today's government is critical. And I don't know that we're proud that we're using it. It's a practical application of what we have to do. And we have to do that because we don't have the kind of people -- numbers -- that we used to.

In the good old days, if you will, it was kind of fun and interesting and easy to have people with spreadsheets and keeping track of all of these things. And we don't have that luxury anymore. But again, it goes back to technology making things happen a little bit better and faster.

Mr. Morales: Now, Curt, earlier in describing your career, you used the word "accountability." So I find it interesting that your organization has received an unqualified opinion on its principal financial statements for the eighth consecutive year, I believe, which clearly demonstrates a pattern of financial accountability. What is the significance of having this clean opinion? And what are the keys to successfully achieving a timely and clean opinion?

Mr. Coy: Well, first, the significance to me is it clearly shows that we're working hard to be good stewards of the taxpayer money. It's not just simply making sure all the numbers are in the right columns or in the right categories. The CFO audit has become so much more than that. It shows that we're a professional organization, that we take pride in what we do, and we stay on these things.

And that's probably the next thing you have to remember: you got to keep up with this year-round. This is not a two-week drill at the end of the fiscal year. This is something that you do over and over and over again throughout the entire year. And probably most importantly is we've been -- knock on wood -- pretty fortunate to have some very, very sharp folks working on this. I think the success of any program in any organization, whether it's in the private sector or public sector, is dependent upon having good folks. And we have some incredibly sharp people that are doing these things, and they're incredibly dedicated.

Mr. Romeo: Curt, part of that accountability is around improper payments. And agencies are required to annually review programs to identify those susceptible to significant improper payments. Improper payments can include payments made in the wrong amount, to an ineligible recipient, or improperly used by the recipient.

Can you elaborate a little bit on the initiatives and strategies that the department has employed to manage and reduce improper payments? Tell us a little bit about the progress you've made. I think the progress you've made in the other areas is very impressive. And then talk a little bit about how much of a challenge that effort still presents to your agency.

Mr. Coy: In HHS, we have about seven programs that are tracked by the Department or OMB, the Office of Management and Budget. Of those seven programs, Medicare and SCHIP, and so on are some of the others -- but ACF owns four of them; the TANF program, which is welfare, Temporary Assistance for Needy Families, our child care program, our foster care program, and our Head Start program. And we also have an improper payments initiative called PARIS. I'm going to talk about that in a few minutes as well.

But the fact of the matter is these four programs are integral to the Department of Health and Human Services' improper payments initiative. And each one presents a different challenge. For example, for the Temporary Assistance to Needy Families, or welfare, that's principally a block grant program that goes out to states. The federal government, for all intents and purposes, does some oversight of that program. But it's left principally up to the states to develop their own welfare programs. That was part of welfare reform back in 1996, and was reinforced again by the reauthorization just last year.

When you say improper payments, we shouldn't be giving money out to the wrong people in the wrong amounts of money. For example, TANF, each state has different eligibility requirements. And so do you measure those that are ineligible, do you measure how many improper payments go to people that aren't supposed to be getting it? Just coming up with those kind of small nuances is critically challenging, if you will.

On the flip side of that is the Head Start program, which is a lot more discretionary program. And what we've done is we've developed an error rate, and we're reporting these things in our budget on a yearly basis. And so -- in each one of these things, they're each done separately.

Now, we've also done about 7 to 15, depending on how you count it, risk assessments of programs that we also have. And we are very serious about it. ACF deserves a lot of credit, those program folks deserve a lot of credit for coming up with strategies to implement the 2002 law.

Mr. Romeo: I can see where, with as many programs as the ACF oversees, it could be a real challenge to track payments across all of those and ensure the correct payments, especially with the number of people that you have as employees.

Mr. Coy: Well, it really is a challenge, because each of these four programs are entirely different, so you can't measure improper payments in Head Start the same way you might measure improper payments in the welfare program. And then there is the child care program and the foster care program. And they're all different size budgets, but they all go out and they're managed by states. The Head Start program is managed by Head Start grantees. And so you can imagine the rolling effect of this.

But what's also interesting is watching the end users of this improper payments initiative and that cultural change, because their first instinct was, "We don't want to have anything to do with this. It's not my problem. That's a federal government problem." Then it went to, "Well, I really don't want anybody to know my error rate." "Who wants to be told what your error rate is? I don't care if it's 1 percent or 50 percent. Nobody wants to be told that you have an error rate."

And that cultural shift is changing now, such that you see things, the nuances of seeing state and local websites that say, "And we're doing these things to support the President's Management Agenda." Or "We're doing these things," maybe not necessarily to support it, but in response to the President's Management Agenda, or in response to the Improper Payments Act.

And we've taken it from, if you will, an environment, I think anyway, that is negative in nature, such that it's now looked at in terms of, "This is critically important." It doesn't mean that you're going to get back all of this money. It doesn't mean that there is going to be billions of dollars that gets poured back into the federal treasury. But what it means is that we, as good stewards of the taxpayer, both at the federal level and at the state and the grantee level, are paying attention to this. And I think that's really the cultural change that one's looking for.

Mr. Romeo: I think the effective application of those dollars to the people they're intended for is a very positive outcome of the programs that you're running.

Mr. Coy: Well, if you look at any one of these significant Improper Payments initiatives, for every dollar that is not spent in the wrong areas is another dollar that can be spent on a Head Start grantee or can be spent on the state's welfare system, can be spent in child care and foster care.

Mr. Romeo: One other area of assessment is the PART tool. So in 2003, the Office of Management and Budget initiated its Program Assessment Rating Tool, commonly referred to as PART. It places greater emphasis on results and outcomes rather than processes and outputs. Can you tell us a little bit about how your agency has performed under the PART? And how has PART enhanced your agency's performance management efforts?

Mr. Coy: PART is rather interesting, and it started out rather slow. And the concept is, "We're not going to just give you money. And to fix your program, we're going to have to give you more money."

What the Program Assessment Rating Tool tries to do is take a look at the intent of the program, and is the program successful with respect to the intent of that program. And so they break PART down into about 25 questions and its four different areas, with the first and fourth section the most important. And then they rate each program as effective, moderately effective, adequate, ineffective, or results not demonstrated.

In ACF, we have had the absolute pleasure of being, if you will, "PARTed" 27 times in the last several years. And we've gotten the following ratings: three were effective, that's the highest score you can get. Eight were moderately effective; that's, if you will, a, b, c, that's the b of things. Seven were adequate. Nine were results not demonstrated. And none of them were ineffective.

We have a great deal of pride that our Child Support Enforcement program scored about 90 percent, which is the highest score for any social services program within the federal government, period, bar none. About 98 percent of ACS performance measures track outcomes rather than outputs. While it may sound like a nuanced response, measuring outcomes instead of how many widgets are you producing with this money and so on, but what is it that you're actually getting for this program, is critically important. And we've seen this success translate into green PMA scores in status and progress.

Our PART team within ACF recently got a Secretary's Distinguished Honor Award. And the other good news is our PART scores are improving. Over the course of 2002 through 2005, we had about 57 percent of our programs that were evaluated rated as results not demonstrated. For the period of 2006 and 2007, only about 12 percent of those scores were results not demonstrated.

So what it shows is two things: first is, there is a little bit of science that goes into the rating tool. But it also points out that you may need to make changes into your program to get the results that you're looking for. And we've used this tool, and now we've inculcated it into our budget and into all of our budget documentations.

Mr. Morales: Curt, we only have about another minute left in this segment. But I do want to ask you about grants management. The grants management line of business seeks to establish a government-wide solution to support the end-to-end grants management activities.

Now, earlier, you mentioned that ACF is perhaps the second largest of the grant-making agencies within the federal government, just behind CMS. Could you tell us about your agency's efforts to become a grants line of management shared services provider within the federal government?

Mr. Coy: We are one of three agencies selected by the Office of Management and Budget to be a Center of Excellence for grant systems processing.

A couple of years ago, in the essence of time here, OMB asked agencies and the private sector to submit proposals to be a Center of Excellence. We did. We were successful. And so now we have about eight different partner agencies. We process about $59 billion in grants through our system alone.

The net operating costs remain at $5 to $6 million a year, which is, if you go look at some of the other grant systems in the federal government, about 10 times less than them. And we got into it for in large part selfish reasons. As you indicated, we're one of the largest grant-making organizations in the federal government. And one could even argue that the Medicaid, Medicare services-type things aren't pure grants as we know them as grants.

We were the big dog, if you will, with respect to the number of grants that were put out -- both in dollars principally. And we thought we had a pretty good system. We wanted to become a Center of Excellence so we wouldn't have to go to anybody else. But the key concepts of the whole Center of Excellence that we've inculcated into ACF is, we look at it as a partnership with our folks that are part of us. It's a shared cost. The overall operating costs are about $5 or $6 million. If you do half of the grant transactions through there, then you pay half the cost.

ACF used to pay the full freight of that $5 or $6 million. Now we pay about 60 percent of it. That money that is physically saved goes back into any number of things, whether it be more grants, whether it be more training opportunities, whether it be more travel opportunities. And so being one of the Centers of Excellence has been really successful for us.

And we've been recognized with a number of awards. We got just this past fall a President's Quality Award, which was HHS' very first President's Quality Award. We've also gotten just recently the Civilian Leadership in Enterprise Architecture Award, presented by the E-Gov Institute.

We were also given the National Grants Contract Management Association Award for Electronic Solutions just this year in April. So we're pretty excited about that.

Mr. Morales: Great, excellent.

What about the Faith-based and Community Initiative? We will ask Curt Coy, Deputy Assistant Secretary for Administration at the Administration for Children and Families, 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 Curt Coy, Deputy Assistant Secretary for Administration at the Administration for Children and Families.

Also joining us in our conversation from IBM is Tom Romeo.

Curt, discretionary grants permit the federal government to exercise judgment or discretion in selecting the applicant or recipient organization through a competitive grant process. In the last fiscal year, the agency provided substantial discretionary grants awards. Could you tell us about the agency's effort to ensure efficiency and manage or reduce risk in this area?

Mr. Coy: I sure can. Let me give you the broad picture. In round numbers, ACF awards about 7,700 grants a year. That's about 20,000 transactions when you add in all of the MODs and this and thats to them, for a total cost of about $47 billion of grants. Of those, about 3,000 of those are discretionary grants, and about 8,800 transactions, worth about $7.5 billion.

And we have a very structured and rigid process with respect to providing discretionary grants. And it all starts with the program announcement. In the contracts world, that's called the Request for Proposal. By the time we get it on the street, it has been vetted by a number of folks. And the program announcement clearly indicates what you're looking for, so that it's critically important that this program announcement be very clear and hopefully very crisp.

In almost every case, we have panels of outside civilians, non-feds, that sit on the panels and evaluate these proposals. And we come up with a rating and ranking list based upon those evaluations. And so they're independent panels overseen by the feds. And so the panel is done. We normalize those scores across panels. And you sort of draw the line on how much money do you have for that particular program. And you draw the line and everybody below the line is not funded, and everybody above the line is funded.

Those grants that we think we're going to fund, we make sure that perhaps there is a geographic distribution that's there. You don't want to have two highly rated grant proposals but they're right next door to each other in the same city, state. You want to try and spread opportunities out across geographic areas.

You also take a look at those grants or proposed grantees and see how they're performing. There are some grantees that are on watch lists because of audits and so on and so forth. So we take a look at it from that aspect.

Once we get done with all of that, that list is then vetted through the grants officers. So the program staff puts it together. Once those two pieces come together, the program staff and the grants staff, and that list is finally established, it comes to me. As the chief grants officer, I take a look at it. Then it goes to the Assistant Secretary. The Assistant Secretary looks at it. And then once the Assistant Secretary says, "Yes, check," then those grants are sent over to the department for sort of one last vetting before we actually make the grants.

Mr. Romeo: Curt, President Bush's Faith-based and Community Initiative represents a new approach to government's role in helping those in need, through its oversight and implementation of key elements of the initiatives agenda. Would you elaborate on how ACF has significantly expanded the number of faith-based communities partnering with HHS?

Mr. Coy: Well, you're hitting on all of the ACF milestones here. ACF is one of the leaders with respect to the President's Faith-Based and Community Initiative programs. And we have a whole wide variety of them, ranging from the Mentoring Children of Prisoners, which the President spoke about in his State of the Union address a couple of years ago, the Healthy Marriage Initiative, the Fatherhood Initiative, the Compassion Capital Fund.

And all of these programs are meant to further the President's Faith-Based and Community Initiative program. And they do it by a number of different areas. Our Compassion Capital Fund initiative, if you will, is sort of a two-part initiative. One is to set up intermediary organizations to help these grassroots, faith-based and community associations apply for federal grants. And so we've been very successful in awarding grants to these intermediary organizations whose sole function is to help those organizations do just that.

We also have another component of the Compassion Capital Fund. We call them mini-grants. And they are $50,000 one-time grants to help a faith-based or community organization in any number of things. And we evaluate those. We started out with, in round numbers, about 52 of them. And in this last year, we gave out about 310. And they range from things -- simple examples of, "Gee whiz, I really could use a new van to get folks from here to there. And that would help my faith-based and community organization do this and that. So I need $47,000 or whatever the number is to do that." "I need a new computer system and printer to be able to print up flyers and so on, so I can do outreach to these folks."

Whatever you might imagine $50,000 might account for, people apply -- and we've given out close to 1,000 of these $50,000 grants, which -- when you think of the federal government, they're worth billions and millions of dollars and hundreds of thousands of dollars. But $50,000 will go a long ways to help one of these organizations. And that might be just the thing that kind of kicks them over the top when it comes to that. So we're very proud of that type of situation.

Our Mentoring Children of Prisoners, as I alluded to, what that does is it gives grants to community organizations that provide children and youth of incarcerated parents with mentors. And we're looking at these kinds of things and seeing very, very positive results when it comes to having good mentors to folks who have kids but are incarcerated.

As well, the Deficit Reduction Act, or TANF, which was reauthorized last year, included about $150 million to support programs that were designed to help couples form and sustain healthy marriages. And so many of these kinds of grants with respect to that are faith-based and community-type grants.

But one of the things that we try not to do is we don't discriminate one from another. What we are trying to do is make sure that faith-based organizations can apply for federal funds just like anybody else. And that's the thrust of what the President's initiative of faith-based is.

So our coalition partners include local governments. They include civic groups; they include churches. They include ethnic and immigrant groups, women's organizations, labor organizations, immigration organizations, community health providers, faith-based organizations, nonprofit social services. And so it's a large encompassing program that we've taken a great deal of pride on its success in the last several years.

Mr. Romeo: Curt, another area that your department has made progress in is improving its real property asset management and rightsizing your asset inventory. Would you talk about how your agency has contributed to the Department's efforts in this area?

Mr. Coy: Well, the Department has a large real property inventory. Under the leadership of the Assistant Secretary Joe Ellis, we have really come a long ways in managing this property. If you sort of think about it, we have the Indian Health Service and the Department of Health and Human Services. They have anything from hospitals to warehouses to all kinds of things.

We're developing a computer-based organization that tracks leased property and owned property by the government, and starting to look at how we manage this property in a much better fashion. Within ACF, we're relatively easy. So I would like to say that we contributed significantly to HHS. But we don't own any buildings. We lease our space. And so our input to real property is principally ensuring that our leases are input into the database, that our leases conform to the kinds of things that the Assistant Secretary has said we need to conform to, as well as OMB.

Mr. Romeo: One of your many hats in the agency is also as the information technology portfolio lead. What are some of the key IT management challenges that ACF faces? And what has your agency done to enhance its IT capabilities to meet such challenges?

Mr. Coy: Well, probably, as I alluded to earlier, the thing that consumes most of our time in the IT world is our grant system Center of Excellence. And we have a number of partners, as you might imagine, and managing that system has become increasingly important.

As CIO, we also are looking at our IT infrastructure. And the IT infrastructure is servers and e-mail and just the business of doing things on a daily basis. ACF has joined a number of other HHS agencies in a shared service platform, it's called the Information Technology Service Center, ITSC, in the hopes of putting together those scale of services, such that we're not managing all of these servers and the nuances of those kinds of things.

Probably the next challenge is the Unified Financial Management System. We implemented that just this past year. There are still things that we need to get the bugs worked out of. And so that consumes time and energy and resources.

And quite frankly, as you look at ACF's budget with respect to discretionary funding, we have been, for all intents and purposes, flatlined for the last several years. What does that mean? We're absorbing pay raises, we're absorbing the cost of increased server costs, we're absorbing the costs of increased IT. And so you get to a point where you have to make some decisions on -- while you would like to do this, what's the business case to be able to go out and get that multimillion-dollar server, for example.

Mr. Morales: Curt, just to change tracks here a little bit. With such a critical and broad mission, collaboration must be critical to your success. What kinds of partnerships are you developing now to improve operations or outcomes at ACF? And how many of these partnerships change over time?

Mr. Coy: Well, to answer your last question first, they change all the time. But one of the things -- and it's most interesting having the CIO role, the CFO role, and the chief grants officer role, and Deputy Assistant Secretary role, because what you're looking at is technology is allowing and the drive to improve business services and government efficiency. It has to. So it's forcing a change in the way organizational boundaries are looked at.

Technology is clearly -- simple things like e-mail. It used to be that you'd take a memo from here to there, and you'd have a runner that would take it to the next building to the -- and now you can communicate almost instantaneously. The grant Center of Excellence that we have is probably an excellent example on how multiple agencies have decided that they have a common interest that's best served by going outside their agency. But they still need to ensure that their mission-critical services are done, and they're done preferably and hopefully at a lower cost.

And so the key to working on this, and a reason this line of business is succeeding for us anyway, is that the vision has to be structured not just on ACF, but the vision has to be structured on what's the bigger picture. And the vision of, in reality, our grant system Center of Excellence is to get grants out the door in a timely and cost-effective manner. It's not to get grants out the door. The way ACF does it, in a timely and in an effective manner. And so these kinds of things become the catalyst as you're working across different agencies.

But the fact of the matter is, you can say technology and you can say financing, you can say all of those things. But you're never going to avoid that interpersonal relationship, the working with other senior staff across agencies. And once you create that bond of that senior staff in fact developing common goals and visions, they quickly become the primary agents of any transformation that you're talking about. And they redefine where those organizational boundaries really are.

I would suggest that across the board, the example that we've seen with our Center of Excellence for the grant system has been a very successful tool. It's been a very collaborative effort, and it's actually been sort of fun.

Mr. Morales: What does the future hold for the Administration for Children and Families?

We will ask Curt Coy, Deputy Assistant Secretary for Administration at the Administration for Children and Families, 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 Curt Coy, Deputy Assistant Secretary for Administration at the Administration for Children and Families.

Also joining us in our conversation is Tom Romeo, IBM's general government industry leader.

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

Mr. Coy: Well, I think our office is evolving a lot. And that's principally as a result of a maturing workforce. You can call it what you like, but the fact is, retirees are on the rise within the federal government. And so how do we handle that kind of succession planning as you lay out training and lay out hiring schemes and so on and so forth. So that's probably the biggest challenge is we're looking at how do we in fact ensure that our programs are done and done properly.

Technology has to be one of those challenges. It also has to be the opportunity that technology is going to allow us to do things better, faster, hopefully more inexpensively, and to be able to leverage our assets across the board.

And then finally, strategic hiring. How do we bring in the right people? So we have a whole strategic hiring process that we have. As we transition to next year and the year after and the year after, I would suggest that in the near term, those are the kinds of things that keep me awake at night.

Mr. Romeo: Two of those points were about your human resources. How do you ensure that your employees have the appropriate training and skills? And what is the organization doing to ensure that it has the right staff mix to meet the upcoming challenges?

Mr. Coy: Well, we're doing two or three things. We have a very robust training plan. In the past several years, we've seen well over 90 percent of ACF staff participating in some degree of training. And that can be extensive training. It can be sort of online training for computer usages, but we've been very aggressive in trying to ensure that all staff have training opportunities.

We also have taken a look at our training funds. We've fenced training funds. And we've made training part of all of our SES performance contracts. Training's important, and we're going to measure it. Senior staff are being held accountable for those kinds of training things. And so we're making that accountability in training on ensuring that we have the skill set.

We're trying to stand back and look at our hiring from a more strategic sense. And what I mean by that is in the days of past, if you will, if a Head Start program person left, then you would go look for another Head Start program person. But in reality what you want is somebody who could read and write well, somebody who can do analysis and strategic planning and so on and so forth. And what are those kinds of characteristics that we're looking for in our entry level workforce as we move up the whole career path that we have.

And so when you look at the human capital aspect of ACF, we've been very successful in retaining good folks. We've been very successful, and recognized for it. So we're looking at the kinds of skill sets that we're looking at when we hire people; once we have them, to ensure that we have training opportunities; and in some cases, training opportunities at the expense of other things, at the expense of perhaps travel, and perhaps even at the expense of hiring another person. Because for every $100,000 that you put into the travel kitty, in round numbers, that's a person that you're not hiring.

Mr. Romeo: Are there special steps taken to attract and maintain high quality technical and professional resources?

Mr. Coy: Well, one of the things that we're trying to do is a strategic hiring process. And we've done is we've tried to lay out and look at our workforce somewhat more strategically.

If you look at the number of occupational codes or series that the Administration for Children and Families have, in round numbers, there are four occupational codes or series that account for over 82 percent of the staff at ACF. So if you manage those four occupational series and you do it well, the other 18 percent you can do on a onesie-twosie basis, on an as-needed basis as you go down the path.

So we've created hiring schemes for those four occupational series, and gone out nationwide and advertised for those jobs. And folks come in and they apply for these jobs. And we have panels from all of the programs that come in and interview them. And so then we end up ranking and rating these folks. And we may hire 20 of them at a pop, or 30 of them, depending on what our budget looks like and so on and so forth. And there is a hope and the intent that we can almost take any one of these 20 or 15 or 30 folks and plug them into almost any program office within the Administration for Children and Families and they'll be successful, because they have the requisite skills to be able to do that.

How do we keep and attract these folks? What we've had from entrance interviews as well as feedback from our process is -- we have things like a student loan program. We're one of the few operating divisions within the Department that has a student loan reimbursement program. We have a tuition assistance program. We have a leadership development program that is designed to develop high-performing GS-12s, and 13s, and 14s, and 15s.

And then finally, we have developed a culture, if you will, that we only hire -- for the most part, there are exceptions like anything, but for the most part, we only hire at the 9, 11, 12 level. When we need to advertise for a GS-13, 14, or 15, we do that internally. And it forces two or three things. It forces that manager out there to say, "Wait a minute. You're not going to get your next GS-14 replacement off the street. It's going to be from that pool of folks that you see right now. So you better make sure that those folks are getting the training and the opportunities that they need." So we have a very robust program when it comes to those kinds of things.

Mr. Morales: Now, Curt, earlier you mentioned the pending retirement wave. So specifically how are you handling this situation, and what are you doing to ensure that the organization has the right mix as you move into these years?

Mr. Coy: Our workforce has shrunk about 10 percent over the past five years. We've often reported -- as you look at the demographics and the statistics -- and I do -- but ACF remains -- as you look at the Department of Health and Human Services as a whole, we're more diverse, we're more educated, and we're more experienced than HHS. And those are all good news things.

The bad news is that in the next five years, about 50 percent of our non-supervisors will be eligible for retirement. That's almost double what the population of HHS is. Within the next five years, 75 percent of ACF supervisors will be retirement-eligible. That's again way above any of the norms that you even read about in HHS or in the federal government as a whole.

And so we need to take a look at those key issues, and we have been, when we do succession planning. Because what we've seen is, number one, we try and manage ACF as a whole. It's not managing as entities. And we haven't said, "Okay, you get five people. You get 10 people. You get 20 people, 30 people, 200 people."

We take a look at ACF across the board and we make serious management decisions on where we need to do that backfill, because what happens is, over the past five years, in round numbers, we've been able to replace about three people for every five that leave.

And so if you take the leadership aspect of being able to manage the workforce and then bringing in the right folks at the entry level in those four occupational codes and series and you focus on those, hopefully we'll be in a good place. Sometimes change is difficult. But we also look at this opportunity -- when it comes to the percentage of supervisors and non-supervisors who are retirement-eligible, and then you stand back and look at the demographics of that. And in any given year, about 20 percent of those who are eligible actually do retire. But you don't know who that's going to be.

That's the very frustrating part is, you can't do succession planning based upon Bob, and Mary, and Joe, and Susie and so on and so forth, because you're not even allowed to ask somebody when they're thinking about retiring. And so you have to do it on a more global sense, not on a more finite sense. That provides a little bit more of a challenge.

Mr. Morales: Curt, you've had a very extensive and very successful career both in public service as well as in the private sector. So I'm curious, what advice might you give a person who is considering a career in public service?

Mr. Coy: Public service is an honor. As corny as it sounds, people ask me, "What made you get back into the government?" The fact of the matter is, public service really is an honor, and that public service is critically important to the way that you view your job.

I would also suggest when it comes to young folks in government service, my advice would be "be curious." That's probably the one attribute that I value the most. Leverage those who go before you. Make sure that you get everything you can from them before they leave. Don't accept the status quo. It's one of the things that probably, stereotypically, government employees have their worst reputation. And that's the status quo. Don't look at things from a status quo perspective.

And then finally, I would suggest that you celebrate what you do and how you do it and why you do it. Because if you're not in that shower in the morning thinking of all those things that you got to get done today, and if you're not driving home at night or going home at night going, "I didn't get these things done today," I would suggest that you're not having fun. And maybe you need to look for something else to do, because at ACF, there's no way that you can't possibly not be challenged by the kind of work that we do.

Mr. Morales: That's fantastic advice. Curt, unfortunately we have reached the end of our time. I want to thank you for fitting us into your busy schedule. But more importantly, Tom and I would like to thank you for your dedicated service to our country both as a naval officer and now at the Administration for Children and Families.

Mr. Coy: Thank you, Al. I appreciate it.

Mr. Morales: This has been The Business of Government Hour, featuring a conversation with Curt Coy, Deputy Assistant Secretary for Administration at the Administration for Children and Families.

My co-host has been Tom Romeo, IBM's general government industry 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 can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support.

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

This has been The Business of Government Hour.

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

Until next week, it's businessofgovernment.org.

Thursday, January 26, 2006

Arlington, Virginia

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

Mr. Enger: Good morning.

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

Mr. Enger: OPM was created by the Civil Service Reform Act of 1978. It has a number of different responsibilities, one of which is to build a high-quality and diverse federal workforce based on merit-system principles. Essentially, it's the guardian of the integrity of the federal merit system. The director of OPM is the HR consultant for the executive branch. She's the President's principal advisor on matters that relate to the civilian workforce.

In addition to this responsibility, the OPM also has responsibility, for example, for the employee benefits systems, and in effect operates and administers the Civil Service Retirement Systems, the Federal Employee Retirement System, and the Civil Service Retirement System, which is servicing millions of retired federal employees. It also administers the Federal Employee Health Benefit System, which, again, services millions of both employed and retired civilian employees.

In addition, a very large responsibility that OPM now has is the processing of personnel background investigations. OPM now performs 90 percent of all the federal government's personnel background investigations, which covers both the civilian workforce, DoD, and also includes contractor personnel.

Mr. Morales: You've been with the Office of Personnel Management now for, I believe, about four years, Norm. Is that correct?

Mr. Enger: That's correct, yes.

Mr. Morales: And you came on board to lead the implementation of the e-government initiatives. Could you describe the various roles at OPM that you've had in these past four years?

Mr. Enger: My background has been private sector. I spent my life in the private sector and what happened, I then was asked by the federal government to help out the federal government. I met with the director of OPM and the chief of staff back in 2000. They asked me would I consider doing some public service. Essentially, at that time, the OPM had five of the original 24 e-government initiatives. These were initiatives that really had three primary mandates, if you will. First one was to make transformational change -- really change a business process in the federal government. Number two, do it in a relatively short space of time -- say, two to three or four years. And also the third mandate was to prove you've been successful. Show us by numbers, metrics, or whatever that you really have achieved that goal. The five that we had really framed the employee life cycle from recruitment to retirement. Essentially, the five we had were what I call point solutions.

For example, one of them dealt with the website where someone goes to find a federal job. That's called usajobs.gov, and we, in effect, transformed that website. What happened is in last three to four years, we've moved those five to a point where they're ready to graduate into the regular business of OPM. They've been successful and met all of their milestones. However, what you're looking at is fixing a piece of the overall HR business process. Namely, you fix the website, but you don't fix the entire hiring process.

What happened is that OMB recognized that perhaps it was wise to expand upon the original concept of improving federal HR systems, and what they did in March of 2004, they announced something called Lines of Business. They announced at that time five lines of business, and one of those five was the Human Resources Line of Business. Essentially, the difference between the original five e-gov I had and the new Line of Business is that this is much broader in scope. They're looking at everything you do in terms of the business process from hiring a person to retiring a person and saying, let's look at the entire scope of this, the entire business process and all the sub-functions and really try and change as much as possible, and where possible use technology.

Mr. Shaw: Norm, you are now the director of the Human Resources Line of Business. Could you tell us about the mission of your office? You've spoken briefly about it, but could you provide some more detail?

Mr. Enger: The mission of my office is really to implement the vision of, now, the Human Resources Line of Business and also to complete the final graduation, if you will, of the original e-gov initiatives. Essentially, we are following the President's Management Agenda, the PMA, which sets forth as one of the five major components, e-government. We're following the goals and desires specified in the PMA -- the part, of course that deals with e-government. We also are following the E-Gov Act of 2002, which, again, has visions to improve federal IT systems. And finally, there's also something now called the Federal Enterprise Architecture, which is a big picture of the government from a business point of view, whereby it's looking at the government as one organization, saying, what does this one organization, this one government do? So we're responsible for, in effect, giving detail and giving the structure to the Human Resources part of the Federal Enterprise Architecture.

In terms of my mission, I have a staff of approximately 37 people working for me. With contractors, we have approximately 60 people working to implement both the HR Line of Business, but also to finish off or complete the earlier 5 e-gov initiatives.

Mr. Shaw: Norm, some of our listeners may have difficulty understanding what the federal government means by "human resources." Could you share your understanding of this term?

Mr. Enger: Human resources really means the 1.8 million people in the civilian workforce. What we are trying to do is we're trying to, in effect, improve how we recruit, how we motivate, how we reward the people in the federal workforce. So human resources means people. Another term that's come into popularity is "human capital." Essentially, this is also the people, but it wants to give the flavor, if you will, of the people in terms of a real asset to the organization. So when you say "human capital," you mean: Think about these people you have and think of them as an asset, like any other asset you have in a large corporation.

Now, the goal of the HR Line of Business is essentially to implement modern and cost-effective HR solutions to support the strategic management of human capital. A goal here is to, in effect, free up the HR professionals in the government from routine back-office type of work and move a lot of that work to federal processing centers -- I should say federal and also private processing centers. So in effect, you free them up to focus on the mission of recruiting, motivating, training, rewarding the people in the federal workforce, the move to a more strategic use of our HR professionals to build a better work force. And of course, a secondary consideration here is the fact that by doing this you also achieve many, many operational efficiencies, you save a lot of money, and you become much more efficient.

Mr. Shaw: As you mentioned earlier, you came to OPM after working in the private sector, including a successful launch of your own technology company. How have you translated your private sector experiences to your work now at OPM?

Mr. Enger: Well, I spent most of my professional life running my own company. It was a consulting, professional services, IT system integration type of company, and then what happened is the company was bought in 2000 by a large multibillion-dollar company called Computer Associates. I spent two years with that company as a vice president. So I really had the experience of both working at my own company and also working for a very successful large corporation.

Now, to answer your question specifically, what has happened is the federal government has moved toward trying to follow the best practices in the private sector. I was surprised when I joined the government in 2002 that I was seeing the government actually turning more and more to the private sector for help, answers, and solutions. Essentially, if you look at how the federal government rates their senior executives, they have several criteria that you have to really try and meet. One is leading change. A second one is leading people. A third one is being results-driven -- give us some results or some tangible evidence you're successful. A fourth one is having business acumen -- namely, you can intelligently operate a business-type function. And the fifth one is building coalitions and communications.

Well, all of these elements, these five, are very, very critical in the private sector. When I ran my own company and when I worked for Computer Associates, these were the criteria by which you judged the successful executives. And now, what I see is that that structure has now moved over into the federal sector, and we find the federal government trying to follow the same model, if you will, that we have in the private sector.

I might also add that a very key element here is results-driven. You see now a very, very keen desire in the federal government to tie performance to results, and that is very much a private sector orientation.

Mr. Morales: What role did OPM play in changing government recruiting? We will ask HR Line of Business director Norm Enger to share with us when the conversation about management continues on The Business of Government Hour.

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with OPM director Norm Enger. Also joining us in our conversation is Don Shaw.

Mr. Enger: Well, this is one of the original five e-gov initiatives. It was called Recruitment One Stop; it's really focused on usajobs, our website. What happened is, when I joined the government, there was an old legacy system, which was definitely in need of replacement, renovation, or whatever. So what happened is in August of 2003, we actually brought up a brand new replacement site. Now, let me mention that this is the primary site where a person goes to locate, search for, and apply for a federal job. All competitive federal jobs must be posted by law on this website.

What happened is that in August of 2003, we shut down the old website on a Friday evening, and we were averaging 20,000 visits a day to that old website. We came live on a Monday morning, and fortunately, there were no glitches with the operation, but what did surprise me is on day one, we had 200,000 people on the site. We increased tenfold when people knew there was a new site. The new site is complete -- it's a modern site, the site appearance, the search engines, the r�sum� builder, the guidance on the site, how to locate a job that meets your desires or qualifications -- this has all been totally redone. It's now a modern, very robust site. So what's happened is that we're now averaging over 300,000 visits on the site per day, and that comes down to over 70 million people a year are actually going to this website. By every rating that we know -- and we actually have third parties evaluate the site -- 91 percent of the people that go to the site say they would return to the site and recommend the site to other people looking for a federal job.

At this point in time, we have over one million r�sum�s on the site. The site, I think, has met the earlier mandate I mentioned of e-government -- namely, you transformed a business operation, you've done it in a relatively short space of time, and you can prove that it's been successful by the number of visitors and outside surveys judging how well the site services the U. S. public.

The site is still evolving. Now, we are trying to give the applicants more feedback as to the status of their application or r�sum� to actually have it so they will know who's looking at their r�sum�, and what the next step in the hiring process is. This is a significant step forward into fixing the hiring process, which is a very high priority with the U. S. government and the director of the Office of Personnel Management. Where we are now is we're trying to have the site integrated more fully with what I call back-end systems in the agencies. Namely, they have systems that asses the applicant r�sum�, and the more we integrate their assessment systems with the r�sum�s produced by usajobs, the more you'll speed up the time it takes to hire somebody and the more you'll improve the federal hiring process.

Mr. Morales: That's a very impressive transformation. Two years ago, we also discussed your efforts to improve the federal government's security clearance process. Could you describe how the E-Clearance Initiative has transformed this approach to granting security clearances in the federal government?

Mr. Enger: This is a very, very major area -- topic area -- especially after 9/11, when the awareness of security really intensified across the country. There are several aspects to e-clearances, the initiative which we're talking about now. It's one of the original five. The first thing that we did is we built a system called the Clearance Verification System. This system -- it's the first time this was ever established -- this system holds 98 percent of all active security clearances. This covers all of the civilian workforce, the DoD workforce, and also all contractors. So one of our major accomplishments here is to build a central database or a central system whereby authorized people can put a name in and rapidly find out their clearance status and who granted that security clearance.

Also under this initiative we have moved forward to automate the forms people use to apply for a security clearance. One of the more common forms is called the SF-86; there are several other forms. What we have done is we have built electronic versions of all of these forms whereby it simplifies the process of filling out the application and also transferring the information to the appropriate investigative agencies.

The third element to this is to develop the specifications, to image background investigation information, the paper files that are produced by the investigators to do the background investigation. So the three pieces of this were the Clearance Verification System, the automation of the forms -- it's called E-hyphen-Q-I-P or e-QIP -- and also the imaging standards to image background investigations.

So in effect, what we've done here is we have moved from a paper-driven security clearance process to an electronic process. A very significant act was the 2004 Intelligence Reform and Terrorism Prevention Act. Based upon the mandate of this very important act, and based upon the progress in e-government, we are now looking that 80 percent of all background checks will be finished within 90 days by the end of 2006. As I said earlier, at this point in time, OPM is doing 90 percent of all the federal government's personnel background investigations. At the present time, we're conducting over one million investigations a year.

Mr. Shaw: Norm, one aspect of the Human Resources Line of Business is skill development, employee skill development. Could you share an update on the E-Training Initiative and the usalearning.gov website?

Mr. Enger: Essentially what this was to accomplish was to build a web-based learning site where people could obtain from the Internet, from a website, courses, books, mentoring, the various things required to develop competencies and skills. We launched, in July of 2002, a very, very simple site. It was extremely basic; at that time, Mark Forman was in charge of e-gov -- now it's Karen Evans. Mark Forman was there, and in effect, we launched the site. We had a handful of courses, maybe 30 or 40 courses; we had a handful of books. It was a very, very humble beginning.

Since July of 2002, it's really grown very, very rapidly. We now have four providers of web-based training services under the E-Training Initiative. We have golearn.gov, which is operated by OPM, which is the site that I mentioned that we brought up in July 2002. We have FasTrac, F-A-S-T-R-A-C, a site operated by NSA. We have a site operated by Department of Commerce, NTIS. And our newest web provider is Department of State, the Federal Service Institute. They all are working with us under the E-Training Initiative, and we have, in effect, an advisory council that works with all of these providers.

And what's happened is now we have 1.3 million registered federal people using the courses and materials under the E-Training websites. These courses -- we now have thousands of courses, not 30 courses, but thousands -- we have hundreds of books, we have collaboration on the site, we have mentoring. The site keeps on getting richer and richer, and it's become a primary vehicle to educate and help the federal workforce build knowledge, skills, and also competencies. The site keeps on expanding in terms of what it's offering.

A very significant aspect now is we're moving into career planning or pathing on the site. We worked with the Chief Information Officer Council and we developed, basically, a career path for people in information technology. We mapped out what they should know from an entry-level position in IT to becoming a chief information officer. A person can go into this site and see at every step in their career in IT what they should know in terms of knowledge areas, skills, abilities, and they're able to, in effect, plan a curriculum and using our USALearning, they're able to, in effect, start taking courses, and the site will help them to track their training and their curriculum. So, in effect, you've moved now from just having courses and materials to actually helping people move forward in a well-defined career. This really is improving competencies. We plan to follow this model of building competencies. We're now working with the HR community, the acquisition community, and the financial community to, in effect, add to this web-based training, career pathing, or planning facilities similar to what we did with the IT community.

Let me also add that we have established a council. It's called the Learning and Development Advisory Council. Now, we have 23 agencies, and we have these four service providers all working with us on this council, which, in effect, as a government, is looking together, saying, how can we better use web-based training to improve and help the federal workforce. This ties very, very much into the whole move to pay-for-performance because you have to have people properly trained to do their job in order to be able to have them able to give the results you want, which ties to their performance on the job.

Mr. Morales: How is OPM supporting electronic payroll? We will ask HR Line of Business director Norm Enger to explain this to us when the conversation about management continues on The Business of Government Hour.

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with HR Line of Business director Norm Enger. And joining us in our conversation is Don Shaw.

Mr. Enger: When I joined the government in 2002, I learned that there were 26 agencies paying the 1.8 million federal employees. Coming from the private sector, where efficiency is very important, I was wondering why do you have 26 places paying the federal workforce. It turns out that the same question was asked many, many times by OMB and other parts of the federal government, and in effect, this initiative was to consolidate and standardize civilian payroll processing. What happened is, starting in 2002, we've moved forward, and what we have done is we have gone through a process in establishing 4 of the 26 agencies to be payroll providers, and we are finishing now the consolidation of civilian payroll into those four providers' sites. The four are the National Finance Center, which is part of Agriculture. It's based in New Orleans. You have the National Business Center, which is part of Interior, based in Denver. You have GSA, which is based in Kansas City. And you have, of course, you have DoD, something called Defense Finance Accounting System of services, payroll also.

Now, where we are in this process is we now are 85 percent complete. We now have 1.5 million of the 1.8 million people in the workforce being serviced by these four payroll providers. I think this is a very, very great success in e-government. We've done this in a relatively short space of time, and we've had no significant problems in terms of somebody getting the wrong paycheck or whatever.

Let me also add that one of our sites, the National Finance Center in New Orleans, they actually were shut down, essentially, during Katrina. They were able, through their planning, to be able to operate at other locations. They were able to continue processing pay for roughly 600,000 federal employees, which I think is a real tribute to how robust and how well this E-Payroll Initiative has progressed. From my point of view, the great success of E-Payroll, which has saved large sums of money and led to a more standard and more coherent civilian payroll system, really was one of the main reasons why the government thought of the Lines of Business. A major part of the Lines of Business is moving away from stovepipe installations, moving to more sharing and, in effect, offering modern, robust solutions at these service centers.

Mr. Morales: We know that OPM, GAO, and the OMB are encouraging the link between employee performance, organizational outcome, and pay. How is your office supporting the development of performance-based organizations?

Mr. Enger: Part of the Human Resources Line of Business, we have a task force of 24 agencies that meets every month to talk about direction, progress, for the Line of Business. But in addition to which, we've established something called the requirements board. This requirements board consists of OPM management, but also we have on the board, for example, we have Defense, Homeland Security, and other parts of the civilian workforce. They are looking at the legislation and requirements that drive information systems.

One of the main areas here is compensation management, which deals with payroll and also the various HR systems. What's happening is that they are developing the requirements which, in effect, become the IT structures, if you will, that will be running at the Federal Service Centers. What I'm saying here is that we now are, through the HR Line of Business, we're putting in place the infrastructure, we're putting in place the data centers or the service centers, and also we're putting in place the requirements for the new personnel payroll systems that'll run at those centers. And all of that supports the new pay-for-performance systems, which are now being implemented at DoD, the National Security Personnel System, and you have a new system at DHS -- Homeland Security -- MAX HR, and they're also talking about a new system for the rest of the civilian workforce in the Working for America Act.

In addition, I said earlier that many aspects of my early initiatives, like the E-Training and such, are really key to building competencies necessary for the workforce to perform properly.

Mr. Shaw: Norm, we've been discussing the coming wave of Lines of Business: Human Resources, Financial Management and Grants, and Information Security. We understand that agencies are planning centralized service providers for these functions. What role does your office have in supporting Human Resources shared service centers?

Mr. Enger: When the business case for the HR Line of Business was finished by our task force in 2004 and delivered to OMB, there were essentially two main recommendations in the business case, one of which was the government should move toward establishing shared service centers that would offer quality modern systems to support HR professionals that manage the civilian workforce.

The second major thrust was there should be more standardization -- where it makes sense -- in the HR business processes. What happened is that in roughly September of 2004, OMB asked agencies who would like to volunteer to be a federal shared service center, as we call it in the HR Line of Business -- namely a provider of these services. At that time, five federal agencies submitted proposals to be these centers. There was a proposal from Defense, a proposal from Agriculture -- the National Finance Center, a proposal from Interior -- the National Business Center, a proposal from Health and Human Services, and a proposal from Treasury. OMB reviewed these five proposals and in February of last year, they announced that from their point of view, from a budgetary and managerial point of view, they passed the OMB review. They were called candidates.

At that point in time, the proposals were turned over to OPM and the HR Line of Business, and we formed a number of panels, a technical and also an advisory board, and we spent many months analyzing these five proposals. We asked for more information from these five proposed providers, we met with them, et cetera. In September of 2005, the director of OPM, Linda Springer, and OMB announced that these had also passed the criteria, if you will, to be certified by OPM. So, in effect, as of September of 2005, you had five established, certified, federal shared service centers. And right now, these centers are in business to, in effect, offer agencies solutions, and they're following all the guidelines of the HR Line of Business, and they're also taking and looking at and moving toward meeting the requirements that we're publishing all the time relative to what they should be offering in terms of modernizing the IT systems that support the federal government.

Let me also add that beyond the IT services, they can offer other services also, but essentially, we're looking at moving routine, back-office type of work from the agencies to these centers.

Mr. Shaw: We understand the Human Resources Line of Business is a significant collaborative effort across multiple agencies. How would you characterize this collaboration, and what lessons learned can you share with us?

Mr. Enger: Well, we established the HRLOB task force in March of 2004, and it meets every month. And the task force is very, very active. We have very, very strong participation. The task force, of course, developed the business case for the line of business, the task force reviews all of the requirements we're putting out in terms of what should be offered at our shared service centers. And what we have now, we have established -- I think there are four poles to the HR Line of Business. One is we have the governance structure, which is the task force of 24 agencies with many, many sub-working groups. We also have established a shared service center advisory council, which consists of the four new HR service providers. And on the same council we also have the earlier four payroll providers, so there are nine components there. Then we also have as part of the task force, we have a group of 11 agencies that represent the voice of the customer.

So we have now the governance structure. We have the voice of the customer, which is a part of my task force, to speak for what the customers want, and they'll develop service-level agreements and performance metrics whereby they'll say what they want from the service centers. Then we have the voice of the service centers, or providers, which is this advisory council I mentioned before. And the last piece, the fourth piece, is we're publishing and making available to both the private sector and the federal government what we want in terms of the modern business systems. We're defining exactly what those systems should do and how they should operate and what their functionality should be. So we're actually telling the private sector and these centers, here's what those systems should do in terms of responsiveness, functionality, and also, you know, various performance criteria. So those are the four poles, if you will, of the HRLOB.

Now, to answer your question, though, what I've learned from this is that you can never do too much communication. You really have to outreach as much as possible to, in effect, make people understand what you're doing and why you're doing it. I've learned, if you will -- it's reinforced what I guess I understood earlier -- that you've got to make an effort, go out to meet whoever wants to meet with you in Congress or an agency, who wants to know more about what you're doing and why you're doing it, and make the presentations. And in that way you build the support which is really critical to moving ahead with these initiatives.

Mr. Shaw: Norm, can you briefly describe the technology that will support the HR Line of Business solution? Are you planning COTS software, or will custom software development be required?

Mr. Enger: Well, essentially, the federal government very much wants to learn and use the private sector as much as possible. There's a real movement away from the federal government building its own systems. So a major thrust here will be to, as much as possible, use commercial off-the-shelf software. Wherever possible, turn to the private sector, bring in their commercial software, and contract with them to, in effect, use that software and benefit from all the evolving technology they've put into that software. A major thrust also is to use the private sector wherever it makes sense, and contract out where it makes sense, and then, in terms of technology, it's really no different from what the private sector is facing in moving toward XML, Java, moving more and more toward Internet-based systems, moving away from the client server toward the Internet-hosted and -based systems. In terms of technology, it's really the exact same technology any large American corporation would be looking at and assessing at this point in time.

Mr. Morales: What does the future hold for the HR Line of Business? We will ask OPM director Norm Enger to discuss this with us when the conversation about management continues on The Business of Government Hour.

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Norm Enger, HR Line of Business director at OPM. Also joining us in our conversation is Don Shaw.

Mr. Enger: I mentioned earlier that we now have in place five federal HR service centers. We anticipate that in fiscal '06 three agencies at least will migrate major HR functions to these Shared Service Centers. I anticipate that the numbers will accelerate in the next fiscal year, so we'll see over the course of the next year more and more of the back-office work moving from the agencies to these service providers. In the course of this year, we'll continue our meetings with the task force, we'll meet every month with these five providers -- we have a council of five providers -- we also will continue the work we're doing to, in effect, define the solutions that we want to run at these service centers.

I think that the work we've done in defining solutions is really key to the future because for the first time, the government is defining what do we want these federal HR systems to do, and these are coming out in published specifications available to the private sector so they can build systems that meet those requirements.

So we have a lot of activity this year to, in effect, move forward defining solutions, and I might add also in defining solutions, that we anticipate that at some point in time, we'll actually be able to certify solutions. So if a vendor says, I have a new HR system that does this and this, we'd be able to take that and match it to our requirements, and then if it passes the requirements testing, we could certify that as a certified federal HR system. And that, of course, would wind up running at one of our shared service centers.

Mr. Morales: Norm, we spent a fair amount of time talking about commercial best practices, and certainly, you have a perspective coming from the private sector. What emerging technologies hold the most promise for improving the federal management of human resources?

Mr. Enger: Well, from a technology point of view, I think we're looking at knowledge management being one broad area. I think open architectures being another one. Web-based services, XML -- I mentioned this before. I think that the technologies that let us integrate systems more and pass information more easily and seamlessly between systems, all of this -- which is really the keynote of the open architecture -- will let us have more flexibility in how these service centers operate, how they communicate with each other, and how they're able to add new functionality, in terms of new vendor software becomes available, and they can plug this in, if you will, and offer this to the federal agencies.

Mr. Shaw: Norm, if we can ask you to look into the future now, what types of human resources concerns will face the federal government in 10 years and then even further out in 25 years?

Mr. Enger: Well, the federal government, as Linda Springer, our director, has said several times now, we're facing the fact that roughly 60 percent of the federal workforce can retire within five years. So you're looking at a very large potential for retirement from a 1.8 million civilian workforce. This puts great pressure on the federal government to do succession planning -- namely to be training people, hiring people to replace these people who leave. Because they leave with many years of knowledge about certain activities and functions, so you have to have in place people who are able to understand that functionality and replace these people.

So we're looking at that, which ties into the very important task of attracting talented young people into the federal workforce. It's very key that we have the ability to attract these young people. One step forward has been this usajobs site that I mentioned. We have to make the federal government more attractive to young college graduates and people looking for long-term careers. The federal government right now has an aging population and in effect, we now really need some new blood and quality -- talented young blood to enter our federal workforce.

Looking forward, we're looking at a more diverse population, a more diverse federal workforce which reflects the American population. The federal government tries to, in effect, represent the U.S. population, which is becoming more diverse. I think we're talking about what I call a blended federal workforce. We find that, in reality, most of your major operations or programs are a blend of both federal people and contractor. We're looking at a realization that we can't just look at a federal workforce, but we have to realize that it's a federal workforce totally supported by a competent private-sector workforce. So you really have to look at the whole picture -- the blended workforce is what I call it. I think this requires a little bit of assessment as to the best way to deal with the blended workforce.

The other issues, I think, are more general, like globalization. You know, there are jobs going overseas, software is being built in India and elsewhere. This does have some impact upon the long-term view we have as to what we're doing in the federal sector.

Mr. Shaw: How will OPM need to evolve to respond to these significant challenges in the future, Norm?

Mr. Enger: Well, the OPM, as I mentioned earlier, is really the guardian of the civilian workforce. Essentially, OPM has as a goal to have agencies adopt human resource systems that allow them to build a competent workforce. A second goal of OPM is to create a work environment so that people want to stay with the federal government or join the federal government. So OPM puts in place the policies, the guidance, to agencies that lets them establish this positive work environment so people can, in effect, do their job properly and, in effect, be results-oriented.

And the third part of OPM's goal here is to deliver services that are both efficient and quality. OPM has major, major roles in benefits, retirement systems, health benefit systems, and also investigative service systems. So OPM wants to deliver its services to the U. S. public very effectively and efficiently and cost-effectively. And also to pass on this view to the agencies that in turn have to service or are servicing both U.S. public and the civilian workforce.

Mr. Morales: Norm, on this theme of guidance, you spent most of your career in the private sector. But you've obviously successfully transferred to public service. What advice could you give a person who's interested in a career in public service?

Mr. Enger: Well, I think we have a significant situation now in terms of the federal government wants to be more like the private sector where it makes sense. The whole idea of pay-for-performance whereby every year you put in place a plan which specifies your goals for the year and ways to measure your achievement of those goals, this is very much a private-sector mentality. I think this will attract many young people who are looking for challenges, who are looking for accomplishments. The federal government offers individuals a chance to work on systems and projects that are much larger than most private companies can offer. I mean, you're talking about systems that affect millions of people, that involve billions of dollars in many cases, and the scale here is quite attractive, I think, to many young professionals coming out of college.

This is a good time for a person to join the federal government. Hopefully our usajobs website has been able to show people some of the benefits of working for agencies and working for the federal government. We have, on usajobs, numerous aids to help people who might have interest in the environment, interest in law enforcement, intelligence, military, whatever -- there are numerous guides on the site that let a person put in their desires, what they'd like to see in the job that'll guide them to what jobs are available in the federal sector. I encourage young people to go to this site and explore the site.

We also have on the site a special area for student jobs. In effect, someone who wants to work part time for the government can go to Student Jobs and find these part-time jobs. We also have something called a Presidential Management Fellows Program, designed to attract young people into the federal service, a special program to motivate and incentivize these young people.

So in summary, I think that this is a very, very good time for a young person looking for a positive career to consider federal service.

Mr. Morales: That's great advice. Norm, we've unfortunately run out of time, and that'll have to be our last question. First, I want to thank you for fitting us into your busy schedule today. Second, Don and I would like to thank you for your dedicated service to the public and our country in the various roles you've held at the Office of Personnel Management and in the information technology industry.

Mr. Enger: Yeah, I would suggest that people go to the opm.gov website. There's much more information about the Line of Business at the site. And also I mentioned the usajobs.gov website where a person can locate and apply for a federal job. Thank you very much.

Mr. Morales: This has been The Business of Government Hour featuring a conversation with Norm Enger, director of the Office of HR Line of Business at the Office of Personnel Management. Be sure to visit us on the web at businessofgovernment.org. There you can learn more about our programs and get a transcript of today's conversation. Once again, that's businessofgovernment.org.

Thursday, June 9, 2005

Arlington, Virginia

Mr. Kamensky: Good morning and welcome to The Business of Government Hour. I'm John Kamensky, a senior fellow with The IBM Center for The Business of Government. We created the Center in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about the Center by visiting us on the web at www.businessofgovernment.org. The Business of Government Radio Hour features a conversation about management with a government executive who is changing the way government does business.

Mr. DuMars: Good morning.

Mr. Kamensky: And joining us in our conversation also from IBM is Jeff Smith. Good morning, Jeff.

Mr. DuMars: Our overall mission and vision are really focused around people, processes, and technologies and how we actually administer the tax code as handed to us by Congress. So what we're trying to do is make sure it's as fair as possible and administer it in that way and then also driving from a paper process, it's been a traditional paper process, to an electronic process, which we think actually benefits the taxpayers both going from individuals all the way up to major corporations. So those are the types of things we're trying to work on in that area.

Mr. Kamensky: Can you tell us a little bit about the Electronic Tax Administration and its e-file programs?

Mr. DuMars: It's interesting. Electronic Tax Administration is broken up into three parts. One part is our strategy, policy, and marketing group, another part is our development services area, and our development services area focuses on things like our next generation of e-file or what we call modernized e-file and also our electronic services, and then our third group is our Internet development services group, which focuses on our portals, portal strategies, and then also irs.gov and where we're going to go with that.

And then, going back to our strategy, policy, and marketing group, it's really interesting that no matter what you do if you change a policy you end up having to change technology to support the policy. If you change technology you have to do the other thing. You have to make sure the policies support the technology change. So it's things that we think of that are fairly simple or easy to do in a technology world when it gets to the policy side become very complex and sometimes things that we think on the policy side are very simple when we get to the technology side become very complex. So there's this balancing act that we always have to play and that's why that third part of ETA or Electronic Tax Administration is so important in our group. So that's how we break up the focus areas that we have.

Mr. Kamensky: In the case of the e-filing what are the benefits of doing that for both the taxpayers as well as for the IRS?

Mr. DuMars: A couple things. For the taxpayers, especially the individual taxpayers, if you have a refund it is the fastest way to get your refund and the majority of all individual taxpayers actually do get a refund. It's well over three- quarters of them. So they will do it and they'll get their refund quicker, in as little as eight days, but more than likely between about a week to three weeks and that's if there's no problems.

The other thing that they get is they actually get an acknowledgement, which is really critical. I can't tell you how many times I've run across people who've said I mailed it in and I never hear back from you in the first place but then all of a sudden I get a notice and it never showed up. And they don't know why and the Postal Service doesn't know why, just something happened.

And then a lot of people also will do certified mail thinking well, that'll guarantee it, right. All certified mail does for us is it really guarantees the envelope showed up. So we'll get stacks of envelopes show up. They got ripped somehow, just something happened along the way. So those are some of the benefits you get. The refunds are faster and then you get the acknowledgement.

And the acknowledgement also becomes critical for the people who actually owe and that are actually our fastest growing segment. That's growing faster than e-file. E-file overall is growing at about 10.7 percent a year. The people who actually owe are growing at 38-plus percent per year. And what they like is they like getting an acknowledgement because then they can come back to us and say yeah, I got it to you, I paid what I owed, so I shouldn't have to owe any penalties and I shouldn't have to pay any additional interest. So it's really important to that group, too.

Mr. Kamensky: Well, what are your roles and responsibilities as the director of the Electronic Tax Administration?

Mr. DuMars: One of my key roles is actually being the spokesperson for the IRS regarding electronic filing so that's a key role. Actually I meet with the press. I work with industry partners, software industry. I also work with the tax professionals. So it's this outbound role. And then on the inward side, facing into the IRS, it's really to help promote and push processes that we can automate, so one of the things that we've been looking at is how does it all work. How does it all work? What's the life cycle from end to end? And one of the key things we keep finding is sure, we could add another form, make another form available, electronically and sure, we could add another electronic service on irs.gov. But oftentimes what really causes most problems of all is some policy that says you have all these electronic policies and there's some policy sitting there right in the middle that says but you have to sign a document and keep that piece of paper. And that will slow down electronic file growth faster than anything else.

Another thing we're looking at is we're looking at the back end. Where does the whole process start for most taxpayers, when they get their W-2 or their 1099 or their 1098? Today those come mostly in paper. And they wait for those to show up and that's when they start their tax return process.

So what is that hurdle of I'm collecting paper and either I'm going to buy a software package and do my return or I'm going to go to my tax preparer, CPA, and do my return or I'm going to go online and do it and I'm starting with paper. Now I'm going from paper to electronic and it's like there's this hurdle that they have to cross over. Now, a lot of people have successfully done that but a lot of other people go if I'm starting with paper I'll just do it on paper, just finish it up. And so I think those are some of the challenges we have going forward and some things I'm trying to work on and fix and that's a big part of my role.

Mr. Kamensky: Well, that raises the question of what's your prior experience before you took this job in April 2004?

Mr. DuMars: I have a rather eclectic background and the reason I say that is because I was a history major undergrad who went to work at a nuclear power plant, actually the Southern California Edison San Onofre Nuclear Generating Station. I started my first year in the management training program in contracts administration and purchasing and then got hooked on computers. Now, that probably should have been natural. As my mom would tell me, she said when you were in college you used to tell us how much you hated computers. But actually all my roommates ended up getting their masters in computer science. That's like, three of my best friends. But I didn't. I was a history major.

And then all of a sudden I become the computer guy at the nuclear power plant and learned it really well just by reading lots of books and on the job training. And then I applied for a position in network engineering with the nuclear power plant and joined a group of people that ended up being leaders in Novell NetWare networking. In fact the guy I ended up working for wrote seven books on it. His name is Bill Lawrence and he wrote multiple books during the eighties and early nineties.

So I worked there for 10 years, gained a lot of experience. I got so good at computer networking I actually ended up teaching for Learning Tree International for a couple years part-time. And then I decided you know what, I've done what I needed to do here and I've had a great career. I want to get my master's degree. I always had this dream of getting my master's degree and my MBA.

And so I applied to several schools and got into the University of Michigan and went there for a couple of years and then I was a customer so I knew a lot of people at Intel and I went to Intel Corporation after my graduate degree and moved into product management marketing. And it was that network engineering piece that fit with what Intel was trying to do in the systems management space.

And then from there I had an opportunity to go to Dell and take it up from systems management for individual products and move to systems management marketing across the entire corporation. And then, of course, this was the late nineties and the dot-com boom and well, I got hooked, too. So I went and did a startup and yes, I succeeded and yes, I failed so I did both.

And then I went back to Intel and went into a division. They were trying to do a big startup called Intel Alliance Services and that was managed web hosting services and was part of that effort. I think Intel invested almost a billion dollars, had data centers all around the world. I was doing the operating support systems and then also services marketing. And then the person I worked for who I'd worked for before at Intel moved to become the chief marketing officer at a company called Trend Micro and was anti-virus and content security and I went there with him and was the global director for the e-business group.

We got to the websites and we implemented new content management systems and so on and was doing online marketing, e-commerce, e-business. It was funny. Things there just started not working out after a while for a variety of reasons and this job at IRS came at the exact same time. And what ended up happening was I read this position. I read all the points. I kept going that's me, that's me, that's me. They were looking for all these different skills that I had and other jobs I had looked at and applied for were always looking for one part of what I was able to bring. And this job allowed me to bring a lot so it was fun. It was interesting.

Mr. Smith: Certainly an eclectic background, like you said.

Mr. DuMars: Yes, my background is very eclectic. But in this role you need that because in the ETA role you go from policy strategy marketing to development services where you're looking at XML technologies and how you would actually change an industry to Internet development technologies where you're looking at well, how would you run websites better and so on and so forth. So it spans all the things I've worked on in my career.

Mr. Smith: Well, I know when you came on board to the IRS the IRS Commissioner Mark Everson said that you bring a variety of talents from the private sector to help lead us through the next stage of our e-file strategy so, hearing that background, how do you apply those experiences to what the commissioner just said there?

Mr. DuMars: Well, it's interesting. I mean, I can take some simple things. Like when I came in, for instance, irs.gov, we know that irs.gov is heavily used. Already this year we've had over a billion page views, just this year. That is more than we had all of last year. So, I mean, it's just grown dramatically. I think we're up over almost 70 percent in growth, which is incredible for websites in this day and age. They usually don't grow this fast any more. I mean, we've been around for a long time. But I have people come up to me and they go your website is great. I am really good at using your website. And that's exactly the wrong thing I want to hear them say. I want them to say your website is so easy to use it makes my life easier, I can find the information I need, and I can do what I need to do.

And so what we're trying to do now is change it from where it's very popular and there's lots and lots of information to it's very popular and it's easy to find the information you need. At one point on April 15th this year we had 80 searches a second. And some people might say well, 80 searches a second, wow, you can really handle the capacity. But on the other side you might say why are people doing that many searches? I mean, is it because our navigation is weak? Are they having a hard time finding things? So those are the types of questions and I bring that background to look at that and help that out.

The other thing, too, is just trying to really understand the customer life cycle and in essence IRS has a channel to the taxpayer because we have the tax professional community. So really understanding how they work, what they need from us, how the software industry works, what they need, and then the taxpayer, what they need, what services, how we can help make this all a much smoother process.

Mr. Kamensky: That's really fascinating. It's a terrific background that you've got that you bring to this to make the IRS e-filing popular and easy to use. What are the factors contributing to the high rate of e-file usage? We'll ask Electronic Tax Administration Director Bert DuMars to explain this to us when the conversation about management continues on The Business of Government Hour.

Mr. Kamensky: Welcome back to The Business of Government Hour. I'm John Kamensky and this morning's conversation is with Bert DuMars, Director of the Electronic Tax Administration at the IRS. Joining us in our conversation is Jeff Smith.

Mr. DuMars: Well, that's a really interesting question because I always get asked that, what was the one thing, and I can tell you there was no one thing. There were lots of things that contributed to why this is growing. There are lots of people, too, that I should probably mention along the way. I mean, one person that really made this go for years was Terry Lutes and is actually the person I work for today, and he's the associate CIO in the IRS information technology services group.

And another thing is all the other IT people surrounding this and make it actually flow and then work on the processes. That's what helped make it smooth. Ad actually I've heard this from several of the software vendors as well that this was the smoothest filing season they've experienced in a long time. So a lot of credit needs to go to that side.

Another thing that we looked at is there's been a lot of marketing efforts over the years. We've had TV advertising, we've had online advertising. That has helped contribute to the knowledge and building up the education. The brand e-file is a well-known brand. It's been going on for several years now it's been available.

Another thing that helped contribute was our Free File program and our Free File alliance members. There are 20 software companies involved with that. They contributed more than 5 million returns this year to the federal program. They also helped promote it and helped us promote that program so that helped e-file grow as well.

And then overall the tax professional community, I mean, the tax professional community actually handles at least 60 percent of the tax returns and they have a big part in contributing to the overall growth of e-file. And finally the one thing that we don't talk about as much but it actually has a big impact are the mandates that the states have put in place on the tax professional community. So we had several mandates this past year. They've built up over a couple years. We have at least one or two more that are going to come on next year and that's also helping the growth of e-file. So it's a whole bunch of different things that actually make it come together and grow fast.

Mr. Smith: That's great. I understand that the IRS has a goal of 80 percent of electronic filing for taxpayers by 2007. So what are your additional plans to reach that 80 percent goal now that you've just crossed 50? Are there any incentives that you're providing taxpayers in that regard or the practitioner community?

Mr. DuMars: With regard to the 80 percent goal we've got two years left and we've just crossed 50 percent. And we can tell you it's very difficult. But we're using the model that Tim Allen used in one of his movies never give up, never surrender. We're going to keep trying until the bitter end.

From an incentives point of view there really isn't a lot the IRS can do to incentivize this. It's been discussed in the past to give them an additional credit or to extend the filing date. These things Congress would have to pass a law to do that so we can't do that unless they decide to do that.

But the one thing that is happening, and I go back to what we talked about in the first segment, is getting those refunds faster, getting their acknowledgements on time, getting those acknowledgements, know they have them, and people who owe needing those acknowledgements all come together are driving it.

And the other thing that's really increasing e-file, another piece that we haven't talked about as much, is just the word of mouth. If your neighbor's e-filing it's like oh, well, this is what my neighbor does, this is what a friend of mine does, it becomes just the common thing to do. So that's helping us as well. For us to grow beyond the 10-11 percent that we've been growing in the last couple years is going to be difficult but we're going to do everything we can.

Mr. Smith: Switching gears a little bit, let me ask how are you addressing some of the taxpayers' fears that credit card or bank account information would be used for data collection or for some other purpose by the IRS? I mean, I know that may have a part in some of that goal that you're trying to achieve.

Mr. DuMars: This year's been a tough year and not necessarily that we've had a tough time this year but it's been a tough year in the overall data collection or financial services industry. There have been a lot of disclosure issues this year. Surprisingly enough, most of those disclosure issues were not around someone hacking into someone's database. They were around really more social engineering where someone said they were someone else and then got the information or information was lost in transit from one place to the other.

What we're trying to do is we're focusing on working with the industry to make sure that disclosures don't happen. We actually have a Regulation 7216 that if a disclosure does happen we actually have teeth behind that. But we think working in a partnership is really going to work better. So we actually had what we called a protecting and securing taxpayer electronic data summit last fall. We met with industry partners, we met with the states and other government agencies, and we talked about what things could happen, what issues could occur, and how we'd work together to solve those problems.

The one fear that we have most of all is that a perceived problem happens and the press takes it and there's a headline. And all of a sudden whether it was real or not or whether the impact was large or small we've got fear and mistrust in the taxpaying community. So we're working on what types of communication strategies we need to put together to help maintain that trust because that's the one thing with e-file we can't lose is the trust of the taxpayer.

And this is another thing that we do looking back at our own systems internally. How do we make sure that our systems are safe and secure? We have to be vigilant about it. The person who comes out in the security area and says I win hasn't won anything. The battle is never-ending, the battle never stops. The people who want to break in are constantly evolving and we have to be vigilant about protecting data no matter where it is either within our systems or in transit to our systems. We have to keep looking at that and make sure that we protect it and work with the industries so they protect it too. So those are the things we're working on together.

Mr. Smith: You mentioned a second ago the role of tax practitioners and they clearly play an important role in making sure that returns are filed electronically. How are you partnering with this community to increase this rate of e-filing?

Mr. DuMars: One of the things we do there is we actually run tax fora through the summer and we invite them in and it's a way for them to get continuing education credits but it's also a way for us to talk to them and hear about their issues. So we want to make sure we're listening to them as well and then coming back with solutions to their problems.

We also meet with them on a regular basis. We have our different groups within IRS. Our national public liaison group actually brings them together into different fora and groups to meet and talk with us and give us feedback. And then for the Electronic Tax Administration we have the Electronic Tax Administration Advisory Council, which consists of tax professional associations, it consists of reporting agents or payroll companies as well, and the software industry with us and states. And we all talk together about what types of issues are going on, what types of things do we need to work on together to make this much easier to do.

The biggest thing that we've had to overcome is showing them that it actually is good for their business. Telling someone e-file is not the same as saying hey, if you e-file and make your total office electronic you actually are going to win in this business space. And what we do, we actually give out awards during the tax fora to those who have actually gone to all-electronic and have done it very successfully with high quality and good customer service. And they actually end up being examples to all the other tax professionals.

People have told us once they cross and they get over and they do all e-file they make money and it actually helps their business and they grow their business. So we know there are a lot of positives for them. It's really educating them and helping them get there.

Mr. Smith: Well, we've talking a lot about the e-filing as it relates to individual filers. Switching to the business community, I know in January the IRS requires now that certain large corporations and tax-exempt corporations have to file either their annual income tax or annual information returns beginning in 2006. So what is the IRS doing to address the other community in the business which is the small businesses? What are you doing to target that population to increase their filings since they're not mandatory at this point?

Mr. DuMars: It's actually pretty amazing what comes from the small business space. There's pent-up demand there. So until the last year when we actually brought out our next generation of e-file or what we've been calling our modernized electronic filing they couldn't e-file. There wasn't really a solution there for them. And now it's available and the biggest problem we have now is actually making sure all the software companies make sure it's available. Now that we have it available and about half the software companies that sell into the space have it available we're already exceeding all expectations for e-filing from the small business community.

What we're expecting next year as all of the software companies come across the finish line is that we're going to see it probably triple in growth again and we saw triple what we thought we'd see out of the small business community. But it's still in the thousands and we have a long way to go because the number of small businesses is actually in the millions. So we'll have a long way to go but I think because they were waiting for it whereas in the individual space it's actually been going since the mid- to late eighties electronic filing has been available. So I think this is a good opportunity for us to really grow in that space and educate. And the other interesting thing there is we have to focus on the tax professional community again because in the individual space it's 60 percent of them use a tax professional. In the business space it's 87 percent. So it's a much higher percentage and really we have to, again, win.

The interesting thing about it is that many tax professionals will do an individual return, they'll do a nonprofit, they'll do a small business, and they may even be doing some medium-sized businesses. So a lot of times you'll run into a professional who's doing an across the board and if we get him in one it's a lot easier to convert them in the others.

Mr. Kamensky: Well, that's interesting because earlier you were mentioning that you are really trying to move forward in reaching the 80 percent goal. What are some of the strategies or approaches that you've got in place over the next couple years to try to get there to increase the usage of e-filing?

Mr. DuMars: One of the things that really became clear to us this past year was that we'd probably run through the cycle of what television and radio ads were going to help us to in the space. We have high awareness; that's not the issue any more. The issue is really more around educating them when they're interested in learning about it.

And the other thing we found and as I was saying with irs.gov, as its growth has dramatically gone up, I mean, it's going faster than it did for the past two prior years, is we've got them coming to us. So that's why this year we're looking at redesigning irs.gov and actually focusing in on its opportunity. The opportunity's there to touch them when they want to be touched.

So that's always your best thing when it comes to marketing. If you can touch them when they want to be touched that's a great way to get them to come across. If we're trying just to reach them when they're not ready to be reached or they're not sure that they want to be reached that's a little more difficult. But we're now getting millions of people coming to our website and we're going to take full advantage of that and really help to guide them to why this is the best solution. So that's one thing, really focusing in the online space. And we're going to continue working with the tax professional communities and we're going to continue working actually more with the tax software communities because if you think about it what is the user interface that a taxpayer or tax professional sees? They go to irs.gov to get information but the user interface that they're doing the preparation is their software package, the one they chose, and they chose it for whatever reasons it makes sense to them, it works for them, it's the usability model that they've chosen.

That's what we want to focus in on is working with them because that's where they're going to either be able to touch the professional or the taxpayer directly. So we're keeping our partnerships and our agreements with them going and working hard to whenever they talk get them to say e-file too just like when we talk with them or we talk by ourselves. So those are some of the tactics we're trying to use.

Mr. Kamensky: That's interesting because it sounds like you're beginning to take the things that you developed when you were in the private sector and bringing those strategies into the public sector space for my guess is the first time.

Mr. DuMars: And the one interesting thing is that everyone thinks you're in the private sector, you have all this money to market. In reality you may have less or you may have none. And in the government because we do have budget deficits and we're trying to be more frugal in the way we spend money we don't have as much money to spend on advertising as we've had in the past. So what do you do? You just take what's worked in the private sector when you don't have a lot of money and you use the same thing in the government and it does work. I mean, there are certain rules that we have in the government that we have to make sure we stay within but besides that sometimes this guerilla marketing effort actually works better than even full-blown advertising.

Mr. Kamensky: For encouraging a greater use of e-filing. How is IRS improving the performance of its programs? We'll ask Bert DuMars, Director of the Electronic Tax Administration at the IRS, to explain this to us when our conversation about management continues on The Business of Government Hour.

Mr. Kamensky: Welcome back to The Business of Government Hour. I'm John Kamensky and this morning's conversation is with Bert DuMars, Director of the Electronic Tax Administration at the IRS. Joining us in our conversation is Jeff Smith. So, Bert, what role do you see electronic filing and e-solutions playing in helping taxpayers?

Mr. DuMars: I think the next steps that we're going to start seeing you actually started seeing in our electronic services which just launched last year. And what this allowed was is really electronic transactions to occur directly between the tax professional or the person representing a taxpayer and the IRS and it speeds the process.

So, for instance, we have electronic account resolution, we have transcript delivery systems, we have the way to check Social Security numbers to validate the Social Security number's accurate. And what it does is instead of them having to send us a letter and we send a letter back and forth and there's paper going back and forth which can take days, weeks, months they can do a process that takes minutes, hours, maybe a day to do. And we see that actually expanding. So as we add more services in the future the tax professional and then the taxpayer will get full benefits of that where they can come directly to us get quick access to services.

A very simple example is our service called "Where's My Refund?" We launched that a couple years ago and everyone thought well, maybe a million people would use it and just check on their refund and we ended up getting 20-plus million. And then this past year we even got more. Tens of millions of people use it and want to see where their refund is, want to see when it's going to show up. I mean, there's a lot of interest there.

And so there was this huge pent-up demand that we hardly even knew about. We just knew people were calling in for the information. We put it on the web and all of a sudden they're using it all the time. So there's obviously a place there for more of these electronic services and this is something we're really going to focus on in the future.

Mr. Smith: So the success of the e-filing is certainly helping the IRS meet its goals and measures. Can you describe how electronic filing has helped the federal government in its overall E-Gov program?

Mr. DuMars: Well, I think when you look at E-Gov with regard to the IRS one of the things with electronic filing, the big benefit, is the cost savings. There's a big cost savings between what a paper return costs to process and what an electronic-filed return costs to process and we've actually over the years have closed down service centers where we process paper and consolidated those down to a couple majors. And that's a good thing because if you think about it from a taxpayer's perspective you don't want us wasting dollars on the least efficient processing method. You want us spending our money most efficiently because that's your tax dollars at work. And that's where electronic filing really pays off in a big benefit.

And also again with the paper process your refunds are going to take much longer to get back to you. If you owe you won't get an acknowledgement. So there's a lot of downsides to the paper process versus the electronic process. So there are really benefits on both sides.

Mr. Smith: Switching a little bit to performance metrics, IRS must track a number of performance metrics for e-filing. Which do you track to see if your goals are being met and then what role do third parties or other stakeholders whether it's agencies with the government help in defining what those metrics are?

Mr. DuMars: What I look at are a couple different things and I focus in on a few. One area is I look at the total, how many electronic returns, and so far this year, we've gotten 66.7 million returns. It's a huge number and that's out of about 133 million returns that we expect. So we're already above 50 percent and growing. And we still have two extensions to go through which will probably give us at least another million, million and a half returns, maybe even more.

A couple other metrics we look at are how are the tax professionals doing, how is their growth, and this past year they grew at 10.7 percent. And then also the online, the self-prepared, the people who are coming across and doing it on their own, that grew at 17 percent. So we're seeing a lot of growth in that space. And then, of course, we keep a close eye on Free File because Free File is a program that it's aimed at a variety of different groups including the poor and underprivileged but also other people that need access and are underserved. And it grew dramatically this year, almost 46 percent. So there are some key metrics in there that we keep an eye on.

The other thing that we've been focusing on quite a bit is our modernized e-file and its growth and that's because we had really underestimated what was going to happen there and it far exceeded our expectations. And so we have several thousand returns that we've gotten in through that process and we're expecting a lot more next year as all the software companies come on. So those are several of the different metrics that we look at. I mean, as you guys can see, I've got tons more but we don't have all day.

Mr. Smith: Well, we've talked today a lot about the strategic relationships IRS has with tax practitioners, with software developers, I know electronic returns organizations, agencies, state governments as well as, of course, the taxpayer and I've heard you refer to this as somewhat of an ecosystem. What are the challenges that you face dealing with this ecosystem or partnership with these?

Mr. DuMars: Let me describe what this ecosystem looks like. When I came into the IRS, and this is the one thing coming from the private sector and most people don't realize this, when you come into the Service it's like getting the fire hose effect. There is so much going on, there's so much new information, and having to deal with Treasury, Congress, the commissioner's needs, your own executives, and the public it's just a lot coming at you all at once. What I was trying to figure out is how does this whole thing work?

I mean, we've got all these different players. We've got software developers, we've got other government agencies, we've got states, and so on and so forth and, as my staff would say, I just started drawing pictures because I'm a visual guy so I'm trying to see how it works instead of just trying to read about how it works. So I was drawing pictures about how the pieces all fit together and that's when I started coming to the realization that there are so many different pieces and parts and so many different pieces work together or work in tandem or work in parallel or cross each other's paths that I thought well, this is some sort of an ecosystem where one group lives off another group and so on and so forth.

So payroll is a big key player and tax software is a big key player. On our end we have vendors that actually help build all the applications behind the scenes like IBM helps us with the modernized e-file and we have a whole bunch of other prime contractors that help us. We have vendors that help us with irs.gov and so on. So all these things come together and make it so the process works.

And the ecosystem has been there for a long time. It was there when the paper process was the primary and it'll be there when it's all electronic some day in the future. And so by understanding that, understanding the ecosystem and that life cycle of how the information flows through, we can start pinpointing what are the problems. Is it a policy issue that's preventing e-file from growing? Is it we're missing a form? Is it we're missing something else? Is it we're missing the fact that 1.4 billion information returns all come in paper to the taxpayers mostly and half of them come in paper to us which is a huge problem. We call it the final frontier because it's the next place we need to fix.

So looking at that we're trying to think about what kind of ideas could we put in place that would help grow e-file more? One of those we keep looking at is a clearinghouse concept for information returns and we're trying to figure out what would that be and how would that work so we're looking at other examples that are out there today. There are examples in the health medical records space, there are examples in student data and transcript space, and there are also examples in transportation and licensing space. So we're trying to understand how they work today and a lot of those have been going for many years and see what we could possibly do in our space.

Is something we want to do a clearinghouse, a nonprofit? Is it something we want to build in the IRS? Is it something the industry would want to build? Don't know what the answer is but we're trying to understand this and by understanding it it will set the direction for where we go in the future.

Mr. Smith: We talked earlier this morning about security as it relates to the data and some of the issues that are surrounding that. But as we bring it back to the ecosystem what is the IRS doing to work with this tax industry community around protecting their critical infrastructure, things that are outside of the IRS's direct control, and what measures are you taking to help them with that?

Mr. DuMars: That was one of the key things when we came to the summit and we all came together. And we sat there on day one and we looked at each other and we said IRS, we're doing a lot of work in security and disaster recovery. Then you talk to another big player like H&R Block and they go we're doing a lot of work in disaster recovery, and Intuit would say the same thing. And we had some smaller vendors there and they say yep, I'm doing a lot of work in protecting myself.

And then we all came to the realization but no one's working to protect the whole thing. We're all looking at each other and we're saying we're all going to protect ourselves but there's a lot of pieces in the middle. And then there's also the taxpayer and the small business owner who's at the end of this line of the ecosystem and how are they protecting themselves and do they fully realize what's going on? And there's been lots of statistics and studies done and 40 to 50 percent of small businesses don't keep their anti-virus software up to date. They don't have personal firewalls on their computers. And if a tax professional is a small business, which a lot of them are, they probably fit in that category. They just forget out it. Oh, I forgot to pay my $19 a year or whatever their cost is for their software.

So how do we educate and outreach in that space? And what things do we do in the event something happens? Four hurricanes in Florida… who would have thought? It happened. It was a statistical anomaly but it occurred. And there are data centers that line up under where those hurricanes were. They could have been impacted. There could have been tax returns floating through there. What would we have to have done as a group, as an industry, to protect ourselves? Because the thing we also came to realize, if one of us has a problem, all of us are having a problem. It's not just one of us has a problem and the rest of the industry gets to skate away from it. We don't get to any more. We don't get a free ride.

Mr. Smith: You're very connected, right.

Mr. DuMars: We're all extremely connected and we all need to work together. So we're actually working right now on different plans for how we would do an industry-wide business recovery plan and what types of communication efforts we work on, how would we keep in touch with each other. Take away the fact that there are terrorist attacks or other types of disasters or cyber attacks it may not be anything associated with it. It could be something completely that we don't expect and it's something we'd work have together on to resolve and fix and, as I say, the thing we can't lose is trust.

Mr. Kamensky: That's really fascinating. It's really interesting to hear your description of a tax ecosystem. What are some of the lessons learned on customer service? We'll ask Bert DuMars, Director of Electronic Tax Administration at the IRS, to explain this to us when our conversation about management continues on The Business of Government Hour.

Mr. Kamensky: Welcome back to The Business of Government Hour. I'm John Kamensky and this morning's conversation is with Bert DuMars, Director of the Electronic Tax Administration at the IRS. Joining us in our conversation is Jeff Smith. Well, what are some of the lessons learned from your experience as Director of Electronic Tax Administration and what advice would you share to government leaders and executives who work on customer service issues?

Mr. DuMars: Well, I think some of the lessons learned in this space have been making sure you've got everyone at the table you need to have at the table if you're going to talk about something, if you're going to talk about, for instance, security in the industry, if you're going to talk about a policy change. Some of the things that we're working on, we're working on some major regulations this summer that we're hoping to go public in the fall so they can comment on it.

We've needed to get feedback and the feedback's been coming in actually even before I got in but it's bringing everyone together and making sure that you can get some consensus. Another thing when I came up with this ecosystem concept a lot of it was based on a reporting agent summit we had when I first arrived at the IRS. And we actually had, again, states and payroll and credit unions and banks and financial services firms all in the room.

And the way I came up with this clearinghouse concept wasn't because I was brilliant and had this great idea. It was because we sent them off in four groups and they all came back and said boy, wouldn't it be cool if we had something like this, a data warehouse somewhere that we could use that would be available to the taxpayer, would be available to us to give data to you, and then they could give data to the government and do that in a safe and secure manner protecting privacy and everything else. So it's really working with them and listening to the industry. And the same thing would go with customer service, listening to their issue, listening to the problems they're having. Sometimes, as I told you earlier, they say boy, I'm really good at using your website. Well, okay, that person's really good at using my website. Well, the other person who maybe just started in the tax industry or has been there for a while is having difficulty using my website. So that says hey, sure, we're meeting the needs of a good group of people but we also need to meet the needs of other people and how do we improve our service that way.

So it's really how do we all work together in bringing the right people together at the table to talk about these things. And that's the interesting thing with the Electronic Tax Administration Advisory Council. We get that opportunity. And they don't always agree. In fact it's hard to get consensus but we get to drive in a very similar direction.

Mr. Smith: Well, technology has certainly also played a part in how the IRS is progressing and how you've dealt with customer service. How do you see information technology as we move forward helping the IRS and helping your office, the Electronic Tax Administration?

Mr. DuMars: I think the real key thing with all the technology direction is, number one, providing more services through the Internet to taxpayers, tax professionals, and businesses that are actually doing their own, they're going to manage their own tax preparation process, and then also providing more automation internally to the IRS itself. How do we make sure our employees are more efficient? At both ends of that scale you see where the taxpayer dollars are being used more efficiently both for internal and external processes. And anywhere where we can do process innovation in those two spaces will make our overall operational excellence improve dramatically.

So how do we make sure that even our customer service agents are much faster, they can answer the phones quicker, they can get the information to the taxpayer quicker? And then how can we make it so the taxpayer can just get it themselves? I think we're going to always have to have multiple channels but the more we can put more automation in and more technology in its place to make those channels faster and more efficient the better off the public is going to be in the long run.

Mr. Smith: So aside from managing this challenge you have with serving varied customers because you have a variety of customers you deal with can you describe other challenges that the IRS faces now that you're dealing with a lot of electronic interaction with taxpayers?

Mr. DuMars: I really think because of all the issues that we had this past year in Chief Security Officer magazine they called it March Madness with all the disclosure issues in the different financial services firms that happened. That is going to be our big issue going forward, how do we maintain that trust? The one key thing about e-file which I haven't mentioned yet is that e-file is a voluntary process. There's nothing that says a taxpayer, a tax professional, a small business, has to e-file their return and if we lose that trust we can't afford for them to go back to paper. So that's a real key point. So we have to make sure we keep that trust and we keep those benefits that they're getting out of the program now and keep those going into the future. And one thing that we're hopeful to have in a few years down the road is the ability for the taxpayer or the tax professional to really go in and have more of an account with the IRS where they can look at their information and they know what they've done in the past and what they need to do for the next filing season. So that's really one of the goals we're trying to strive for as well.

Mr. Smith: So looking forward 5 to 10 years from now, where do you see your office, Electronic Tax Administration, in the IRS overall?

Mr. DuMars: Well, it's funny. Electronic Tax Administration has a role of really pushing the IRS, pushing it along, looking for new opportunities to move our processes in the electronic space. A good example is this information return area. There's a good opportunity there to do more in that space. There's a good opportunity to advance in more of our electronic services.

I'm hopeful that someday instead of having 50, 60, 70, even 80 percent of e-file returns hopefully we're banging closer into the mid-90s and maybe even higher. Who knows? We'll see where things are in 5 to 10 years from now. But if we have an all-electronic process from end to end starting with think about you're getting your paycheck and money's being distributed to the state and federal governments, Social Security, and then when you get at the end it's an all- electronic, you get all your information in an account format and you start your preparation process either yourself or with a tax professional and then it's all done electronically. You get your refund or you make your payment electronically. It's this total electronic process and you know it's done, it's all secure, it's all safe, and that's really where we want to be. We want to see that whole process end to end all electronic, all secure, and all safe.

And I think that by doing that and making it easier and safer and securer that it'll actually allow the taxpayer to pay their fair amount and know that they've done that and know that their neighbor's doing that as well so that they won't feel like hey, someone's getting away with something. It'll all just work. It'll be seamless.

Mr. Kamensky: One last question we always ask our interviewees, what advice can you give to a person who's interested in a career in public service given that you've come here for the first time from the private sector?

Mr. DuMars: Well, I'll tell you coming from the private sector the one thing you have to be is patient. The process is a long process. If you want to go into the IRS or any of the agencies you have to go through a lot of background investigation. You have to give them time to go through the interview process and go through the approval process to hire you. So one piece of advice is if you want to go for a federal government position give yourself six months to make it happen because it's going to take at least that long. That's one thing.

And don't get frustrated. The people that are trying to get you in, they're working hard but there are processes in place and they're in place for a good reason, to make sure that they're getting the right employees. The other thing to consider is when you're in there you will never get more exposure than inside the federal government because if you're working on a high profile or a low profile there's a lot of oversight. There's more oversight than there is in the private sector. So you need to understand that going in.

And it's not that people are going to be beating you up or they're looking to take down your program or anything. It's just part of the process of the checks and balances. It's the oversight from one agency to the other. It's the oversight from Congress over the agencies or even within the Treasury over the IRS and OMB over IRS. So those are the things you just have to be aware of when you come in. Not get too frustrated, understand the processes, and understand how to communicate within those boundaries.

Mr. Kamensky: That's really fascinating. Jeff and I want to thank you for fitting us in your busy schedule and joining us this morning.

Mr. DuMars: Oh, well, thank you and thanks for having me. And if anyone wants to get more information about our programs in the IRS please do go to www.irs.gov.

Mr. Kamensky: This has been The Business of Government Hour featuring a conversation with Bert DuMars, Director of the Electronic Tax Administration at the IRS. Be sure to visit us on the web at www.businessofgovernment.org.

Thursday, March 11, 2004

Arlington, Virginia

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

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

Good morning, Norm.

Mr. Enger: Good morning.

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

Good morning, Tom.

Mr. Romeo: Good morning.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(Intermission)

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

And joining us in our conversation is Tom Romeo.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(Intermission)

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

And joining us in our conversation is Tom Romeo.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(Intermission)

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

And joining us in our conversation is Tom Romeo.

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Lawrence: Thank you very much.

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

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

This is Paul Lawrence. Thank you for listening.

Arlington, Virginia

Wednesday, April 3, 2002

Mr. Lawrence: Welcome to The Business of Government Hour.   I'm Paul Lawrence, a partner at PricewaterhouseCoopers and the co-chair of The Endowment for The Business of Government.  We created The Endowment in 1998 to encourage discussion and research about new approaches to improving government effectiveness.  Find out more about The Endowment by visiting us on the web at endowment.pwcglobal.com.

The Business of Government Hourfeatures a conversation about management with a government executive who is changing the way government does business.  Our conversation this morning is with Major General James Jackson, Commanding General, U.S. Army, Military District of Washington.  

Good morning, General Jackson.

Gen. Jackson: Good morning, Paul.

Mr. Lawrence: And joining us in our conversation is another PwC partner, Brian Dickson. 

Good morning, Brian.

Mr. Dickson: Good morning, Paul.

Mr. Lawrence: Well, General Jackson, although most of our listeners have probably witnessed the ceremonies and events that MDW orchestrates, could you give us a sense of its roles and the responsibilities?

Gen. Jackson: I have three major missions.  The first one deals with something we saw during 9/11, which is to respond to any crises or disaster or any kind of special security operation inside what we call the National Capital Region, which is just roughly a big goose-egg in and around Washington, D.C., Arlington, and the surrounding territory. 

The second one deals with providing base operations support for five different installations that work for me, ranging as far away as Fort Hamilton, New York up in Brooklyn, and as far down south as A.P. Hill, Virginia. 

And then the last one is the thing that most listeners might be most familiar with is the official ceremonial part of our business and public events which we conduct on an annual basis.

Mr. Lawrence: How large is your MDW team?

Gen. Jackson: I have a staff that is several hundred.  And then of course the command across the board ranges -- is approximately around 7,000 people, split between military and civilian.

Mr. Lawrence: And what type of skills will these people have?  You described such a range of activities.  I'm curious.

Gen. Jackson: Well, I pretty much run the gambit of all skills.  For example, I have operators whose job it is is to plan and control operations.   Much of what you saw during 9/11 -- those people were involved with that.  I have personnel people to keep track of people, both civilian and military, and take care of them.

I have a ceremonial staff that provides oversight and guidance as far as the events we do at both the White House, and then of course anything we do for the Department of Defense in and around the city.  I have logistics personnel who deal with that part of the business.  I have personnel who look at the garrison functions, or the functions that take place on a day-to-day basis on all those five installations.

And so I pretty much run the gambit.   I've got lawyers to take care of the contractual issues and some what we call the Uniform Code of Military Justice, the legal part of our business.  And of course, I've got Arlington National Cemetery and people like that.   So it pretty much runs the gambit.    

Mr. Dickson: Can you talk a little bit about what it's like to be a commanding general?

Gen. Jackson: I guess the first thing you say, it's great.  It's good to be in charge.  Most of us spend our lifetime in this business wanting to command and to be in positions where we pretty much are the senior authority in an organization.   Of course, we temper that with understanding we all work for somebody.  So we're not necessarily always the end to the food chain.

The job is a good one.   It's fun to be part of everything that an organization does.  And so, kind of as a CEO kind of person, I have my fingers pretty much spread across a little bit of everything that goes on in the command.   While I won't be the most knowledgeable on any specific subject, I might be able to argue that I know a little bit about everything.  And my job is to find out or know where the experts are who can give me that detailed information at the right time.

Mr. Lawrence: General, can you tell us a little bit about your career in the Army, some of your highlights that have brought you to this point?

Gen. Jackson: Sure.   I come from a military family.   My father served 33 years, World War II, Korea.  And so he was -- I guess I grew up in a military family.  And I respond to people who ask me where's my hometown, that I really don't have one.  I've been all over the country. 

I've served 30 years.   Started out after graduation out of college serving in the 82^ndAirborne Division, and then continued to multiple assignments with some Special Ops units and some -- with the Airborne forces, primarily in the light infantry side, which just means we do mostly walking or jumping and that kind of thing.

And through a variety of different command and staff positions, that has ultimately brought me to here.   I've served overseas in Korea twice, across the United States in multiple different locations.   I was checking the other day, by chance, and reminded myself that in 20 years of marriage with my wife, we've moved 13 times.  So we tend to move a lot.  And I have in the meantime been able to raise three daughters that are great kids.

Mr. Lawrence: Normally, we ask what drew you to public service, but I think you answered that by virtue of your family.  But I'm wondering what kept you in public service.  I can't help but imagine you had other opportunities throughout your career.

Gen. Jackson: I'm not so sure that public service itself is what I focus or I see the military as, to be quite honest.  But the fact that I stayed in the military I think is an important one.   And the fact that dealing with people tends to be something that is interesting and exciting.  

I had it explained to me years ago that you can be in charge of things -- equipment -- and you'll see the same thing pretty much every day.  When you work with people, you are always surprised, because people do so many different things.

And I have found working with people to be a really exciting part of the job.  And so as a leader, my job is to interface with people.   So that's what I do all day long, and that's what's been bringing me back to achieve a 30-year career.

Mr. Lawrence: Which jobs in your career have given you the most interesting challenges?

Gen. Jackson: Well, I'll be honest and say any time I've been in command, be it from the company level, which is about an organization of 150, up to regimental size, which is several thousand, and then into the job I'm at now, which is multiple thousand -- any time you're in charge of something, you draw more satisfaction from the business.  

But I would tell you also that any time I've dealt with soldiers in the role of -- be it jumping out of airplanes or any kind of operations we've done, it has brought me great satisfaction, because of the things that they do and the way they operate, and the kinds of people they are.

And all you've got to do is turn on the TV any night and see the kinds of things that are going on in Afghanistan today and kind of recognize that.  These young kids are just great, and 18, 22 years old.  And the real challenge is be careful what you ask them to do, because they're going to do it.  And you need to be right. 

Mr. Lawrence: What were the positions or the events that trained you to be in command?

Gen. Jackson: Well, I think it's something that you gain by exposure and experience over time.   Obviously, you know, you go through your formative years in college, you've got four years there.   And then you start in the Army as a young second lieutenant, and you start to learn.   You're a dry sponge, soaking up everything that comes across your path. 

And you also learn by contact with other people.  I would say that I am a composite of everybody I've ever worked for or worked with.   I see things that they do that I like, and I steal them and I try and emulate those some way.   And so I am a real composite.   I couldn't really articulate any single thing that's mine; someone else's that I've taken on and decided that I think that's the right way to go about doing business.

Mr. Lawrence: Was the learning taking place at a technical level or a management level, a general management level?

Gen. Jackson: I think both.   There is a tremendous technical side to our business that most Americans who have no Service experience probably have trouble comprehending.  Many Americans, their only connection to the military is what they see on television or what they see in the movies.  And I would tell you that the complexity of the operations, just as an example, the things going on in Afghanistan are surprising.

I mean, most people would find them to be daunting when you stop and think about trying to build an event that involves multiple things to try and happen all at the same time or very close together.  And they're all mutually supportive.  It gets to be a very technically demanding business.

From a management perspective, you're growing every day.  If you aren't improving and growing and learning in everything you do, then you have no business being where you are.  And I think any major CEO or CEO of any organization would tell you the same thing: he's learning every day.

Mr. Lawrence: Let me ask you about leadership.  In your opinion, what are the top qualities of a good leader?

Gen. Jackson: Well, I think that's a very broad question.  And I could give you a litany of answers.  But I guess I would come back to things that have always stuck with me.   And first of all, as a leader, I've always carried with me -- I've got two major responsibilities.   One is to get my job done, and the other is to take care of the people who work for me, who are going to be accomplishing that work for me.  And if you think about those two things in the way you deal with people, you really can't go wrong. 

And I guess the third thing I would tell you, I label the trait, the character trait of the ability to adapt to change as being the most significant.  And that's -- even how you adapt from one job to another, how you adapt when you're working for one boss and all of a sudden you get a new boss -- how do you adapt between being in a command position versus a staff position?

And how do you adapt to just change in your environment?  9/11 brought some changes to the way we live in this country.   The question is, how do we adapt to deal with that change?  Good leaders, great leaders can do that.

Mr. Lawrence: That's a good stopping point.  Come back with us after the break as we continue our conversation with General Jackson of the Military District of Washington. 

In our next segment, we'll ask him about the events of 9/11 and how they have affected his team and the challenges it's presented. 

This is The Business of Government Hour.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour.   I'm Paul Lawrence, a partner with PricewaterhouseCoopers.  And today's conversation is with Major General James Jackson, Commanding General, U.S. Army, Military District of Washington. 

And joining us in our conversation is another PwC partner, Brian Dickson.

Mr. Dickson: General Jackson, can you talk to us a little bit about what you were doing on the morning of September 11^th, and how your day progressed in the immediate aftermath of the tragedy of that day?

Gen. Jackson: Sure.   Actually, we were in a staff meeting, so I was sitting at the head of the table with my entire staff.   And my aide brought in a note to me, and indicated that an airplane had run into one of the Twin Towers in New York City, to which I read and discounted it as some wayward pilot who couldn't fly very well. 

So we continued with the meeting.   And then, shortly after, he came in again and said there had been a second plane, to which we indicated, or it was quickly obvious to us that coincidence didn't happen this way.   So we cancelled the meeting and went and started watching the TV to see what had happened.

Shortly thereafter, someone came into the office and indicated there was a rather large smoke plume coming up from across the river, which is where the Pentagon is.  So we walked outside the building and took a look, and sure enough recognized that this was something bad that had just happened over there.

We went back inside, talked about it a little bit, and then decided that we would change clothes, get into our go-to-business suits, the BDUs, battle dress uniform, fatigues, and take a ride over to the Pentagon.  And that pretty much started the day.  And we stayed at the Pentagon probably until about 10:00, 11:00 that night, went back to the office, got some sleep real quick, went home, got cleaned up, and went back to work about 3:00 in the morning.

Mr. Dickson: Can you describe the scene that you found upon arrival at the Pentagon? 

Gen. Jackson: Yeah, sure.   Well, obviously, we got there, and it was somewhat chaotic.  And there was a lot of people moving about.  There were obviously some people who were trying to apply some coherency to the situation.  And they were pretty much gathering up a bunch of volunteers to assist in handling any casualties if they found them. 

As we assessed the situation and linked up with the fire chief, who we were told was going to be the incident commander, I asked him what he needed and what we could do to help.   And his first response was: "I need some manpower."  Well, as it so happens, that's one of the things we can provide, and so we made some phone calls.   And within an hour, we had brought some troops down. 

The initial operations on the site was to apply some degree of coherency to what's going on, and the troops came in to backfill the volunteers.  The volunteers weren't dressed properly, and their organization was rather loose, as you might imagine.  Bringing in soldiers as part of organizations, I can line them up very quickly; I've got a chain of command I can deal with and I can control them better.  

And it allowed us to allow the volunteers to go home, see family members, call family members and then to basically get back to work doing the things that they are required to do.   An interesting note is that none of the military functions that go on in the Pentagon stopped.   And so we freed those people up to go back to doing what they're supposed to do, and allowed us to do the work we were supposed to do.  And basically was providing support to the fire chief, who was the incident commander at the site.

Mr. Dickson: Does your organization -- are you still involved in recovery efforts at this point?

Gen. Jackson: No, not as such.   The recovery operations have stopped.  As you know, the building's being repaired and fixed, and I'm being told they're ahead of schedule.  The only thing we're still doing is we have collected some personal effects, both from the building itself as we cleared it, and also stuff that has been identified as personal effects from the individual remains that were retrieved from the site.   And our job, the organization that works for me, is to identify those, catalogue them, and then make them available to family members in the event they wish to identify them and claim them.   And that process is still going on, just because it's a very painstaking and detailed process.   And we expect it to conclude somewhere this summer.

Mr. Dickson: In the aftermath of September 11^th, how have you adjusted your priorities and your organization to meet the new challenges that the country faces?

Gen. Jackson: Well, the most significant that we're dealing with right now is the added security that we've established on all our installations.  In fact, we started drifting towards that back in August, with the attempt to get back to controlling access to our installations, because they do house a lot of people, and some sensitive assets that need to be protected.

So we were well on our way.   And so, since September 11^th, we have just continued on that, and remained at the high level of alert that we're at. 

The other thing that I would offer is more of a broad-brush approach.  And that is to deal with change in itself.  Obviously, since 9/11, lots of things have changed.   And so as those things change, they cause other changes.  And we have to deal with those on a day-to-day basis.

And those kinds of things are happening.  Not just the security on bases, but other things that we've become more attuned to.   You know, cyber security.   We're talking about reviewing all our contingency plans, taking a look at them, seeing if we can improve some of our communications capabilities, and the other things that we might be able to do to make our response to something like this or something similar to this in the future, go better.  And so that eats up a lot of our time.

Mr. Dickson: What type of planning or preparation pre-September 11^th had you done for events like that? 

Gen. Jackson: Well, obviously, we've got some plans.  I mean, we go out and write some and we prepare them.  But we can't write a plan for every eventuality.   As a matter of fact, someone asked me after this if we had a plan.  I said: "Yeah, we had a plan.  But we didn't have a plan that talked about what we did if a plane flew into the Pentagon." 

The interesting thing is we didn't need a plan for that.  We took the plan we had, we modified it, and that's what senior people get paid to do, is to deal with those kinds of changes.  And we executed the modified plan.  And it worked exceptionally well.

Mr. Lawrence: Let me follow that up with another question about working together.  You talked about working with the Arlington Fire Department.    I know that the FBI and FEMA were involved.  I wonder, you know, what the lessons are working across organizations like that?

Gen. Jackson: We had a great relationship with all the people and all the organizations that came in and worked at the Pentagon.  I think the biggest lesson was that the system that's in place across the country, the Incident Command System that they have, the Federal Response Plan that is in place, is a good one.

In this case, inside the United States, the military does not take the lead.  Even though that was military land in the Pentagon, the guy in charge of the operation was in fact the fire chief out of Arlington.   And that's where I reported, and I worked for him, basically.

I asked him what he wanted me to do.   And if he asked, and if there was something I could do for him, we provided it.   It was a very collegial, cooperative kind of environment, and it works great.

As the fire chief slid out of that command role, because the fire was out and the structural damage to the building had been taken care of, the crime scene part came up, and then the FBI took over.  No problem.   I then start working for the FBI, doing the things they want me to do.

Once the FBI was done with the building, they turned it back over to us, and then we continued to do the things we had to do until we were complete, and then we gave it back to the Pentagon folks.

The value of the working across the interdepartmental and interagency work that we did was manifested by our relationship that we have established over time, because we live in the city, we work in the city, we know these people.  We talk to them, we review our plans together, and we have a relationship.

That relationship is built on trust and on capability.  We understand what each of us brings to the fray, and what things we should be able to do.   And we don't look at doing someone else's job, we do what we can do best.  And in this case, it worked out exceptionally well.   The people that we worked with on 9/11 were just wonderful folks, and great leaders and great people in their communities.

The interesting thing is the relationships that we built have just increased in significance, in that we still talk to each other, go see each other, and spend time together.   And that's what makes things work, is that interrelationships that we've built.

Mr. Lawrence: You've talked about the value of relationships.  You obviously didn't begin building those relationships on the morning of 9/11.   What were you doing before to build relationships with those groups?

Gen. Jackson: Well, interestingly, the Inaugural that we had for President Bush brought us all together, because of the significant event in Washington, D.C. and the kinds of stuff that happens there, the security aspects, the volume of people that come in, and the military participation, and the fact that we help prepare and plan the whole -- the inaugural, at least the parade portion and some of the rest of the stuff that is done.

We have to sit down and talk.   And you go through a lengthy process of building a plan, executing it on a tabletop or on a floor, and then rehearsing it.  And so throughout that event, over a period of several weeks, we become very close, and we get to understand. 

So I know pretty much or have met every police senior member throughout the District, and certainly in the surrounding counties.  Some fire chiefs, I've known.  We train periodically with their own search-and-rescue people, because I have a search-and-rescue element.  And they train together.

And so that's where we build those relationships.    

Mr. Lawrence: That's a good stopping point.  Stick with us as we continue our discussion about management with General Jackson of the Military District of Washington.  

When we come back, we'll ask him about the challenges of managing Arlington Cemetery. 

This is The Business of Government Hour.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner in PricewaterhouseCoopers.  And today's conversation is with Major General James Jackson, Commanding General, U.S. Army, Military District of Washington.

And joining us in our conversation is another PwC partner, Brian Dickson. 

Well, General Jackson, one of the things that I've always been most impressed about MDW is Arlington National Cemetery.  Could you describe the management challenges one faces in operating a cemetery, or operating the cemetery?

Gen. Jackson: The biggest challenge with Arlington is space.  We're fast running out of space. Where it sits geographically, it's bounded by a variety of different things.  And so we're concerned that at some point in time, we'll just run out of ground.

We're building plans to be able to take us well into this century, beyond 2050, and a little bit further than that to be able to do the things we have to do.  But there's going to have to be some other innovative ways to deal with it.  And that's why we're building things like columbariums for cremation and so forth.

The other aspect is that we run anywhere from about 28 funerals a day, and average about 24.   But we can go as high as up to 28.   And we inter both Army and of course all the other services.  Regardless of which service is participating, I could have elements of my own participating, depending on the level of the funeral.  Depending on the individual veteran, there are certain honors that are rendered based upon what level that individual worked.   And so we go through a fairly lengthy process to figure all that out so that we render proper honors for all of them.

But as you might expect, Arlington has a lot of emotion tied to it.  And we deal with that as best we can, because we have families that are deserving of our attention at this point in time in their lives.   As far as they're concerned, that's the most important thing that's happened at that point in time in their lives.   And we deal with that.

Overall, things operate very smoothly.   One thing I would pass on to all your listeners is that as a veteran, if you're out there, you need to make sure that your paperwork and stuff is available and properly set aside so when the time comes, your family is properly prepared.  And there is a degree of paperwork associated with everything we do.   And if you don't have that available, you can make things a little bit more difficult.  

And there are ways to deal with that.   All you've got to do is pick up the phone and call, and people can be happy to provide that information to you either through the veterans' services, or, of course, you can Arlington itself.

Mr. Lawrence:   From personal experience, as well as talking to people who have been involved at a ceremony at Arlington National Cemetery, the response is all very, very positive.   And so my question to you is how does it run so well?  How does everything, with 20 or 28 ceremonies, how does it all work so well?

Gen. Jackson:   Well, we've had lots of time to perfect that.  In all honesty, we have had lots of time.  And over time, the experience causes people to be able to find ways to make it better.   Additionally, I would tell you that the young people and all the folks that we have working down there are focused keenly on that one event.  And they take it very seriously.

The soldiers who participate in Arlington will tell you to a man that they are very proud to be able to provide that service to veterans who have served their country, and now they're paying their last respects.  And so every time I've witnessed a funeral, I've never seen anything but a tremendous sense of dedication and desire on the part of everybody to render those honors properly.  And it ranges from the very top down to the

lowest-ranking individual, to include family members who receive some honors.

Mr. Dickson: General, I know from my work with the Army that you personally, and also the Military District of Washington, has taken a leading role in developing innovative ways to managing your post infrastructure, including moving out into some innovative approaches in the area of privatization.  Could you talk about what you're doing in this area?

Gen. Jackson:   Basically, it's a fairly simplistic approach, but it's complicated as you get into details.   The simplistic part is that the U.S. Army is good at many things.  But some things we're not as good at as the private industry.   And so the desire is to -- let's go get the experts to do the things that they're good at, and let's let us go back to doing the things we're good at.

And so running installations and providing utilities to an installation is not something you learn about in the Army.   And maybe we ought to go out and find those experts.  And so that's what we're doing.  We're trying to bring them in -- all with the stated goal of being more efficient and effective with the dollars that the taxpayers give us.

Another example would be the Residential Community Initiative, which is RCI, in short.   But it's just a fancy way of finding out how we can build new houses, or improve the maintenance on the existing housing that we have on our installations. 

For example, the house I live in is 100 years old.  Everything you do to that house is now historically based.  And so it costs us money to be able to do that, and it costs more money than you might on a younger house.

But how do we go about fixing all this old infrastructure that in some cases we can't tear down because of the preservation and the historical requirements?  And so we took at look at that, and the Army decided the best way to do that is to partner with private firms who build houses.   And we pay for them by using the housing allowance that we receive -- if you own a house and you're living off the installation, you forfeit that when you move into government quarters.

Well, in this case, we won't forfeit it any more.  We will take that money and pay the private contractor who has built the house.   And they're contracting to do this, or building this partnership for long term.  The one up at Fort Meade is a company called Piscern Real Estate, and they're tied in for 50 years right now.

So they see -- the novel approach here is, here's an American business that is not necessarily concerned with instantaneous gratification or profit.  He is building his program to make money over 50 years.   And he's partnering with the military to do that.

And so we are going to get newer houses, better-maintained houses while he gets a

long-term return on his investment, which is kind of novel.

Mr. Lawrence: You said it was a simple concept, yet it was hard to do.  What's the hard-to-do part about?

Gen. Jackson: Well, the hard part is because it's new.  No one's done this before.  And so you're kind of groping as you go, trying to figure out how to do it.   As you break new ground, it just causes new things to occur, and things that you haven't thought of necessarily.

There were some hurdles.   There's legal hurdles; there's some political concerns.  And there's also just the issue of how do we go about maintaining a relationship for 50 years with a private entity?  You know, when was the last time the military built a partnership, a literal partnership, with a commercial entity?  And so that's the difficult part, putting together the product or the process so that it produces the product you want and at the quality you want to give our people the kind of living standards that they deserve.  

Mr. Lawrence: What are your special authorities as the commanding general of MDW?

Gen. Jackson: First of all, one of the extra functions I have is to function as the general court martial convening authority for all of the elements in and around the National Capital Region.   What that basically means is when there's an infraction or some kind of  legal problem, I'm the decisionmaker as to whether we take that to a court martial or we process it with another way.

So I will deal with all the military who work in the Pentagon and throughout the area from, again, as close as Fort Meade, Fort Belvoir and all the other agencies who, while they may not work for me, they will still fall under my jurisdiction for this.

The last time we counted, it's over 90 different organizations.  The other interesting part that falls to me is we have elements of Navy, Marine Corps, Air Force and Coast Guard that also work in the Capital Region that have jobs similar to mine.  And so what we do is we constantly interface with them so that we all know what each other's doing to try and facilitate the jobs.

Because again, in a crisis situation, we might very well need their assets to assist us, and so we work together.

Additionally, in the area of joint ceremonies, either at the White House or dealing with the Department of Defense, my organization takes the lead and all the others follow what we do.   And they'll take instructions from us.

Mr. Dickson: As the commanding general for the Military District of Washington, you have jurisdiction over both Army soldiers and a large number of civilians.  What are the significant cultural differences between these two groups?

Gen. Jackson:   You know, that's an interesting question, because before I came here, I  might have answered it a lot differently than I will today.   I will tell you today that I find very little difference between good workers, be they civilian or military.   I mean, good workers, good employees do things well, regardless of what clothing they wear and what their background is.  They just want to strive to do well, and they'll do well. 

Now, there's those that aren't so good, and then there's lots of differences with those.   But I have not-so-good that wear uniforms sometimes, too.  So, again, there's a commonality there that I don't really think transcends culture here.  So I would offer that in my job, that the people I've worked with, both civilian and military, I've found to be very capable, able, dedicated.  And they desire to do a great job.  And therefore, there's really no difference between either one of them.  And I'm blessed.   I've got good folks who work for me, and those problems don't seem to take up much of my time.

Mr. Lawrence: That's a good stopping point.  Rejoin us after the break as we continue our discussion with General Jackson of the Military District of Washington. 

This is The Business of Government Hour.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers.  And today's conversation is with Major General James Jackson, commanding general, U.S. Army, Military District of Washington. 

Joining us in our conversation is another PwC partner, Brian Dickson.

Mr. Dickson: General Jackson, I'm aware that the Military District of Washington is also playing a leading role in helping the Army improve its technology infrastructure and to develop more standard approaches to using information technology.   Can you talk a little bit about your efforts in this area? 

Gen. Jackson: The Pentagon has decided to take the lead, and to develop a program to do all those things you mentioned.  Our part is to kind of  be the test bed, or be a laboratory to take some of their ideas and actually put them into place and see how they work.  We're a relatively small command as Army commands go.   And so we can do that with a fairly small overhead, and we can see if it works.

The whole purpose behind it is to try and make our organizations more effective, more efficient by using not only common business practices, but also technology, by re-engineering the current technologies to give us the ability to get to information that is important and critical for us to make better decisions.   And we're doing things like remoting our servicing capability for our computers.  We have that capability now to basically reach into a computer and fix a software problem without ever having to send a service member down to touch the machine.  It can be done from a remote site.

Looking at consolidating our information techniques, our ability to store information in a database so that it makes it available for more people to get to, so that you, one, know that information is available so you can go retrieve it quickly and make it go.  And it's just a matter of trying to take all these tools and make them available to the decisionmakers.

Mr. Dickson: People who are technologists often talk about the introduction of technology changes organizations.   And in many ways, they say that when they get rid of the middle managers, they flatten the structure because they're able to do the kind of things you just described.   And I'm curious.   Can you imagine that happening to the Army?  It somehow seems counterintuitive to think that a structure that has lasted so long in history would change.

Gen. Jackson: I guess what I have learned over my 30 years is don't ever say never, because you'll probably be bit after a while.   I think those kinds of changes are worth looking at and exploring.  I think the Army has got ways to improve itself, and this may be one of them.   My only caution would be we need to look at it and address it.  And if we think it's going to work, then we move ahead.

And certainly our civilian and military leaders are taking a look at these things.   I know General Shinseki is working hard to do what he's calling the transformation business, to transform the Army into a different organization that can better meet the nation's needs.  

You know, if you don't change, to adapt, or adapt to the environment you're dealing in, sooner or later, you're going to become inconsequential or superfluous, and you'll go away.

Mr. Lawrence: What might be some of those differences?  Does that mean different way that the members of the Army do their jobs, would it mean different type jobs?  What?

Gen. Jackson: I think both those, certainly.  Obviously, there's many different ways to accomplish the same role.   And we should be looking for ways that are more efficient and more effective all the time.   Some jobs will go away.  

We've got new jobs today that weren't around 30 years ago when I came in the Army.   One of the little vignettes I tell my people is just the PCs, the personal computers that we're dealing with today, there weren't in the Army 30 years ago.  And today, when I'm standing in front of a big group, I ask them: "Is there anyone here who does not have a PC on your desk?"   And no hands go up.

That has affected the way we move information.  I mean, e-mail has taken away the old buck slip, the handwritten note.  Very rarely do we do that anymore.  Now, I do some because it carries a little bit of added weight sometimes.   But the point is the routine way of transferring information now has become the computer.

Just take a look at your own organizations and ask yourself what happens when the computer goes down?  What if the system breaks?  You find out you're all of a sudden got lots of spare time on your hands.   Because a tool has been taken away that you've become very accustomed to.  And so that has changed.  And that's just one example, which is not necessarily a big one, but it's been one example that has reached out and touched almost everybody in the military.

Mr. Lawrence: There's still talk about the coming wave of retirements of individuals in government.   Is this a challenge to MDW?

Gen. Jackson:  I don't think so.   You know, we have been having people retire in the military for many, many years.   In fact, it comes to all of us sooner or later.  And we have procedures in place to deal with that.  We have incentives, and we retain the people that we want to retain and that want to stay with us.  And we have a program to do that.  I think it's just the way we do business, and it's one of the things that we deal with every day.  

Mr. Dickson: Sir, is MDW heavily involved in recruiting and the retention of soldiers?   And what are you folks doing to try to improve recruitment and retention?

Gen. Jackson: Overall, recruiting has been a good story for the Army, although I personally -- my command -- does not get involved in recruiting initial entry soldiers, the first-time people coming in.

But my understanding is the Army is doing well across the board.   And in the area of retaining soldiers, my command does do that, and we're doing very well.   At this point in time, we're about 117 percent of our stated goals up to this point in time.

And we have a variety of different ways we deal with that in the way of incentives.   Some monetary incentives; college education that can be provided through the GI bill; training choices.   And the one that seems to pop up most readily in our command is the option to re-enlist, to stay where you're at.   And about half of our re-enlistments that are retention of soldiers comes in that category, which means people are pretty much happy with what they're doing, and they're going to stay with us, or try to stay with us longer.

And so right now, that's all going pretty well for us.

Mr. Dickson: Do you focus a lot on improving or maintaining a high quality of life for the soldiers as a means for ensuring high retention rates?  And what kinds of things are you doing in that area? style="font-WEIGHT: normal">

Gen. Jackson:  We are doing things to affect the lifestyle of the soldiers.  We've got some programs in place called wellness, and a wellness program that is designed to look at how you treat the whole family as opposed to just the soldier.  We need to recognize that if the soldier's going home upset, or has a family life that's not doing too well, he's not going to be very good on duty.

Mr. Lawrence: What advice would you give a young person interested in the military?  

Gen. Jackson: I would ask him to stay in school, learn all you can, be as good a student as you can.   Remember that you're going to go through high school, like most of us, once.  Get as much as you can out of that.  And then if you have a desire to come to the Army, get yourself in good physical shape, keep yourself as morally straight as you possibly can, and step forward.  But be prepared for challenges, and be prepared to face some things new in your life.   And the Army will in fact bring those things out.

But we look forward to bringing on every young able-bodied American citizen who wants to serve.   And I think there's a value added to every life that comes in and participates with us, because there's things we can do for them that probably are fairly unique.

Mr. Lawrence: I've heard about two programs.   Perhaps you could tell me more about them, Twilight Tattoo and Spirit of America.  

Gen. Jackson: Well, Twilight Tattoo is our summer program that occurs out on the White House Ellipse.   We do it every Wednesday at 7:00.   We're going to start April 17^th, and we'll go to mid-July.  And it's about an hour, hour and a half, or a little over an hour show.  And it's intended to basically provide the viewer a snapshot of what the Army has done over time, and some of the assets that are available within MDW.   But it's an historically based show that talks a little bit about the Army over the years.   And then it also gives them an opportunity to see some of the more visible assets that are available to me and that we put on the show. 

Some music.   It's all built around music.   We try to build it with some of the more contemporary music, which is rather difficult for an old person like me.   But I've got folks who help me with that.  And so the intent is to reach out to young people and to make it both an enjoyable but an informative event.

Spirit of America is really a large musical show that is done up in the MCI Arena.  We'll be doing that 26 through 29 September.   And what it amounts to, it's a patriotic version of any kind of a show that you might see.   And it's again designed around the Army, and what kinds of things we've done or meant to the country, and what the country means to the Army.  And it's put on by all our soldiers.  I mean, there's no professional actors there.  These are our people who are taught how to do this.  

And we write the show from scratch, and then put it on.  And we were going to do it last year.  But as you know, with the 9/11 events, it was decided that we would cancel that event.   And so we're going to come back this year, and hope that the public comes out and spends an evening with us or an afternoon with us, and hope they learn something, and also hope they enjoy themselves.

Mr. Lawrence: Well, those certainly sound interesting, but I'm afraid we're out of time.  

Brian and I want to thank you very much, General Jackson, for being with us this morning.

Gen. Jackson:  My pleasure.   Thank you.

Mr. Lawrence: This has been The Business of Government Hour, featuring a conversation with Major General James Jackson, commanding general, U.S. Army, Military District of Washington. 

Be sure and visit us at the web at endowment.pwcglobal.com.  There you can learn more about our programs, and get a transcript of today's interesting conversation.  Once again, that's endowment.pwcglobal.com.

This is Paul Lawrence.   See you next week.