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Driving Operational Innovation Using Lean Six Sigma

Tuesday, January 30th, 2007 - 20:00
Author(s): 
Government leaders today face mounting pressures to innovate; yet finding ways to actually enable innovation remains a challenge for many. Top organizations with successful track records of innovation, however, have discovered one possible solution. Lean Six Sigma, a relatively well-known approach for achieving operational excellence, can, as it turns out, do more than simply improve processes. It can help leaders discover innovation opportunities far beyond operations, enhance financial performance and create organizations that have an inherent inclination toward innovation.

R. Allen Pittman interview

Friday, January 26th, 2007 - 20:00
Phrase: 
"Where we need to move from where we are today, how do we transform ourselves -- it is moving from a personnel transaction-based organization into a human resources consulting behavioral-based organization."
Radio show date: 
Sat, 01/27/2007
Guest: 
Intro text: 
R. Allen Pittman
Complete transcript: 

Originally Broadcast Saturday, January 27, 2007

Washington, D.C.

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

The Business of Government Radio Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is Mr. Allen Pittman, Assistant Secretary for Human Resources and Administration, and Chief Human Capital Officer at the U.S. Department of Veterans Affairs.

Good morning, Allen.

Mr. Pittman: Good morning, Albert.

Mr. Morales: And joining us in our conversation is Solly Thomas, associate partner in IBM's Human Capital Practice, and former Acting Associate Director for Human Capital at the Office of Personnel Management.

Good morning, Solly.

Mr. Thomas: Good morning, Al.

Mr. Morales: Allen, perhaps you could start by giving our listeners an overview of the history and the mission of the U.S. Department of Veterans Affairs.

Mr. Pittman: Be more than my pleasure to do so. Veterans Affairs actually was established through an Executive Order creating an agency by President Hoover in 1930. In 1989, we became a Cabinet-level department under President Reagan.

Mr. Morales: Could you give us a sense of the scale of the VA? Also, how is it organized, the size of its budget, the number of full-time employees, and its overall geographic footprint?

Mr. Pittman: Absolutely. VA has 235,000 employees, and that fluctuates every month, typically goes up to about 238,000, drops down to about 234,000, but we're currently about 235,000 employees. Of the 235,000 employees, just to give you additional information, we have approximately 190,000 employees that are members of the union. So that's taken into consideration. The VA itself is broken into three major operating groups.

We are kind of different than the rest of the government in that we're actually an operating company if you look at us as a business entity. We have Veterans Health Administration. That has the largest component of employees -- approximately 190,000 employees. Then we have Veterans Benefits Administration, and then we also have the National Cemetery Administration. The remainder would be the staff offices supporting those three operational groups.

We have 1598 locations made up of 156 hospitals, 877 outpatient clinics, 136 nursing homes, 43 residential rehabilitation treatment programs, 207 readjustment counseling centers, 57 veterans benefits regional offices, and 122 national cemeteries.

Mr. Thomas: Allen, perhaps you could tell us a little bit more about your specific role as the Assistant Secretary for Human Resources and Administration, and also as the Chief Human Capital Officer. Could you tell us a little bit about the areas under your purview, the organizations, the size, the budget, the resources available to you?

Mr. Pittman: I have five program areas. There's human resources. There's labor relations management; there's administration; there's diversity management, and then the Office of Resolution Management. I have -- reporting into those five program areas, I have approximately 550 employees, and I have a budget responsibility for around $101million.

Mr. Thomas: Allen, I want to shift the focus now and ask you to describe your career path for our listeners. How did you begin your career? Could you talk about your experiences, and also what drew you to this critical position at the VA?

Mr. Pittman: Well, let me go back a little further than what you anticipate by that question, but I think I have to set the stage. I actually was a money and banking major in college, with the University of Arkansas. I had returned from Vietnam -- I'm a Vietnam veteran -- and I was on the G.I. Bill. And majoring through money and banking, I had reached the last semester of my eligibility out of the G.I. Bill and was running out of money. And I had to take one class which remained in my core criteria in reference to my major. Unfortunately, there wasn't anyone available to teach that class. So I switched to personnel management. That's how I got into personnel management.

Upon graduation, I started interviewing within the area that the University of Arkansas was located in, which is Northwest Arkansas. Unfortunately, the only jobs I was receiving came from Tyson Foods. And at that time, the offer that I was given was actually $2,000 less than the poverty level. And my dad, who was a family physician -- here comes a tie as far as health care -- suggested that possibly I get into pharmaceutical sales. So I ventured into that arena as far as that industry sector, and I went to work for American Cyanamid Lederle Laboratories, and eventually for Pfizer Labs.

So I became a pharmaceutical detail man. In my background in the military, I was a hospital corpsman. Again, you'll see there's a thread of health care. So I was able -- I was a caregiver in the Service, obviously, even though it was in a combat-oriented environment. But with pharmaceutical sales, I started understanding pharmacology. After I left Pfizer and went to work in the private sector, I went to work at a hospital, where I was a personnel manager.

I eventually went to work with Fluor Corporation, which was an engineering construction organization, and that was one of the best moves I made, principally because it was so fundamentally sound in reference to its training and development organizations. And from the human resources component, they soon put me into a fast track program where they wanted to make a general manager out of me. But in order to do that, I had to complete all the various disciplines within human resources.

And at Fluor Corporation, they had everything but labor relations. So therefore, I became a fundamental human resources technician, in that I've been in every discipline that there is within human resources, either as a technician or a supervisor or a manager. With that then I soon went on down the road in human resources, but I was soon contacted in the early '80s by a gentleman that I worked with for about 22 years. And we started two companies, both in health care -- both were ambulatory care, but one was home infusion, and the other one, the last one, was U.S. Oncology, which was a cancer-based community-based organization for the treatment of cancer. That's really helped me out. The background that I had created a situation for me in these operational companies that we started up not only in maintaining the direct responsibility for human resources, but also being the operating executive within those two organizations.

So I bring a different fit into the government in that I'm a true operational executive, and have been for over 20 years. However, I'm also a human resources professional. And I think that's always important. When you look at a career in human resources, it's unusual to have someone that understands health care to the degree that I do, and can apply it through a human resources aspect.

Mr. Thomas: Allen, with such a fascinating background and wealth of experiences, I'm curious: how have these experiences prepared you for your current leadership role, and how has this informed your current management approach and leadership style?

Mr. Pittman: Well, it's been beneficial from this respect. I think that you know I'm a political appointee. And with that, a political appointee comes into an environment that the majority of -- at least 98 percent or 99 percent of the employee base are career employees. At the VA, we only have 15 political appointees. We're treating veterans. This is not political, this is an apolitical environment.

So with that, the fact that I have this experience, that brings credibility. So when I talk, I bring credibility from the standpoint of -- again understanding the business, and being able to relate the business to a human resources decision or strategy. And that's been most important.

The other aspect, too -- in those two organizations in particular that I referenced about starting up, we had approximately 40, 45 acquisitions in those two organizations. So needless to say when you acquire an organization and try to transform and transition those two organizations together, it is very, very difficult. So it requires a lot of selling experience and being to sell the program, but importantly, you have to work collaboratively and participatively. I am a collaborator in reference to my management ability. In addition to that, I believe in participation.

That's where ownership comes in as far as whatever strategy or initiative you may have, and ownership by those that are participating in that initiative. I think that's been crucial, because there's such a short time to be able to come into the VA to hopefully impact and move that organization from a collaborative standpoint to where it should be.

Mr. Morales: Fantastic.

What is the VA's human resource strategy? We will ask Allen Pittman, Assistant Secretary for Human Resources and Administration, and Chief Human Capital Officer of the VA, 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 Allen Pittman, Assistant Secretary for Human Resources and Administration, and Chief Human Capital Officer at the VA.

Also joining us in our conversation is Solly Thomas, associate partner in IBM's Human Capital Practice.

Allen, could you elaborate on the four-part HR consulting model that you and your team had recently rolled out? And how does it frame your human capital strategy?

Mr. Pittman: Well, to give you just a little bit of background, first of all, VA, unfortunately over the years, has not kept up as far as leading edge technology or actually systems from a people perspective within the VA. And you might understand why. VA is mostly known for health care and also veterans benefits. So therefore, when the budget comes through, from an appropriation standpoint, it's typically for health care and benefits administration, plus for national cemeteries, of course.

So when you talk about overhead, which we are, it's very difficult to get those dollars that are necessary to move forward. What we've done since I've been there is to identify what we need to be within the future. So we're going through an HR transformation process. And I will tell you something that I think is somewhat funny. When I first came here and did an assessment of VA from the human resource perspective, I mapped out what I thought needed to be done before we sat down and did a collaborative strategic plan as far as human capital plan is concerned. Turns out that it matches the President's Management Agenda, and I would prefer to say that the President is following my lead, but unfortunately, that is -- that is not -- as it turns out, it's a pretty good fit.

And this is not rocket science when you look at human resources. If you look at the fact that fundamentally you're a personnel organization, a personnel department, even though we are 235,000 strong, then you'll soon see what we must do. And automation is almost non-existent to VA. We have a payroll system that has a component for human resources in it.

So taking a look at where we need to move from where we are today to where we're going to in the future, and the people involved, and how do we get there, how do we transform ourselves, a lot of it is moving from a personnel transaction-based organization into a human resources consulting behavioral-based organization. But you also need to have the tools that allow you to do that.

We went through that process and soon realized that if we're going to become a consulting organization, then what do we need to subscribe to? And you mentioned the four-step consulting model. Well, it includes the focus on customer needs, exploring solutions, developing and executing action plans, and closing the loop with our HR practitioners, but also the line managers that they work with.

So what we're trying to do is take those four components and develop core competency training programs so we can create an organization that is a consulting organization. We have a three-year plan in reference to that training and development piece as far as human resources and the human resource professionals are concerned. A lot of it's contingent also upon automation.

Mr. Morales: You talk about the scale of transition. Could you elaborate a little bit more on the VA's plan to transition to an HR line of business? And how does this move factor into your strategy, which you talked about, of moving your HR function to a more consultative and less transactional focus?

Mr. Pittman: Well, if one understands -- if you're a personnel transaction-based organization -- I'll give you an example of that: within the federal government, there is a Form 52, which is actually a change of status for an employee that's filled out typically by either the supervisor or human resources. And it's a paper form, and that's the way we do it at VA.

Understanding that that's a transaction itself, and then also understanding that our survey has shown us that approximately 36 to 42 percent of our HR professionals are transaction-based tasks, then you can see just how much labor it's taking in order to move an individual from one slot to another to perform any function within human resources. So just imagine if we automated those functions, then wouldn't that give us more capacity without even adding staff? And that is our strategy right there.

We want to automate, thus increasing capacity of our human resources professionals to allow them to do consulting without adding FTE. In order to do that -- that's where our HR line of business comes into play -- pretty much tells us where we need to go, and that's even better. Why? Because we don't have to build it. The HR line of business goes through a process through OPM. And OPM goes through the due diligence process of not only creating the project teams that represent all the departments and agencies within the federal government, to be able to select going through a due diligence process of who can perform these functions from a transaction-based piece.

Most people call these organizations "service centers." So a service center can offer, for example, classification. What we're doing is buying that service from either another agency and the agencies that have been identified within the federal government have been identified, and there's four that meet the criteria we need from the human resource information standpoint.

However, at the same time, OMB is going through a process of due diligence as far as the private sector is concerned, allowing them the opportunity also to become service center operators. So we're waiting for that one aspect to be complete. But by utilizing a human resource information system, this allows us to go into the database. And the database, in this respect, comes from a personnel file.

Once we automate that personnel file, the official personnel file, then this human resource information system -- an automated system can reach down into that database and pull out all these various aspects of an employee. And that will help us in managing our workforce.

Mr. Thomas: Allen, I want to talk a little bit about performance management. I want to know if you could elaborate on the VA's five-tier performance management system, and your experience implementing the performance appraisal plans. In particular, I'm interested in hearing what kind of findings, what your experience was under your performance management data site.

Mr. Pittman: Well, most people are unaware of this, that there is an awful lot of publicity in reference to the Department of Defense and Homeland Security and the issues they're having to train and to implement a five-tier performance appraisal system, which is absolutely crucial to performance planning. VA is the second largest agency and department within the federal government -- 235,000 strong.

All 235,000 employees are on the five-tier system. We had that ratified by the union six months ago. And we've worked with our union partners to get that. That was an essential piece. If we didn't do that, other than our Senior Executive Service who is on a five-tier system already, and that's approximately 300 of our executives -- if we didn't have a five-tier system, we'd still be on a pass/fail system. Now, the pass/fail system doesn't bode well for lots of different reasons. If you and I -- Solly, for example, are in the same classification and the same job title and we perform the same work, and you receive a pass and I receive a pass, but you work extremely hard and I work just enough to get a pass, then who can the supervisor and who should the supervisor invest in from a training and development standpoint for the future of this succession plan and also strategies of VA?

If the investment goes into you, I have every right to raise my hand and say, "How come you're not investing in me, I also have a pass?" We need to be able to distinguish between the levels of performance to give us a determination of who from a career path and career progression standpoint is going to move forward; also, who needs development, how can we invest those very valuable and scarce resources, dollars, that we get from the Congress, to invest in you?

So from a five-tier system, we started this process just this last six months, with the exception of the Senior Executive Service. So we have gone out and we've tested it, we've implemented it in all parts of the country. We are writing up the objectives as we just speak now that align with incentives, the incentives being defined as the strategies of the VA, strategies of the organization and also the objectives of the individual. So we can have measurable metrics that will afford us the opportunity to move people through the system based upon performance.

Now, the experience we have has been short-lived other than the Senior Executive Service. We've piloted this program and it's working extremely well. We had approximately three VISNs. VISNs are integrated systems within VHA. So it's Veterans Information and Integrated Service Network -- that's what a VISN is. So we've done that, it's working extremely well, and now we are doing a wholesale rollout in reference to the five-tier performance appraisal system. Unfortunately, we don't have that much experience to speak of.

Mr. Thomas: And you mentioned that you worked with the unions. I'm sure they raised some concerns at the outset. How did you address those concerns?

Mr. Pittman: Well, I speak very openly and short and to the point. And if I'm asked a question, I'll answer the question, obviously, but if there is a confidential situation, I'll explain it's confidential, I can't explain it. But in talking with the unions, I've been very, very clear about their relationship. When I first came into the VA, I read the master agreement with reference to the American Federation of Government Employees master agreement and saw that it was a pro-union master contract. In talking with the unions, I expressed that, and I said, well, what we need to do is not to create a pro-management agreement, but to create one that is equitable for not only the unions, but also for management, which would impact, obviously positively, the employees.

It's very, very difficult to manage an employee, the human capital asset, if in fact you can't do it directly. And if you have to give 30 days' notice every time you do something, whether it's a salary increase or whether it's a performance appraisal or et cetera. And that's what we talked about. We talked about how we could collaboratively develop a master agreement that would allow us the opportunity to manage the employees for the benefit of the veterans that we serve. Otherwise, we are too restrictive right now. In addition to that, I did talk about the fact that, you know, there's a trend within the private sector in particular that unions are becoming more and more minimized. And there is an opportunity to work with us in a partnership to develop an equitable plan, an equitable agreement to allow them to participate properly in the future.

You know, I talked about performance planning. Their concern was performance planning. And when there is an issue, whether it's positive or negative, but typically negative, then there is not a performance plan in place that allows the employee a good-faith effort to turn around and to continue employment. We have a philosophy at VA, I have a philosophy at VA -- it's our job to retain an employee. It's not our job to separate an employee. It's difficult enough bringing someone on board, so why not keep them. So through a performance plan request that they had as far as negotiations are concerned, I said absolutely, that's what supervisors are supposed to do.

Again, some of the very basic elements of labor management relations that should have been there were not there. We are creating that.

Mr. Morales: How is VA transforming how it manages its workforce?

We will ask Allen Pittman, Assistant Secretary for Human Resources and Administration, and Chief Human Capital Officer at the VA, 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 Allen Pittman, Assistant Secretary for Human Resources and Administration, and Chief Human Capital Officer at the VA.

Also joining us in our conversation is Solly Thomas, associate partner in IBM's Human Capital Practice.

Allen, we often talk with our guests about the pending retirement wave in government and the type of impact that this will have on their operations. What are you seeing within the VA, and what plans are in place to mitigate its possible effects?

Mr. Pittman: This is one of the most important areas that not only VA, but also the government, needs to respond to and respond to very quickly. Director Springer of the Office of Personnel Management uses the phrase "retirement tsunami." And I think that's a pretty good graphic, as a matter of fact, when you start talking about retirement. At the VA, which is in parallel to the rest of the agencies, but speaking about VA, we actually have 60 percent of our employee workforce that is eligible to retire within the next five years, not 10 years.

And doing an analysis in reference to where they're at as far as their retirements are concerned -- they being the employees, we've done two things. One is we have started a program of actually asking the employees -- which is part of succession planning -- it really surprises me when I first came on this, has anybody ever asked the employee when they have an expectation of retirement? And it's not illegal to do so. And the reason behind that is anyone can apply for retirement. They have to fill out an application actually to retire. They can actually pull that application anytime they want to, even though they've said they're going to retire. But from a planning perspective, you need to understand that.

What's even more important, not only from a planning perspective, is also understanding the intellectual, institutional knowledge that they have. They maintain a lot of information that's not written down anywhere. And it's absolutely necessary that we try and transition that knowledge base to someone else.

And the way that we are trying to approach it is actually multifaceted. What we're looking at and doing an analysis, which was the first part of what I was starting to answer a moment ago, is we were looking at those eligible to retire from an age perspective. When is it that they will retire based upon tendencies? If you look back over the years and look at the individuals that hold certain positions, you'll see that the higher the level, the shorter the time they will have as far as an age perspective. They may retire at 55, they may retire at 58, depending upon the number of years and combination. But you'll find, for example, senior executives, they normally do not go to age 65. Our senior executives typically go right at 59-1/2. And the rationale behind that is they have their high threes.

But if you look at that, that's when an individual -- an executive -- I happen to be 59, just for your information -- I know that I have a lot of years left. You may not think so, but I do. And you're at your peak. So why in fact should we work hard on trying to retain those individuals, how can we retain those individuals, not just plan for future replacement of the individuals through succession planning, but why can't we -- from a legislation standpoint, why can we retain without impacting their high threes as an individual, moving them into another slot parallel for a year or two-year period, to be able to transfer that institutional knowledge they have, and also to mentor their replacements, et cetera. That's an example of what we're trying to do.

The other aspect as far as succession planning is concerned also: the federal government has a tendency of really spending a lot of time on workforce planning. It has been an exceptional tool for the last two to three years. But it is now time to move to succession planning. Director Springer actually has taken this under her objectives and strategies. I believe VA started that process.

Part of what we need is automation -- if you recall, we need to have a learning management system that catches the skills inventory of each individual, not only their skills, but also their educational licensures, to be able to create a database so we can at that point develop a gap analysis in reference to where their skills and where their experiences and professional knowledge are in reference to where we're going from the VA perspective.

The federal government typically does strategic planning on a five-year basis. We are moving to a 10-year plan. There is nothing that you can accomplish in the five-year period. So why don't you look further out, look out further and see what your lines of business are going to be, what your technologies are going to be, what skill sets are necessary to support those lines of business, and start looking not only internally through a gap analysis, developing those competencies through leadership development programs and/or skill development programs to be able to support the lines of business into the future. And also to sit down and review the strategic plan on an annual basis. Right now, there's legislation out there that you have to review your plan every two years.

Well, typically an agency or department will take that plan off the shelf every two years, dust it off, enhance it, put it back on the shelf. It needs to be a living document, where you are looking at it every year and determining that if your lines of business that have been identified in the future have changed, you need to revise your strategies, which means you revise your skill sets necessary to support them.

So one of the things we need to do is to develop career pathing programs. VA does an exceptional job, and I'm serious, an exceptional job, for the highest levels of leadership. That includes the Senior Executive Service. And we have a program that's called the Senior Executive Career Development Program, which actually is a feeder program into the Senior Executive Service. We also have another program called the Leadership VA. The Leadership VA is actually the first executive-level, usually GS-13, 14 and 15 level development program, that is a feeder into the SESCDP, which feeds into the SES program.

However, the void is this: we don't have anything universally across the VA for the GS-3s through 12s. How do you create the pools of talent, how do you create the developed pools of talent in order to succeed? And this succession plan itself identifies positions based upon not only skill sets, but also careers. We have a tendency of recruiting. When we recruit for future purposes, we don't really recruit for the future. What we are recruiting is for now, for the vacancy. We are changing our recruitment strategies, our recruitment strategies for the future development based upon the skill sets necessary to support the strategies of the future and also technologies in the lines of business. So when we go out and recruit, we actually are offering a career based upon a need for the VA, not the vacancy.

Mr. Morales: I want to go back to some of the earlier comments you made about the -- certainly the size of the VA and its geographic dispersion. I'm curious. How does the VA evaluate HR field performance as well as impart some of these best practices to the HR community? And what steps are you taking to ensure that the policies and procedures are documented and communicated in a timely and comprehensible manner?

Mr. Pittman: Well, this is twofold. Again, when I came onboard and did an assessment, I asked first of all, do we have the human resource information system? That system is absolutely crucial to anyone that is in the profession of human resources. Why? For example, when you are talking about field audits, you can do system audits if you have a human resource information system, it will save you a ton of time to ensure that you have compliance to various policies, to include, for example, veterans preference on the hiring process. So a system that we will have on board over the course of the next two to three years maximum will be on board to allow us to do that.

In the meantime, I looked at also again what OPM was requiring us to do to go green. And by the way, we have gone green. We went green approximately six months ago. So we are the largest federal agency that has a green status at the current time. And part of that process, and what we needed to do, is to create an accountability organization. The accountability organization functions like an audit organization that comes out of human resources.

So it's a manual process, and what we do is we started out with just one individual. And we now have 11 staff that's in the accountability office. That's how important it is to our organization, and also one of the most important strategies we've done to ensure compliance. I think that you know that first of all, we are Veterans Affairs. So therefore, one of our most and greatest priorities that we ought to have is the hiring of veterans. And as you well know, there is veterans preference from a legal perspective that needs to be complied with.

We are the second-largest department behind the Department of Defense, with 30 percent of employment being veterans. And we absolutely believe in the merit system to begin with. I'm a strong supporter of the merit system, which surprised me when I came on board, coming from the private sector. However, I'm a firm believer that that needs to be there and to be maintained. And the other aspect of it, too, is that any preferences that we have as far as legislation is concerned needs to be followed to disability, age, whatever it might be -- needs to be followed.

So this accountability organization has been absolutely crucial. What it does, it checks every aspect, every function of human resources, not only from a recruiting standpoint, but from a classification standpoint, compensation, disciplinary action, it ensures compliance. Unfortunately, being the size that we are, 235,000 employees, and the dispersion that we have geographically as far as our locations are concerned, needless to say, this is a little bit difficult when you have a staff of 11. What we are doing though is, we're now training up the field staff, field human resource organizations, coming out of each one of our administrations -- that's Veterans Health Administration, Veterans Benefits Administration and National Cemetery Administration -- their human resources staff, to function as a team with us.

We've taken an integrated team approach. Those individuals that come from field operations will now be auditing their own facilities or even in their own administration. Therefore, we will have more capability to be able to do that. That's how we do it currently. We are anticipating automation. It will help us as far as system audits.

Mr. Thomas: Allen, you had mentioned some changes you had put into place to focus on the recruitment process. Maybe you could elaborate in a little bit more detail. And on a related matter, does the VA use flexible compensation strategies to attract and retain quality talent?

Mr. Pittman: To answer your question in reference to flexibility, the answer is yes. We extensively use such things as recruitment relocation and retention incentives. We use special rate ranges to attract and retain quality employees that possess mission-critical competencies. So we use all the flexibilities that OPM allows, and we use them very aggressively. The other aspect, too, in mentioning the recruitment strategies, when I first came onboard -- again, and it seems like everything that I have done is being matched by someone else from an initiative standpoint -- either the President or the OPM, so they are following me extremely well, by the way. But I will tell you, we needed help as far as our recruiting strategies, in reference to bringing people onboard.

Our analysis of the general schedule, the GS classifications, in the hiring of the general schedule employees was that we were exceeding in the neighborhood of 95 days to bring on a general schedule. From a Senior Executive Service onboard process, we were in the neighborhood of 220 days. So can you imagine? We're sitting here trying to compete with the private sector, and a private sector employee has been offered a job from us for the Senior Executive Service probably has gone to work for three or four companies during that 220-day period.

So you can just imagine the talent that we were losing. So what we ended up doing is we sought help from the Office of Personnel Management actually. And they have a process; it's called a hiring makeover. We asked them to come in and help us. We are an operational organization, so we don't have that much staff to sit back and assess, analyze. We have to operate an organization, and at the same time try to do these assessments. So OPM offered their services; we took advantage. They came in, and it was most beneficial. From a general schedule standpoint, taking a look at what we were doing and how we were bringing people onboard, we have now gone down to 38 days in reference to the onboard process for the general schedule, which also helps us as far as going green and maintaining our green status.

Also from the Senior Executive Service standpoint, we've reduced the 220 down to 98 days, and we're on our way to an objective of 45 days. Now, one aspect that we've done just recently is the utilization of USA Staffing. USA Staffing is an application of recruitment that also enhances and expedites the process of delegated examining units. So the delegating examining function, which actually rates and ranks applicants and their applications, takes into consideration the preferences and creates a certificate. It's done automatically through the automated USA Staffing approach.

So that's been most beneficial in impacting what we are doing. Now we are in the process of rolling that out. We have 800 licenses that we are going to be going after pretty soon through the Office of Personnel Management, which will help us again trying to bring that onboard process down to something manageable, and therefore not losing the talent as much as we have in the past, because competition with the private sector is just huge.

Mr. Morales: How is VA planning for its future staffing needs?

We will ask Allen Pittman, Assistant Secretary for Human Resource and Administration, and Chief Human Capital Officer at the VA, 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 Allen Pittman, Assistant Secretary for Human Resources and Administration, and Chief Human Capital Officer at the VA.

Also joining us in our conversation is Solly Thomas, associate partner in IBM's Human Capital Practice.

Allen, you talked about your movement to a 10-year plan. So as you look at this horizon, what types of personnel challenges do you think the VA will face?

Mr. Pittman: From a personnel challenge standpoint, if you're talking about human capital into the future, we have a huge challenge ahead of us. I'd just very briefly talk about succession planning. Obviously, you have to ensure that you have a flow of candidates for employment. That's absolutely crucial that we not only focus there but also understand what we are about in the lines of business that we're going to support in the future.

Again, mentioning our three administrations, if you know that VHA, Veterans Health Administration, is the largest component of our operating units and it is patient care-oriented, then that tells you pretty much the focus that we would have in reference to that administration. Doctors, nurses, health care professionals and health care technicians.

And we need to ensure that there is a constant flow, and we're taking steps to do that. We've developed, for example -- we're trying to brand ourselves within the minority community. It's an unusual approach; again, this is thinking outside the box. The private sector and the federal government typically go after anyone that they can recruit, but the most overlooked segment of our society happens to be the minorities. And that speaks very, very clearly. I mean, if you look at under-representation within the government, that speaks to where we are not getting candidates for employment from.

So why not become the brand within that minority community? I'll give you an example. We developed just recently and implemented in Puerto Rico a community prosperity partnership with one of the nation's largest Hispanic organizations, LULAC, and also the American GI Forum, which is a Hispanic veteran organization that's chartered by the federal government. And what the intent is is to look 10 years in the future and see what our job requirements are based upon the lines of business, the skills necessary to support those, and turn it right around and go into the Hispanic community through the storefronts that belong to American GI Forum and also LULAC; they're inviting us into their community.

The problem with our recruiting strategies typically is we don't understand the culture. So by working with them to develop those strategies, what we're doing is taking those job requirements into their youth development programs and developing that individual to where they are qualified for the job openings. The biggest barrier that we have is finding a qualified candidate for the job posting. So if we have a qualified candidate, that minimizes that barrier approach. Well, there's other approaches, too. Nursing; nursing shortages continue to happen. And it's not that there are not individuals that want to become nurses, the numbers are there. It's just that the nursing schools don't have the number of openings because they don't have enough instructors.

So therefore VA, has taken another unique approach. The Deputy suggested -- again thinking outside the box -- why doesn't VA have a nursing school, a national nursing school? Well, we're looking into that, so we can have people come to us. I also have been talking with the surgeon generals of the British Military Services. And they are very, very supportive of this. The allied health care professionals, for example, the non-nurses, non-physicians, those that have made the actual decision to separate from Service, why can't we bring them into our organization? Remember, we hire veterans. But also, we are bringing in qualified individuals.

If we had someone, for example, that was a hospital corpsman in the navy that wants to come to VA and become a nurse, we have a program where they can actually come in and we'll send them to a nursing school. We'll pay them 100 percent of their salary while they are going to school, and then whenever they get out of school, then they'll sign a contract with us for a number of years of service in order to pay us back for taking them through that process. But in talking with the military branches, they are wholeheartedly supportive of that. The one concern they have is that our program becomes so good that those individuals that were in the military or on the border, I mean on the edge of making decision whether staying in the military or leaving, that they may make the decision to leave or separate. So that's a concern we have is making sure we have a human capital for the future.

Mr. Morales: Along sort of the same lines, what challenges and adjustments do you foresee as a result of the ongoing operations in Iraq and Afghanistan?

Mr. Pittman: There is a program that we have that's actually called Coming Home to Work Initiative. And for those young men and women, the veterans returning from Iraq and Afghanistan, the theaters, that have been severely wounded or disabled, they typically would go through a process of rehabilitation assessment, for example, at Walter Reed -- or it could be Bethesda Naval or it could be in San Diego, it could be at Madigan in Seattle. There is a process they're going through where there's determination being made as to whether they can stay in the service, or unfortunately, from their perspective, being discharged.

And I would tell you, if you ask them, they want to stay in the service, they want to stay, and they actually want to go back to Afghanistan and Iraq. And it makes you so proud when you talk to them. But what we have is in the Coming Home to Work Initiative is actually a compensated work initiative. What that means is while they are going through rehabilitation and being paid by their military branch, by the Department of Defense, we have them come to work for us for 17 hours a week, and our one commitment is and the top priority is getting back for rehabilitation therapy. Any employment they had, we'll get them back. But what we're trying to do is during the 17-hour-a-week process, is to help them develop a new profession, a new occupation.

And we started that program about 2-1/2 years ago, and since that period of time, we have hired onboard with us -- mostly in information technology actually. It's about approximately 45 individuals, but we have more that's coming through the process itself. So we're trying to anticipate, from an employment perspective, those individuals coming back. From a network perspective, from a Veterans Health Administration standpoint, obviously we have health care needs also. And we're trying to adapt to that. And we're doing an extremely good job there. And particularly when it comes to brain injury and spinal code injuries, we actually have Centers of Excellence across the country, eight in number. And we're known now as a Center of Excellence for those severe injuries.

Mr. Thomas: Allen, I want to talk a little bit about technologies that are used in the Human Resources area. There's a lot of talk about commercial best practices, and certainly you have an interesting perspective coming in from the private sector. What emerging technologies do you think hold the most promise for improving federal human resource management?

Mr. Pittman: Well, I really think that what we need into the future is really what we are trying to do now through the HR lines of business. However, to take a step further, we need to have an opportunity to where we created a desktop management, human resources management approach for each manager and supervisor. If you look at the flexibility that we have by automating personnel files through the electronic official personnel file process under e-gov and also the human resource information system under the HR lines of business, the intent is to create an icon sitting on that desktop, that computer desktop, that not only sits there with the other icons you may have, like Word and et cetera, but to be able to tap into this icon that says H-R-I-S.

Now, through access rights to whatever applications may be within the human resources information system and also field rights, that supervisor -- as I had mentioned to you earlier, we have a Form 52 which is a manual process on an employee change of status of some sort -- if that supervisor wants to initiate an action, then they can just tap that icon, go into that -- the certain field of an application, fill out electronically that form and also transmit it -- if it requires upline management approval -- to transmit it.

It also has the learning management system that sits within it. For example, the individual development profiles of those employees that they supervise; what kind of training is necessary; what's necessary into the future? So it's to create a desktop approach that's absolutely essential for every manager in order to manage the workforce of tomorrow.

Mr. Morales: Allen, you have a tremendous passion for the business, and you started your career in the private sector and sort of had a variety of experiences. I'm curious and I'd love to learn, for those folks that are out there possibly thinking about a career in public service, what advice could you give them to get started?

Mr. Pittman: I think it's an honor to serve for the public, with the public, in any kind of opportunity that one may have, whether it's the federal government, state, local, could be the Peace Corps, could be the military. If one were to ask me 35 years ago what I would do for anyone coming out of high school, I would highly recommend having a two-year tour duty in public service. And I'll say the Peace Corps again, or it could be the military. I happen to be one of those individuals coming out of a process to where I was a little bit on the wild side, and I needed to have an understanding of a little bit more discipline in my life.

And what I understood in the military, as an example -- and this happens in public service, it's not about I, it's about we. It's a team. You cannot move anything to an outcome unless you have others to help you and to be part of that team approach. And just by the mere fact that you know that you're giving back to your community in one form or another, truly, truly excites me day-in and day-out.

Some say this is a sacrifice. This is not a sacrifice; it's an honor.

Mr. Morales: Great, that is fantastic. Unfortunately, we have reached the end of our time. I do want to thank you for fitting us into your busy schedule, but more importantly, Solly and I would like to thank you for your dedicated service to our country and our veterans.

Mr. Pittman: Thank you very much. Again, I would just like to emphasize, if one has the opportunity for public service, please serve. I can't miss this opportunity to say something about Veterans Affairs; the Veterans Health Administration itself. If you have been reading anything about the VA over the course of the last two years, you now know that the Veterans Health Administration has the highest quality outcomes of any health care distributing system in the world. It's known for its quality care. What a change.

And our Secretary has a tendency -- Secretary Nicholson has a tendency of saying this is the best story never told. And that's true. We're taking an approach now that every opportunity we have, like I do now, to talk about Veterans Affairs, talk about not only medical care, but the Veterans Benefits Administration, and also the shrines that we have for those veterans that are going be laid to rest.

And again, thank you very much. Again, it's an honor to be here and it's an honor to talk about the Veterans Affairs Department.

Mr. Morales: And it is a wonderful story.

This has been The Business of Government Hour, featuring a conversation with Allen Pittman, Assistant Secretary for Human Resource and Administration, and Chief Human Capital Officer at the U.S. Department of Veterans Affairs.

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.

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 are improving their government, but who deserve our unconditional respect and support.

For The Business of Government Hour, I am Albert Morales.

Thank you for listening.

Michael Ryan interview

Friday, January 5th, 2007 - 20:00
Phrase: 
"MCC provides assistance in a manner that promotes economic growth and the alleviation of extreme poverty and strengthens good governance, economic freedom, and of course, investments in people."
Radio show date: 
Sat, 01/06/2007
Guest: 
Intro text: 
Financial Management; Managing for Performance and Results; Missions and Program ...
Financial Management; Managing for Performance and Results; Missions and Program
Complete transcript: 

Originally Broadcast Saturday, January 6, 2007

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 this 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. Our special guest this morning is Michael Ryan, vice president of the Administration and Finance with the Millennium Challenge Corporation.

Good morning, Michael.

Mr. Ryan: Good morning.

Mr. Morales: And joining us in our conversation is Pete Boyer, Director in IBM's federal consulting practice. Good morning, Pete.

Mr. Boyer: Good morning, Al.

Mr. Morales: Mike, perhaps you could start by giving us an overview of the Millennium Challenge Corporation. Tell us a little bit about the mission and give us an overview of the Millennium Challenge Act of 2003, and some of its key requirements.

Mr. Ryan: That would be my great pleasure.

The MCC mission is simply to reduce poverty by supporting sustainable economic growth in developing countries -- in those countries which create and maintain sound policy environments.

The Millennium Challenge Act established MCC to administer the Millennium Challenge account. This was established in January of 2004 as a result of President Bush's commitment at the Monterey summit. And that summit focused on financing for development, and the purpose, as stated, was to provide greater resources for developing countries, taking greater responsibility for their own development. It sometimes been referred to as assistance with accountability.

The act itself mandates that MCC provide assistance in a manner that promotes economic growth and the alleviation of extreme poverty and strengthens good governance, economic freedom, and of course, investments in people.

The MCC program, of course, is only one component of our overall foreign assistance strategy, but it is an important and an innovative one. It's something new, and our work draws on lessons learned from international development organizations over the past 50 years, and it focuses on the long-term mission of reducing poverty, as I mentioned, through economic growth.

In short, we work in partnership with some of the poorest countries to create country ownership instead of long-term dependence on assistance. We want to give assistance in order for countries to take over the job of their economic growth and alleviate poverty within their borders.

Mr. Morales: Mike, this is certainly a non-trivial challenge in mission. Could you tell us a little bit about how your organization is organized, the size of your budget, and how many people are employed in your organization?

Mr. Ryan: MCC was designed as a small and a federal corporation and is meant to ensure accountability for the aid we administer. As a federal corporation, it's managed by a chief executive officer, who's currently Ambassador John Danilovich, and he's appointed by the president and confirmed by the U.S. Senate.

What makes us a little bit different is we're overseen by a board of directors, who make the major decisions, what countries to give assistance to and the like. And that board of directors is chaired by the secretary of state. The vice chair is a secretary of the treasury. Other members include the -- the United States trade representative. The U.S. aid administrator. And it is has interestingly two public members currently, although, there may be more in the future.

Kenneth Hackett, who's the president of Catholic Relief Services, and Governor Christine Todd Whitman, who in addition to being the governor of New Jersey, was also a former EPA administrator and now is a president of the Whitman Strategy Group.

We have a number of departments. We have operations, we have a department of accountability, a department of policy and international relations. Of course, we have congressional public affairs and an office of the general counsel. And then we have the department that -- that I head up, administration and finance.

As far as our budget goes, the commitment had been to rise to $5 billion a year. The current request is for $3 billion. The House passed a bill, and now is at $2 billion. I don't know where that's going to end up. And clearly, one thing that gives us a good deal of flexibility is that all of our MCC funds are no-year funds, which means that we can obligate funds for a five-year compact at the beginning of the five years, and it's available until it's expended on that -- that compact. It saves us from year-to-year ups and downs and countries can rely on this -- this assistance.

As far as the -- the level of staff, as I said, we're small and we're -- we aim to be small. We want to arise to a staff of -- of 300 in Washington, D.C. Currently, we have 20 people stationed overseas that are above that 300 number, and that number overseas should rise as we established additional contacts in other countries. At the present time, we have approximately 280 people in Washington.

Mr. Morales: So, almost 300 people managing $3 billion in assets?

Mr. Ryan: That's right.

Mr. Boyer: Now, Mike, what are your specific responsibilities and duties as a vice president of administration and finance, and could you tell us about the areas under your purview?

Mr. Ryan: Sure, Pete. I -- I'm essentially a chief financial officer in the federal mold. I'm responsible for the same areas that many CFOs are responsible for, financial management and reporting, financial services, budget formulation execution, development of annual performance plans, oversight of financial systems, and producing the annual performance and accountability report and procurement.

I also have oversight of HR, Human Resources, recruiting in development. Facilities management, both in Washington and overseas. IT and personnel security. So, it's just a full range of administrative and financial duties that you'd expect to see in an organization with my title.

Mr. Boyer: Now, Mike, you clearly had a very interesting career. Could you describe your career path for our listeners? Specifically, how did you begin your career?

Mr. Ryan: Well, I should start off by saying that I -- I had been a civil servant until my current appointment with MCC for many, many years, but my first position actually was a mathematics teacher in Baltimore City schools. After I earned an undergraduate degree at St. John's College in Annapolis. But I left teaching math and went to -- to Harvard where I got a -- a PhD in near eastern languages and civilizations. I got that degree in 1981, after having joined the federal government in 1979.

During my studies on -- on that degree, I spent three years researching Egypt and traveling around the Middle East under a Fulbright at Smithsonian and the Center for Arabic Study Abroad fellowships.

I've had several positions in the Department of Defense and Department of State. And when I first joined in 1979, as I mentioned previously, I was a Middle East analyst for the Department of Defense. I've also had senior-level positions, including deputy director of a plans directorate under the Defense Security Assistance Agency. I've been the acting deputy assistant secretary for International Narcotics in Law Enforcement Affairs in the Department of State. I was also the executive director and comptroller of that same bureau in the Department of State.

I also worked at EPA, where I first met Governor Whitman, and I mentioned before, when she was the administrator. And I first started as a comptroller there in 1997, with responsibility for budget formulation and execution. As all -- as well as all aspects of financial management in operations.

I became the deputy CFO of EPA then in 2000, and I had that job until 2006. May, actually, when in joined MCC. At EPA, I also managed their strategic planning, budgeting, financial management, performance measurement analysis, and their accountability functions.

Mr. Boyer: Mike, that's a very broad set of experiences. I'm curious, how have these experiences prepared you for your current leadership role at MCC, and have formed your management approach and leadership style?

Mr. Ryan: I guess being deputy CFO at EPA and acting CFO during periods when EPA did not have a Senate-confirmed CFO in place was the best preparation for my technical duties at MCC. Having a practical experience in managing a CFO shop, including problem-solving in all areas normally reporting to a CFO, and also extremely useful contacts within the CFO counsel, helpful opportunities to share experiences across the federal CFO community.

Previously, I think overseas experiences in the Department of -- of State and Defense, where I was based in Washington, but did extensive travel, in addition to my -- my work, as I -- I -- on my degree that I -- I referred to previously, helped me understand other country's governments and -- and cultures, and how you deal with countries in their own terms and -- and not necessarily bring your own cultural assumptions to play.

So, it was a useful body of knowledge overseas and -- and in the CFO environment because I had to deal with a wide variety of people and -- and people who approached tasks from different angles, and it's tremendously useful in the federal workplace, which is, as you know, wonderfully diverse.

Another useful leadership lesson from defense was that you really have to build a team from the people that you inherit, and then you get to the task of recruiting others. And everybody brings skills to the task. It's a leader's responsibility really to find the best way to use each team member's skills to support the mission and target your recruiting to fill any areas where skills need reinforcement.

I think it's another example of why it's important to appreciate the diversity of abilities and backgrounds represented in the federal workforce based on all the talents that federal employees bring to work everyday, I think we're well equipped for problem-solving from a variety of perspectives, and we're especially well set up to deal with foreign governments, many of whose children, if you will, came to the United States either recently or in the distant past as immigrants and deal very well with those cultures.

Another lesson learned from my experience in defense, state, and EPA, and especially now at MCC, is the importance of public/private partnerships. The private sector has a depth of talent and knowledge that's always refreshed, and government can make good use of private sector expertise to augment its workforce to accomplish the civic tasks without institutionalizing that expertise when it might not be appropriate. To the next set of tasks that lie ahead. It helps to keep public sector organizations more nimble by allowing us to take on specialized talent as needed, while maintaining a basic core of skills in the career ranks.

For example, when EPA was assigned to a government center of excellence to host financial systems, my staff and I argued successfully for a public-private partnership along private sector centers of excellence to compete for technical services in the IT area and in accounting.

This competition, I understand, here at the beginning of December is still going on at EPA. OPM is -- is now, I understand, going to do something similar, and I think that's a good model for a small lien organization like MCC. That is reaching out to the private sector for help in those areas that the private sector does especially well, and can tailor its support for the needs of the day without institutionalizing that support and fixing it in place.

Mr. Morales: That's fantastic. I can -- I can see now why you are focusing on solving some of the world's greatest challenges. Thank you.

What kinds of innovations are being pursued by the Millennium Challenge Corporation? We will ask Michael Ryan, vice president of Administration and Finance with the Millennium Challenge Corporation 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 Mike Ryan, vice president of Administration and Finance with the Millennium Challenge Corporation. Also joining us in our conversation is Pete Boyer, director in IBM's federal consulting practice.

Mike, in pursuit of its mission to reduce poverty by supporting economic growth as you described in the first segment, the MCC has identified and defined three key principles to guide the efforts.

Can you elaborate on those guiding principles and what is new about the MCC approach to international development?

Mr. Ryan: Well, thank you. The three principles are first of all, to reward good policy. Countries are selected based on their performance, as shown on objective indicators. Not indicators that -- that MCC develops, but that NGOs of the private sector, someone outside, an objective measurement is done on governing justly, which means investing in their citizens and encouraging economic freedom.

The second thing, in addition to rewarding good policy, is that we operate as partners. Countries are responsible for identify the greatest barriers to their own development, ensuring civil society participation in planning and developing a Millennium Challenge account, or MCA program.

Then, to participate in -- in a MCA program requires a high level commitment from the host government. Now, when I say "MCA," of course, I mean the Millennium Challenge account, which is the appropriate that MCC uses.

Each country enters into a public compact with MCC. That includes a multi-year plan for achieving development objectives and identifies the responsibilities of each partner in achieving those objectives.

The third principle, the first being rewarding good policy, and the second, to operate as partners, is to focus on results. MCA assistance goes to countries that have well-designed programs with clear objectives, benchmarks to measure progress, procedures to ensure a fiscal accountability per the use of the Millennium Challenge account assistance, and a plan for effective monitoring and objective evaluation of results.

Because we focus on rewarding good policy, we are seeing something new, and this is where the innovation comes in. Something new in international development, which our CEO calls the MCC effect.

We are seeing examples of countries making important policy changes on their own in order to qualify for funding for the Millennium Challenge account. This is extremely encouraging because we are seeing positive change even before MCC investment begins. I could give one example of this that happened fairly recently in the last couple of months.

We had one country that had a policy. Actually, it was written into their constitution, that married women couldn't inherit property in their own name. And we determined early on that this would mean that only 50 percent of the population would get any benefit out of the --economic benefit out of -- out of our policies, and we told the government, no, this is just not acceptable. You know, we can't continue our conversations if this stays in place. Although it was a longstanding policy and it was rooted in -- in culture and -- and in -- in prior law, they went ahead and changed that law, and they did that without receiving a nickel from us. And one got the feeling at the end of the day that there was something in just getting the stamp of approval that they had passed the test.

That's one anecdotal account, but a very real one. Two Harvard economists studied the MCC effect in a report released earlier this year, and they concluded that countries are responding to MCC's clear and actionable incentives. This is -- was -- was done in the Kennedy School of Government; it was called "Can Foreign Aid create an Incentive for Good Governance: Evidence of the Millennium Challenge Corporation."

Then there was another one from the manager of the World's Bank's "Doing Business Project," And the quote there I think is a good one, in which they stated that we have seen a number of reforms around the world in both rich and poor countries, but in many of the developing countries, the reform has actually been primarily as a result of the inclusion in the Millennium Challenge account.

Now, I would note that we often see reforms, as I -- as I mentioned before, in anticipation of the funding of the Millennium Challenge account, and not just as a result of projects in those countries.

Mr. Morales: That's a powerful story. Now, you used the word "compact." Can you describe the MCC compact development and implementation process, and what are the criteria methodology for determining eligible countries and establishing these compacts? And can you tell us a little bit about the composition of the projects that make up the portfolio?

Mr. Ryan: Surely. I think around the compact development, you get a lot of the innovation that -- that you asked me about before. I mean, what is different? Well, for example, for the fiscal year 2007, the candidative countries, you know, were identified on the basis of a per-capita income, and they must be in the low-income, preferably, for a lower/middle-income categories established by the World Bank. By law, only 25 percent of our funding may be used for lower/middle-income countries, assuring that most of our support goes to the poorest nations in the world. And I might add that we make every effort that if a lower/middle-income country makes a -- a proposal for a compact, and it is for some of the poorest people in their country, we find that to be a very compelling argument for going to that lower/middle-income country.

We report to Congress on our selection methodology, and our board of directors that I mentioned before, base a selection on specific performance indicators developed by independent, third-party institutions. We also seek public comment on selection methodology.

Right now, we're using 16 indicators in three broad categories, and countries must score above the median to be eligible. These indicators come from organizations including the World Bank, the World Health Organization, Freedom House, and UNESCO. And again, the indicators are -- are in the three areas that I mentioned before, ruling justly, investing in people, and -- and I think I mentioned economic freedom.

And by "economic freedom," we -- we mean things like the costs of starting a business or the days to start a business, trade policy, those things that might be either barriers or spurs to economic development we want to see.

Investing in people, you could have public expenditure on immunization, public expenditure on primary education, and -- and interestingly, girls education completion rate, which we see -- think to be extremely important.

Ruling justly, I think we're more familiar with. I mean, civil liberties, political rites, voice and accountability, rule of law, and significantly control of corruption.

The MCC board selects eligible countries using the above methodology and submits a report to Congress, and the selective countries are then eligible to begin developing a compact proposal for MCC consideration. At this time, we have 11 signed compacts in place, representing a total of nearly $3 billion, supporting programs in agriculture, infrastructure, land tenure, healthcare, and other sectors. Most compacts extend over a five-year period.

Mr. Boyer: Mike, does the MCC dedicate any funds for those countries that do not specifically meet the compact criteria, but are moving in the right direction? And if so, how?

Mr. Ryan: We do, Pete. We offer a threshold program that provides financial assistance to help improve a score on one of our -- of the 16 indicators that I mentioned.

The board of directors selects the countries for the threshold program based on their overall performance on all 16 indicators and their demonstrated commitment to improving the scores and their ability to undertake reform. Countries selected for threshold consideration must create a plan that identifies miserable ways to improve a specific indicator score and they must submit that plan for MCC review and approval. We make threshold program agreements with countries whose plans demonstrate meaningful commitment to reform and a high likelihood of successful implementation. And, of course, the measurement of that success is, again, done outside of MCC. I'll just give you two examples.

In the first case is the government of the Philippines, which actually passed the corruption indicator, but both the government of the Philippines and MCC felt that we would like to work more on this. And so, we made $21 million in threshold funds available to the Philippines in 2006 for anticorruption efforts. And what was really exciting about this was that the government made a decision to match those funds fairly closely so that it doubled the amount that was available, and we view this as a real commitment to reform on behalf of the people of the Philippines.

Another example that's not corruption was in 2005, Burkina Faso in Africa became the first threshold country to be approved for a compact funding. Burkina Faso was awarded $12.9 million for its threshold country plan, which was designed specifically to improve girl's primary education completion rates.

Mr. Boyer: Those are powerful examples. What does it mean for compacts to enter into force, and how does it relate to the actual disbursement of committed MCC funds to recipient countries?

Mr. Ryan: Well, this is another term of art. A compact is a contract is between MCC and a foreign government. It sets out the terms of the programs to be funded along with the funding to be dedicate in each year -- in each compact year for specific project components.

For example, a compact might set out dollar amounts anticipated to be spanned in each five years on a component such as improvement of a particular set of rural roads to get products to market, for example. The compact also outlines the general terms of the road improvement work to be undertaken. The signing of the compact commits the full funding for the specified project in a given country. After the signing, we continue to work with the country, we do due diligence, and we make sure that all conditions are in place to support a proper disbursement of funds.

When those conditions are met, then we declare the compact ready to enter into force, we obligate the funding and technical terms and the disbursements begin thereafter.

Mr. Boyer: Mike, to supplement its organizational structure in assisting caring out its mission, MCC has several formalized interagency agreements, or IAAs, with other federal government agencies. Could you elaborate on these collaborative relationships?

Mr. Ryan: Well, I think that -- that with a small organization, it must be clear to everyone that we can't do everything that is necessary for us to succeed. So, we have a number of these kinds of agreements.

For example, the National Business Center of the Department of Interior pays the MCC employees and provides financial systems and some accounting support. We also work closely with USAID, and to some extent, with the Department of Justice for the threshold programs that we discussed earlier. Treasury also provides technical assistance, especially in the banking sector, and from time to time, no doubt will sign other IAAs with other federal entities as the need arises.

Mr. Morales: Excellent. How is the MCC managing its program development efforts? We will ask Michael Ryan, Vice President, Administration and Finance for the Millennium Challenge Corporation 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 Michael Ryan, Vice President, Administration and Finance with the Millennium Challenge Corporation. Also joining us in our conversation is Pete Boyer, director in IBM's federal consulting practice.

Mike, how does the MCC make sure that compacts with partnered countries are going to produce the results that will satisfy the U.S. taxpayers and meet the goals of the MCC?

Mr. Ryan: Well, I think that the U.S. taxpayer has shown the willingness to fund humanitarian assistance and assistance to poor people, as long as the overhead is not too high, and as long as the goals are worthy, and the people that really need the assistance receive it.

To ensure that we meet some of these expectations, MCC forms a transaction team whose members work closely with representatives from the country developing a compact proposal. Our teams include people with a range of a pertinent expertise in economics, law, and the appropriate technical areas, such as engineering or agriculture. We may also have someone who's an expert on gender issues, for example, or other social issues, or even the environment.

Partner country representatives are expected to engage in wide consultation with members of the public in a civil society in their own countries to ensure their compact proposals reflect needs identified by their own people and the poorest among them, and that the solutions are likely to work best for them.

MCC transaction team members evaluate all parts of a proposal and work with partner country representatives to develop practical, well-designed programs that incorporate steps to measure and evaluate results. MCC's investment committee, on which I have a vote, also plays an important role. It's chaired by the deputy CEO and is composed of MCC's senior officials.

The MCC committee considers all aspects of compact development and votes up or down any aspect along the way. MCC's board of directors, of course, has the final vote on a compact. The best designed compact programs are in the support of the investment committee first, and then the board of directors by incorporating meaningful evaluation of results and showing the promise of reducing measurably the number of people living in poverty. And, I might add, all of our discussions of the size of our staff and the amount of money that we put into overhead I think is an important one because we try to keep the overhead fairly low.

Mr. Morales: Now, Mike, as the -- as the CFO, many of our listeners may find it interesting that the MCC has identified that Chief Financial Officers Act of 1990 and the Federal Financial Management Improvement Act of 1996, and various other financial laws and regulations did not cover your operations.

What is MCC's basis for this position and does the MCC plan to follow at least the spirit, if not the letter, of those laws because they make good business sense?

Mr. Ryan: Actually, Al, we do manage our business according to the mandates of these laws and regulations. As we've said several times, we're small and organized as a federal corporation, rather than as a typical independent agency. And we were established after many of these laws were enacted. But we comply with them, however, and because we're part of the executive branch, and because they make good business sense.

For example, we issued our financial statements on November 15th with the rest of the federal government, and I might add, we got a clean opinion on that, and we intend to do similar things in the future.

There have been a number of government management reforms enacted in legislation in recent years. Most of them aimed at focusing agencies on managing for results and enhancing accountability for program outcomes. I'd like to think that MCC was designed to accomplish both of these ends, so it is not a stretch for us to follow the course outlined in legislation.

Mr. Boyer: Mike, on a similar topic, a key element of all compact development and execution is fiscal accountability. You know, the mechanisms and processes that assure that funds are managed properly and procurements are undertaken in a fair, open, and transparent manner. However, some of the compact countries do not perform accounting on a accrual basis by recording commitments and obligations.

Would you elaborate on the guidance provided to compact countries and requirements placed on those countries, and how has MCC handled this situation?

Mr. Ryan: Well, Pete, that's a question that's going to warm accountants' hearts all over the city this morning. MCC has a department of accountability which is responsible for these matters, and my department, of course, supports their work. Consistent with our model of country ownership of MCC-funded projects, compact countries must have internationally recognized system of accounting in place. It does not have to be identical to the U.S. model, but has to be recognized. We're constantly refining our approaches to this and expect to see continued improvements in the future.

For example, we require compact countries to have a fiscal agent and a procurement agent that we consider to be technically qualified. But while some countries might not use accrual accounting, the accountable entity, which is the organization set up in the country to carry out the compact by the government of that country, the accountable entity, often referred to as an MCA, set up by the government of a compact country must provide us with regular estimates of their cash needs. And these actually can serve as a surrogate for accruals, and indeed, we did an accrual in our financial statements just like every other federal entity on November 15th, as I mentioned before.

Mr. Boyer: Well, Mike we're -- we're glad we can get the -- the hearts of the accountants warmed up this morning.

Mr. Ryan: Let's not warm them too much.

Mr. Boyer: The USAID Office of Inspector General identified vulnerabilities affecting the MCC program in several criteria areas, including procurement, cash management, and disbursement that may adversely impact its financial operations. For example, the IG identified that the MCC Cape Verde compact had problems in the areas of cash management and procurement.

Could you elaborate on the MCC strategy for mitigating such risks and vulnerabilities? Specifically, has the MCC established policies and procedures for evaluating disbursement requests submitted by recipient countries to ensure that the amounts disbursed are only for immediate cash needs?

Mr. Ryan: Sure. First of all, I -- I have to point out that we have a very collaborative relationship with our IG. And I personally engage in conversation with IG staff on many issues, including the one you're -- you're asking me about. And while we do not always agree, we receive many useful recommendations that have caused us to improve our procedures. And we've been working on some exciting -- at least exciting to me, possibilities to enhance mechanism for getting funding out to compact countries.

Our current approach requires quarterly disbursement requests from a country. It comes into MCC, we consider it, and we say yes to the -- to the funding, its justified under the compact or -- or we ask questions. But we disburse on a monthly basis, asking the country to project their cash needs for the coming month, as I mentioned before.

However, we are in consultation with the Department of Treasury right now to see if we might use their Web-based online system for making payments worldwide. They call this system ITS. This would enable us to require that fiscal agents I mentioned previously overseas to request payments based on specific invoices and to justify disbursements in a systematic way in -- in real time. In addition, we're investigating to see if there might not be a private sector that would provide a -- a global payment solution, as well.

Treasury is interested in working with us on a solution in either case, and if we can't do this, I believe it would address the IG's concerns that you've -- that you've mentioned before. I'd also like to be able to try a pilot as early as January of 2007, so quite soon with -- with one or two countries to see how this actually might work in -- in reality.

Mr. Morales: Michael, we talked earlier about some of the interagency collaboration, and we know that the MCC has outsourced much of its administrative functions, including human resource and payroll management.

But does the MCC recognize the value of implementing an integrated human resource and payroll system, and can you elaborate on the status of this effort and the overall strategy to forge an integrated system that reduces the reliance on manual processes and enhances your interface with the NBC systems?

Mr. Ryan: Well, that's a great question. I mentioned before our -- our interest in keeping overhead down and of course manual processes are done by people, and people are overhead. So, we want to cut down on these things. They also introduce errors, as everyone knows, and -- and we'd like to do as much as possible automatically and with an -- with an integrated system.

We get great service from Interior's National Business Center, but it does not have an integrated system at this time. I understand they have long-term plans to make it integrate in the future, but at the current time, it's simply not.

The benefits of integration are especially important for a small organization like MCC. We do not have the personnel to make the multiple entries required by a non-integrated system, especially as we take on more compacts and more countries. We will be engaging consults soon to perform an analysis of how MCC might best achieve full integration of its financial management. And also, I hope a reasonable timeframe for achieving it.

You know, I am intrigued by efforts to engage private sector organization as -- as a center of excellence to supplement governmental centers of excellence. I am very familiar with the competition that's been going on at EPA, and I'm -- I'm looking forward to see the results of that competition for running their financial system. It's something that I saw at the beginning of when I was -- when I was at EPA. And now, I read recently that OPM is -- is also looking for a private public competition in this, and I think that's really healthy and something that might work very well for MCC.

Mr. Morales: What does the future hold for the Millennium Challenge Corporation? We will ask Michael Ryan, vice president, Administration and Finance with the Millennium Challenge Corporation 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 Michael Ryan, vice president, Administration and Finance with the Millennium Challenge Corporation. Also joining us in our conversation is Pete Boyer, Director in IBM's federal consulting practice

Mike, in its rather brief existence, the MCC has had some significant achievements, and we've certainly talked about many of those today.

What do you envision for the MCC over the next 5 to 10 years, and what are some of the key challenges and major opportunities facing the organization?

Mr. Ryan: Well, our overwhelming challenge is going to be compact implementation. We've been talking about performing the compacts, and that's what the corporation (off mike) spending its first two and a half, three years of existence doing. But making sure that results that we envision are achieved is our next challenge. Most of the work will be undertaken by partner countries, as they own the projects. So, it's really more of a challenge to them. And the real beneficiaries -- if -- if both us, that is to say MCC and the host governments are successful, the real beneficiaries are the poor people of our partner countries.

Mr. Morales: Mike, with such a small organization, I can only imagine that every single individual has a critical role and -- and is critical to the organization.

To that end, what steps are being taken to attract and maintain a high -- high-quality technical force, and can you elaborate on initiatives to ensure that you have the right skill and the right staff mix?

Mr. Ryan: First of all, let me say that I don't think any organization in my federal career can claim a higher quality workforce than MCC. And we owe that in part to the attractiveness, I think, of our mission, but also we've talked a lot today about public/private partnerships.

We have a partnership with Korn/Ferry International, in particular their Futurestep Division, which ahs been supporting our recruiting and hiring efforts. We've also been energizing our recruiting efforts through partnerships with targeted non-profit organizations who subscribe to our belief that, and this is a term we think has some power, that a diverse workforce can make a world of difference. And as far as training goes, I've been tasked by our CEO to create an overarching training plan for MCC. Everything from language skills to management skills. And we're beginning with training for all our transaction teams in partnership with the Federal Executive Institute.

Mr. Boyer: Mike, you mentioned MCC's focus on low overhead, and we've talked about it on a number of questions today, but how do you respond to people in a developing community that have expressed that MCC's proposed staffing level of 300 is very lean for an organization planning to disburse $2 billion or more per year?

Mr. Ryan: Well, you know, when the road is -- is twisting and turning and you're in a race, you'd rather have a sports car. So, we're -- we're -- MCC is based on a new organizational model. And we think our -- our leanness is an asset rather than a liability.

The key to our ultimate success has got to be related to our ability to identify the right countries with the right governance and respect their responsibility for their own development. We believe this approach is more likely to give arise to sustainable efforts and lasting reduction in poverty.

If we were to increase our own numbers, we might be -- just might be more tempted to give ourselves a larger role in other countries' efforts, and we really don't want to do this. Having said that, we are concerned with the growing workload, and we're constantly looking for ways to streamline our work and procedures.

In fact, it's interesting as far as this question goes that as I left MCC to come to this program this morning, we'd had a little meeting in which we talked about our model and whether we should change it, what aspects we should change to meet the challenge of the growing workload that's -- that's certainly coming. But I'm confident that this is a problem that we can meet square on, and we aren't going to go above 300 people in Washington.

Mr. Boyer: I like the race car analogy, Mike. MCC's compact pipeline seems to be robust and growing. Could you give us a sense of the current and future pipeline, and is there a point at which expansion becomes too much for a fairly new organization like the MCC?

Mr. Ryan: Well, obviously, I can't predict how much the pipeline will develop, and because so much of our future activities will depend on congressional funding, and that again will depend on what we do in our measurements of success. But we've been signing. This past year, we've signed six compacts, and I would think that this year, I would hope we'd sign three or four. But beyond that, it would be difficult to speculate.

We've learned a great deal about what works and doesn't work based on our experience with the 11 compact countries so far and recognizing that individual circumstances make each nation unique in its capabilities and the development issues that it seeks to address, we know that we found some approaches that are replicable, and we may identify some efficiencies as a result.

Finally, I really think being a new organization is a benefit because we can implement new ideas without being burdened by our past. Perhaps a real challenge is to remain, as the song goes, "every young," and avoid the bureaucratic impulse.

Mr. Morales: Michael, you've had a highly distinguished career in public service spanning some 25 years, as you indicate.

Is there any advice that you would give to an individual who is perhaps considering a career in public sector, or who may have a specific interest in the efforts at the MCC?

Mr. Ryan: I think the most important question might be why should someone want to work for the United States government? Because, after all, MCC, even though we're different and new, is part of the -- is a part of the federal community. The answer, I think, has to be, because it's the largest, most ambitious, and most diverse enterprise in history. Working for the federal government means upholding the principles on which the country was founded in the form of the Constitution, which is still the model for many countries, and many of the countries we deal with. The federal mission is also large enough to accommodate just about any interest or skill.

What's the best preparation for a federal job? I think everybody has their own concept, but I always recommend that people get the best general education available to them, especially in the liberal arts. But, to me, that means science, math, history, and language, before they specialize.

USA Jobs is a central Web site for all federal jobs openings, and it really does contain something for everything. Our MCC.gov Web site also provides the ability for individuals to go on and do online applications for our jobs, and actually anybody who comes to talk to us, no matter who they are or where they come from or what their background, ultimately, we ask them go back to our Web site, MCC.gov, and fill out an online application.

With respect to jobs at MCC, we find a variety of technical skills useful, much like the other federal agencies in the development community. But I would encourage people to focus on foreign language skills, with French, Spanish, and Portuguese, the most useful to MCC at this time.

To work with representative other countries, there is an obvious benefit to being able to speak and understand their languages. Of course, it's not just language; we can never have too many employees with skills that include communicating across cultural lines, regardless of what their technical expertise may be.

Mr. Morales: That's fantastic. Mike, we have reached the end of our time, and that'll have to be our last question.

I do want to thank you for fitting us into your busy schedule this morning, but more importantly, Pete and I would like to thank you for your dedicated service to our country.

Mr. Ryan: Well, thank you. It's a great honor for me to be here. It's a great pleasure.

I'd like to invite everybody who would like to learn more about MCC, certainly more than -- than I was able to give this morning, to go to our Web site, MCC.gov, and there you can see information about countries, about our programs, and also apply for a job if you want, as I mentioned before.

Thanks a lot; I appreciate being here this morning.

Mr. Morales: Fantastic. Thank you.

This has been the Business of Government Hour featuring a conversation with Michael Ryan, vice president, Administration and Finance with the Millennium Challenge Corporation.

Be sure to visit us on the Web at businessofgovt.org. There you can learn more about our programs and you get a transcript of today's conversation. Once again, that's businessofgovt.org.

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 Radio Hour, I'm Albert Morales. Thank you for listening.

Lt. Gen. Roger A. Brady interview

Friday, October 20th, 2006 - 20:00
Phrase: 
"Our job is to make sure that we have the right airmen with the right skills in the right place at the right time."
Radio show date: 
Sat, 10/21/2006
Intro text: 
In this interview, Brady discusses: the Air Force's transformation strategy; Force development initiative; Personnel Services Delivery (PSD) initiative; National Security Personnel System (NSPS); Supporting Air Force families; and the Air Force's organizational...
In this interview, Brady discusses: the Air Force's transformation strategy; Force development initiative; Personnel Services Delivery (PSD) initiative; National Security Personnel System (NSPS); Supporting Air Force families; and the Air Force's organizational culture.
Complete transcript: 

Originally Broadcast Saturday, October 21, 2006

Washington, D.C.

Mr. Morales: Good morning, and welcome to The Business of Government Hour. I'm Albert Morales, your host, and managing partner of The IBM Center for The Business of Government. We created the Center in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about the Center by visiting us on the web at 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. Our special guest this morning is Lt. General Roger Brady, Deputy Chief of Staff, Manpower and Personnel, United States Air Force.

Good morning, General.

LTG Brady: Good morning.

Mr. Morales: And joining us in our conversation is Bob Bleimeister, partner in IBM's Human Capital Practice.

Good morning, Bob.

Mr. Bleimeister: Good morning.

Mr. Morales: General, can you tell us about the mission of your office and how it supports the mission of the Department and the Air Force specifically?

LTG Brady: Well, as much as it might seem like a clich�, we like to say that our job is to make sure that we have the right airmen with the right skills in the right place at the right time. That's important for the Air Force; obviously for the individual as well. But we support Air Force commanders, and by extension also combatant commanders around the world, in the variety of missions that airpower is assigned.

Mr. Morales: General, can you give our listeners a sense of scope and scale, how big is the Air Force in terms of military personnel, Reserve civilians; how big is the manpower budget and how big is the overall personnel community?

LTG Brady: Well, it's rather large. When you add civilians and all the components that you talked about, active Guard and Reserve, about 700,000 people. About 350,000 of that is active, about 75,000 Reserves, 105,000 Guard and about 160,000 civilians. So it's a large enterprise of very talented people.

Mr. Bleimeister: General, could you focus a little on your role as Deputy Chief of Staff for Manpower and Personnel, and tell us more about your specific responsibilities?

LTG Brady: Yes, I'm responsible at the headquarters Air Force level. I guess you'd think of it as corporate headquarters in the civilian context for the Air Force's policy on education, training, development, benefits, compensation, also services; the services that we provide our people on bases for family support and recreation as well as manpower. We kind of handle a lot of the cultural issues of the Air Force, like we do uniforms and things of that nature, and currently, we're -- as you may have heard, we're working on a rather significant personnel reduction within the Air Force, which occupies a lot of our effort at the moment.

Mr. Bleimeister: You've had a pretty lengthy career. Could you give us some highlights of that, and perhaps what some of the most important things you did that may have prepared you for this role?

LTG Brady: Well, I think -- I'm not sure that anything prepares you for this role, actually, but I started out during the Vietnam era. I in fact went toVietnam as an intelligence officer, as a lieutenant, then later went to pilot training and flew in the mobility world for a number of years. Also, I was a training command instructor -- pilot training instructor for a long time. I've served in plans jobs, in acquisition and maintenance, personnel operations for many years. So I've seen a wide spectrum of the Air Force.

Mr. Morales: General, I'm curious, you mentioned earlier you have about 700,000 personnel in total in the Air Force community. About how many individuals are in your organization that service those 700,000 people?

LTG Brady: I have a little over 200 people here at Air Force headquarters, but then I have -- we also execute the assignment system for the Air Force, which is -- unlike most industries you would see, we move -- transfer about 160,000 of our people every year, and that execution process is accomplished by an organization in San Antonio that's another 2,500 people. That's our personnel center, and they're kind of the execution arm of Air Force personnel policy.

Mr. Morales: That's a large number. You surely don't see numbers like that in the private sector.

LTG Brady: That's rather large.

Mr. Morales: Great. You talked about some of your earlier experiences going back to the Vietnam War. How have these experiences, such as being a command pilot involved in a variety of major deployments, prepared you for your current role, responsible for Air Force manpower and personnel issues?

LTG Brady: Well, I think the most -- as I look back on my career, I don't think anybody planned back in the late '60s for me to be the Air Force Deputy Chief of Staff for Personnel. But as it happens, I have a great background for doing this because I've seen so many parts of the Air Force. Obviously, being an aviator I think teaches you lots of intangibles about situational awareness and knowing what's critical and what's not and what decisions have to be made now and what decisions could be made later. But I think specifically for this job, I have pretty good familiarity with a lot of the different -- as we like to call them -- a lot of the different tribes in the Air Force, the different functional communities, and so they have a different kind of -- sometimes a thought process, cultures within the Air Force culture, and an awareness of those is very helpful in dealing with them in what can be very personal and sometimes emotional issues.

Mr. Morales: Well, I've got to expect with 700,000 people, it's probably several cultures within an organization of that size.

LTG Brady: Yes, there are -- there are.

Mr. Morales: Excellent.

How is the Air Force transforming, maintaining and shaping its force structure? We will ask Lt. General Roger Brady, Air Force Deputy Chief of Staff, Manpower and Personnel, 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 Lt. General Roger Brady, Air Force Deputy Chief of Staff, Manpower and Personnel.

Also joining us on our conversation is Bob Bleimeister, partner in IBM's Human Capital Practice.

General, many pressing issues have required the United States Armed Forces to reassess and transform the way they operate to properly meet future challenges. Could you give us an overview of the Air Force's transformation strategy?

LTG Brady: Sure, I'd love to, but let me first spend just a moment telling you the environment that we are in that makes this transformation critical. We find ourselves in a situation, as you can well appreciate, fighting the Global War on Terrorism, which we refer to as The Long War. It's going to go on certainly for the rest of our careers, if not the rest of our lives, we anticipate.

So we have to win that war. We also have to be prepared for the next war, whatever that is. And so we find ourselves with a very high tempo operations tempo. We find ourselves with operating costs that are very high, and there is not much flex there because the tempo is so high, and we find ourselves flying very old equipment; the oldest equipment we have ever flown -- the most effective equipment in the world but old -- 23 years old on average -- we'll be over 30 years old, even if we get everything we are trying to buy in the next few years.

So we are way behind in our investment strategy, and people -- as any business will tell you, the cost is going out of sight, particularly health care. So where is our flex? We need to look at our portfolio of human capital and see what we can do there to be more effective, because we can't affect our operating tempo; we have to win. And if we don't want to fly 75-year-old airplanes, we've got to find a capability to recapitalize ourselves.

And so our flex is in people, and we also have to get -- people are our most important asset, and when I say that, you would ask, well, then why are you getting rid of them? I say because they are very valuable, but at the same time, they are very expensive. And the people we have have to be the most flexible, the most educated, the most appropriately trained, and we have to maintain the capability to sustain the benefit -- the benefits that our people have had over the years and have come to expect and deserve, including health care, et cetera.

So we cannot afford to have too many people. We got to have the right number. And so that brings us to the transformation that led to a reduction of some 40,000 full-time equivalents in our people over the next few years, which gets me to your question of strategy. What's the strategy for doing that? Well, again, warfighting is job one. If you do nothing else, you got to win the war. You can't get to be second place in our business. So we're focused on warfighting skills and those capabilities that deploy forward.

We then worked ourselves back from the deployed locations and said, okay, what does it take to sustain the institution, and as you go further back, what does it take to sustain garrison locations, and look at how efficient we are there. We do not want to take risk forward. We will manage risk in the rear, in CONUS, which drives us to seeing how efficient we can be in our organization and our processes, and the use of our very precious human capital resource to affect the future and to be as good and better than we have been in the past.

Mr. Morales: General, you alluded to these reductions in manpower, and I believe you alluded to the program name AFSO21, which stands for the Air Force Smart Operations 21. With all of these reductions and this change, what do you expect the impact to be on the corps airmen and women, especially those that remain?

LTG Brady: Well, I think that we're going to have -- as I said, we're going to have to use our people more efficiently, more effectively. Now, if we don't change the way we do things -- I mean, we can't just expect people to run faster. So we have to help our people learn to work smarter, and that's what AFSO21 is about. Air Force Smart Operations 21 is a combination of all those great management process improvement efforts that have been successful in industry and within the Air Force, such as lean initiatives and things of that nature, so that we can use the people that we have more effectively, help them work smarter and not harder to get the job done. And in many ways, we will broaden the capabilities of our people. We want to enhance their educations in every way that's appropriate, and I think we will make many of the jobs that our people have much more fulfilling. We will expect more of them, but we will prepare them to meet the challenge, and they will.

Mr. Bleimeister: General, given the reductions you've talked about, what actions are being taken to make sure that's the right number, and the shape of the force, once that reduction is taken, meets what you need to do for your strategy?

LTG Brady: Well, we have a -- as you know, we have a volunteer force, which is a huge challenge over time. It's the force we want. 100 percent of our people want to be with us, but they can also leave when their tour of duty is up, if they want to. So we have to be on top of taking care of our people, and we have to have some good analytics that tells us historically what our people are going to do -- you know, we always say it's easy to make personnel policy, but you don't always know how your people are going to respond to it in a voluntary environment.

So we have a very rich history, career field by career field, specialty by specialty of how a career field tends to behave over time, how it relates to market forces, et cetera, and obviously, this is -- I have to tell you, there is a lot of science involved, but it's frankly more art than science in my view. But we have a lot of people who have a lot of talent in this regard to determine, you know, what the force will look like, what it takes to maintain a certain force.

Some of our highly skilled technical people, for example, are the same people that are greatly valued in the outside world. So you find yourself having to perhaps recruit more of those kinds of people, because they tend to not retain as long because there are other attractive opportunities for them. So throughout your force, you have to look at all of those things to make sure that you have the right number of folks, and that you retain the right number of folks for the future to have your force structure look right.

Mr. Bleimeister: A lot of alternatives to work with, but you still have to meet mandated end strength targets each year. For our listeners, end strength refers to the limit set by Congress on the number of people the military can have on active duty.

General, how did you do on end strength in FY '06 as far as those targets went?

LTG Brady: Yes, at the end of fiscal year '06, which ends, of course, at the end of September, and we will -- we came in about 6,000 under, and that's good because we are going down. We're coming down at about 20,000 people in fiscal year '07, so being 6,000 ahead at this point is a good thing. So we would like to stay within one to two percent of our authorized end strength. Given that we are in a reduction mode, we are pretty happy with where we are at the moment.

Mr. Bleimeister: And will normal conditions get you to the '07 number, or are you going to have to implement other force-shaping actions? In the past, things like reduction boards have been held.

LTG Brady: Right. We will do some of that. We have greatly relaxed the requirements for people to get out in terms of -- we've expanded their opportunity to leave if they want to. We've relaxed some of the requirements to serve out commitments that they've made in the past. Career field by career field, as I implied earlier, you know how many people you need in each year group, because at the Air Force, unlike a civilian business, we can't go to another company and hire somebody of a certain grade, certain skill level and certain rank.

So all of our people are all homegrown, so we have to pay attention year group by year group to how big that force is. And so you know how many people you want to leave in each year group. We will provide some monetary incentives and some voluntary separation pay for some year groups, and for people who are already retirement-eligible; in other words, those people at 20 years and out, there will be a selective early retirement board. And again, we will allow some of those people to, who might not be eligible to retirement by virtue of a recent promotion, we've relaxed those rules as well. So we've tried to put together a portfolio, and with the help of the Congress, we are getting the authorities we need to shape our force by a combination of methods.

Mr. Morales: It sounds like there's many levers that you can actuate to meet those goals. I'm not going to ask you which is more complicated, doing that or flying an airplane, although I think many of our listeners may be interested in that answer.

In addition to maintaining and shaping the active duty force, we understand that you also spend a fair amount of time focusing on some of the specialties between the regular, the Air National Guard, the Reserve components as well the civilian components and the contractors, and this is usually described as the total force. Could you describe some of the total force initiatives being pursued to ensure that this balance such as Blue to Green and Palace Chase, among others?

LTG Brady: Right, yes. And I'm glad you mentioned the total force. We are extremely proud of all the components of our force. Our civilians are just absolutely top notch, and our Guard and Reserve are absolutely second to none. They are maintained -- we maintain them at exactly the same level of proficiency as the active force, and when we go forward there -- it's absolutely transparent as to who they are. You wouldn't be able to tell a Guardsman from an active duty from a Reservist.

So they are very critical to that. So we look at -- as you imply, we look at what size we needed those components to be. A lot of our young people that leave us from active duty will look for opportunities in the Guard and Reserve, and there are some opportunities for them to do that, because we need to keep them robust. We are also looking at opportunities for people who are perhaps in skill sets that are overmanned to stay with us as civilians, and there is some opportunity for people to do that and to stay in government service. So you're exactly right, we do pay attention to the size of each component and where those reductions are taken.

Mr. Morales: So it's really a very large portfolio management process in terms of managing the blends of all these characters of people?

LTG Brady: Yes, it is.

Mr. Morales: Excellent.

How is the Air Force personnel function specifically being transformed? We will ask Lt. General Roger Brady, Air Force Deputy Chief of Staff for Manpower and Personnel, to explain this to 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 Lt. General Roger Brady, Air Force Deputy Chief of Staff, Manpower and Personnel.

Also joining us on our conversation is Bob Bleimeister, partner in IBM's Human Capital Practice.

General, force shaping and reductions are only part of the equation. The Air Force is involved in numerous force development programs as well. What is its fundamental purpose of the force development initiative, and can you provide an overview of some of the initiative programs in place to enhance force development, such as the International Affairs Specialist Program.

LTG Brady: The fundamental purpose of force development is to deliberately connect education, training and experience with the goal to be, as I said from the very outset, producing the right number of airmen and with the right competencies at the right time. And recall what I said earlier about we can't hire somebody off the street, you know, mid-level in their career. So we grow our own. So the development part of the personnel business, the human resources business in the Air Force, is absolutely critical to us. And so through the force development initiatives, we want to deliberately develop a cadre' of airmen equipped to tackle our toughest challenges.

Now, before we instituted force development, frankly, it was more ad hoc. Members accrued the right sets of skills eventually, but most of the time the skills were required outside of a formal system, and perhaps sometimes even in spite of the formal system. So force development in its latest iteration, which began about 10 years ago actually, started with a realization that at some times at our most senior levels, our people were too stovepiped.

In other words, their background was too narrow, and so we had very senior people who were very deep in a particular part of the Air Force -- operations or maintenance or whatever -- and yet we needed them and their expertise in a broader set of skills. So the initial effort began with this realization, and the desire perhaps to develop along the way some second competencies for people. A primary competency perhaps and a secondary competency.

And that has become even more important as we find space operations becoming even more important, and now, of course, cyberspace operations. So we need a set of leaders and certainly mid-level people who understand the operational and the strategic level of war and can operate in the different media, the domains that we operate in airspace and cyberspace. So our efforts are along that, with that side picture.

Now, in terms of specific efforts, what we look at is, young airmen and young officers come into the force, and initially their focus is on technical competency and what you might call an occupational skill. But as they get further into the career, we need to broaden them so that they see more of the operation, so they understand how their particular specialty contributes to the overall joint effort within Air Force and with other services.

So when we do that then, we focus on education, we focus on training in schools in which you put all of these people together and they gain a renewed respect for the different talents that are in the Air Force, and they learn how to bring all the different talents of the Air Force to bring to bear combat capabilities that are required. And we have -- we send people to school. We spend a lot of money educating our people.

We send them to a school called Squadron Officer School, for example, at about the four-year point. Now, these are captains, essentially. We then have an intermediate school, when people have made major, and that's at about the 10-, 11-, 12-year point. We bring them -- and that's where they learn more about command and staff. In fact, we have a school called the Air Command and Staff College. Then they go usually and have their first command, squadron command, or go to a staff position. And they will come later to a senior development opportunity at our Air War College, et cetera, where they learn more about the operational art of war, and how you bring all the forces together.

These people are lieutenant colonels and colonels, and they've been in the Air Force around 20 years by this point. So we then continue even after people -- those people who go on and perhaps become general officers and senior leaders in our Air Force, we provide them educational opportunities within the Air Force and also in the civilian world so that we can be as broad as we need to be, at the same time be technically proficient.

Mr. Bleimeister: And how are you aligning these programs to support joint officer requirements as well?

LTG Brady: That's a very good question. As you may know, there was an act passed, I believe in 1986, the Goldwater-Nichols Act, which required -- which dictated joint service -- service in joint assignments with other services at certain times in your career, particularly for those individuals who were going to rise to general officer rank, to flag rank. And so there are times in your career -- that usually comes about the time, for most people, at the major, lieutenant colonel realm -- between, you know, 10 and 15 years, that's about the time that you would get into joint assignments.

And that's where you learn a great deal about not only your own mission, you bring to that effort the expertise of an airman, and so the services provide interdependent competencies that are unique to that service. And we feed the joint fight that way to be what we are, which is the best military in the world. So joint experience gives -- exposes our people to that environment where we see all the competencies of the services and the unique capabilities that they have to come together to perform a mission.

Mr. Morales: General, obviously you are making large investments in people, and whether you are in the public service or even in the private sector, you lose very talented people with critical skills at any given point in time. How do you go about correcting these potential skill imbalances, especially as a result of trying to drive towards a particular end strength requirement?

LTG Brady: Well, as I said earlier, first of all, we have some experience with what the retention rates you might say are -- how good we are at retaining different kinds of skill sets. Now occasionally, the economy will throw us a curve on that, but we have pretty good indications year-in, year-out on what people are going to do in the different skill sets. And quite frankly, we have some skill sets that are very difficult to retain because they have -- people have, with the skill sets, have lots of options. But we are able to deal with that now. As you get more senior, we are able to use people more broadly, so specific technical expertise becomes less -- relatively less important than managerial skills and leadership skills.

So as we get more senior, we can use people a lot more broadly, and we typically, just like industry would do -- you know, you might move a CEO from one company to another, where he really knows nothing about the business, but he understands business. It's the same in the Air Force; you can move many times a colonel or a general officer from one portion of the business to another, where he may not have a specific technical tactical expertise, but he or she understands the Air Force and how things fit together in the fight, and the leadership skills and certainly the talent of the people below you make you successful.

Mr. Bleimeister: General, I'd like to shift our discussion to the personnel function and the personnel organization. We understand there is a lot of transformation being worked with the organization itself called an initiative, Personnel Services Delivery. Could you tell us about PSD and what some of the goals are?

LTG Brady: Certainly. And this is perhaps one of the most challenging things that we've done, certainly in the personnel community, in a long time. To be quite candid, personnel services, or HR, as your audience might be more familiar with, in the Air Force has been and still is to a large degree very much a hands-on operation. If you want something done with your payroll, if you want something -- if you need to talk about benefits, if you want to talk about your next assignment, if you want to talk about another training opportunity, in the Air Force, you can go talk to a human being.

You can go talk to someone. And that's both good and bad, because in many cases, it means you leave your job, you get in your car, you drive across base, you find a person who knows something about what you want to talk about. It's very much hands-on. About 90 percent of our operations are hands-on. In the civilian world -- industry have kind of moved away from that model long ago.

So our challenge that we find ourselves in is how do we do that more efficiently without losing the personal touch and taking care of people? So we have really gone to school with looking at a lot of the civilian world and how HR has done, and so we are looking at how we use call centers, how we transform our processes so that we can reach back from overseas to get thing done. How people could go online and take care of a lot of the purely transactional things that have to do with personnel. If they need to change allotments in their pay, if they want to volunteer for an assignment, if they want to retire for that matter, they can now do that online.

They don't have to get in their car, drive across base, find a parking spot, et cetera, et cetera. So what this means is our personnelists, HR in civilian terms, our specialists in the human capital, are now going to be focusing less on transactional activities and more on being advisors to commanders as to how to train, develop, and take care of their people. So this means, quite frankly, that you are going to need fewer personnelists then we've had in the past, but I think it also means that it's going to be a richer job.

Something that is different in the Air Force that will not change, different from much of the civilian community, is again that cradle-to-grave business we have with our people. And so a large part of human resources in the Air Force is cradle-to-grave development of our people, and so a large part will be advising and being strategic advisors to commanders about how we take care of and mentor, evaluate, motivate, et cetera, our people. So I think it's an exciting possibility.

But it's changed, which means it's challenging, people view it with some suspicion sometimes, some fear, perhaps, a little uneasiness about something that is that significant -- because it's a very significant change in what personnelists have traditionally done in the Air Force. But our folks are starting to embrace it, and I think it's going to do great things for our people and for our Air Force.

Something that's very interesting about this is that the change is also generational. Those of us who are a little older in the force and were around before computers came -- as I like to say -- were used to having our hands held by personnelists. So it's a more difficult change for us to take care of ourselves online or in a call center. But the younger generation has never known anything but that, and so they are eager for it. So it's an interesting challenge, as you relate to the different generations in the Air Force, as to how we take on this issue.

Mr. Bleimeister: So it sounds like the personnel field isn't exempt from the reductions and force shaping initiatives that are going on?

LTG Brady: No. Absolutely not.

Mr. Bleimeister: And what about -- are there initiatives to better integrate from a total force perspective how you manage civilians, Reservists, even the contractor work force --

LTG Brady: Absolutely. In fact, we use our civilians and we use our Air National Guard and our Reserves interchangeably with active duty. And that means that you've go to be as consistent as you can in how you manage those people. So what we are looking at is, as part of our transformation, is when we transform a process, an end-to-end global process -- and because, as I said -- because we move about a third of our people every year, we have to have global processes, because if you move from here to Germany to Japan in your functional community, you need -- we don't want to have to retrain you every time you go there. So it's very important that we have global end-to-end processes.

And when we change a process, unless there is a legal or statutory or Secretary of Defense directive that requires that we treat a component differently, those processes need to be the same. So that's a change for us, but we will work through that. So unless there is a bona fide reason to do something differently in one component from another, we won't.

Mr. Morales: General, we've talked a lot about the focus on the core of the Air Force, and you talked about the 106,000 deployments that occur every year. With these ongoing deployment demands, I'm curious, how are you helping the airmen and their families maintain a total life balance? Are there any key initiatives focused on supporting the Air Force family?

LTG Brady: Now, that's great, that's a great question. It's long been understood in the U.S. military that you recruit the member but you retain the family. And regardless of how happy the military member may be, if the family is not, you're eventually going to lose that person. So families are absolutely critical to us, and unlike a military of generations before us, we are largely a married force. So we are principally a family organization.

So yes, we are. We have great programs in our airmen and family support centers that provide support to people when -- to their families, when they are gone. We have great programs where the individual is left behind, the spouse and family that's left behind, we stay in contact with them. They can always rely upon the service for support. We have sponsored programs that do that. We have capabilities to provide child care for people, to give spouses a break.

We have a very robust program when we reintegrate people back into a family after a deployment. Sometimes separations do interesting things to family relationships, and so if there are challenges or frictions, when that happens, we follow up with people and we do -- we stay in contact with people so that we can provide families whatever support they need, and so there just lots of effort that goes in to make sure that we take care of the entire family unit.

Mr. Morales: That's fantastic.

How will innovative change shape the Air Force of the future? We will ask Lt. General Roger Brady, Air Force Deputy Chief of Staff, Manpower and Personnel, to discuss this 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 Lt. General Roger Brady, Air Force Deputy Chief of Staff, Manpower and Personnel.

Also joining us on our conversation is Bob Bleimeister, partner in IBM's Human Capital Practice.

General, as you look over the next 10 years, what type of personnel concerns do you think the Air Force will face?

LTG Brady: Well, I think there are a couple of challenges as we go forward. We are becoming more and more a technical force. We always have been on the leading edge of technology. But as we go into space and cyberspace, and as we operate in those domains, as equipment becomes more technically oriented, we -- that requires a skill set of people, that requires us to have really good people and to continue to develop, educate, and train them and provide them with a wide variety of experiences. We also find ourselves operating around the world in coalition environments. We need to understand whoever the hostile force is, in a cultural sense.

We also need to understand our partners; our coalition partners, and we will inevitably go to war in the future with coalition partners, as we have -- as we are now and as we have in the recent past. So continuing to develop our people to operate effectively, both in terms of the interface with the technology that we have and the equipment that we have, and also with our coalition partners will be increasingly important to us. And we're placing great focus on that.

Mr. Morales: General, in our time, we haven't had a chance to discuss in too much detail the BRAC and QDR, but I am curious -- how is Personnel and Manpower involved in helping ensure seamless transition to some of the new structures and missions while preserving its unique vital capabilities?

LTG Brady: Well, that's a great question. And obviously, when you move people around and you have units move as we have had associated with the Base Realignment and Closure activity, you have missions that change, you have particularly -- Guard and Reserve, you'll have units change missions. So you've got a lot of people that you've got to train for the -- retrain for the new mission. So there are challenges there.

And as we -- as we draw down also, as I said earlier, we have a reduced manpower pool, but at the same time, we have a mission that's demanding as ever. So that means that we have to pay even more attention than we have in the past -- what we call our tooth-to-tail ratio. So you've got to look at your management structures, because management structure's our tail. And so we have to look and see to make sure that within our processes at every level of the organization, we don't have redundancy in the things that we do.

And as we like to say, we can't have checkers checking checkers. And so a lot of work that we're doing is to make sure that our process is aligned and then we cut out as much redundancy as we can, and we make our organizations as flat as we can.

Mr. Bleimeister: General, I would like to shift to another force of change; the National Security Personnel System, NSPS. Can you give us your -- that will impact the civilian workforce. Can you give us your understanding of NSPS and how you think it will impact the Air Force civilian workforce and your own organization?

LTG Brady: Yes, NSPS is critically important to us. Our civilians are absolutely vital to everything that we do, and we're using them more and more, in fact, right up to a general officer level, and in many cases we're using them interchangeably with general officers, which gives us great flexibility in our general officer corps.

But what NSPS does -- unlike the system that we now live under, NSPS will give us the flexibility to reassign people more easily. It will give us the capability to reward our best people. It greatly cuts down on the bureaucracy associated with skill levels and reclassification of jobs and things like that that make reassignment of people painful for everyone; for the individual, for the organization, et cetera.

I think it will be a great boon to our people. It allows us to move our people around more easily and identify our best people with greater precision, and give people the development that they need so that those civilians who want to serve at higher levels have the capability to get development to do that. So I think it's a wonderful initiative and we're trying very hard to implement it now, and it will pay us great dividends, both to the institution and the people.

Mr. Bleimeister: Organizations going through large scale change like you're going through often conflict with the current culture of the organization. How do you think the Air Force will adapt culturally over the next coming years as this change is implemented?

LTG Brady: Well, we like to believe that we're the most adaptive of all military folks, but you raise an important question. We are a large organization, and some would say a large bureaucracy, and that's true. However, we're an organization that is used to change. We have been, for example, operating in the deserts of Southwest Asia since August of 1990, constantly. So a lot of our people have seen the sandbox.

And when you do that, from the people who have come from the various parts of the Air Force and perhaps grow up in a particular functional area, all of that -- to even a greater degree than at home base, gets melded together, because you are focused on a absolutely critical mission, you live together, you eat together, you work together, and there is a great bonding of airmen in that experience. You gain an incredible appreciation for what the services people do, for what the personnelists do, for what the fighter pilots do, for what the aircraft maintainers do. And if you didn't have that appreciation before, you come away from that experience understanding that it takes all of us to make this work.

So I think we're looking forward to this challenge. And it is change, and because we're humans, we tend to resist change, and change is difficult, but at the same time, I think we've proven over many years that change is something that we can accomplish and we'll thrive in this environment.

Mr. Morales: General, your passion has given us a window into the exciting personnel transformation going on in the Air Force. What advice can you give to a person who is interested in a career in public service, especially in the military? And finally General, what do you say to a young enlisted Lieutenant Airman about the career opportunities and climate of the Air Force in the future?

LTG Brady: I think we would like to say that we have a rich heritage and we have an endless horizon. We're a force that operates in air and space and cyberspace. It is the ultimate high ground. There are incredible challenges. We ask our young people how can we do things better, and they tell us. There is great opportunity for people who want to serve a cause that's greater than themselves. And it is an exciting place to be.

And when you go forward and particularly -- you go to the most difficult, what might be the seemingly most difficult place to serve in our Air Force, you will find the highest morale among our people, because they know they're serving a cause that's greater than themselves. They have come to trust, rely on, and respect each other. It's a wonderful thing to see. It's a very rich life, it's a very demanding life.

I think that many Americans -- young Americans are going to continue to want to do this. We need very talented people who are willing to serve this country and be a part of something very important. And so I think there is great opportunity across a whole array of educational backgrounds and skill sets, men and women -- women have done an incredible job in our force. They represent about 20 percent of our force now, almost, and they're involved in virtually everything that we do and are succeeding marvelously. It's an absolutely -- a great team to be a part of and I'm excited every time my -- every day I come to work to be with great young people -- and they're looking younger and younger to me -- but to be with young people who want to succeed, who want the Air Force to succeed, and want to serve this nation, it's very gratifying.

Mr. Morales: General, that's fantastic. Unfortunately, we have reached the end of our time. I want to thank you for fitting us into your busy schedule today, but more importantly, Bob and I would like to thank you for your dedicated service to our country in the various roles you've held in the United States Air Force.

LTG Brady: Thank you very much. And again, thank you for having me here. I always relish the opportunity to talk about our Air Force and the great young men and women who make it such a great institution.

Mr. Morales: Thank you. This has been The Business of Government Hour, featuring a conversation with Lt. General Roger Brady of the United States Air Force.

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 fascinating conversation.

Once again, that's businessofgovernment.org. 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.

David A. Bowen interview

Friday, October 6th, 2006 - 20:00
Phrase: 
"[My IT] strategy basically consists of five components, and they all start with 'C' -- the five C's are 'Confirm, Comply, Consolidate, Construct and Communicate'."
Radio show date: 
Sat, 10/07/2006
Guest: 
Intro text: 
In this interview, Bowen discusses: the Mission and scope of FAA's chief information office; the FAA's key information technology priorities and initiatives; FAA's Strategic Sourcing for the Acquisition of Various Equipment and Supplies (SAVES) program;...
In this interview, Bowen discusses: the Mission and scope of FAA's chief information office; the FAA's key information technology priorities and initiatives; FAA's Strategic Sourcing for the Acquisition of Various Equipment and Supplies (SAVES) program; Collaboration and partnership among agencies; New technologies that enable FAA to manage more effectively; and Information technology security.
Complete transcript: 

Originally Broadcast Saturday, October 7, 2006

Washington, D.C.

Mr. Morales: Good morning, and welcome to The Business of Government Hour. I'm Al Morales, your host, and managing partner of The IBM Center for The Business of Government. We created The Center in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about the Center by visiting us on the web at 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. Our special guest this morning is David Bowen, Assistant Administrator for Information Services and Chief Information Officer for the U.S. Federal Aviation Administration.

Good morning, Dave.

Mr. Bowen: Al, good morning to you.

Mr. Morales: And joining us in our conversation is Pete Boyer, Director in IBM's Federal Consulting Practice.

Good morning, Pete.

Mr. Boyer: Good morning, Al.

Mr. Morales: Dave, can you tell us a little bit about the history and the mission of the Federal Aviation Administration?

Mr. Bowen: Sure, I'd be happy to. Very succinctly, it's basically to provide the safest aerospace system in the world. And let me give you a little bit of context around that. The FAA manages over 24 million square miles of airspace. Actually, we manage the airspace over about 15 percent of the world's surface area. Airspace we manage covers the continental United States as well as Alaska, goes halfway out over the Atlantic Ocean, and almost entirely out over the northern Pacific Ocean.

That chunk of airspace alone is 15 million square miles of airspace. We handle between 56,000 and 57,000 flights in that airspace everyday -- so it's a big chunk of airspace. There is a lot of air travel, a lot of activity in there, and nothing moves in that airspace without us giving approval. We monitor military operations, we give the space shuttle permission to launch; we know what's going on in almost all parts of that airspace all the time.

Mr. Morales: That's an incredible scope and scale. Can you tell us a little bit about specifically the mission and scope of the FAA CIO office, and can you also give us a sense of scale in terms of budget and number of employees?

Mr. Bowen: Sure. Our scope really has two pieces. It involves the strategic IT planning across the FAA's lines of business, and from an operational perspective, we have the responsibility of making sure that our IT infrastructure and systems are secure from cyber attacks, if you will. The FAA has a federated model where the lines of business have the operational responsibility for managing your own systems, and our role is to coordinate their activities across the agency.

So my office isn't all that big. We have about 94 FTEs, and our annual budget is about $37 million. However, we do get involved in IT spending across the agency, and the FAA has a very large IT budget, exceeding $1.5 billion annually. So it's a pretty big chunk of budget that goes into IT-related activities.

Mr. Boyer: Dave, on a related topic, please describe your role as Assistant Administrator and CIO. Specifically, what are your official responsibilities, and how do you support the mission of the organization?

Mr. Bowen: Well, Pete, to respond to this question, I'll paraphrase from my own job description. Basically, to be the advisor to the Administrator on the agency's information technology, and help direct strategic planning for IT across the agency. We just alluded to that. We're also responsible for ensuring that our technology assets are effectively and efficiently aligned with the FAA's strategic mission needs. And as I said, we oversee the implementation and operation of our IT security programs.

As you can probably imagine, the FAA is very IT-intensive. If you think about what it is we do, my office plays either directly or indirectly into almost all of the agency activities. Our management of the FAA is based around what we call a "flight plan" that has four operating components. One is to make sure that we safely manage the airspace; one is to make sure that we provide adequate capacity for aircraft in the airspace system; the third one is to provide international leadership to the aviation communities around the world; and then the fourth one focuses on the FAA itself, and that is to make sure that we're running the agency efficiently and effectively and basically providing organizational excellence. Our administrator likes to talk about running the FAA like a business, and when I interviewed for the position, her charge to me was run IT at the FAA like you'd be running IT in a large business.

Mr. Boyer: And clearly, you've had a very interesting career. Can you tell us about your previous experiences before becoming the CIO?

Mr. Bowen: Sure. I'm not a federal employee by career, obviously, and I'm not in the aviation industry by way of my career. My career basically has consisted of increasing responsibilities in the IT area at progressively larger health care institutions. I've been a CIO at a 7-hospital system, a 14-hospital system, a system with 50 hospitals, and then lastly with a very large health plan in California: Blue Shield of California, based in San Francisco.

An interesting note here, I did take a diversion for a little while in my career and ran a technical manpower company in Saudi Arabia for a couple of years. So I have some overseas experience, international experience. By way of education, I've got a bachelor's degree, I've got an MBA, and in a little bit of a twist, I'm also a certified public accountant.

Mr. Morales: Dave, from your background, we do see that your connection to FAA could be the fact that you're a certified commercial pilot. People always have interesting stories of how they got started in that field, so I'd be interested to hear your story of how you got interested in flying.

Mr. Bowen: How I got started flying? Well, it's something I've always wanted to do. My dad was a pilot during World War II, although he stopped flying after the war and hasn't flown since. So it's something that I've always wanted to do. I got started back in 1980. I was doing some consulting, had a little bit of a bonus in that enabled me to begin taking flying lessons. So I've been flying ever since, and worked my way up through the progression of ratings and licenses, through an instrument rating, commercial rating -- I've never flown professionally, but I've also owned a number of aircraft and have worked up through the ranks in terms of aircraft as well.

So basically I'm with the FAA because I have a passion for flying. I'm very passionate. I love this stuff. I love going around and talking to the people in the agency about what they do. As I told the Administrator when I interviewed with her, I've been her customer for the last 25 years. I want to bring some business expertise to the government, and I just love working with the people in the FAA.

Mr. Morales: That's fantastic.

What are some of the key priorities and initiatives for the FAA? We will ask David Bowen, Assistant Administrator for Information Services and Chief Information Officer within the FAA, 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, Al Morales, and this morning's conversation is with FAA CIO David Bowen.

Also joining us in our conversation is Pete Boyer, Director in IBM's Federal Consulting Practice.

Dave, what are some of the organizational priorities for 2007 at the FAA?

Mr. Bowen: Well, it kind of takes us back to the topic that we talked about about the scope of the office, basically coordinating activities across the agency. We have a number of things on the docket, if you will, for 2007, a lot of things around cost efficiencies, cost effectiveness, establishing standards, taking dollars out of our infrastructure operations so that we can put them to better use in doing more customer-focused things.

We're looking at consolidating some of our data centers. We have a number of those, and think that we can get that number down. We've got a number of points where we touch the web, and that's just a concern for us not only from a cost standpoint but also from a security standpoint, and we want to reduce those. We've got an objective around reducing servers.

And then the other thing I feel very strongly about, and that is we need to work on where our next generation of IT professionals is going to come from. To that end, I've had some input from my staff that they would like some assistance with career planning, career development. We have some programs to bring new blood in to the agency; we want to beef those up. And then obviously, to continue to protect our systems from cyber incidents.

When I got to the agency, I embarked on a program that I called meet, listen and learn for the first 100 days, that they talk about the first 100 days in government, and that was really to go around the agency and talk to people, find out what they were thinking about IT, what their issues were, how IT supported their business needs or didn't, if you will.

It gave me the opportunity to get out and really see at ground level what was going on, what people were doing. I got to a number of regions. I was at our Aeronautical Center in Oklahoma City, was at our Technical Center at Atlantic City. I went to Alaska, I flew airplanes up onto glaciers and helicopters and did all kinds of neat stuff. And then came back and was charged by the Administrator to develop a strategy for moving IT forward, and so I presented her this strategy around the Memorial Day time frame. She approved it, asked me to make sure that I ran it by all the other line of business executives, and so finally in July, she came out with an endorsement of our strategy.

The strategy basically consists of five components, and they all start with "C." This kind of comes from my pilot training. When you're learning to fly, at least general aviation, they tell you if you get into trouble, there are four Cs that you need to remember: that's "Climb, Communicate, Confess, and Comply." So this strategy is built around five Cs, and the five C's are "Confirm, Comply, Consolidate, Construct and Communicate." So --

Mr. Boyer: I noticed you left "Confess" out.

Mr. Bowen: Yeah. I'm afraid that's for later.

Mr. Boyer: That's for later?

Mr. Bowen: So what we're trying to do is, first thing we're trying to do is to confirm our standards, our infrastructural standards. And then secondly, develop processes to enable us to make sure that going forward, this new stuff at least that we built begins to comply with those standards. So that's point number two.

Third point is consolidation, and we talked about that: infrastructure, data centers, servers et cetera. The fourth thing refers to the construction of a career development plan for the staff, and start focusing on some of the staff issues. And then finally the fifth point -- as always, you need to communicate, you need to communicate what you're doing, your successes, et cetera. So that's the going-forward strategy for the time being. We may change it over the next year or so, but for now, that's kind of what we're working off.

Mr. Morales: I'm excited to see that you've identified the human capital challenges as a priority of yours. I know that many of the organizations and agencies are struggling with that piece, but I'd like to get to that a little bit later. How has the FAA assisted the Department of Transportation in becoming the first Cabinet -level agency to achieve green in the PMA's e-govern area?

Mr. Bowen: Well, I'd like to take credit for that, but unfortunately, it was all done by my predecessor, Dan Mann. Dan, back in 2004-2005, when this initiative first came out, was very aggressive in getting together with our IT security manager, Mike Brown, and the two of them put a huge push on throughout the agency to get our system certified and authorized in 2004, primarily, and then moving into 2005.

Under the e-Gov. initiative, we had to have 90 percent of our systems reviewed in 2004 and certified, and working with our line of business staffs, we were actually able to beat this percentage -- whereas we had -- I think it was 95 percent was the eventual percentage that we were able to get done in 2004, and then took that to 100 percent in 2005. And so at that time, we had over 275 systems, and it's certainly a credit to Dan and his efforts as well as to the folks across the agency to be able to get that done, and that was a big factor in the DoT being able to achieve that green rating in the PMA initiative.

Mr. Boyer: On a similar topic, Dave, to help the effort to control cost, the FAA has embarked on an important agency-wide strategic sourcing initiative. This initiative is called Strategic Sourcing for the Acquisition of Various Equipment and Supplies, or the SAVES program. Could you describe the SAVES initiative and how it relates to your office?

Mr. Bowen: Sure, Pete. I'm glad you defined what SAVES actually stood for. It's a pretty long title. I had to go back and research it myself. The SAVES program, I would describe it as a managed and highly structured reverse option of standardized packages of goods and services.

Currently, we're packaging goods and services into a couple of different buckets; one is around office supplies, one is around office equipment, one is around career services, one is around printing services, and one is around IT network equipment. And so we are gathering specifications for these goods and services together, we are putting out proposals on the street for vendors to bid on those services; we have a sort of a web-based reverse option, which a lot of people are doing these days. And then we're awarding qualified vendors who are aggressive in their pricing and bidding the ability to have contracts with us for these standard sets of services.

We are right now partway through this program. A couple of contracts have been let, a number of RFPs are still out there on the street, but we do expect to save about 14 percent across the board, or $5 million on these services annually. At least we expected to do that when we put the program together. Our first two contracts I will tell you are doing much better than that. So we're very excited about this initiative, and look forward to the savings that we think it will generate.

Mr. Boyer: Now, we've talked with many of our guests about the use of collaboration and partnership among agencies and with the private sector to achieve mission results. What kind of partnerships are you developing now to improve IT operations or outcomes at FAA, and how do you see these partnerships changing over time?

Mr. Bowen: Well, in my commercial experience, I did a lot of this collaboration. I actually chaired an organization that was comprised of all the Blue Cross/Blue Shield CIOs from around the country. So this is very consistent with the style in which I like to operate and find out what other people are doing, and not reinventing the wheel. So we concurrently collaborate with a lot of different organizations both inside and outside the government. We share data with them, we share methodologies, and then in return get a lot of benefit from that.

Let me talk about two areas specifically. One is the IT security area. Here, we can cooperate with the various intelligence and security agencies of the federal government. We collaborate also with air traffic control organizations outside of the government, outside the United States, those being Canada, Mexico, also with what we call Eurocontrol, and we're in the final throes of signing an agreement with NATO for the sharing of data relative to IT security practices and procedures and alerts.

We also collaborate in the same area with various companies in the private sector who supply us technology, and also as well with large universities who are assisting us in developing state-of-the-art technologies around IT security.

Outside of the IT security area, the air traffic control area is an area where we obviously cooperate with NASA, the Defense Department and others, and we also co-operate with the private sector companies as well, particularly in the development of what we call the next generation Air Traffic Control System. We're sharing data with the National Geospatial Agency and others, and I think going forward, we're going to see much more data sharing, much more collaboration with agencies like the Department of Homeland Security, Defense Department, increasing cooperation with our customers in the commercial airlines, and certainly private sector companies in making use of their resources and sharing information with them.

Mr. Morales: Dave, earlier, you mentioned that one of the priorities was around cost efficiency, and we talked a little bit about some technologies. What are some examples of potential new technologies that may help the FAA manage itself more effectively?

Mr. Bowen: Well, Al, this is really a terrific question, because there is so much new technology coming into aviation, it's unbelievable. A lot of things we're seeing actually are being deployed in the general aviation community before it gets into the commercial aviation community. So there's so much stuff happening, it makes it a very interesting time to be a part of the FAA.

Let me talk about some of these technologies. Probably first and foremost is what we call ADSB, which is Automated Dependent Surveillance Broadcasting. Basically what this is it's based on GPS technology like you're seeing in your cars, where the car knows where it is. But ADSB goes a step further and basically says I'm a GPS receiver, I'm operating in an airplane and I'm going to be broadcasting my position, not only to ground base stations, but to other aircraft who may be operating in the area. And because of this, we can then reduce the separation between aircraft because we now have a much better idea of exactly where in space that aircraft is operating. Before, we had to make allowances for the variability around radar, and so now that can be reduced.

What that means is that we can pack more airplanes into a given airspace, and that is consistent with our capacity, our goal from our flight plan. But not only that, it means that we can actually do that more safely, because the aircraft now know where each other -- where they all are, and where all the other aircraft are, and then the aircraft can actually assist the ground-based controller in seeing and avoiding other aircraft operating in its airspace.

I've flown some aircraft with this technology up in Alaska, and it's really interesting to see what you can do with that. That's one technology that's going to be a real cornerstone for some of the new air traffic control capabilities that we're working to develop.

Some other technologies include what we call ASDE-X. It's basically a surface radar just like operates on the airport, looks across the airport surface to see where aircraft are operating.

There is a new technology coming out called Synthetic Vision. We're actually seeing this being deployed in some general aviation aircraft. And if you really stop and think about it it's really neat, because the GPS receiver knows where it is and it knows where, let's say, the airport is, or the runway that you're trying to land on as a pilot. Unfortunately, you can't see the runway because there's clouds in the way or it's night or raining, or whatever. But because the GPS knows where the runway is relative to your position, the GPS can construct a visual image of what that runway would look like if in fact you could see it.

So you can basically shift your attention to flying -- a CRT display screen that will bring this runway into your field of vision digitally, even though you can't see it outside and enable you to land on it, basically sort of like Microsoft Flight Simulator. So that's pretty neat, and you're starting to see that.

We also flew in Alaska some new equipment that looks at not only where the airplane is currently, but again through GPS where the airplane is projected to be. It's called Trajectory Projection. And there is an indicator that goes ahead of the airplane and says in a minute or a minute-and-a-half or two minutes from now, if you currently are on your course and speed and altitude, this is where you're going to be in space. And that's very helpful in Alaska for terrain avoidance and things like that, so that if somebody makes a turn, again, the GPS knows how high it is and it knows how high the terrain is, and it can alert the pilot if you're turning into terrain that's actually higher than you are.

This kind of technology has been in use in the military for a while now, but it's just now coming into use in the general aviation area. So those are some new technologies that we're really excited about.

Mr. Morales: It is fascinating, exciting.

What is the FAA's IT investment in capital planning process? We will ask David Bowen, Assistant Administrator for Information Services and FAA's Chief Information Officer, to explain this to 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, Al Morales, and this morning's conversation is with FAA Chief Information Officer David Bowen.

Also joining us in our conversation is Pete Boyer, Director in IBM's Federal Consulting Practice.

Dave, given both your private and public sector experiences, we'd like to get a sense of your management strategy. Could you provide us an overview of your management strategy?

Mr. Bowen: I'd be happy to, Al. When I joined the agency, I brought with me a set of principles which I call our operating principles. These came from my experience at Blue Shield, and really helped us institute a very disciplined culture there. So we're starting to roll those out, certainly in my group in the FAA and the groups that I am interacting with. It really talks about principles and behaviors -- and I won't go into all of the details, but some of the principles that we are trying to enforce here include enforcing a culture of data-driven decisionmaking, not making decisions based on, you know, hearsay or whatever. Be prepared to know the details of your line of business. Leadership should be in the trenches. That's a leadership principle.

And then one that I think is important talks about alignment. You know, you give everybody the opportunity to participate in a decision, but once the decision is made, we expect people to get in line behind the decision and act accordingly. Don't go out of the meeting room and basically try to undermine the decision that you just made. So that principle says once we get to alignment, act aligned.

Well, there are a couple of behaviors, too, that I want to highlight. There were about six or seven of them that I brought to the agency, but a couple that I'll highlight include one is to be clear and explicit. What are we asking to be done, who are we asking to do it? How are we asking for it to be done, and when are we expecting it to be completed? Oftentimes in a discussion, these parameters aren't agreed to mutually by the parties, and result in confusion.

A big one for the FAA involves taking an enterprise-wide view. This is where we are challenging people to start thinking about doing what's in the best interest of the agency, not necessarily what's in the best interest of either of them personally or their line of business. And that's a very difficult thing to do given the line of business focus that we have in our culture.

Two other ones: one involves responding with appropriate urgency, and then the final one is to take personal responsibility for execution. And that is to hold people accountable and make sure that people understand that they have a responsibility to make things happen. And, you know, if it doesn't happen, then they need to be accountable. They should not be making excuses, "I couldn't do x, y, or z." They need to stand up and be accountable and take on this responsibility.

So those are some of the things that I brought to the FAA from the commercial world. And so far, they are working out well.

Mr. Morales: Earlier this year, the IBM Center for the Business of Government published a report comparing the U.S. air traffic system to the systems in the U.K. and Canada, which have adopted market-based principles and rigorous capital investment processes. Unlike the U.K. and the Canada systems, the U.S. ATC capital investment planning process has been marked by a history of relatively poor performance and high costs. Could you tell us about this planning process at FAA, and highlight some of the more recent improvements?

Mr. Bowen: Sure, I'd be happy to. I think part of this gets back to the context that I tried to set in the beginning of this discussion around the size and scope of the services that we provide. A comparison with the air traffic control system in Canada and in the U.K. is probably appropriate from a structural standpoint, but maybe not from a volume standpoint. Our aerospace is far larger; we handle far, far more aircraft. And so we think that our business is a lot more complex.

Nonetheless, we have had to improve our acquisition and management review processes over the last couple of years. We have been called to task by the IG, and as well the OMB, and have had our projects on the various watch lists of those sort of oversight kinds of agencies. We've taken a number of steps to improve our processes. Obviously we, like most of the -- or all of the agencies in the federal government -- are now doing business cases around our expenditures. We are doing projections of where our projects are.

I happen to sit on the FAA investment review committee that reviews all investments across the agency, so I bring not only an IT background, but also a financial management background to this process. And I am starting to ask a lot of tough questions, as are some of my counterparts on those investment review committees.

So we are actively improving our project management processes. We just had our final project taken off the OMB management watch list, so we are right now not in anybody's sights as far as the oversight boards. Everybody seems to be relatively happy with the way things are going. We discuss these projects periodically, review them, and overall, I think our processes have improved significantly.

Mr. Morales: That's fantastic. I know being under that kind of scrutiny puts a fair amount of undue pressure on your organization.

Mr. Boyer: Dave, there are many exciting approaches to technologies that are vogue in the marketplace today promising significant advantage and cost savings and improved systems integration. For example, there is the rise of Service Oriented Architecture, or SOA, which is the architectural style whose goal is to achieve loose coupling among interacting software agents. What is FAA's investment strategy to enhance its future technology portfolio?

Mr. Bowen: Well, Pete, I'd like to say we are further along in that area than we are. You know, it's funny, you get these sort of waves of timely topics or whatever, and some of it seems to be the most recent sort of wave du jour, if you will, in the IT community. But nonetheless, there are a lot of advantages to moving to a service-oriented architecture.

What I have got to say though is that because we are still operating in a federal model and we haven't established hard standards around software development and the software development life cycle, we have a lot of people doing a lot of different things. So we are not there yet. We certainly want to move to a position where we do have standards in this area, but we are just not there.

Mr. Morales: Well, we've talked a little bit about security earlier, but as you know, information technology security has been in the news a lot lately, with stolen laptops causing major problems in various government agencies, and also causing concern among our citizens over issues like identification theft. FAA has made significant progress in addressing computer security weakness. Could you elaborate on the progress made by FAA remedying such weaknesses?

Mr. Bowen: Al, I'd really be happy to, because we are very proud of the progress that we've have made in this area. It kind of takes us back to the discussion around -- the getting to green in the PMA agenda. And we made huge progress in the area of IT security. We have a state-of-the-art Cyber Security Incident Response Center which monitors the FAA computer networks 24 hours a day, seven days a week.

I talked about the various agencies that we are collaborating with in doing this and sharing data with. We think our center is one of the best in the civilian government, was just certified at a new higher level of CMM, which is a Capability Maturity Model standard that is in use for operations of this type. We have a performance objective in the flight plan of not having any cyber events disrupt our systems.

And despite the fact that we deny over one million access requests to our network each and every day, we have yet to have a significant cyber event. We are looking to set up this Cyber Security Center as a federal government center of excellence for computer system security. We are working with the Department of Transportation in helping them out and moving this forward. So a lot of progress there, things going well, and we are real happy about that.

Regarding the identity issue, this is an area of particular sensitivity to me, and may get back to the conversation we had around the health care experience, because in the health care space, this personal identity issue and identity theft issue has been on the forefront of our activities for the last five or six years going back to the HIPAA legislation that mandated some protections for particularly health-related information. So in the health care sector, we are very sensitive to that.

I talked to our Deputy Administrator probably a couple of months ago about the possibility of encrypting data on all the laptops, and got his endorsement to do that, and so we've embarked on a policy whereby we are not going to fool around with this stuff. We are going to basically make it a policy that every laptop in the Federal Aviation Administration is going to be encrypted, so that in the event it gets lost, stolen or whatever, we know that we are protected from that theft and the resultant loss of data, and any kind of implications that it may have, and not have to worry about it.

This goes beyond recently published OMB guidelines for the protection of what they call Personally Identifiable Information, or PII. But again, I feel strongly about this -- probably my health care background -- this is the right thing to do. We need to do it, and we are doing it.

Mr. Morales: On a similar theme with personal identification, we understand that the FAA is currently planning for the implementation of smartcard technology, programming personal access to facilities and information systems to meet the requirements of HSPD-12. What's FAA's strategy around this initiative?

Mr. Bowen: Well, we do have an HSPD-12 program in place. HSPD-12 has two phases: a physical access phase which allows an individual access to physical facilities, as well as a logical access, which allows an individual access into their computer systems applications and things that they are allowed to use. We are pretty far along in the physical access piece; we have systems in place that have some degree of that kind of capability. We need to put them together, and we need to bring them up to standards that are mandated by HSPD-12 in terms of the information contained on the card and things like that.

We have a little bit more time to work through the logical access implications of HSPD-12. We do have a team working on that. It is being driven largely out of our area, my office, and we are developing plans, we are developing an architecture and infrastructure. I think this is an area where we really want to spend time looking at what industry has done and also what other agencies are done, because unlike most of the initiatives, it seems to me in the federal government this is an initiative that is relatively consistent across all of the agencies.

You know, the Agriculture people need the same kind of physical access and logical access that we do. And so I'd certainly like to see more inter-departmental cooperation in this area so that we can move forward collectively and not all have to reinvent the wheel. Right now, we are taking a build approach to HSPD-12, particularly in the logical access piece. But we continue to look at what industry solutions are out there being offered by various vendors. And some of the agencies I think are taking a leadership position and offering services to other agencies, and we certainly want to explore those. Bottom line here is to make the best business decision that's in the best interest of the FAA.

Mr. Morales: Excellent.

What does the future hold for the FAA's IT office? We will ask CIO David Bowen 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, Al Morales, and this morning's conversation is with FAA's Chief Information Officer, David Bowen.

Also joining us in our conversation is Pete Boyer, Director in IBM's Federal Consulting Practice.

Dave, what trends, whether demographic, technical, economic, and/or industry, will have the largest impact on the FAA over the next 10 years, and how will your office adapt to these changes?

Mr. Bowen: Well, this is a really exciting topic, and I think we touched on it when we talked a little bit about new technologies. But there are a number of industry events that are moving to sort of show us the wave of the future, a couple of trends that we are watching very carefully and actually participating in. Obviously, we see an increase in air travel over the next several years.

The air travel business fell off after 9/11, but we are to the point where it is now higher than it was at 9/11, and certainly as high as it was shortly before 9/11, so we see air travel continuing to increase. And that's a factor that we are going to have to deal with. We are actually projecting an increase in air travel overall by a factor of three by the year 2025. So that there is some sort of long-term study numbers that we've had done, and those are the kind of numbers we are seeing there.

There are a number of other things happening in the aerospace industry. You may have read about the coming wave of what we call VLJs, very light jets. These are small, nimble, four- or five-six-passenger jets that we are actively involved in certifying. They are using new technology and new types of manufacturing methods to bring these aircraft to market at much lower prices than we've seen private jets in the past, and so we think we are going to see an increase in that kind of traffic.

We also see commercial space travel developing. I just saw a note the other day, I think it was -- I forget, Paris Hilton or one of the Hiltons -- booked a flight on some space travel junket at some point in the future. We can kind of chuckle about that, but we have a branch in the agency that's dedicated to space travel, and they are actually very, very busy.

We certify space ports and oversee space launches and things like that, and we see this is an area of enormous growth for us. We also see the growth of what we call UASs, which are Unmanned Aerial Systems. We made some press, I think, recently where the sheriff of Los Angeles County wanted to fly some unmanned surveillance aircraft. And certainly we are working with people like the Naturalization Service, who are flying unmanned aerial platforms, if you will, to look at borders and everything else.

The military obviously has been using some of these systems for some time, but we are seeing increasing civilian uses for these types of platforms. So all this has to be dealt with through increased automation as a way of dealing with this, as our current system which is run by humans, largely human-dependent, is becoming more and more -- I shouldn't say incapable -- but it's certainly becoming more and more difficult for us to manage all these different types of air traffic, all operating in the same airspace.

So the solution is really going to be more automation. I mean, we don't see any way around it. We are in the process of developing what we call the next generation air traffic control system, which is going to enable us to deal with these projected volumes of traffic as well as these new types of aerial platforms.

Mr. Boyer: Now, Dave, according to a June 2005 Federal Computer Week survey, the FAA was voted one of the best places to work in the Federal IT. How do you intend to retain this impressive accomplishment?

Mr. Bowen: Well, I wish I had seen that before I joined the agency. And I talked about why I joined, but I think one of the reasons I joined the agency is one of the reasons why we got that high rating. I think we attract people who are passionate about aviation. That's why I joined the agency. My goal is to be sure that our folks in IT understand the mission of the agency and how they clearly contribute to it.

So from a standpoint of somebody coming into the agency, I think our mission around air traffic control and around aviation safety is very, very visible and very real to people. I mean, you walk through an airport and see little kids coming out of the jetway meeting mom or meeting grandma, where they travel to -- you know, travel to go and be with the family -- I mean that's really what we are all about. And I -- you know, I take that very seriously, and I know that a lot of my colleagues in the agency do, too.

We are trying to do some management things I think that will attract IT people to the agency. I think I talked about my management style. Basically, I see my role as sort of a coordination/collaboration sort of facilitator. I like to set goals, get people the resources that they need and get out of their way. I am a very hands-off manager, and my people seem to like that.

We talked about communication. One of the things that we've done and was done based on a suggestion I got out of one of my all hands' meetings is to develop a website, or a capability on our website, where people can anonymously ask the CIO a question. And we've had a lot of response to that, and a lot of questions about all different kinds of things. Not just IT topics, but all kinds of things all across the agency.

So I think that is one thing -- one of many things that we can do to be sensitive to the needs of our people, help communicate the mission of the agency, and clearly show them where their activities tie directly to our mission and to our flight plan. We reward our employees for superior performance, and we also try to have fun in the process.

Mr. Boyer: That's excellent. Given your private and public sector experience, what have you learned about the ideal skills and traits that a CIO must have to be successful across these industries?

Mr. Bowen: Ideal skills and traits? I think the most accurate description that I've heard of the CIO job is to build relationships and execute with excellence. And that came out of a quote by one of the CIOs in CIO Magazine, and I think that's very true, certainly at high levels in the government agencies where I operate. My technical skills have long since departed me, but it's my business skills and my relationship skills that I think are what the FAA is depending upon me to use to move IT at the agency forward.

I think you have to know and understand the business you are in. And I am going to talk probably in another month or so, maybe two months, I think, to a group of health care people about how health care skills may transition to other industries. And we kind of touched upon that in this discussion, but I think the fact that I was a pilot and have operated in the airspace system and owned aircraft and gone through all the pilot-type stuff really helped me to understand the business, plus the fact that I bring a passion to the business as well. So I think in terms of private versus public sectors, those are some universal, I think, similarities.

Mr. Morales: Dave, you've obviously had a very successful private sector career, and now you've made the transition over to government. What advice could you give to a person who is interested in making a similar transition over to public service?

Mr. Bowen: Well, what advice could I give? Kind of a tough question. I would say that you need to find something that you need to be -- that you can be passionate about and go for it. In my limited experience, and I have been in the federal government now six months, the one thing that really surprises me is that there is an enormous range of opportunities to do things in the federal government. Enormous possibilities for interesting assignments, for details, for moving around in the federal, sort of, you know agency world and moving up.

I think we probably have more flexibility to do some of these things than I would say we have in the private sector. And the government certainly encourages that as a way for federal employees to develop their career. So certainly that potential is out there for people to do things, and if you have a positive attitude and you've got initiative and you are passionate about the agency mission and what you want to do, I think the potential is unlimited, so I tell people to go for it.

Mr. Morales: Excellent, excellent. That's great advice.

We've unfortunately reached the end of our time, and that'll have to be my last question. I do want to thank you for fitting us into your busy schedule. But more importantly, Pete and I would like to thank you for your dedicated service to the public and our country as CIO of the FAA.

Mr. Boyer: Thanks Al, I am delighted to be here. If people want to learn more about the FAA, they can go to our website, faa.gov, lot of stuff there. And I hope to maybe come back and talk to you again soon.

Mr. Morales: Excellent, we'd enjoy that.

This has been The Business of Government Hour, featuring conversation with the Assistant Administrator for Information Services, and Chief Information Officer for the U.S. Federal Aviation Administration, David Bowen.

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.

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.

 

Josefina Carbonell interview

Friday, September 22nd, 2006 - 20:00
Phrase: 
"Our mission is to provide services and support, and empower people to live independently with dignity in their older age. We're the largest provider of home and community based care in this country."
Radio show date: 
Sat, 09/23/2006
Intro text: 
In this interview, Carbonell discusses: the Mission and history of the Administration on Aging (AoA); Reauthorization and modernization of the Older Americans Act; Medicare prescription benefits program; Aging and Disability Resource Centers; Measuring...
In this interview, Carbonell discusses: the Mission and history of the Administration on Aging (AoA); Reauthorization and modernization of the Older Americans Act; Medicare prescription benefits program; Aging and Disability Resource Centers; Measuring AoA program results; and the Importance of collaboration and partnerships. Missions and Programs
Magazine profile: 
Complete transcript: 

Originally Broadcast Saturday, September 23, 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 on the web at 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. Our special guest this morning is Josefina Carbonell, Assistant Secretary for Aging at the Department of Health and Human Services. Good morning Josefina.

Ms. Carbonell: Thank you. Good morning to you all.

Mr. Morales: Also joining us in our conversation is Brenda Kunkel, managing consultant at IBM. Good morning Brenda.

Ms. Kunkel: Good morning.

Mr. Morales: Josefina, you have so much experience and passion for older adults. How did you get interested in this field of aging, and can you tell us how you got started on your career path?

Ms. Carbonell: Well, first of all, I started as a volunteer. Part of my family efforts have always been to volunteer and contribute to the community. And I started as a United Way volunteer many years ago, and with the Red Cross, in filling some of the needs, basically in emergency response, in '72, to an earthquake in South America.

Then they were developing all the Hispanic capacity building for community support and volunteering efforts, and I was asked to join the United Way in their efforts for recruitment of new volunteers. And of course then that transferred into really looking at community resources and public service mostly. And they developed a capacity to build new programs around the same time that the Older Americans Act was being created nationally as a pilot program. One of the first pilot programs for senior centers and Older Americans Act occurred in Miami, Florida. And I was asked to join that planning effort through United Way of Dade County at that time. That led, eventually, to my engagement in the first Hispanic aging organization in the country to be launched, at the end of '72, and then developed into a larger, mostly based in grass roots, and that led to a whole array of areas, both in health care and long-term care in the community.

Mr. Morales: Outstanding. Before serving at the Administration of Aging, you led an aging community services organization in Florida. How has your leadership style changed as you've taken the various positions you have in your career?

Ms. Carbonell: You know, like Secretary Leavitt likes to say, it depends on what seat you're sitting in, your role transcends that specific seat that you occupy. My perspective, the role that I come from is the community role. I am historically the first community provider, or business provider in the aging seat, ever. Mostly policy people have occupied university research -- persons. So I was the unlikely, but the right fit in that role as a leader. It was very clear to me as I came onboard that -- and having worked in the specific programs that the Administration on Aging administers throughout the states and local communities across this country, and I had done that work for over 30 years in the community.

It clearly gave me a very solid base on what our consumers were, what the role of the leadership role, and the functions of the U.S. administration was in a different level and a different perspective on how policy would drive, would impact the ability of providers in the community level, to be able to serve the ever-growing aging populations. So, you know, when I got into the role we realized that the role of the Administration on Aging needed really a quantum leap in the kind of modernization and getting up to speed to the rest of the health care transformation that was happening just around us, just in the immediacy of HHS.

I think the leadership of Secretary Tommy Thompson, which brought in incredible leadership, not only in welfare reform, but in aging services. He was the first one to develop the whole welfare reform change agent in the state models. He was also the first to develop the transformation of long-term care from institutional base to common community based in his own state.

So I was very attracted and very pleased and honored to serve under his tenure, and now under tenure of another very exciting governor, former governor, Mike Leavitt, both governors that had been chief operating officers for their own states. And as a chief operating officer from the community level in these programs, they gave me a distinct role and opportunity to shift, use my best talents, and modernize my talents to implement national programs and national policies, and transform really long-term care.

Mr. Morales: Excellent.

Ms. Kunkel: To clearly have an understanding of the impact of the policies that your administration is implementing on the community services, can you tell us a little bit about the mission and history of the Administration on Aging?

Ms. Carbonell: Well the Administration on Aging was created in 1965 by the Congress. The original mission -- you know, it's one of the unique pieces of legislation that I've seen. Our unique mission is, number one, to really develop the capacity to make sure that we provide services and supports and empower people to live independently and with dignity in their older age. But the second most important part of our mission is, we have a distinct charge to keep people out of nursing homes by allowing people to live independently.

So it has been a very -- in the kind of transformational change that I think that we're going through in health care reform in this country, and entitlement reform, and other kinds of challenges that we have for our older population, has given us a very important role and a very unique role for us to play within the changes. It developed a whole network, as the years progressed. It was born at the same time that Medicaid was born and Medicare, so it's 40 years old, 41 this year. It is a whole network that was developed locally based up, the other way around. So the capacity was built, unlike other agencies, in the department where you have -- you go all the way down to maybe just the regional level in the structure of the administration.

The greatest asset within our organization is that the bulk of all of our dollars are contracted out to the private sector and the local communities, the state units on aging and then the area agencies on aging, which sort of serve as our local planning and service areas, most of them privatized, run either by non-profits or also by public entities, counties, et cetera. And then you have over 29,000 providers, most of them in the private sector providers, either for profit or not-for-profit faith-based communities. And then you also have over 230 tribes that form part of the overall network that we contract with tribes across the country, so it has a tribal program alongside the states' programs.

So it really gave us the opportunity to have a system in place to be consumer centered. Most importantly it was locally designed. It means the planning efforts come from the local level up to the state plans, and then to the local, to the federal government, we set standards and basically monitor and improve the efficiency. But as the years progressed, we went from an agency that basically does grants, to positioning our agency and the services that we provide in a better role -- to take a central role in the transformation of health, and most importantly long-term care services in this country.

Ms. Kunkel: So for listeners who may not be familiar with the Administration on Aging, can you talk more about the current role of the organization?

Ms. Carbonell: The role of the organization -- we're the largest provider of home- and community-based care in this country. You have not only the meals-on-wheels programs, that -- one of the greatest achievements in volunteerism in this country has been led under the meals-on-wheels program and the nutrition services. But we are also -- home care, we run the adult daycare centers. We contract for services that support family caregivers, which was one of my responsibilities coming in, implementing the new family caregivers support program, knowing that family caregivers in this country are providing the bulk of the care for older people and disabled people in this country.

So our mainstay of long-term care and -- as our family caregivers. Also the role of prevention and health care promotion, and disease prevention in simple ways that we can implement it with simple tools so people can remain independent in their own communities. But most importantly also, being able to focus more on consumers versus services or service silos.

Ms. Kunkel: And what are your current priorities?

Ms. Carbonell: The current priorities are threefold: Ensure that we provide accurate and good access and information for people to access an integrated health and long-term care system. Less confusing, easily accessible, reduce duplication. We want to maintain -- give people the ability to maintain themselves healthier in their communities. And then we want to support family caregivers, to help their elderly remain at home, independent and living in their communities.

We also are focusing our efforts on promoting and preventing elder abuse, financial exploitation in areas of fraud and abuse that are perpetrating many of our vulnerable populations. We want to make sure that we do it in the best effective fashion that we maximize our taxpayer dollars. But most importantly that we assist people in using their own resources, empowering people using their own resources better, so they may age in place, and plan ahead much better for their long-term care needs.

Mr. Morales: How is the Administration on Aging supporting new Medicare and Medicaid programs for seniors? We will ask Assistant Secretary for Aging at HHS, Josefina Carbonell 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 Assistant Secretary for Aging at HHS, Josefina Carbonell. Also joining us in our conversation is Brenda Kunkel.

Josefina, we understand that the Older Americans Act is currently being reauthorized and modernized. How will this change aging services?

Ms. Carbonell: Well, I think that first before talking about reauthorization I want to put this in some kind of context as it relates to our current long-term care system. Currently, long-term care system is really institutionally biased. It really focuses on institutional care and chronic diseases, although, you know, the incidence of chronic disease is really on the way to decreasing for boomers. People are living longer than before. The reality is that the inevitable condition of aging would bring chronic condition is one of the biggest challenges in chronic care, one of the biggest challenges that we have for the demographics of aging in this country.

I think that the goal to keep people, and to assist people to live longer, is to assist them to take care of their chronic conditions or to manage their chronic conditions better. So our goal to modernize long-term care, which is basically the centerpiece of the reauthorization of the Older Americans Act, goes along with the reform and the transformation and the modernization that has occurred with Medicare, and it is simultaneous to the changes that we are trying to implement in Medicaid reform.

So again it will be a parallel movement to ensure that we transform the long-term care system from an institutional medical model only system to a more integrated model where we will have not only the supports but focusing instead of just on services or caretaking role to more of empowering people and assisting the people to plan ahead, and a more consumer-directed option of putting the consumer front and center.

So again, number one, the role of the reauthorization and our reform and transformation is really targeted at the capacity of our nation to respond to the aging of the baby boom generations, and then of course future generations as we look at that. And then of course to be able to reflect those changes, we need to really transform the act from an institutional based program, which obviously, unfortunately, it's financially unsustainable. Mostly due to the unintended consequence that Medicaid has become the primary payer for long-term services in this country. Yet it only covers 12 percent of the population. But the reality, it's unsustainable. And, it's really based on an old demographic model. We're living longer, so therefore that paradigm has changed and the goals should change alongside with it. Currently it's very complex, very fragmented, and difficult for people to understand, and most importantly, again it's heavily based on institutional care when we know that people want to remain in their communities, and in their homes independently as more if possible.

So there's three key approaches to that we're using, or three key principles that will drive the reauthorization proposal, which is called Choices for Independence. Again, we're shifting from institutional care to consumer-based and community-based care. Number one, most importantly is that we will empower individuals to make informed decisions about their care options, and to help them access the care that they need. And that includes not only dealing with the older people right now, because the act allows us to reach a younger population than retirement age. It gives us the opportunity to reach people at younger age or at middle age, there's still time to make some planning, changes in your -- both your financial security, but also in your long-term care planning goals to be able to meet the needs in the future.

We're also making sure that to enable to turn the tide around, both on spend-down of people to Medicaid or on a direct link between hospitalizations and nursing home. It's really provide and target services to those at highest risk of nursing home placement before they become eligible for Medicaid, but most importantly before they become disabled and on a down track to more dependence and spend-down.

And then thirdly we're trying to enable people to make behavioral changes that really reduce the risk of disease and disability as they age. We know that our older population and our seniors are much healthier than their former cohorts were. We want to keep that.

We want to be able to also deploy the best science and the best evidence-based prevention science that we have, that we invest through our institutes of health at the department, and our research and science institutions across this country, and the medical technology and health technology to be able to keep people at home and empower them with the right tools that they can simply be able to assist themselves. And then really target public dollars at those at a highest risk, and again at those that most need it.

Mr. Morales: Yeah, the theme of empowerment certainly comes through very clearly. How does the Administration on Aging support seniors on Medicare policies and programs?

Ms. Carbonell: One of the things that I found out early on is obviously their partnerships are so crucial to an agency such as Administration on Aging, because obviously aging crosses all the sectors that we work with; we can't do this alone. So one of the agencies that we have been closest to in partnering since the early times have been the Centers for Medicare and Medicaid Services, particularly on the Medicare portion.

Number one, most importantly, our network or the network of our providers provide the majority of the insurance counseling for both Medicare and Medicaid products throughout the country. And, most importantly, the network has worked very closely with the Centers for Medicare and Medicaid Services, most recently to help inform, educate, and assist in the enrollment for the new Medicare drug benefit that came online January this year.

And then the second portion of our work and our partnership with Medicare is and has been and will continue to take a more important role in the future with the new Medicare benefits in assisting people on how to make best use of the prevention, and the chronic disease prevention benefits that have been put online and have been brought into the new Medicare law in assisting people to make sure that they get their vaccines, that they have access to the kinds of new benefits that have come online, and that we assist them in how to navigate and access those new preventive benefits that keep people healthy in their communities.

Ms. Kunkel: Great. One of the areas of collaboration between AoA and the Centers for Medicare and Medicaid Services that you mentioned is the new federal benefits, prescription benefits program. How would you characterize the implementation of that new program?

Ms. Carbonell: We're very pleased with the outcome. We've worked very hard, the Administration on Aging and our partners in the community. It has been a tremendous effort where not only have the communications, the ads, and the efforts done under Medicare was important. I think the partnership that we developed with the Centers for Medicare and Medicaid Services gave us the grass roots local community support that was so needed for particularly our seniors, our older seniors, our seniors -- our low-income seniors, which are a very difficult population to reach and to assist in educating about this new benefit.

So the partnership that we developed early on, working together, adding value, and adding, most importantly, a very critical part of the work that we do, it was a natural for us at the Administration on Aging to partner. As part, not only of our statutory role as the lead aging advocate throughout the government, but most importantly as a very effective bringing down that personalized assistance to the individual Medicare beneficiaries played a very key role in achieving 90 percent enrollment of 38 million people by May 15th, and the work continues, it hasn't stopped. We're working through, particularly with our low-income communities, where we know that the majority -- about half of the people that still had not enrolled are eligible for the additional benefits.

So we continue to work with those communities and rural communities, in limited-English-speaking communities where we know that more people need to be assisted through this effort. And again, at the end of the year we will continue to work in the second phase of the enrollment period. So we're very pleased that even in those most vulnerable populations, we have achieved three-quarter percent enrollment in the Hispanic community, in the African American community, in the Asian American community where you have so many languages. It was very rewarding to see that the work had paid off, and most importantly that paid off because of that personalized assistance was there at the community level.

And also in the private sector, it created opportunities, greater opportunities for enriching the partnerships at the community level. Private and public partnerships where you saw municipalities coming together with banks and other business sector community in assisting people to enroll, either because they were lending them the computers at the community level to access or they were lending staff resources or volunteers, or they were partnering with community colleges and universities to bring their service down to the community.

So it was very exciting, and has been very exciting and has opened up other avenues of further collaboration that are going to very much serve us as we move forward with obviously creating better access, better information, and better consumer empowerment.

Mr. Morales: Josefina, we only have about a minute, but I want to touch upon something that you mentioned earlier, which I think is very important for seniors, and that's this whole issue around financial protection and financial security, and fraud. Can you tell us a little bit more about what you are doing in this area?

Ms. Carbonell: We've run the Medicare patrol programs, which are really another fantastic volunteer, and certified volunteers, which assist us in educating and preventing health care fraud and assisting people in understanding their Medicare bills and making sure that they get the kind of services what they purchase.

We also -- we know that the vulnerability of many of our seniors are tied directly to their functional status. So we know as people age and become frail and dependent and homebound and isolated, they're at highest risk of being abused financially, you know, whether it's a caretaker, whether it's a family member, or just -- the opportunities are abound, to be taking care of -- to be really taken advantage of.

We also run eldercare programs in the legal services to assist people, you know, about their rights, but most importantly to protect them. We have developed a whole -- we run the Nursing Home Ombudsman Program, which is another huge program that serves as the -- we serve as ombudsman for nursing home and long-term care independent living facility members, and we are the conduits, an independent body to assist the elders and their caregivers in problems that they're having in facilities, and we work very effectively to educate, but also to assist.

We worked again with Centers for Medicare and Medicaid Services in their implementation of their quality improvement initiatives, both in nursing home and in home healthcare. To use the ombudsman program as another avenue, another support, adding value at the community level, adding local resources that people could turn to, to be able to support them in questions or problems in challenges that they were encountering.

Mr. Morales: Great. How is the Administration on Aging tracking results? We will ask Assistant Secretary Josefina Carbonell to share the details 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 Assistant Secretary for Aging, Josefina Carbonell. Also joining us in our conversation is Brenda Kunkel.

Ms. Kunkel: Josefina, there is some points that we would like to follow up from our last segment. Starting with, how is the Administration on Aging supporting a more effective long-term care approach?

Ms. Carbonell: What we're doing is really we're looking at key models as strategies that we've been investing in as a segue to the implementation of the new reauthorization when it comes through, is really focusing on strategies that will improve our efficiency, but will allow us to transform from the current old system of care to a more integrated model.

And particularly we're focused on those areas, where we know that states have been successful in transforming their own long-term care system and home and community-based care, Wisconsin being one of the first ones, Utah, Washington, et cetera, et cetera. So we've invested in four program areas under the discretionary area that have led us to the point that we are right now.

One has been the investments in developing of the Aging and Disability Resource Centers, what we call the ADRCs or -- or for short, one-stop centers in which we are creating a single coordinated system of access and information to long-term care supports, for people -- for general people in this country.

Second is, using again our -- the best science that we have developed and best technology and making sure that that we implement the programs under an evidence-based science model, particularly in the area of prevention. So we're using our best science, which has already been proven, taking it off the shelves and putting it to test at the local level with people, and making sure simple tools for people can remain healthy and independent in their communities.

The third area is of course the most important, it's transforming from a siloed approach, service-oriented infrastructure, to a more consumer-driven and consumer-directed care approach model. And then of course our own -- your own future campaign, which is the whole -- insuring that we provide the right tools for people to plan ahead for their future and their future long-term care needs.

Ms. Kunkel: Great, and let's return to that first element, which is the Aging and Disability Resource Centers. Can you tell our listeners more about them?

Ms. Carbonell: Well, the Aging and Disability Resource Center initiative really represents a historic partnership, again between the Administration on Aging and the Centers for Medicare and Medicaid services where it had never been done before, that funding was put together jointly under the Systems Change Grants initiatives that occurred in the investments, since '01, to the current period, to really build the capacity to initiate system's change in access to long-term care. So what we're trying to is again, looking at the fragmented system, the duplication and the real difficult system of access to long-term care of different agencies, and develop a one-stop shop kind of programs, where they are virtual one stop, "no wrong door" kind of concept at the community level to assist people with disabilities of all ages to make informed decisions about the care supports that they might need.

Again, also provide the information assistance to all individuals regardless of income and serve as a single point of entry to all publicly administered supports including Medicaid, the Older Americans Act and state revenue programs. Since 2003, we've funded 43 ADRCs -- Aging and Disability Resource Centers or one-stops, and we have received grants. Currently it's being expanded and extended and it's exciting to see that many of the states are already taking these programs nationally.

States have also implemented their own state statutes to integrate the long-term care systems to again, reduce fragmentation, improve access, but most importantly, improve the efficiency of the programs and give people better choices to remain at home, including using their own resources. And we've really focused on performance and outcomes, and we define outcomes not only on financial side, but really define outcomes on a consumer perspective. So we want to make sure that we developed a whole array of tracking outcome information and sharing lessons learned across the centers.

Again, as we see the fragmentation between the different models in each states, we want to make sure that we give grantees the ability to not only set the guidelines at the federal level, but most importantly, to assist them in tracking those outcome data in areas such as program visibility, trust, effectiveness, and efficiency. And again, they must develop efficient ways of getting information to consumers again, as well as for sharing information across state agencies.

We know that in many states -- we know that the programs, the different long-term care services or supports are funded through different agencies and through different regulations and guidelines, and it just makes it a maze for people and their caregivers to access those kinds of care. One-stop centers have really brought that together with CMS -- brought one single point access into all publicly funded support systems. But it has allowed us to begin to develop the capacity and the infrastructure for taking on people in all income levels and assisting people to also plan ahead about their long-term care needs.

Mr. Morales: Josefina, on this topic of outcomes we understand that you focused efforts on measuring program results, especially focusing on outcomes in your management of the Administration on Aging including the development of new GPRA plan. Can you tell our listeners about this plan?

Ms. Carbonell: Well, the most important thing is that, of course, the key element of the President's management agenda, is the integration of performance measurements with the program budgeting. And at AoA, we know that our budget success really relies on the quality of our performance measures. And that was quite a surprise for folks looking at me -- coming from the private sector saying, "Why would you be passionate?" And one of the first things that I did when I got into office was to bring on someone with extensive experience in performance outcomes from the general department, the management and budget area, to come into the immediate office of the Assistant Secretary, not only because I was passionate about performance, but most importantly because we knew that how important performance was going to be to the success of our budget and our operation and our programs.

We've streamlined our performance measures to focus really on three broad areas that are critical and resonate not only with the OMB and Congress, but most importantly with us, and that's improving our program efficiency. To us it means increasing our return on investment, making sure that we have turned the agency around, increasing the number of people served for a million dollars. So not necessarily getting more money to do more work, it's really getting better efficient programs, better outcomes out of the existing dollar amounts that we have, so again, increasing our efficiency.

Efficiency to me also is defined in the way that we provide client outcomes. Not only are we serving a meal, are we keeping people healthier by serving that meal, are we assisting people to remain at home independent, versus institutionalization by providing home care supports that range not only from costlier home health care kinds of service, but then we have transportation and we have other modes of non-intensive or non-medical supports that are very practicable and very much needed by people to remain at home.

And again, increasing our targets to again, to vulnerable populations. If we are to prevent, you know, institutionalization, we really need to serve those at highest risk. So we want to make sure that we are serving the right people.

So those are the three areas where we really focused our investments, really improving our efficiency factor by 15 percent from 2002 to 2004. You know, we are paying attention to increasing our return on investment and that it's really not only doing better with the dollars that we have, but providing quality services. So we're tracking outcome by measuring results by consumer satisfaction, and also, most importantly, by assessing how effective are our services in keeping people in their homes and communities and assisting caregivers to care for their loved ones longer.

So those are the results that are very promising that are coming in. We are very encouraged. We'll continue to build upon them to improve. Of course, the targeting measures are really targeting in the sense of making sure that we are serving the right people and that we target those that are more vulnerable to nursing home placement, and being able to assist them immediately by the personalized service, and again by the partnerships that we develop in the community.

Mr. Morales: So in this arena it really is as much a question of effectiveness as it is about -- with efficiency?

Ms. Carbonell: Absolutely, and we're particularly proud of our outreach to consumers. Again, one of the most important things we did as a management tool and as an administration tool for the Administration on Aging was really focusing on who are our clients and who are we really trying to serve. Are we trying to just continue to build upon services infrastructures with actually no context of who our real customers are, then that's why consumers and providers that are really the ones that serve, you know, our customers to making sure that the senior remains at home independent, we wanted to make sure that we were doing the right things, and in the kinds of standards and policies that will facilitate that transformation from a service siloed approach to a more consumer-based approach. So again, giving them the right tools, investing in areas where it would improve the efficiency of the programs, but it would also improve the quality of the care and the transformational care that needs to happen in a long-term care.

Mr. Morales: We only have a minute, but this is such a critical topic -- along this theme of program success, we talk a great deal and you have mentioned this around collaboration. And this is a collaboration and partnerships between the agency, other governmental agencies, NGOs or even the private sector. How do you see this partnership evolving over the coming years?

Ms. Carbonell: Well, I think that almost virtually every significant initiative that the Administration on Aging has taken on has been based on partnerships. That tone was set early on in this administration. How -- we needed to look at how, you know, interdependent we were, but most importantly how important it was for us. I mean, for me coming from the community, it was clear that part of the fragmentation that we experienced at the community level, whether be it on an individual basis when an elderly or a family caregiver was trying to access those kinds of support or information and the fragmentation or a provider, like I was, to be able to serve that whole individual and all their needs was trying to see how we could collaborate better in not only the systems but in the implementation and the direction that we gave at the federal policy level and guidelines.

So again, collaboration is critical to our work, it's certainly collaboration with CMS on the implementation of the prescription drug benefit like we talked before, you know, has been able to be of critical importance to millions of people and that were educated and enrolled in the benefits as a result of the partnership. The partnership with CMS on the Aging and Disability Resource Center, the one-stop, has opened the door that will lead to the modernization, both the Older Americans Act and the Medicaid program and how important -- and we've begun to eliminate that fragmentation of access to long-term care at the national level because of our joint commitment. And that's translating down, channeling down to the local provider and most importantly to the consumers, which is where we're trying to impact the change.

Mr. Morales: Great. What does the future hold for the Administration on Aging? We will ask Assistant Secretary Josefina Carbonell to discuss this 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 Assistant Secretary for Aging Josefina Carbonell. Also joining us in our conversation is Brenda Kunkel.

Josefina, it seems as though the very definition of retirement is changing. What do you predict for the future of the concept of retirement?

Ms. Carbonell: I think we have the first wave of baby boomers turning 60 this year. And we know we have two boomers that turned 60, President Bush and Sylvester Stallone. It really is defining the way that we look at age and retirement in this country. I think many people are choosing to continue to work past their age, and not so necessarily within their same job or same field. So we're looking at people taking pauses in their lives and doing career changes, or actually looking for non-traditional job structures where people will be working in different lifestyle changes along their lifespan.

I think we've talked about boomers and one of the thoughts for the future generations, and I think that as we learn from the past, we need to look towards the future. And I think the best advice is keep healthy. I think your best investment in your later life is to invest early in healthy -- adopting healthy lifestyle choices, and continuing to live them throughout your lives.

And second, most importantly, start saving early and planning early for when you're older, and also get back to your community. I think there is a great opportunity for people to give back and we know the great value that many of our older people are contributing to communities across this country.

Mr. Morales: Many of our guests share challenges in making sure that their staff have the best training and skill set for the future -- and I think this also ties to retirement and the amount of knowledge that is typically lost in organizations that have high rates of retirement. What is the administration doing to attract and retain highly qualified employees and to stem the tide of this brain drain?

Ms. Carbonell: I think the most important thing is that -- we looked at the appropriate mix of staff. I think the strategic human capital investments have been very important for us and they have really driven our reauthorization proposals and the principles of reauthorization. And that is to really retool our organization and agency from an agency that just had grants to an agency that's really leading change in long-term care reform, but most importantly in giving people and consumers the right information so they can have better choices to remain independent.

So the capacity of the shift in the strategic investments in our staffing, not only at the federal level, but also at the state and local level has been critical. I'd like to say that employers, I think in general, in both the private and public sectors really will be facing a great brain drain as a large segment of our workforce begins to retire. So this will create a powerful incentive really for employers to identify new ways of retaining, of retraining, and retooling, older workers and recruiting older workers. I think that certainly that's an opportunity for looking at some of the recent surveys that have come out from MetLife that found that half of adults aged 50 and 70 want to do jobs that help improve the quality of life in their communities. And I think that that's another wonderful opportunity to be able to actually attract a whole core of people to come in to the federal workforce as an opportunity.

Mr. Morales: That's fantastic. Josefina, you just have a wonderful personal career and I have to ask you this. Probably many people out there are interested in contributing in this field and so my question to you is what advice could you give to a person who is really interested in a career in public service or in community service?

Ms. Carbonell: Well, I think we need to continue to look at America as in transition. I think that the 21st century offers us some great opportunities and great challenges. I think that that's a wonderful time, a unique time to be in public service. I think more and more the business of government, there seems to be a thin transformation of that dividing line between private sector doing the government's business and government doing the government's business. And I think that it's coming closer together and it doesn't necessarily need to be in conflict with each other.

I see the opportunities for great public services, whether you're serving in that capacity in a government role or in inherent government capacity or you're serving in that role in the public sector as a private sector contractor to a government agency.

Mr. Morales: That's wonderful. Unfortunately we've reached the end of our time and so that will have to be my last question. I want to thank you for fitting us into your busy schedule. But more importantly Brenda and I would like to thank you for your dedicated service to the public and to our country in the roles that you've held at the Department of Health and Human Services.

Ms. Carbonell: Thank you. Thank you very much, and thank you for this wonderful opportunity to be with you. I think if I may, I'd like to -- obviously it's my role as the chief aging advocate in this country -- is to make sure that, you know, all of us have caregiving responsibilities. We either have our own families that we are trying to struggle, our jobs and struggle to deal with our loved ones as they age -- relatives or relatives-in-law, and I would like to put in a plug for our elder care locator number, which is what we're trying to do is improve the access of information to resources and supports of people -- can get the right choices to remain at home. And that number is 1 (800) 677-1116.

Bradford R. Higgins interview

Friday, August 25th, 2006 - 20:00
Phrase: 
"We live in difficult times and the taxpayer wants to know, what type of results should we be expecting and what type of effects is this funding generating?"
Radio show date: 
Sat, 08/26/2006
Intro text: 
Higgins discusses the mission and activities of the State Department's Bureau of Resource Management, the State Department CFO role, the role as CFO in the Office of the Coalition Provisional Authority in Baghdad, recent bureau awards and accomplishments,...
Higgins discusses the mission and activities of the State Department's Bureau of Resource Management, the State Department CFO role, the role as CFO in the Office of the Coalition Provisional Authority in Baghdad, recent bureau awards and accomplishments, advice for achieving "green" ratings on President's Management Agenda (PMA) initiatives, the challenge of implementing the budget and performance integration aspects of the PMA and OMB A-123 requirements, an overview of implementing certain lines of business, and the future vision and priorities for the bureau.
Complete transcript: 

Originally Broadcast Saturday, August 26, 2006

Arlington, Virginia

Mr. Morales: Good morning, and welcome to The Business of Government Hour. I am Albert Morales, your host and managing partner of The IBM Center for The Business of Government. We created the center in 1998, to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about the center by visiting us on the web at 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. Our special guest this morning is Mr. Bradford R. Higgins, Assistant Secretary of State for Resource Management and Chief Financial Officer for the Department of State. Good morning, Brad.

Mr. Higgins: Good Morning, Al.

Mr. Morales: And joining us in our conversation is IBM Project Executive, Bonnie Glick. Good morning, Bonnie.

Ms. Glick: Good morning.

Mr. Morales: Brad, most of our listeners are familiar with the Department of State as the diplomatic arm of the U.S. Government, but listeners may not know that the chief financial officer at the State Department fits within the Bureau of Resource Management and manages a budget of approximately $33.6 billion, which certainly rivals many of the Fortune 500 companies out there. Can we start by talking more about the mission of the State Department's Bureau of Resource Management and its activities?

Mr. Higgins: I will be happy to. Resource Management was set up in 2002, out of Secretary Powell's initiative, and it really focused on his belief in having a real organization -- not just diplomacy -- but how do you support diplomacy. The intent was to integrate policy, planning, and budgeting, and then finally accounting. The mission statement is pretty straightforward: it is to integrate strategic planning, budgeting, and performance, and secure the resources necessary to accomplish the Department of State's mission.

To be perfectly honest though, that mission has expanded dramatically, since 9/11. The demands of what the State Department is doing overseas, and be it Iraq, or literally any other part of the world, has put tremendous demands on financial management and control. Really, I think the question for us is - [for] what we are getting from Congress and the American taxpayers: how are we spending the money they are giving us and for what effect? Now, we live in difficult times and the taxpayer wants to know: what type of results should we be expecting and what type of effects is this funding generating?

Mr. Morales: Can you describe specifically your role as chief financial officer? And what are some of your official responsibilities and how do you support the broader mission of the organization?

Mr. Higgins: Well, let me start off by saying something. I think I have the best financial job in America. Really quite simply: because I have input in almost all the decisions affecting the U.S. overseas. These are, you know, be it Iraq, what we are doing in Afghanistan, what we are doing in a lot of the other countries. These issues will define our generation, so I cannot tell you how much I've enjoyed my time, being able to ask the kind of questions, that just like anybody else, would want answered -- being an outsider. But the specific responsibility as chief financial officer, is again as I mentioned before, the development of the Department's internal planning, budgeting, and accounting functions.

It goes much further than simply putting together a budget. We have embassies in over 170 countries around the world. We develop business plans, or what we call mission performance plans, for every one of them. The individual missions develop [the plans]. We critique [the plans], we meet with at least 60 of the [missions] every year. It is a very interactive process, and for someone like [me], who is new to the government, it's been fascinating, because what you find is no mission is alike.

The challenges that we face overseas are just profound, and they're changing constantly. [The] ability to have men and women on the ground, working with these countries is absolutely critical. Our role is in terms of how do we support them and how do we give them the assets or the resources to help them do their job. This goes to my next area, which is, the Bureau of Resource Management has a number of different areas in addition to just putting together budgets.

As I mentioned before, we've got planning and we've got accounting, but we also are the financial services provider for the -- not simply the State Department, but all U.S. agencies overseas (outside of the Department of Defense). [For example, if the]Department of Commerce has some one, let's say, in Egypt, you know, it's the responsibility of the State Department to provide life support and service for them� through the chief mission. We also handle the salaries of all the foreign service nationals who happen to work for the U.S. Government overseas.

For example, we pay the salaries of about 90,000 Americans, locally engaged staff, and retirees annually. What makes us different, though, from any other organization in the U.S. Government is that, we just don't pay in U.S. dollars. We pay salaries in a 160 different currencies, and we have about 260 different pay plans around the world. So the accounting and the administration functions of this are enormous, and particularly when you realize the State Department staff, you know, a typical assignment and a mission at the State Department is anywhere from one to three years.

So in any given year, you probably have 30 to 40 percent turnover. So you know in every country the pay plans are a little different, because whether it's a hazard pay or just a type of things that, you know, family type of provisions, so that it gets incredibly complicated, just from getting the right pay out. Those are the type of issues that we deal with on a daily basis. The other thing, if I can finish, is outside of the normal accounting business in the financial operations, we also have the mandate for what we call mission assurance.

If something was to happen to the State Department, what are the plans? And we help organize all of the other bureaus in terms of their contingency planning, so it's a basically critical infrastructure planning. This is again, a follow-on to what happened after 9/11. What do you do if something happens? We also have responsibilities for dealing with GAO liaison. We deal with them on a daily basis in terms of their audits. So we have a pretty broad mandate, but again it comes back to financial services and making it as effective as possible for the Secretary.

Ms. Glick: Brad, you have a tremendous range of responsibility within the State Department itself. I'm wondering if you can tell us how your broad range of professional experience, including a successful career in the private sector, as well as your previous stint as the CFO of the Office of the Coalition Provisional Authority in Baghdad, prepared you for your current position? How has such a background influenced your personal management style?

Mr. Higgins: That's a very interesting question. It's hard to say anyone could be prepared for going over to Baghdad. I started my career as a lawyer, and I decided shortly after practicing for about two years to become an investment banker, but I've always had an interest in the public sector. I gravitated toward public finance and I did that for about 20 years on Wall Street at firms like Goldman Sachs and First Boston. I led a number of groups primarily focused in public power and infrastructure.

I specialized [in] large complicated problem projects. When we went into Iraq we used to joke, you know, "Iraq was the mother of all projects." It was something that caught my interest. I also think, for me to go there, was [that] a former colleague of mine was the Chief Financial Officer at the State Department --Chris Burnham. After 9/11, I had wanted to do something to help and get involved, just like thousands of other Americans. I volunteered to be an advisor in Washington for a year.

Well, that lasted about a day and they asked me if I'd be interested in going to Baghdad -- a week later I'm sitting in Baghdad. It was partially my background in terms of trying to analyze problems and ask questions. One of the things that I found incredibly helpful with [a] Wall Street background, and which is really not different from anyone out there in terms of managing their own finances, is that I want to know: why we are spending this or why is it costing so much -- the due diligence aspects of Wall Street, I think, have proven to be very helpful.

You know, I come from not so much a spending perspective, but an investing perspective. When we're looking at things, particularly on foreign assistance, why are we spending this, what's our return, what are we doing to help and quite honestly, what's our exit strategy, so those type of experiences have really proven to be very helpful. I think that if I was to say, "Where did I learn the most?" it was my 13 months in Baghdad.

I did two tours over there and working with, not only the Iraqis, but the Americans. We tend to forget there has been an awful lot of criticism of what's transpired there -- fraud, waste, and mismanagement that I kept on hearing about. Well, I have to tell you, I started off as a CFO for CPA and I worked very hard. I was largely brought over to fix a budget deficit. We were projecting about a $400 million shortfall on an $800 million budget. It took me about three or four weeks with a team of folks, but we ended up not only resolving the shortfall, but we ended up turning over a surplus. It was asking a lot of questions, and that was really my primary focus. I had a chance to see what was going on and I was concerned. When the State Department took over, I asked if I could extend, and they said fine and they made me the Chief of Planning for what was known as the Iraq Reconstruction Management Office better known as IRMO.

We did the first reprogramming and that was really reflecting on how we saw the situation evolving in Iraq. One of the real challenges that we, all of us, whether it's the Hill or the American taxpayer, are wrestling with right now is: how did we get there and what's transpired. When we first went in there, it was really a reconstruction program -- it was what is better known as postwar reconstruction -- and that was one of the real challenges, because it evolved very quickly to a wartime reconstruction.

What I found, as with most businessmen, or people, you are constantly evolving, you are constantly reassessing, so when people say mistakes, well, no, it's re-aiming -- particularly in a war zone, where there are attacks exchanged almost daily. We had to keep learning from our mistakes and lessons. When I came back I remember sitting down with the Secretary upon my arrival, toward my confirmation process, I tried to explain to her: "Look, if you can get something done in Baghdad, you should be able to get something done in Washington." I was welcomed. I was pleased to come back.

In some respects, I think the experience in Baghdad has put me in a very good position, not so much because of all the lessons. The fact of the matter is the men and women, the Americans in the coalition and the Iraqis, what they're going through, having very much of [an on the] ground feeling. It is one thing to sit in Washington and talk about what we have to do and how it's going. It is another thing to be out there, trying to make it happen. When we talk about programs, or budgets, or money, well, I've got a pretty good idea how difficult it is�to ask the kind of question�how exactly are we going to do this?

Mr. Morales: We certainly want to hear more of the stories from Baghdad, because we think there is a lot of learning here. But I want to transition here a little bit and ask you, we understand that the Bureau has received numerous awards from organizations such as the Association of Government Accountants and the League of American Communication Professionals, just to name a few. Can you tell us about some of these awards and accomplishments?

Mr. Higgins: Oh, I'd love to. I only wish I could take credit for them. All these awards were worked on last year. I'd like to say, I hope we can continue doing them, and if we fail, please let it not be on my watch. But I will say, the team that I inherited at the State Department is really second to none. I think I can talk with a certain level of experience, spending almost 30 years in the private sector and in the public sector, and being in management positions for probably 20 of those, so it really is a credit to the team that we have at RM.

Probably the best one to start off with, is the double green score on OMB scorecard for the President's Management Initiative, and I'm sure we will get into that later on, but I think it's something that the listeners should be more aware of that the PMA is one of the real achievements of this administration. That they're, you know, trying to make the government work better and work harder and to justify the taxpayer's dollars. In our area the two that we were responsible for, planning, budget integration, and financial management.

We are proud to say we are double green, for progress and for status. OMB is a demanding boss and they're constantly asking questions. The other areas that I think we are particularly proud of, the last five years we have received the AGA's prestigious Certificate of Excellence in Accounting, on accountability reporting, I should say. And this all goes back to our performance and accountability report. This is something Americans don't really look at enough.

The federal agencies by law are required to do annual reports and they are called PARs, Performance and Accountability Reports. This is really a good area, if you want to find out what is going on in an agency, particularly, the State Department, go to their website, open it up. Or contact us and we will send you a disk. They are long, so we are going to have to send you a disk, rather than a printed copy. But it goes into all our different programs and what our record is. There is a lot of accountability and there is more so today than ever before, because of a lot of the work OMB has done.

Another one, and this goes back to our annual report, the PAR, is the Mercado Center of George Mason University started ranking them, probably seven or eight years ago. We started off in 20th out of 27 agencies. Well, you know, for the last two years we've been ranked second. What's interesting, I think, from the State Department, is that most of the other agencies have effectively one mission and it's whether it be labor, or social security, or commerce, but you know, the State Department handles the foreign relations for the U.S. Government, which is everything.

So the number of programs and the number of initiatives we're involved in is not in the dozens. It's literally in the hundreds. And we have to report on those. So I think it's a real credit to the team at the State Department to have been able to put that into an effective and cohesive manner, so that people can have a better understanding of what we're trying to do.

Mr. Morales: Certainly, a phenomenal accomplishment. What are the goals and priorities for the State Department's Bureau of Resource Management? We will ask Assistant Secretary and Chief Financial Officer, Brad Higgins, 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 Assistant Secretary and Chief Financial Officer, Brad Higgins. Also joining us on our conversation is IBM Project Executive, Bonnie Glick.

Brad, could you highlight some of the Bureau's goals for this current year as well as the goals that look forward into FY 2007?

Mr. Higgins: I'll be happy to. I think the key goal for us is what I call operationalizing Secretary Rice's initiative on transformational diplomacy, which is really a fundamental change in the way we operate at the State Department. Historically, the State Department would be more of a reporting function keeping Washington updated on what was going on. Her vision of the future, which I think is exciting, is much more proactive, actively influencing improvements around the world, be it diplomacy or a democracy, I should say, or economic development and it's really built around self-help. And so part of our job is to sit there, and okay, what kind of resources, what type of changes from a funding perspective or on a program perspective, we're going to need to put into place to effectuate her initiative.

I think that the next priority for me, which really is a driver here, and that's really kind of my background, is the evolution of resource management to more of a financial advisor to the Secretary. One of the things I noticed, the difference between the public sector and the private sector, the private sector is much more focused on results. The public sector, because it does budgets, it is more focused on the process of getting the money, not so much on how we spend it. And that's really one of the things that I am, you know, I may be a little obsessive about the spending, all these years on Wall Street, perhaps even more so, having spent so much time in Iraq, is that I'm very focused on results. What are we trying to do with this? And I think that's something that's very much in line with what the Secretary is pushing for.

And I guess the third thing that's key for RM, resource management, our assistance in increasing the interagency coordination. One of the things I think we've all found on the government side is that we can't do it alone. The State Department can't, the DoD can't. The challenges around the world are immense. We need to act in a cooperative and a coordinated fashion, and it doesn't just stop at the U.S. Government. It goes on to the private sector and really the international side.

I think, again, Iraq is one of those classic places, where as we go through a transition to the Iraqi government, how do we work with the international side. So a lot of this goes back to using some of the resources that we have within resource management to help effectuate these interagency efforts.

Mr. Morales: The theme of collaboration is certainly a very important part of the government's lexicons these days, but I want to get back to something that you said in the first segment around linking budget to performance. How does the Bureau plan to expand the use of financial data to inform its management decision process?

Mr. Higgins: That's a good question. I think you start out with financial management. At the State Department it means knowing where every dollar comes from and where every dollar goes in a timely and accurate manner, and that's really kind of the traditional definition. But I think what we need to do is to move beyond the sort of, the fundamental or, you know, sort of traditional compliance focus to one of more of a results focus. What exactly are we doing? What are the deliverables?

You first need to have a core data and that's really what we spent the last four years doing, building the data systems. Congress has been very supportive. You know, they have given a good amount of funding to upgrade our systems at the State Department, so we can be smarter and we can be more effective, but what do you do with that data, and how do you put it into place? We have a number of mechanisms for identifying metrics. One of them obviously was an audited financial statement, but also our PAR, our performance and accountability report. That's a key area.

We also turn out a quarterly ambassador's report, which summarizes our performance on a number of different areas and it's something we work very closely with OMB. We have a quarterly report to OMB that goes through not only our PMA initiatives, but just about everything else we do at the State Department and they grade us, and they are pretty tough graders. You know, there is a lot of oversight, but there is also I think -- well, my goal is to have even increased internal oversight.

There are a number of things like A-123, but I think it comes back to management and the expectations of the leadership of the State Department, the Undersecretary for Management, Henrietta Fore, puts out about four taskers a day to me about this and that, and if there is someone out there who is dedicated in trying to extract more value about what we do, it's been her.

Ms. Glick: What advice would you share with other government leaders about getting to green in certain presidential management agenda-related initiatives and staying there?

Mr. Higgins: Well, that's actually a good segue. The first advice, it's very important to have high-level executive buy-in. And since Henrietta is a, you know -- I don't think she carries a gun, but she might use it if we went and we stopped being green -- so needless to say, it's a high-level executive support at the State Department. And the other piece of advice, it's very important to have an open and regular dialogue with OMB.

OMB is there to help. It's not quite like the IRS, but they certainly have been very supportive, because again, they work on our budgets. They give us the money needed to make these changes, so if you have an open dialogue, they've been very supportive. I would also think that, you know, as we move toward green and the goal of green, it's not just the goal of green, it's building the basics to justify the green.

And that's again going back to focusing on the blocking and tackling of running a budget and being able to have accounting statements. This is a situation as we see, and particularly at the State Department, nothing is static, everything is constantly changing. And even though we may have a clean audit last year, well, there are probably a half a dozen things will happen in the next 12 months that could take us to a material weakness, so it's the constant tracking and the discipline of maintaining standards.

Ms. Glick: It's my understanding that the Department's Management Control Steering Committee established a subcommittee comprised of the Bureau of Resource Management to report on efforts to comply with the auditor's findings on the Federal Financial Management Improvement Act deficiencies and how to categorize the issues. What are some of the innovative efforts in place to remedy these identified deficiencies?

Mr. Higgins: We actually started something called the Management Control Steering Committee almost 20 years ago, so this is something that's been around the State Department for a while. But it also, you know, helps for us to comply with the -- I have the same problem saying this -- Federal Managers Financial Integrity Act. But at the end of the day it's "How are you running your business?" It really looks at, you know, our financial management systems and so many things, like how we manage our property as well.

It really is the basics of our balance sheet. I'd share that and we meet every quarter and the goal there is -- and this is really an internal audit function or a management function -- is to identify what we think our weakness is. You know, we would probably come up with a longer list than the auditor will, because the job is not to, sort of, gloss it over, it's to identify the problems early on. And if there is any doubt, we put it on the list, and then we try to address it. So that really has been very helpful.

We've also in the last two or three years really started pushing more on managerial cost accounting. This is a little different than what you normally see at the State Department, where it's really budgets. We started off at the mission level, then we go to the bureau, then we go the department levels. How we spend our money. Very specifically, how do we account for it? Now, that's one of the challenges I think in the government today, is for the financial managers to be able to say to the senior leadership, to the Secretary, "Madame Secretary, this is going to cost you X. You've got two or three different options, but we've got to be able to price them out."

This is something we do every day in the private sector. I would say it's long overdue. It's something that's been on everyone's screen in the government, but it's something that the people like myself really have to push on, and to be able to have specific numbers. I'm always amazed by the amount of the dollar figures that get thrown around in the government. You know, it's almost like popcorn at times. And I think, having run a couple of businesses, and not having an annual appropriation, but having to make the bottom-line, you know, this is something I joined the government because I think the, you know, the American taxpayers should expect that.

Mr. Morales: Brad, we only a minute left, but I do want to ask you about the Joint Performance Plan that the State Department and USAID submit jointly. Could you share a bit about this plan and what does this report reveal about your joint performance, and how, if at all, does it relate to the allocation of funding across strategic goals and performance measures?

Mr. Higgins: To me it's one of the real positives in the government. This is not an annual report. It looks back, but it really looks forward, you know, basically saying this is what we intend to do. We need to have Congress look at it closer. Obviously, OMB follows it, but it's something that none of us likes to, you know, draw a line in the sand -- "I'm going to do this and that." Well, this does that and it also reflects on the fact that foreign assistance, USAID, and the State Department are really joined at the hip, that we need to work together. We need to have the kind of integrated approach.

Diplomacy isn't very good if you don't follow it up with foreign assistance and vice versa. So I think this has been a very important opportunity for us to pull that together. A couple of months ago, as some of the listeners may have heard, we created something called the Director of Foreign Assistance, and that was led by Randall Tobias, Ambassador Tobias. He is also the new USAID Administrator, so that jointness is becoming even more pronounced every day, so I think going forward, it's the integration that we talked about earlier that's key to greater effectiveness.

Mr. Morales: Great. How is the State Department integrating budget and performance information? We will ask Assistant Secretary and CFO, Brad Higgins, to share the details 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 am your host, Albert Morales, and this morning's conversation is with Assistant Secretary and Chief Financial Officer, Brad Higgins. Also joining us in our conversation is Bonnie Glick, Project Executive for IBM.

Brad, many agencies are working to implement the budget and performance integration aspects of the PMA. What is the status of the Bureau's plan for this effort?

Mr. Higgins: As I've mentioned earlier, we are at double green for progress and status for a budget and performance integration. This is something that we continue to work very closely with OMB, trying to make it, you know, to take it to the next step. I think one of the challenges that we have is being a double green. What does that do for us? Is it integrated into the other initiatives? So we start looking at the potential of basically a balanced scorecard, looking at the other initiatives and integrating that and, at the end of the day, the budgeting and performance integration really is supposed to describe all the aspects of the State Department because everything's got a funding aspect to it.

So whether it's e-governance or real estate and things like that, how does it all fit together? And that comes back to performance, and so I think that's really the challenge of how do we pull these things together so that it becomes effectively a return on equity, if you would use a Wall Street parlance.

Ms. Glick: Where is the Bureau of Resource Management in terms of implementing Sarbanes-Oxley or A-123 requirements? Do you have any lessons learned that you could share with other government leaders?

Mr. Higgins: Well, leaving Wall Street, I was looking forward to getting away from Sarbanes-Oxley and I discovered something called A-123, which is the same thing, but it's for us. We have worked very hard on that at the State Department. We've always maintained robust systems of management controls, as I mentioned before, going back almost 20 years. And, you know, the OMB issued its revised Circular A-123 in December of '04. The deadline was for the end of FY '06.

We intend to have full implementation at the end of [the] FY. So this has been a big issue in our operation, trying to meet that and some of the lessons -- we have already learned quite a few lessons trying to meet that, and I am confident we will meet that standard by the end of September. But it really is important, because you have so many different things going on in a large agency like the State Department and I think the key thing is to identify and then integrate these efforts into a cohesive pattern. And then you have someone managing that process, which is someone who we have in RM following up on that collaboration.

You have to be able to work closely with the OIG, the Inspector General and with the auditor. Again, you know, they aren't going to get too cozy with you, but the practical matter is you've got to work together to be able to meet these criteria. And for those who aren't familiar with A-123, in previous practices the standard was nothing was coming to our attention. Well, now we actually have to prove it. We have to test it and look at these rather than -- the other standard was significantly easier. No one is taking our word for it anymore.

Now, we have to demonstrate proficiency and the first year is expensive and it's time consuming. But hopefully, once we get the standards in place, it will allow us to be that much more effective. But I think the challenge is, first you are doing, you know, a lot of work, but also you have to start early. One of the things I have found, particularly in the public sector, if given enough time, you can, you know, you can fix almost anything. Time is our biggest challenge.

If you identify something in August with a year-end at the end of September, you got yourself a real problem. Most people know we used to have six months to turn in financials. Now we have to do it in 45 days. November 15th is a very hard date for us, so if we are not in place by then, that has pretty dire circumstances to the way we do our operations. So A-123 is a challenge and the demands of OMB on the timing of it, this also makes it doubly difficult.

Ms. Glick: Those are important lessons. We understand your focus on cost accounting and performance measurement. Can you tell us a little bit about your activities beyond in this area? Is there a balance scorecard that's in place in the Department to monitor your progress in this area?

Mr. Higgins: It's something we obviously are working on, and we've had some good discussions with OMB, because this is the core. You know, just doing one thing right isn't enough. You've got to integrate it so you have an effective operation, and I think for me a balanced scorecard is very important. What we have done though, going back to, sort of, the managerial cost accounting, is we've put a team together and we have been out there for, well, about two years now, developing this. And we started off by identifying other agencies' best practices and there is a lot of lessons to be learned from the other agencies. Some of them have done a terrific job.

We have 30 different bureaus at the State Department and we sat down with all of them and we interviewed them to find out what their particular needs are, the type of cost information they need to develop budgets, their current cost accounting practices and reporting. Oddly enough, it's not always uniform, and the bureaus are different, and part of our job is to develop a single standard so that we can have some comparability, and then coming back to looking at outputs and outcomes.

We very much need to have an outcome focus and not how many things we produce, but what type of effects they are having. And that's sort of the next step of managerial cost accounting. And when you start looking at what's the cost benefit of something, we have a lot of challenges in the U.S. Government about, you know, we have choices. Some things generate a lot more benefit than others. Some things are incredibly expensive. Some things are relatively inexpensive that have huge upside. Some of the lessons we have learned at the State Department are really the effect of cultural exchanges.

Relatively low cost, but unbelievably effective because they tend to be the leaders of tomorrow in these other countries, and you know, my job is really on an annual basis, but the State Department is going to be there into perpetuity, and certainly that's what I hope. So we have to be thinking at 10, 15, 20 years who are the future leaders of the other countries and what type of relationships we develop with them, and the earlier the better.

Mr. Morales: Brad, one of the larger business model changes in the federal government these days is the lines of business. Does the Bureau have plans to implement lines of business for the foreign service nationals and third country nationals serving us overseas?

Mr. Higgins: Yes, Al, we do. Again, OMB has made this a top priority, trying to identify who does it best in the federal government. Clearly, our role, and under the constitution, and the practicality of being responsible for foreign relations, it really puts us in a position to handle the overseas. OPM has designated us as the provider of payroll for, you know, the foreign service nationals. And it's something we intend to continue to expand upon.

We will be making a submittal for this line of, actually a line of business for all foreign service support, but it's something that we currently handle, all of the other agencies as I mentioned. And I think, you know, as a practical matter we are doing it anyway, and making it more formalized, I think, only helps.

Mr. Morales: What does the future hold for the State Department and its Bureau of Resource Management? We will ask Assistant Secretary and Chief Financial Officer, Brad Higgins, to discuss this 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 am your host, Albert Morales, and this morning's conversation is with Assistant Secretary of State and Chief Financial Officer, Brad Higgins. Also joining us on our conversation is IBM Project Executive, Bonnie Glick.

Brad, recommendations have been made that State, with the Department of Defense and USAID, establish a means to track and account for security costs to develop more accurate budget estimates. Are there any specific efforts in place to implement such recommendations?

Mr. Higgins: Yes, there are, Al. The U.S. Government Accountability Office, better known as GAO, is in the process of reviewing that issue, and they've asked, and this is particularly in Iraq, to look at the private security providers there, and to account for their costs. And people don't appreciate one of the real challenges, and I think earlier I mentioned some of the cost overruns in the, you know, what people call fraud, waste, and abuse.

Well, that's about five to ten percent of the cost. I'd say about 30 to 40 percent of our costs now have been in security, and I think GAO wants to know about it, but it is becoming part and parcel of operating in this world. And in a hostile environment one of our top priorities is to protect the American citizen. To protect the people we asked to go out there, and it's taking a little adjusting in our budgeting to reflect this really high cost of operating, but that is the cost of being in a place like Iraq. It's a necessary cost. You know, we need to be able to have people out there and we can't do it by phone. So it is something that we're tracking closely, and it also means the importance of us working very closely with the military and the type of protection they provide us.

I spent a lot of time in Humvees, protected by marines and soldiers, and you know, my hat's off to them, and to what they've done, but as we all know, the costs are high, but again they are unfortunately necessary to winning this global war on terror.

Ms. Glick: Given the management changes that are already underway in the Department of State, in the areas of transformational diplomacy, where do you see the Bureau of Resource Management in the next five to ten years?

Mr. Higgins: Well, to be honest, you know, maybe it's just because where I come from, but what I see and my goal is to turn the resource management into a true financial advisor to the Secretary and to the senior management. They should know what things are going to cost. They should say, "What options do I have, and if I've got X amount of money, what can I do? Are there better programs?" And that kind of goes back to what I was just saying before, about our priorities, of working the interagency side and the international side, so that we're able to, you know, if we provide the seed capital, will the private sector come in? Can we get another country to match what we are doing?

Pushing that, trying to maximize the use of the taxpayer dollars, and I think I mentioned before the philosophy that I've taken is one not of spending, but of investing. We need to be looking at, you know, what is the best use of this money? And that to me is, the real goal of RM is to provide that analytical capability. Not just the budgeting, but to be able to monitor it and work with the various bureaus to say, "You know, if you did it this way, you might be able to get that. If you did it another way --" And I really do believe the challenge for us, particularly with Congress, is not one of funding, it is one of execution.

We get the execution right, I have a pretty strong feeling Congress will give whatever funding we need. They've been very supportive, but I also think they have a right to demand results. And I think part of my job is to be able to provide that accounting, and provide that responsibility. You know, you should know there is something called the CFO Act of 1990. That requires me to be responsible for all financial activities at the State Department. I'm not a glutton for punishment, but if I'm going to take this job, it's important for me to live up to it.

You know, I had that great opportunity of being in Iraq. I know the sacrifices our men and women are experiencing over there, and I think that makes my job very, very clear. Are we getting the results we need? And if we're not, they should replace me, and in fact, I will go recruit someone who would do a better job -- but to me that is really the job number one for the CFO at the State Department.

Mr. Morales: Brad, I'm hard-pressed to believe that you can actually find somebody who's done a better job than you have, but you obviously bring a wealth of experience from your tenure in the private sector. So I would like to ask you a two-part question here. One is, you know, what other best practices and learnings can you share with your fellow public sector CFOs? And what advice would you give to a person who is out there in the private sector, perhaps thinking about a career in public service?

Mr. Higgins: It's a good question. I guess the best advice I would give, and sort of following on what I've said, is for the CFOs is to focus on execution. Let the funding follow the execution. It becomes a lot easier when people have confidence that you are spending the money wisely. You know, I always say, well, that's the way you would run your own home and run your own company, and I think that's the standard we should apply to our own government.

You know, to me, talking about job satisfaction and the type of the job I have, the pay sometimes isn't as good as Wall Street, but there is one thing, I guess, you get to my age, job satisfaction becomes very important. You know, it's not something I thought about when I got out of college, and oddly enough, the only regret I think I had coming out of Iraq was, I didn't go into the marines after college. Because I think the experiences these young men and women have is just life-altering and life-changing in terms of being part of something bigger than themselves, and it's not all about how much money I'm making.

But I also think that there are a lot of us who are, you know, of my generation, when you are born in the '50s, that you're getting to that point of retirement or where you want to have a second career, and I can't think of a better area than going back into the government. And one of the things I'm pushing hard for is to develop fellowships with either the private sector or universities, and we always have constraints on how much staff, and being able to bring people in who can bring the intellectual rigor.

The lesson I learned in Iraq is that most people don't realize this, but people over there work seven days a week, upwards of 14 to 16 hours a day. You actually lose track of what day of the week it is, and the strain of that is that you're constantly putting out fires and you don't have the time to really do that rigorous research and thinking through that you would like to do. And I think one of the things I would like to see is to bring the private sector more actively involved into the public sector, be it on a volunteer basis or sponsored by institutions, but we really benefit from the experiences of the private sector and that's something that, you know, whether it's someone coming out of college, looking to have a career or someone who has already had a career and has got nothing to prove, and I kind of fall into that.

You know, there are days it's been the most frustrating job I've ever had, but there are far more days that this has been the best job I've ever had. So I can't say enough about the State Department. At times it is very critical about some of the things we did in Iraq, and I think the lesson that I've tried to follow was, if I want to criticize, I better have a solution, and I also better be willing to roll up my sleeves and go do it.

I put together courses of action or plans of action, and there wasn't enough staff out in Baghdad last summer, and I said, "Well, I guess I will go out and help." Well, I thought I was going to be there for three weeks. I ended up being there five months. But these people are working very hard and I think that's the message I want us to share, is that this has been a great career for the people of the State Department. We are always looking for talent at all levels.

You know, whether it's entry level or later on, or senior levels, and I would encourage people to go to our website, state.gov, and explore what's going on, whether it's working in Iraq or working in Afghanistan, or just working at the State Department, what opportunities we have. It's an exciting place. Perhaps, more than any other time, and certainly in our history -- at least you know, our immediate history -- there are some real challenges. You just have to pick up the newspaper to realize what's going on and it's a scary time.

And I find it's a lot easier to get involved than to read about it in the newspaper. And one thing I will finish with is that what you read in the newspaper and what goes on out there, sometimes it's very different, and that the challenge is to be out there and to see it firsthand, and to put your experience to work there, and have that sense of satisfaction. Obviously, I'm not going to do it alone, or I'm just a small player, but certainly it's been exciting to be around people like Ambassador Khalilzad or Secretary Rice and see what they have been doing.

Mr. Morales: Brad, thank you. That's great advice and certainly your passion and enthusiasm rings crystal clear through the studio here. Unfortunately, we have reached the end of our time and although I have a million questions, and I'm sure Bonnie has another million, we will have to end our questioning. I do want to thank you for fitting us into your busy schedule today, but more importantly, Bonnie 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 State and in the financial management field.

Mr. Higgins: Well, thanks Al and Bonnie. I welcome this and it's one of those things where, you know, we get so focused on what we're doing, and we sometimes forget the message has got to get out there. I would encourage all the listeners to look at our site. I mentioned before about jobs, but to go to the State Department website, and open up our performance and accountability report, and read it. Send us an e-mail if you want more information because I think there is an awful lot going on and it's a much better story than one might first perceive. This is all about learning, you know, from what's working and what's not, and I think that's the one thing I'm convinced with the State Department is that we're trying to do a better job everyday but it's a dynamic situation and we do need the support of everyone involved.

Mr. Morales: Great. Thank you. This has been The Business of Government Hour, featuring a conversation with Assistant Secretary, Bureau of Resource Management and Chief Financial Officer of the Department of State, Mr. Bradford Higgins. 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.

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 am Albert Morales. Thank you for listening.

Lisa Fiely interview

Friday, April 21st, 2006 - 20:00
Phrase: 
"What you need to show to get to green is that you’re reporting accurate financial information and that somebody is using it. That’s why we’ve dedicated our resources so that these reports contain data that people need to manage their organizations."
Radio show date: 
Sat, 04/22/2006
Guest: 
Intro text: 
Fiely describes her career in government (USAID, the Internal Revenue Service, Environmental Protection Agency, and the Social Security Administration). Fiely also discusses the challenges of implementing change in a global organization such as USAID,...
Fiely describes her career in government (USAID, the Internal Revenue Service, Environmental Protection Agency, and the Social Security Administration). Fiely also discusses the challenges of implementing change in a global organization such as USAID, as USAID faces technological as well as cultural challenges when implementing systems internationally.
Magazine profile: 
Complete transcript: 

Tuesday, February 7, 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 this 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. Our special guest this morning is Lisa Fiely, Chief Financial Officer at the United States Agency for International Development or USAID.

Good Morning., Lisa.

Ms. Fiely: Hi, Al.

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

Ms. Feller: Good morning.

Mr. Morales: Lisa, many of our listeners may be familiar with USAID, but many also may not be. Can you tell us about the mission and history of the USAID?

Ms. Fiely: Sure, USAID actually came about as a result of the Marshall Reconstruction Plan for the economic recovery in Europe after World War II. Actually, the beginnings of this plan came about as a result of a speech that George Marshall, who was the Secretary of State under Truman, gave at Harvard back in 1947. It is the government's arm to lend foreign assistance from this country, and it was actually named USAID and put into existence officially by the Foreign Assistance Act, which was passed in 1961.

There are four pillar bureaus; we have an Economic Growth, Agriculture and Trade; Global Health Bureau; a Democracy, Conflict and Humanitarian Assistance Bureau; and we have the Management Bureau, which is where the Chief Financial Office is housed. There are also four regional bureaus, which is the Sub-Saharan Africa Bureau, Asia and the Near East, Latin America and Caribbean, and Europe and Eurasia.

We administer our programs through 90 missions located overseas. We have 29 in Africa, 20 in Asia and Near East, 24 in Europe and Eurasia, and 17 in Latin America.

Mr. Morales: Lisa, that's fascinating. That's a very broad set of missions. Can you give us some examples of USAID's work?

Ms. Fiely: Sure, it's sort of broken up into different aspects. We do development work. We also do assistance work, emergency type assistance, which would be a situation like, for example, the Pakistan earthquake, the tsunami, or other direct emergency type relief. Some of our development work includes alternative crop development. There was an interesting project that I visited when I was over in South America where we're actually teaching farmers how to grow different crops, trying to keep them from growing the coca crop, which is the crop used to manufacture cocaine and trying to get them into other crops, rice and corn and things like that to help stop the drug trafficking.

And we also have some democracy programs. One of our biggest programs of course right now is the President's emergency plan for AIDS relief. We have a huge program basically focused towards Africa which also spans the other bureaus as well.

Mr. Morales: Great. I think some of our listeners might be interested in a higher octane version of coffee, so if you can have some folks working on that that would be great.

Ms. Fiely: Well, you know, you can actually go to Starbucks on occasion and get coffee that we have actually had some play in helping.

Mr. Morales: Oh, that's very interesting. Can you tell us a little bit more about your office, specifically the Office of the Chief Financial Officer? How many staff members are in your office, and what kinds of skills do they have?

Ms. Fiely: Sure, actually we have a myriad of skills. We have CPAs in the office, audit types in the office, financial management systems, project management, and budget-type folks in our office. We have 97 people in Washington, who directly report to me. Overseas we have about 200 folks who are in our controller offices, in our missions. We have about 50 controller offices.

They don't directly report to me, they would report to the mission director where they are housed, but they look to our office for policy. We have to approve performance-type things and programs that are administered from the central agency aspect. Like right now, we are implementing a new system. They would look to us for that.

As a result of a recent reorganization, the Office of Finance was combined with the Office of Management Planning and Innovation, so we grew a little bit there, but we're your basic government financial management office.

Ms. Feller: Lisa, I understand that you came to USAID after working with the Internal Revenue Service, including a role in business modernization. Have you translated your IRS experience into your work at USAID?

Ms. Fiely: Actually, the IRS experience translated extremely well, maybe too well, to my work at USAID. I think one of the reasons, probably the main reason, why they were looking for somebody like myself when they went on a search at USAID was because I came from IRS with both disciplines, systems implementation, because I had worked for the chief information officer for a time, as well as finance, because I was the deputy CFO at IRS. That was exactly what USAID was looking for at the time, having had some problems with previous systems implementation and having had several CFOs in as many years. They had pretty much a CFO per year, so they were looking for some stability and for someone with a background in both disciplines, and as luck would have it, I fit that bill.

Ms. Feller: I would imagine that's pretty unique, actually, in the CFO field. And kind of building on that, I understand you worked in a variety of positions across agencies, including Social Security and the Environmental Protection Agency. How would you compare USAID to the other agencies you have supported both culturally and in terms of financial management outcomes?

Ms. Fiely: Culturally, I would say that USAID probably mirrors EPA most. It was sort of a mission-centric organization. People joined AID and I found when I was at EPA they joined EPA because of the admirable nature of the mission. You also had a lot more optimism than pessimism. You have sort of a young, if not in years in thought process, a younger thinking crowd, and they are both smaller agencies with lots of vision.

For IRS I would say it's probably 360 degrees. It's a whole different atmosphere at IRS. Not a bad thing, I think you need both types of agencies. I mean, what IRS was there to do was collect taxes and they do it well. If not for IRS collecting the taxes we wouldn't have the money to fund agencies like USAID and EPA.

And as far as the other agencies in between, I worked at Interior for a time, I worked, as you said, Lori, for the Social Security Administration for a time. Probably they would fall in the middle.

Mr. Morales: In terms of the financial management outcomes, you talked a little bit about the different missions, can you describe a little about the financial processes in these various organizations and how they differ in terms of their vision and in terms of their operations?

Ms. Fiely: Well, you know, as far as the financial processes, they don't differ that much. You have a certain financial management mandates that we operate under, and, you could go from IRS to EPA to Interior, and we all have to adhere to the same governing mandates, if you will.

So I wouldn't say that those were that different. There could possibly be a difference in the way they are administered. Obviously, USAID is administered very differently just because of the mapping, you know, we're all over the world. So you're dealing with different folks, a lot of our people that are working for finance and for the Agency at large are foreign service nationals, so it's a whole different culture out there.

That's one of the nice things about Washington. If you are in a certain field you can go from one agency to the next because you carry that expertise. You're going to encounter the same types of things, the same situations.

Mr. Morales: It's really portable.

Ms. Fiely: Uh-huh.

Mr. Morales: Lisa, given the vast experience you described, the many agencies you worked for and the various roles in systems, in finance, in audit. Our listeners may be curious about how your personnel management style has changed over time. Can you describe that for us, please?

Ms. Fiely: It's kind of an interesting question. I guess I don't look at it so much as changing over time as maybe evolving over time. I don't really look at it as managing per se. I've always sort of looked at my role as head of a group or an organization as a leadership role. When I really think of management I sort of think of managing a checkbook or managing a job.

When I was an auditor you had distinct audit jobs that you managed. Obviously, you managed the people working on the job too, but maybe it's because personally I think of managing and I think of manipulating to some extent, and I don't like to think that I do that. I like to think that I lead my folks, and they want to follow as opposed to forcing a situation. And it's worked very well. I mean, over the years as I've changed jobs and changed agencies. Often I have gone with somebody who has moved to a different agency, and my folks have come with me. So hopefully I'm doing something right if they want to come and not escape me.

Mr. Morales: Well, we'll certainly know after your employees hear this show. How does USAID prepare its PAR report? We will ask USAID CFO Lisa Fiely 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 USAID Chief Financial Officer Lisa Fiely. Also joining us in our conversation is Lori Feller.

Lisa, I'd like to start with USAID's Performance and Accountability Report or the PAR. Could you talk about the process USAID uses to develop this report and what role your office plays in coordinating this report with the Department of State?

Ms. Fiely: Sure. We have a separate report from Department Of State. Our information is not in their PAR report, but we try to very closely mirror it cosmetically. We try to mirror very closely. Also we are looking off of the same strategic plan; there is a joint USAID-State Strategic Plan right now, which we are using in developing the performance matrices that are reported in our PAR.

Primarily, the CFO is giving a lot of input and all of the financial input to the Performance and Accountability Report, which I'm very proud of ours. In fact, it was just this week that we have run out of them. They are hot item and so they took mine, because they had to give it to someone, but it has a lot of information. I mean, anybody who doesn't know anything about the Agency could read it as a textbook and get a real flavor for the types of programs that we have, our financial results, and the performance matrix that are in there.

I'm very proud of it. I think it's an excellent report, and we've gotten very, very high grades on it from the groups that look at it, the CEAR program that ranks Performance and Accountability Reports and the Mercatus folks that look at Performance and Accountability Reports. So we put it together. It's a difficult process, it's very tedious. There's a lot, a lot of data in there, but there is also a lot of very easy to read information just to give you a thought for what our agency does.

And our theme in 2005 was sort of the silent tsunami. I mean, we deal all the time in the forefront of situations like the earthquake in Pakistan, or we were right there leading the efforts when the tsunami hit. But, you know, when I say silent tsunami, I mean, there is constantly poverty and instability and illiteracy, sort of the silent programs that were there for all the time that doesn't get that publicity that you get when you have a disaster type of situation. And that's really the backbone of our agency. It's not just reacting. It's constantly trying to change the environment where people are living in and improve it.

Mr. Morales: Lisa, we understand that USAID has installed a new financial system called Phoenix, and that this installation has occurred in many of your overseas locations last year. Certainly, installing a financial system in one location is challenging enough, but to do that across many locations, especially some in developing countries, must be a real challenge. Can you describe that to us?

Ms. Fiely: Well, you have to always be ready for the unknown. Lori knows that, having worked with us on this particular project, but you just don't know what you are going to encounter when you go overseas. One of the main warnings that we have gotten and one of our things that we are watching out for is the bandwidth and the communications issues that we have been warned about overseas. We have thus far -- you know, we obviously started with the easier ones, so that we could have a learning process, I mean, we started with Washington back in 2000, and then we moved to Latin America, we moved to Europe and Eurasia, Asia and Near East, and our final roll out will be in Africa.

This year we'll be rolling out in March and May, and that's where we fear that we may have some issues with the connectivity. Thus far we have been very fortunate that that has worked out fine, but that's sort of the technological issue that we have encountered. There are also a lot of people issues, cultural issues and customs that we encounter. I mean we go to rollout in a certain country or continent, if you will, and we find out that we're smack in the middle of Ramadan, or some other religious holiday, certain customs that we've had to bump up against where we have folks that we want to travel to be trained. In certain nationalities you cannot have the wives travel without the husbands, so we've had to deal with that.

Just a myriad of things that you could say can go wrong. We have learned every time we have rolled out in a particular location. We have our lessons learned after we complete that rollout, we look at what went right, what went wrong, what can we do to fix what may have gone wrong, and it has worked out extremely well. I mean, I sort of try to tout this as one of the more successful systems implementation in the federal government because we've had a myriad of things that we've had to deal with, and we've dealt with them and moved on.

Mr. Morales: There must be some great stories that come out of this implementation. Is there one in particular that you care to share with us, something sort of completely unexpected, completely unknown?

Ms. Fiely: Well, you know they're not really unknown because once you get there you sort of realize, you know, you should have known about this and where you are at, but I mean we've gone into locations. We had someone in Bolivia when there was a revolt in Bolivia, and this person was one of our contractors, actually, was stuck at the airport, and couldn't get into the office, couldn't get out of Bolivia. You know, we've had situations where we've arrived to do an implementation and found out it was a holiday. That wasn't the worst thing, I mean, I had a nice day of touring but, you know, things like that that after the first couple of rollouts we learned fast, and we don't find that situation occurring. Obviously, the revolt, you can't do anything about that.

Mr. Morales: Right.

Ms. Fiely: That's not something you can anticipate, but most of the cultural things that can be anticipated, now, the folks are very good about doing that.

Ms. Feller: Lisa, I want to build on the lessons learned aspect that you've mentioned a couple of times. What are some of the things that we've learned that you'd like to share with other leaders who maybe designing or implementing a new financial system?

Ms. Fiely: Well, you know, I guess the lessons learned is always be ready to react to things, and I guess I would say also, never give up. I mean, we were given some alternatives that we might want to employ, if you will, rather than go out and try to do an online real time situation in countries where the connectivity was low. But, you know, testing and doing things prior to going out there and going live, you cannot do enough testing and simulations, and I guess that's what I would recommend for somebody to know. And pick a system that you're capable of implementing. I mean I've seen situations where agencies have taken on a system that with the resources they have there was no way they were ever going to be able to implement such a complicated system. At least not without scaling back some of the utilities of that system, and you just don't want to go there.

Senior leadership, senior buy-in and support is key; you've got to have someone out there giving you the rah-rahs and getting the folks from the very top committed to the project, because that's the only way you're going to get people to work on the project. I mean, let's face it, everybody has a real job. I mean, when you implement a system, usually it's an extra, additional thing that people are being asked to do.

Mr. Morales: It's a collateral duty.

Ms. Fiely: Yeah, and if you don't have someone championing that system from the very top, you're just not going to have the buy-in. Now, we were fortunate that, you know, Administrator Natsios was very, very supportive of this project. I mean, he was very supportive of all of the management projects, but even in his farewell speech, I mean, this was what he touted as one of his big successes, to be able to get this agency in a position where we are recognized as in the forefront of financial management.

And that made all of us feel very good, and it was a lot of his commitment that made all of that possible.

Ms. Feller: Lisa, you also touched on being ready for the unknown and changing things. In the middle of the rollout, I understand that the hardware for the software was recently co-located with the financial system for the Department of State. Has this co-location impacted operation? Has it changed your rollout schedule? Has it really impacted what's going on?

Ms. Fiely: Actually, the co-location by and large has not impacted our operation. I mean, obviously we have a change in our systems architecture. We're located now down in Charleston, South Carolina along with the State Department and our COOP site now with the State COOP site. This was something that was brought to the attention of the Agency by OMB to try to get some economies within the federal government, and that's a good thing. We have already seen some savings based on this merging, if you will, of the systems infrastructure.

And, you know, I think the fact that it hasn't impacted operations and folks aren't noticing it is a good thing. I mean, a switch like that should be noticed by people. It happened one weekend and people signed on Monday, and people were none the wiser that it was located in a different place. All of our equipment is down in Charleston. We have a couple of folks in Charleston ourselves, but for the most part it's run on the State platform and it's working out very well.

Mr. Morales: Lisa, I would imagine that a system like this has changed financial reporting at USAID. Could you share some of the highlights of this improved reporting with our listeners, and how these changes have affected decision-making at the program level?

Ms. Fiely: I've got to be honest with you, reporting has been our biggest disappointment from this systems implementation. We're not unique in the federal government. I was implementing a system over at IRS before I left there, and it went live shortly after I left. You know, we're now being mandated to go with commercial off-the-shelf products. They do not want government agencies developing their own systems, and that's a good thing, but it also sort of takes the menu of selection process and makes it much smaller.

So you have a few of the major systems that you select from, there are five or seven, something like that, and I don't believe that the software packages have really stepped up to the plate as far as delivery in the reports line. I mean, most of these off-the-shelf products come with a reporting vehicle that is satisfactory for central agency reporting. It has the bare minimum of what an agency needs to function in the federal government, but it doesn't have those extra reports for it to manage.

We had a couple of different ways we went about this. We had the reports that came out of our system. Then we went to Crystal Reports and then we went to Crystal Ad Hocs so people could have more say in what they were putting on to their reports. That failed miserable; that just did not work for us at all. And then we were down at State in Charleston, you know, at one of our preliminary meetings to moving our platform down there, and they gave us a demo of what they called R-Viewer, and that essentially was sort of a reporting system that they had developed that would actually allow them to take the data, upload it every night to the Web so that their offices, their embassies could then download the information the following day.

And they could slice it and dice it the way they wanted, which is pretty much exactly what our folks wanted, a sort of data warehouse type of situation, a mini data warehouse with their own information. Once they downloaded it, they can slice it and dice it, and we borrowed that. We're now calling our version of it Aid-viewer, and it has some of its own reports that we have blessed and we have developed from a central perspective. But the missions are also, when they have ad hoc increase for information at a mission level, they have their data there, they are able to work their data themselves and put this in one column, that in another column, and other what-if scenarios they can do, and they are very pleased with it.

But that reporting was probably what we get the most complaints about, and it was our biggest headache. So you asked me earlier what I would recommend to someone implementing a system. Don't go into it thinking that the system is going to have everything you need, you know, prepare from the get-go that you're going to have to do something about the reporting aspects of it, because I've talked to my counterparts in other government agencies, and our problem with reporting is not unique.

Mr. Morales: That's good advice. How is the Agency handling accelerated financial reporting this year? We will ask USAID CFO Lisa Fiely 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 USAID CFO Lisa Fiely. Also joining us in our conversation is Lori Feller.

Lisa, let's talk a little about the accelerated financial reporting. What steps have you taken to meet the new deadlines for combined performance and accountability reporting this year? And what advise would you have for your colleagues?

Ms. Fiely: Well, we've actually steadily improved each year, since they instituted the new, much earlier reporting deadlines. I mean, it used to be in the spring following the year, you could get some statements out and that was sufficient. Now, we are looking at a 45-day time period, which is hard to meet. It's very difficult to meet, but in 2001 our IG expressed qualified opinions on three of our five statements. And in 2002, we had a qualified opinion on four of our five statements. So we are steadily improving

In 2003, we managed to get our first clean opinion on all of our statements, and at the same time we hit the 45 days, and that was one year before it was going to become a requirement. We were actually the second agency in the entire federal government. I have a group that works solely on publishing our performance and accountability report and they were just thrilled. And so was I, you know, quite frankly. We've sustained our clean opinions. We've had them for three years in a row now, which is just really something to be proud of.

In the Agency, for many, many years, just getting a statement together was big, but to get it together in that time period and to be able get an unqualified audit opinion, that's a big deal. And so we are really proud. We actually went about this by having an agreement, a memorandum of understanding with our administrator signing it, myself signing it and our inspector general signing it, which detailed each of the audit steps and each of the due dates that things would be done.

I mean, if they were going to give us a legal rep letter, they were going to give it to us on this date. We had such and such an amount of time to review it. So everybody could anticipate what was going to be asked for and when, and you sort of planned your agenda around that because, you know, getting these statements out and getting the opinion on them was first and foremost. I mean, we had a lot of catching up on routine functions when this was over, because it was a real task for everyone.

Mr. Morales: So it sounds like clarity of processing and clarity of role are real key to successes here?

Ms. Fiely: Exactly, exactly, it's like every night I kind of have a list of things to do tomorrow. And I am adding on to them until I fall asleep. You know, and that's what this was like. I mean, anytime the auditors had to change something for any reason or if we were asking for a couple more days for something, that got changed, that got agreed to and then it was sort of etched in stone after that. And it worked out very well for us.

Mr. Morales: Great. How is USAID implementing the Sarbanes Oxley regulations or the OMB Circular A-123, and what steps have you taken to date?

Ms. Fiely: Well, we're implementing it with difficulty, like every other federal agency. I mean, this was sort of thrown at us. Some of the agencies have money to contract out and get contractor assistance. We have very little, so we're doing a lot of the mechanics of implementing the changes ourselves, with in-house staff, which is tough. The original Circular A-123 was a bear to implement, to do your risk assessments and your reviews and to document, I mean, it was a horrendous paper work exercise.

Actually, if you had done that when the Act was originally passed, and you had continued that process, you wouldn't be in bad shape. But most agencies didn't continue it with the vigor that was intended. And that's why this is sort of a new thing, the Appendix A requirements under A-123. But we actually have our plan in place. We have our senior team in place, the senior assessment team, which is required.

And OMB has already started ranking agencies according to their color code ranking, and we got a yellow on this. And we got the yellow because everything over, I think, about 10 things that they look at. Everything was green, with the exception of our dedication of adequate resources. And we just don't have the adequate resources which brought us down to yellow, because we are rated red there. But we are working with other Government agencies, trying to share as much information as we can, and you know, looking into just how much of it we can get done in-house.

Actually, part of our assessment team that we have, looking at this, we have an overseas group that are implementing it. And we have a real strong cadre of folks overseas. Our Foreign Service nationals are just great, and it's actually one of our Foreign Service nationals from Egypt who is leading the effort. I mean, when I go out I am always, and maybe I shouldn't be anymore, but I am always so surprised at the dedication and the expertise these people have, it's just amazing.

They are leading an effort to document our procedures, to conduct some of the reviews. We are also trying to take advantage of as many internal reviews that are done for other reasons. And trying to get credit for those reviews, which is something that you can do. And we're working closely with our auditors. So we're just doing well as far as implementing this, I mean, obviously this is a good thing. It's a lot of work. But I think everybody will agree when all is said and done, and we have this implemented and the structure in place, it shouldn't be a lot of work, but it's just getting the infrastructure in place.

Ms. Feller: Lisa, improper payments is another hot topic in financial management. What steps have you taken to ensure that USAID has significantly reduced your improper payments in accordance with the federal guidelines? What advice do you have for your federal colleagues?

Ms. Fiely: Well, luckily Lori, improper payments really aren't a hot topic for us, because we don't have a big problem with improper payments. We actually fell under the threshold and don't have to do a lot of the reporting that some of the larger agencies or some of the domestic assistance agencies that have had some problems do. We had $13 billion in grants and contracts and of that, we only had about $6 billion, where we had questioned costs, and then we recovered $4.5 billion of that.

So we're actually sitting very, very well. And have not had to dedicate a lot to get our improper payments back, if you will. So, as I could have it, that's not really high on our radar screen because we've got a good payments unit and a good process in place for reviewing contracts and grants and then recouping question costs.

Mr. Morales: Lisa, let's talk for a moment about the President's Management Agenda. In the last OMB scorecard, USAID received a green rating in Financial Performance Progress. To what activities do you attribute the success and what steps are planned to bring USAID to green in financial management overall?

Ms. Fiely: Actually, we plan on going directly from where we are to green, with no stops on yellow. And we are hoping that once we complete our systems implementation, our Phoenix Systems implementation, we'll be there. One of the issues, and our major issue for not being there now, is the fact that the current system that we operate under, which we're really only operating in one of our bureaus now, was not compliant with laws and regs, specifically FFMIA. We weren't recording transactions according to the standard general ledger.

So this being an approved package that we're implementing, we will have that done once we complete our roll out to Africa, in our Phase 1 and in our Phase 2. That brings you really to yellow, if you really read the requirements. What you really need to show to get to green is that not only are you reporting good, accurate financial information but there's somebody using it. And that's where in, we have our angst about our reporting situation, and that's why we have dedicated so many resources to getting these reports right, and getting these reports to contain the data that people want and need to manage the organization.

We believe that we're getting there now, and once we roll out in Africa, if we continue on the same successful path that we're having now with the reports, we are hoping to jump from red to green.

Mr. Morales: Lisa, you mentioned a few times, the immigration points with the Department of State, you talked a little bit about the center down in Charleston. Can you talk about the steps being taken by your office to coordinate with the Department of State?

Ms. Fiely: Actually, we have what we call the JFMS, it's the Joint Financial Management Systems committee. We have that at a working level and we also have an executive body that oversees it, of which I am a member of the executive body, and folks on my staff are at the working level. But that group actually worked very tediously in getting us moved down to Charleston. But it continues as a governing body, to make sure that we are in sync as far as upgrades, because from this point on, we will have to deal with coordinating with the State, if we want to do an upgrade. We just recently did an upgrade of our software.

Working by committee like that, both at the Washington level and in Charleston, having our folks down housed permanently in Charleston in their offices there. It's working out very well, but I think this will be a body that continues for the unforeseeable future. I mean, we have our Joint Management Committee which has stayed in USAID. And the JFMS actually reports up to one of the Joint Management Committee working groups which I co-chair, the financial processes, the Management Processes Work Group that overlooks that.

There are a lot of people watching. I mean, we want to take advantage as much as we can, of the economies of having both platforms together, you know, both systems together on one platform. But at the same time, there is a lot to be looked at. I mean, you have two different financial systems, two different sets of financial statements that have to be prepared, so you have to continue to have a body looking at that from all angles.

Mr. Morales: What does the future hold for USAID, we will ask Chief Financial Officer, Lisa Fiely, to discuss this 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 am your host, Albert Morales, and this morning's conversation is with Lisa Fiely, Chief Financial Officer at USAID. Also joining us in our conversation is Lori Feller.

Lisa, we understand that USAID is facing critical shortfalls in operating cost. Why is this and how is this affecting USAID's planning for the coming five years?

Ms. Fiely: Well, it's not actually just the USAID. I believe all agencies are facing some critical junctures, as far as having their budgets reduced. We at USAID have a separate budget for our operating expenses. So it's particularly problematic because although we have our programs increasing in size and often times that's not an anticipated thing. I mean, we have a situation in Iraq, we have situations in Afghanistan, the Pakistan earthquake, things that you can't anticipate but obviously your program funds start going through the roof, and you don't have the commensurate operating monies to support this program.

So, it's very, very problematic. I mean, we are doing a lot of things to try to cope with it. We are continually in the process of trying to improve our program operations to reduce cost, to look for new ways to leverage technology. And over a five-year period we hope to at some point to start graduating countries so that, once countries are in a situation where they are graduated, then you don't have to continue the programs without the commensurate operating monies to support it. But, a lot of what we're looking towards now, is sort of a transformational development process, where we're trying to get countries to move on to help themselves.

Mr. Morales: Aside from the funding, what are some of the other global changes that will impact the strategy of USAID in the coming years?

Ms. Fiely: Well, sort of an unanticipated impacts, our humanitarian and health care needs, the avian flu for instance. I mean, we are gearing up for that and there are a lot of unknowns around that. The HIV/AIDS is a big program. Some of the, as I said, unknowns, I mean, you don't know what kind of natural disaster can occur, but you always have to be ready to jump in there. The transformational development that we are moving more towards and the Millennium Challenge, is actually focused towards that as well are taking countries that have proven themselves against various criteria. And we are trying to put our funding towards those countries, to actually see the effects of change and to be able to have countries take it on themselves, help themselves, if you will.

Worldwide security is another thing that's impacting our delivery systems. The terrorism and wars, I mean, there are lot of stuff that cannot be anticipated but in the coming years will obviously affect our strategy. And our strategy has to be flexible. We have to be able to accommodate unknowns and unanticipated events.

Ms. Feller: Lisa, we talked with many of our guests about the impact of the pending wave of government retirement. Is this an issue for USAID and how is USAID planning to address this concern?

Ms. Fiely: Well, Lori, this is a huge issue for the federal government. You are hitting it in every agency and we have actually dealt with it, by employing a lot of personal service contractors, which we send out to our missions. We employ our Foreign Service officers who have retired. I don't necessarily think this is the answer, because eventually people will retire forever and you can't always count on that. I think where the federal government has maybe made a mistake is, there is a void in there.

I mean, there was a time when you had a lot of young people coming into the federal government, where you had a very secure retirement system. That changed from the civil service to a different type of system that relied on social security. And I think there was a void that was actually occurred during that time, and there was a point in time where you didn't get the younger folks coming into the federal government. And that is actually coming to pass right now.

I mean you're having a lot of folks that are going to be retiring in the next three to five years and you don't have a commensurate numbers of folks that came in, that can take these places. I mean, obviously we are outsourcing a lot of the functions, functions that can be outsourced. But there are a lot of key functions that the federal government can't outsource and shouldn't outsource. And in that situation, you have to have people on-board to run the programs.

We bring in new employees every year, we have classes. But with the budget as it is, we may have to actually cut one of our classes this year. So as much as we are trying to deal with this, I think it's a broader issue that needs to be dealt with on the federal government level, not as an agency-by-agency issue.

Mr. Morales: Lisa, it dawned on me that we spent a fair amount of time talking about the systems within USAID and the Phoenix project. How do you collaborate with the CIO shop within USAID? How will this collaboration work in the future?

Ms. Fiely: Actually, we have a very good working relationship between the CFO's office and the CIO office. And it's actually a very close relationship and that could be as a result of the fact that we're implementing a financial system now. And it's a different paradigm than you may see at some other agencies. Often times you may have a CIO shop implementing any type of IT system. There are sort of two schools of thought on that. Some would say that the customer, the CFO, if it's a financial system, should be the lead. Some would say that the CIO with the technical expertise should be the lead and the CFO should be a customer.

The paradigm that we selected at USAID of having the Chief Financial Officer run the project with the support of the CIO has worked immensely. Well, you know, we have very good co-operation, we have folks from the IT Organization working on the project. We have contractors; we have our own CFO folks, so I see partnering. I mean, there are other systems that are being implemented at USAID right now. We have new procurement systems, we have data warehouse that we are -- we are actually implementing. But what we are trying to do in our case is, take the support of the CIO's office and work as a team. And the paradigm has worked very well for us. It's not to say that every project should be implemented in a fashion of having the customer do it, but it's worked very well for us.

Mr. Morales: Excellent. Lisa, you've had a long successful career spanning several organizations and roles. What advise could you give a person that's interested in a career in public service?

Ms. Fiely: Well, you know, I would say, "Come on." I mean, it has been a wonderful career for me. I mean, I sort of fell into it. My intention was never to necessarily work for the federal government, but as one thing happened, I ended up here. I ended up staying here, and I don't regret it for a minute. It's a very rewarding career, and I think you'll find that you're able to control things and be responsible for areas that possibly, in private industry at certain levels, you would never believe that you could do. It's challenging, it's tough now. I mean, we're facing lots of shortfalls and budget crunch and folks not coming to backfill, but the challenge makes it all the more fun.

Mr. Morales: That's great. We reached the end of our time, that will have to be your last question. First, I want you to thank you for fitting us into your busy schedule today. Second one, I would like to thank you for your dedicated service to the public at USAID, IRS, EPA and all the other organizations that you worked at.

Ms. Fiely: Well, you know, thank you for having me. I've really enjoyed this, and you know, thank you. I mean, it's the support of many, many different contractors that help us deliver what we're delivering to the American people and we appreciate that and we rely on that. So we don't just do it alone. And anyone who is even remotely interested in coming on for a career in the federal government, I would recommend USAID. It's been a great place to work; we have a website, www.usaid.gov. You can learn a lot about what we do and where we're located. Take a look.

Mr. Morales: Great. Thank you.

This has been The Business of Government Hour featuring a conversation with Lisa Fiely, Chief Financial Officer of the U.S. Agency for International Development. Be sure to visit us on the web at www.businessofgovernment.org. There you can learn more about our programs and get a transcript of today's fascinating conversation. Once again that's www.businessofgovernment.org.

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 am Albert Morales. Thank you for listening.

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