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Originally Broadcast August 8, 2009
Mr. Morales: Welcome to another edition of The Business of Government Hour. I'm Albert Morales, your host and managing partner of the IBM Center for the Business of Government. One of today's greatest challenges is protecting the country from terrorists and the instruments of terror, while at the same time, fostering the country's economic security through lawful travel and trade. U.S. Customs and Border Protection operates at the nexus of national security and American economic security. In meeting this challenge, CBP has unique challenges and requires a focused procurement and acquisition strategy. With us this morning to discuss his efforts in making this happen is our special guest, John Ely, Executive Director of Procurement at the U.S. Customs and Border Protection. John, welcome to our show. It's a pleasure having you.
Mr. Ely: Thank you. It's great to be here.
Mr. Morales: Also joining our conversation is Solly Thomas, associate partner in IBM's public sector consulting practice. Solly, good to have you as always.
Mr. Thomas: Good morning Al and good to see you again John.
Mr. Morales: John, let's start by providing our listeners some context around your organization. Can you tell us a little about the mission and this history of the U.S. Customs and Border Protection, otherwise known as CBP?
Mr. Ely: Yeah, I'd be glad to. I think that the best way that I can articulate that is just to read the CBP mission statement because it's very well-crafted and I believe it says everything that CBP needs to say in a statement. The mission statements goes like this: "We are the guardians of our nation's borders. We are America's frontline. We safeguard the homeland at and beyond our borders. We protect the American public against terrorists and the instruments of terror. We steadfastly enforce the laws of the United States while fostering our nation's economic security through lawful international trade and travel. We serve the American public with vigilance, integrity and professionalism."
A little bit of history about Customs and Border Protection, I'm going to keep it really brief. The customs component of CBP was created in 1789. It is extremely old organization. The U.S. Border Patrol was created originally under the Department of Labor back in 1924 and then INS, Immigration and Naturalization Service was created in 1933. And customs, border patrol and some component of INS was pulled together in 2003 when CBP was created as a component of the Department of Homeland Security.
Mr. Morales: So John, obviously a very powerful mission and a very broad mission. Can you put a finer point on the scale of operations over at CBP? Perhaps you could tell us a little about, you mentioned border protection, how many miles of borders are covered? How many ports of entry might exist? And how many people and items pass in and out of these borders?
Mr. Ely: I've got some statistics and some information that I find fascinating. I look at this information quite regularly because it amazes me when I see the mission the CBP undertakes everyday. And I've got some statistics. We protect 1,900 miles of border with Mexico. We protect 5,000 miles of border with Canada. We have 327 official entry ports and we have 144 CBP border patrol stations. In terms of what we process daily, and this is a daily set of numbers, 1.09 million passengers daily. We process 70,451 truck, rail and sea containers. We execute 2,895 apprehensions between the ports for illegal entry and 73 arrests of criminals at ports of entry.
Our seizures, 7,621 pounds of narcotics and seizures of 4,125 agricultural items and 435 pests at ports of entry. And again, those are daily figures.
Mr. Morales: That's certainly a heck of a day. (Laughter--)
Mr. Ely: Sure is.
Mr. Thomas: John, would this description of the agency and its incredible responsibilities, perhaps you could tell our listeners a little bit more about the specific mission and scope of your office. I'm curious to hear what the size of your budget is and how many employees work in your organization to support the agency.
Mr. Ely: First of all, I'm absolutely thrilled to be part of this organization and the important mission that they have been entrusted with and I feel that our acquisition procurement organization is truly a big part of bringing success to that mission. We are in the acquisition business and that is our job. We acquire the products and services to continuously improve the operations of U.S. Customs and Border Protection.
I have about 177 employees. They're located all over the country. I have people strewn along the southern border co-located with border patrol stations. I have people on the northern border. I have a fairly large office in Indianapolis, Indiana and a large office in the Washington D.C. area. Our annual spend is approximately $3.3 billion dollars and that's the money that comes through my procurement organization. That's pretty much a summary of the operation.
Mr. Thomas: And John, continuing to drill down on the responsibilities, talk to us a little bit about your role as CBP's Executive Director of Procurement. What are your official responsibilities and how do you support the mission of CBP?
Mr. Ely: While it doesn't sound official, my belief that my primary role is a facilitator to the employees, customers and the commercial business partners that are all involved in the procurement area and supporting the mission of customs and border protection. I'm responsible for managing the spend that supports our organization as efficiently, as effectively as possible and representing our American taxpayer by being prudent in the way that I spend their dollars; yet being effective in supporting the mission of the organization.
With that said, I'd like to emphasize that this is the operating principles for all of the heads of contracting activities in the Department of Homeland Security components. We all have the focus and we all have that function. I, as a senior procurement professional, I'm very familiar with CBP's mission and I understand the challenges that my customers face and it makes my organization better in terms of standing up the support that they need to be successful in their operations.
As a strategic leader, my goal is to full integrate the procurement process with a customer environment that delivers the required results while complying with law regulation and ensuring prudent expenditure of taxpayer's money. The point there is my goal is to continuously make our process, which at times can be viewed as a bureaucratic process, transparent to my customers so that they don't see the things that aren't really pertinent to them getting the goods and services that they need.
Mr. Morales: Now John I understand that you have some 30 years with the U.S. Federal government. Tell me a little bit about your career path. And how'd you get started?
Mr. Ely: Started very early in my life. I've got 34 years as a federal employee. Pretty much all of my 34 years has been in the procurement or acquisitions environments. I actually started as a summer hire when I was in college. I worked for the Department of the Army. And when I got out of school, I became an Army intern in a contracting shop and I stayed in that contracting shop at the Pentagon for 15 years.
Mr. Morales: That's a long summer.
Mr. Ely: It was a long summer.
Mr. Ely: It was an incredible place to learn procurement. It was an incredible mission supporting the Department of Defense. After that, I moved on to the Internal Revenue Service which was a very different environment where I started off as a branch chief; basically, my first significant supervisory experience. I was promoted later to Division Director and then Deputy Head of Contracting Activity. And I was there for 12 years mostly engaged in the information technology acquisition business, which while it might sound kind of mundane, is a very exciting field because it's very competitive and the technologies that we used and that were acquiring are very important, especially in the tax collection business.
Now I'm at CBP as the Head of Contracting Activity and I've been there for 5 years and I'm absolutely thrilled in this position and very much challenged and excited every day that I come to work.
Mr. Morales: So, John as you reflect back on your 15 years with the Army and the 12 years over at IRS, how have these experiences prepared for you for your current leadership role and perhaps have shaped your management approach and your leadership style over the years?
Mr. Ely: I want to start off with the very beginning. I'm an Army brat. My dad was an Army officer. My grandfather was an army officer. My father was very much loved by his troops and I watched him and I tried to emulate a lot about him that I saw as driving his success. And his success was in genuinely caring about his people and they in turn, delivered for him. He saw himself as facilitator to the success of others and I try to emulate that style.
When I first started working in procurement, I learned the business first. And I always work with the goal of balancing the customers' needs along with properly managing taxpayer dollars. During my career, I worked with a wide range of managers and executives and I tried to develop my style as a combination of what I saw as the best of both. During the latter part of my federal career, I spent lots of time with people who were experts in continuous improvement. And above and beyond the procurement field, I started getting into the concept of continuous process improvement.
I'm not the most organized person in the world but I do recognize the value that predictable processes, improvement processes, being imbedded in organizations and I try to capture that through a process improvement program. So, I worked with process improvement experts that have helped me get in place documented repeatable processes that make my organization extremely efficient and effective.
Mr. Morales: What is CBP's acquisition and improvement initiative? We will ask John Ely, Executive Director of Procurement at the U.S. Customs and Border Protection, to share with us when the conversation about management continues on The Business of Government Hour.
Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and today's conversation is with John Ely, Executive Director of Procurement at U.S. Customs and Border Protection. Also, joining us from IBM is Solly Thomas. John, much like finance or information technology or human resources, you lead one of CBP's core business functions. Could you take a moment to describe in a bit more detail the procurement function? And tell us a bit about some of the key elements of acquisition management.
Mr. Ely: I'll give you the basic process. It involves early definition of requirements by the customer. That's a little more complicated than it sounds because articulating what your needs are for a government customer sometimes can be difficult. But, we seek to get a good solid definition of the outcomes or the products that our customers are looking for. And then we secure the funding associated with those requirements. There's a collaboration between the procurement organization, the contracting officer and the customer over a strategy for acquisition. There are multiple ways to acquire things and the best fit for the customer and the particular product is something that we arrive at in collaborative way.
At some point, we release a solicitation or a request for proposals for pricing and descriptions on supplies and services that we're looking for. We take those products and we give them to our customers to do an evaluation. And evaluations are either for compliance and award to the lowest cost or we also have what's known as best value awards, where there is technical merit associated with an offer's proposal and those technical merits are evaluated. And then a balance is drawn between the offered price and the technical merit and what we call a best value acquisition can be awarded.
That is very much different than a low cost award because you can actually pay more for something if the government team's perception of the value warrants that extra payment. Then comes the notice to the contractors and the debriefing of unsuccessful offers. What I think is really important is that debriefings to unsuccessful offers are not just I'm sorry, you didn't get the job. We are required to give meaningful, helpful information to companies as to why they did not receive the award of the contract without giving away proprietary or trade secrets for the winning offer.
Finally, we initiate contract performance and contract management activities that in and of itself, is a very important complex process. And then at the end of contract performance, or delivery period, there's a contract closeout where we double check and make sure everything was provided to the satisfaction of the government customer, the contractor's been paid and then at some point we close the contract out completely.
In terms of success in procurement function, I'll give you some ideas about what I view as steps in ensuring procurement success. That mutual understanding between the customer and procurement personnel regarding the procurement process, the roles and responsibilities of the different parties and building a solid, trusting, working relationship between the government procurement personnel and the mission individuals that are representing the customer needs is absolutely critical.
Good contracting organizations have people that are not just buyers, but they're good business specialists. They understand their customers. They seek to engage both the customer and ideas from contractors throughout the lifecycle of whatever product or service is being ordered. Good procurement organizations are involved in all aspects of the lifecycle. We know about our customer. My border patrol buyers are very familiar with the border patrol function. My legacy customs support buyers, they know customs; they know what custom officers do. And all of our buyers are very close to the functional needs of our components and it makes them very good at what they do because they're continuously involved in the mission and the needs of the organization.
In most organizations, weaknesses are found in contract management. And to be honest with you, I think that's a problem with government contracting in general. There aren't the people out there and the emphasis. Even though we've been trying to place the emphasis, it's still not there in terms of what happens once the contract is signed. The government in general needs to be more attentive to what happens after the contract's signed because you've only just begun. But shortage of federal contracting personnel still keeps us in the hole that we're in and not as able to manage contracts after they're awarded.
Mr. Morales: Now John, on that note, in our earlier segment, you made a reference to continuous improvement and you used the word repeatable. So, tell us a little about CBP's acquisition improvement initiative. Where does it focus and how is this program defined, developed and deployed these customer-focused solutions that you reference?
Mr. Ely: When I first started working at IRS, I ended up working with some information technology specialists who were focused on software development and one of the people that I worked very closely with was a certified process improvement expert. And I soon came to find out that these people are out there and they're very good at articulating and stringing together processes so people understand how you get from point a to point z when you're trying to develop and build an end product. In this case, it was software, which is pretty complex. But, the concept behind these process improvement experts is they articulate the process, they make it as efficient and effective as possible and they stick to standards where they repeat the process and you should be able to get the same exact outcomes in terms of your desired results.
In meeting and getting engaged with people like that, I started realizing we could apply this to the procurement process. And I eventually hired a process improvement expert and brought them on as senior staff in looking at the procurement process. One of the problems that we had is our customers felt that every process or every procurement was run differently. And what I basically did is I implemented a very structured environment where we very clearly outlined the process, outlined the outcomes and the roles and responsibilities of all the people that were involved in the procurement process.
It's actually done a lot for me in terms of being able to be predictable in terms of results to my customers. In terms of the acquisition improvement initiative, that is what we've stood up at customs and border protection procurement. And again, I have a full-time process improvement expert responsible for that. In CBP's AI2 program, we focus on four broad areas: assets, business, customer and data. We call it the ABCD model. The asset piece is our people, it's our systems. The business piece is our customers; what they do, what they acquire to achieve. The customer is our customer themselves, you know, who is that customer? What is it that they're looking for? What do they stand for? And then data, which to us, is probably one of the most important things. We strive to collect and understand data relative to what our customers need, what we've bought in the past. And that data helps us optimize how well we do in the future in terms of performing the acquisition function.
The bottom line is all of our efforts in AI2 are geared to supporting customer's needs and mission success in creating a work environment where people can grow and thrive. AI2 generates improvement opportunities from both top down and bottom up. And what is real exciting to me is that with a lot of the new entry-level people we have working in the procurement organization, we have some people that have just walked in the door and they have been with us more than a year, that are coming up with some fabulous ideas because of their fresh perspective. They're not mired in the federal process. And we're starting to listen to those ideas and actually build some improvements in the program based upon somebody who's just walked through the door saying, hey, why not? And that's been very, very good for us.
We have participation goals in acquisition improvement. I have expectations of all my directors on their folks and what percentage of those people will continuously be involved. That hasn't been a problem because what has happened is when people in my organization see that they really can change the direction that we're taking and deliver better results for our customers as a result of their efforts, they participate. And they don't have to be asked to participate because they see that they're making a difference.
I'll give you an example of some of the teams we have because AI2 is broken down into some teams, different teams, and that's how we control memberships and outcomes. We have the quality of life team. The quality of life team really does focus on how are things going for the people in the organization. What's the work life like? What do people like, don't like? How can we make the quality of life from 9-5 better for our people and therefore, make them more productive and effective as federal employees.
We have a contract administration team. Again, federal procurement organizations tend to sometimes award the contract, walk away from them because they've got the next thing they've got to focus on. When we, in fact, with our contract administration team are looking for ways to stay there with our customer, administer the contracts and assure them that they receive the desired products or services.
And then, my data and spend analysis team is probably one of the ones I'm really the most proud of. Although, I really shouldn't say anything about being the most proud. But, our ability to slice and dice the data has been one of the most rewarding things for me. You can ask me how many light bulbs we bought last year and I can tell you. You ask me how many mainframe computers we bought, I will tell you. If you ask me how many detainee meals we bought and where they went, I can tell you. What that has done for us is it gives us the opportunity to sift through our spend data and look for low hanging fruit or even high hanging fruit for our strategic sourcing initiatives. When we decided that we needed to start hitting strategic sourcing, we looked at the spend and it gave us a profile of where our CBP money is going all the way down to the day to day subsistent level.
And then, the strategic sourcing teams. And I also have a mentoring team which is a very structured program around bringing our entry-level people up faster up into operational mode.
Mr. Thomas: Now John, it's been my experience that agencies need to have an effective strategy for organizing and retaining its intellectual resources and its institutional memory. So, to that end, can you elaborate on your efforts to implement an effective knowledge management system. And I'm particularly interested in hearing more about your Acquisition Resource Management System and how it factors into this efforts and provides the one-stop shopping capabilities.
Mr. Ely: We have implemented ARMS. And ARMS is something I'm extremely proud of because we do have, in the organization, a fairly mature knowledge management system. With our aging workforce and the expansion of our headcount, it's imperative that we have that knowledge and that we share the information and this ARMS is a repository for information and also for exchanging ideas, communications across a large, geographically diverse work environment.
And really, one of the most important things that has come of our knowledge management system is connecting our broad customer base and a youthful workforce. We have people now that are attracted to technology and the ARMS system is something people tend to move towards and use because it's got data in it, it's got communications in it; and those are the things people need to communicate effectively.
ARMS is a way to both get knowledge into the repository and a better way to use and improve the knowledge and our collaboration for the betterment of the mission. Our documents, our announcements, our regulations, our memorandum are all posted through ARMS. And probably one of the most interesting things is the discussion threads. We have chat rooms and discussion threads where people can talk about the collaboration of improving a contract document or how to manage a contract better. We have a birds of a feather area in ARMS where people can gather and talk about areas that are of common interest. And we also have a message center and I have a blog now that helps me connect to a very geographically diverse organization. I log in and I can just say hello and talk to my people without ever having to worry about dialing or being in any physical place. And that's been a wonderful, wonderful benefit for me.
Mr. Thomas: Now John, you eluded to strategic sourcing a little bit earlier and of course, that's typically defined as a means to achieve benefits through an organized, systematic and collaborative approach, to acquire goods and services. Could you elaborate more on your strategic sourcing program? What types of opportunities have been identified and to what extent has it enhanced your coordination in strategic thinking across the department?
Mr. Ely: What I'd like to do before I get into the rest of that question, I'd like to talk a little bit about how I got into strategic sourcing in the first place because I think it's a fairly interesting story. When I was at IRS, I signed up for a course, and it had some mundane title and I don't even remember what that course was -
Mr. Ely: -- but a gentleman that I worked with and I went to this course. I believe it was in Dallas, and we ended up in this room full of people and not one of them was a government employee. And it turned out what this group was, and it had something to do with sourcing, sourcing was in the title. Basically, what it was, was a group of people who were part of the sourcing organizations for very large companies. If I'm not mistaken, TI was there, Ford Industries was there, IBM was there. Several other major companies were there. And all of these people had one thing in common and it struck us very quickly that this was going to be an interesting environment.
Every one of those companies were at one point on the brink of going out of business. And what those people in that room had done is through the sourcing of supplies and services into their production process or their delivery process in a service environment they turned to strategic sourcing and said, if we do business the old way we will be out of business. What is the new way of doing business? And I spent about three or four days with those people and I learned a whole lot about how you can adopt that mindset, the stay in business mindset. Even if we're government, let's pretend we could be sent home and fired tomorrow. Let's get lean and mean and look at ways we can be effective, efficient and save money all at the same time.
We came back to IRS and that's when we started realizing our capability in spend analysis; knowing where the IRS dollar was going. And knowing where that dollar was going, we started targeting commodity and service groupings and looking at how can we do business better. We brought in some people that consulted with us to talk to us about smarter ways of doing business and we took on strategic sourcing initiatives for cell phones, guard services, copiers, faxes and printers. And to give you a little bit of insight into the true strategic sourcing concept; copiers, faxes and printers, the idea to strategic sourcing those is not to get economy of scale on contracts. That's one objective. But the perception that we had was that there might be a better way to deal with copiers, faxes and printers.
Now, in a federal environment, a lot of times you'll see a copier, a fax and a printer. And in some cases, you'll see all three of those around an individual's desk and you'll see those all over the place around different individual desks. We started talking about multi-function machines, acquiring multi-function machines. A single machine that copies, faxes, prints. And having those machines in a central environment rather than dedicated to a given workstation. So, you think about how often your printer's humming or fax is humming on your desk dedicated to your work, you can start seeing how a multi-function machine might actually be economical and provide the services that everybody else needs at a significantly lower cost. That's where strategic sourcing comes in.
We changed the way we were doing business. We saved money, yet we delivered the same results. So, when I got to CBP after IRS, I instantly knew that I had to make a difference by standing up a very similar program at CBP and that is our acquisition improvement initiative. And that is the same process. It has a very similar approach where we want to stay in business. We want to take the stay in business mindset as a government entity.
I've already stood up a team that now has the spend analysis capability. I can look at any, every piece of everything CBP has bought and we're now focusing on how products and services are acquired. We've had a few near term hits on strategic sourcing. One of them is body armor. In the old days, we bought body armor, the body armor would be shipped, the employee would put the body armor on, measure his specific fit and then send it out to be tailored to fit him or her. We now have awarded a contract for body armor that has a film clip in the website where you're shown how to measure yourself for body armor ahead of time before you order it. So, you ship the order, you ship the measurements, the body armor's delivered and it goes right out of the box and onto your back saving your life sooner. That is a real good example of how strategic sourcing works.
Again, economy's a scale but also a significant improvements in how we utilize the commodities of services. We are looking at canines. We've had some success with puppies. We do a lot of buying of puppies. They're really cute and even when you buy them in quantity, they're really cute. But, we're looking at strategic sourcing of canines, industrial laundry and we're also looking now at our spend on detainee meals. An early glance tells us that there are different kinds of detainee meals that are being served up all over the southwest and actually in all the detention areas. And while they're all fairly low cost, we think that if we standardize that and bought large quantities of detainee meals that were not perishable or could be used over long periods of time, we could save significant amounts of money. So, there's just a few examples of that strategic sourcing environment.
Mr. Ely: Sure. We have an overwhelming workload as most procurement organizations do. We also have a young emerging professional workforce. Those two have come together for us when we started looking at technology. And there are reverse auctioning tools. We use a tool called FedBid, and basically, what tools do is it allows your contracting officials to post their requirements on an electronic forum and bidders will bid on the requirements electronically and then the buying activity can come back to the end of the day and look at the bidding history and make an award.
Basically, it is a seamless, automated process for running our competitions. Its usually done for commercially available items, but we've had a lot of success in the post and go. And again, we post it, we come back, we see what the natural bidding process that occurs through the system and we make awards to the low, responsible offers. Reverse auctioning has done so much in terms of our ability to load those smaller requirements, while we work on the more sophisticated requirements that require attention; where our employees need to develop their skills. At the same time, we're saving lots of money. And I have some statistics about what that automated reverse auctioning process has done for us.
Basically, it is a seamless, automated process for running our competitions. Its usually done for commercially available items, but we've had a lot of success in the post and go. And again, we post it, we come back, we see what the natural bidding process that occurs through the system and we make awards to the low, responsible offers. Reverse auctioning has done so much in terms of our ability to load those smaller requirements, while we work on the more sophisticated requirements that require attention; where our employees need to develop their skills. At the same time, we're saving lots of money. And I have some statistics about what that automated reverse auctioning process has done for us.
Mr. Morales: What about CBP's acquisition workforce management strategy? We will ask John Ely, Executive Director of Procurement at the U.S. Customs and Border Protection, to share with us as the conversation continues on The Business of Government Hour.
Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and with us today is John Ely, Executive Director of Procurement at the U.S. Customs and Border Protection. Also, joining us from IBM is Solly Thomas. John, the American Recovery and Reinvestment Act of 2009, otherwise known as the Recovery Act, provides some $680 million dollars to CBP for investment in aging infrastructure. First, could you tell us more about your procurement strategy and how the money will be spent. But, more importantly, what role does your office play in this area and how are you managing the procurements associated specifically with the Recovery Act funding?
Mr. Ely: Much of the ARRA funding is targeted for port modernization in both the northern and southern borders. We are very much engaged in writing contracts and facilitating that modernization effort. Our goal is to make awards in a timely manner while competing contracts as much as possible. We've stood up an FM&E facilities management and engineering contracting organization to meet this challenge we're working hand in glove with the CBP FM&E organization to implement. We're competing requirements for technology and construction directly with commercial sources, but we're also utilizing the services of the Corps of Engineers and GSA for construction contracting requirements.
Mr. Morales: It strikes me that balancing the appropriate number of CBP contracting officials with the growth of your portfolio is perhaps a challenging task. What changes have you made to your recruitment process and does CBP use flexible compensation strategies to attract and retain employees who possess what you would deem as critical skills?
Mr. Ely: Excellent question. Initially, when I first came to CBP, we focused on recruiting higher-grade personnel; but, it's really hard to find them. It's really very difficult to find them across government. So, we've moved to entry-level hires and we're supporting the rapid growth through mentoring, training and phased-in levels of contracting sophistication. So, we're trying to bring them up fairly quickly, but we are making sure they're ready for each phase. We think we've got a good plan for getting the entry-level hires up to speed faster than people were ever before by using technology, mentors, etc.
The DHS Chief Procurement Officer supports us through their Acquisition Career Program. They have a very sophisticated program and we are on the recipient list for the ACP interns. And that's born out well for us as well. We're still hiring higher-grade personnel for complex and critical procurements. And if any of you out there are the higher-graded, highly capable contracting types, just let us know.
Actually, on USAjobs, we have a great video clip from one of our CBP contracting officers and some information on job announcements. So, if you go to USAjobs, you'll probably find that icon to click on and see one of my folks with a lot of the products and services in the backdrop giving you some information about working for me. CBP offers flexible work schedules, tuition reimbursement for permanent status employees and in some cases, recruitment bonuses and/or payment of relocation services.
Mr. Thomas: John, staying on that topic, in recent years the size of the acquisition workforce has remained relatively the same while procurement spending has pretty much skyrocketed. For over a year, agencies have had the ability to re-hire the retired acquisition personnel, but only a few agencies have sought to formally use this authority. Could you talk a little bit about the benefits, as well as the possible limitations, of this particular strategy? And more importantly, what are your plans to use this authority as a tool to fulfill staffing needs?
Mr. Ely: Sure. Good contracting people are, as I've said before, are always in high demand both in government and industry. DHS has been successful in implementing authority to hire retired procurement personnel, known as retired annuitants. And we are pursuing the hiring of retired annuitants who offer a wealth of knowledge, skills and abilities and we're seeking to take as much advantage of that as we can. That is still a fairly small number, relatively speaking, of potential resources.
And the flipside of the benefits of that is also that these people will re-retire as some point in time. So, you can't really stake your future on retired annuitants, however, they do help in the near term.
Mr. Thomas: Now shifting from the recruitment discussion to developmental, what are you doing to ensure that your staff has the appropriate training and skills and how are you leveraging the resources from organizations like the Federal Acquisition Institute?
Mr. Ely: I'm very proud of our training program. It's extremely important in our line of business. Our training program is fairly well funded and we have a specific training curriculum in place. Employees can count on receiving specific, substantial training in the procurement business area. And there are training tracks associated with each level of procurement professional. We have a fully funded training. Each employee receives a minimum of forty hours per year. And we utilize FAI for both classroom and online training. And the DHS Chief Procurement Officers Organization has entered into an agreement with DAU to reserve seats in their classes for DHS procurement personnel, and that includes my folks as well.
Mr. Thomas: Now John, at last count, the federal government spends approximately $140 billion dollars on services to meet agency needs and the use of performance-based acquisition is the federal government's preferred approach for acquiring these services. Tell us about CBP's efforts in implementing performance-based acquisition strategies.
Mr. Ely: First, to comment, a personal comment on PBAs. I agree that they are the desired vehicle, but there is something complex about them that needs to be understood and that is that it is an outcomes-oriented acquisition approach. That's where we truly have to get away from the nuts and bolts of how you get from point a to point b when the outcome is articulated get me to point b. And you don't spend a lot of time talking about how you get there. It's the outcomes that drive a performance-based contract to success.
So, in this environment, the government personnel serve as facilitators for contractor success, which is a little different than some government folks you are used to, where they believe that they are supposed to be directing the activities of the contractor. In performance-based acquisitions, they're facilitators. They help the contractor get to the successful end. Again, acting as facilitators versus directors. In CBP procurement, performance-based acquisitions are now automatically the first consideration for service contracts. Every service requirement that we get in, we look for the applicability of performance-based contracting as a solution.
All of my people receive training in performance-based acquisitions and our CBP Acting Commissioner supports performance-based acquisitions, and has asked his assistant commissioners to develop metrics and measures for their contracts to make sure they're receiving value for their dollars. We have a long way to go to reach our PBA goals, but we're working hard and I think we're doing a pretty good job learning more and more as we move along about the unique method of contracting.
Mr. Morales: John, I talk with many of my guests about collaboration. And certainly, procurements and acquisitions are perhaps some of the more complex business processes within a large entity such as CBP. What kinds of partnerships are you developing now to improve operations or outcomes at CBP and how many of these partnerships change over time?
Mr. Ely: That's an excellent question. I think acquisition by definition is a collaborative process. If you're not collaborating with your customers or your contractors who are helping you deliver results, you're going to be surprised by what happens at the end of the day. Procurement's close relationship with our parent organization, which is the Office of Finance, has helped us become very collaborative in terms of working with the components of finance which is budget, asset management, facilities, management and engineering and our financial operations organization.
We work together with them to make sure that CBP's needs are met at a fair and reasonable cost and that taxpayer dollars are properly expended. Our partnerships within the parent Office of Finance have enabled us to leverage our financial management capability. And our relationships with the customers and industry help bring best value for the taxpayer dollars that are entrusted to CBP. I see the further positive change, we build a greater capability in the big A, acquisition arena. The big A, which is acquisition, will bring us closer to being worldclass acquisition organization that's forward-thinking and focused on return investment for the mission and the American taxpayer.
Mr. Morales: Now, since its inception, DHS has had some very large and complex procurements such as, the Coastguard's Deepwater Program and CBP's SBInet. What are some of the key lessons learned from these large acquisitions and how are they shaping and informing your operations today?
Mr. Ely: I'm going to give you a generic answer on that, because I'm not as specifically familiar with Deepwater. I have some familiar, but with CBP's SBInet program, but I'd like to keep it generic because it does apply I guarantee to both programs and probably other, most complex government programs. The key to success with these procurements is planning, proper planning. The formulation of strong acquisitions teams and efficient, effective and responsible source selection process. And most importantly, properly staffed and managed postwar program and contract management organizations.
Too often, we think we've hit the home run. The ball is out the park once the contract's signed, when in fact you haven't even swung yet. I think it's also essential that when managing programs, one must realize that detractors are natural and important part of a balanced government business environment. And while these detractors may be disheartening at times, their presence can help keep acquisition personnel focused on the proper outcomes of their programs.
Mr. Morales: So John, you've eluded a couple times to CBP's acquisition function and its relationship to the broader DHS organization. How does this alignment benefit CBP and DHS' overall acquisition strategy and do you think that DHS will be adopting a more centralized model going beyond just mere oversight?
Mr. Ely: That's an excellent question. I've felt this issue going back and forth. Naturally, the components would like to retain control over their procurement organizations. And it's understandable that DHS would like to centralize, capitalizing on economies of scale, ensuring a consistency in the way that we spend the DHS dollar. But actually, there is a dual accountability role right now at DHS. While, I report to Customs and Border Protections Chief Financial Officer, I have very specific responsibilities for which I'm accountable to the DHS Chief Procurement Officer. And the same holds true for the procurement executives and the other DHS components. They also have that dual accountability.
I would also like to state that the DHS Head of Contracting Activities Organization, that is all the HCAs for the DHS components, are a group that works collaboratively and embraces the authority and leadership of the DHS Chief Procurement Officer. We meet on a regular basis and are actually quite effective in helping make DHS procurement functions as efficient and effective as possible.
Mr. Morales: So what does the future hold for CBP procurement? We will ask John Ely, Executive Director of Procurement at the U.S. Customs and Border Protection, to share with us as the conversation continues on The Business of Government Hour.
Mr. Morales: Welcome back to our final segment of The Business of Government Hour. I'm your host, Albert Morales, and with today's conversation is with John Ely, Executive Director of Procurement at U.S. Customs and Border Protection. Also, joining us from IBM is Solly Thomas. John, CBP's experience in applying innovative solutions to help address agency procurement issues has provided some valuable lessons and insights, many of which we've talked about. But, could you summarize some of these key lessons and some of these critical insights?
Mr. Ely: I'd be glad to. Number one, continuously improve. The American taxpayer deserves it. Secondly, get people involved in creating solutions. The old saying, two heads are better than one, holds true. Groups of individuals working with common goals will get you there a lot faster than individuals who are spinning off on their own path. Constantly seek to improve and get industry input on a regular basis. Industry must succeed or die and they're a good model to look at when you're looking at the best way to run your own government operation. Finally, communication is key. When you think you've done it or done enough, do more because trust me, you probably haven't.
Mr. Thomas: Now John, since acquisition is a fiduciary responsibility, the business of government must be conducted with complete impartiality. Could you elaborate on efforts being pursued to ensure procurement integrity, making sure the proper standards of conduct, both ethical and legal requirements are being followed by the Federal Acquisition staff?
Mr. Ely: Sure. First, I'd like to start by saying that I'm very proud to be a federal procurement professional. We've all seen situations where integrity has been an issue in procurements and it's inexcusable. And people that don't use integrity will get caught. But, I have faith in the federal procurement process. The vast majority of people that work in that environment are honest, hard working public servants that want to do good. Furthermore, all federal agencies have programs that emphasize standards of conduct and provide continuous training in the areas of procurement integrity.
Mr. Morales: John, I'd like to transition to now to the future. Could you give us a sense of some of the key issues that will affect acquisition and procurement offices government-wide over the next few years?
Mr. Ely: Sure. Shortages of contracting and program management personnel is a huge challenge. Balancing highly innovative ways of doing procurements within a highly regulated environment is another. Increased oversight and the need for transparency for large scale programs with congressional and public and customer scrutiny in how we do business is again, another. The constant pace of change and the scale of procurements that we're seeing as it continues to grow. And finally, the time constraints for planning large major acquisition initiatives.
Mr. Morales: So, then more locally, what are some of the major opportunities and challenges that your organization will encounter in the future and how do you envision your area will evolve over the next say three to five years?
Mr. Ely: I see significant opportunities in the future as CBP becomes more and more sophisticated in its view and management of investments for the good of its mission. I see an organization that's becoming more and more enlightened in ways to efficiently and effectively invest its resources. And I see my procurement organization as one of the best in government; fully integrated with the CBP customer and delivering the best value for the taxpayers' dollars.
Mr. Morales: So, John you've had a very extensive career with the federal government and you just had a wonderful story of how you got started. So, I'm curious what advice might you give someone who's out there thinking about a career in public service and maybe even perhaps a career in the acquisition community?
Mr. Ely: I've been there. I was there on the brink trying to decide which way to go and I will tell you that serving the American public is an honor and a privilege and has significant financial and personal rewards. The government pays well and the work is rewarding. There is an incredible satisfaction delivering good things to the American public. And our government works hard to take care of its people and public service is an incredible opportunity to be a part of that important task.
Mr. Morales: That's just great. Unfortunately John, we have reached the end of our time. I want to thank you for fitting us into your busy schedule, but more importantly, Solly and I would like to thank you for your dedicated service to our country across your 34 years of federal government service.
Mr. Ely: Thank you so much for having me both of you.
Mr. Morales: This has been The Business of Government Hour featuring a conversation with John Ely, Executive Director of Procurement at U.S. Customs and Border Protection. My co-host has been Solly Thomas, associate partner in IBM's public sector consulting practice.
As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad who may not be able to hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support.
For The Business of Government Hour, I'm Albert Morales. Thank you for listening.
Announcer: This has been The Business of Government Hour. Be sure to join us every Saturday at 9:00 a.m. And visit us on the web at businessofgovernment.org. There you can learn more about our programs, and get a transcript of today's conversation. Until next week, it's businessofgovernment.org.
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Wednesday, January 30, 2002
Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, a partner of PricewaterhouseCoopers and the co-chair of The Endowment for The Business of Government. We created the endowment in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the endowment by visiting us on the web at endowment.pwcglobal.com.
The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation this morning is with Anne Chasser, commissioner for trademarks, the U.S. Patent and Trademark Office, which is a bureau of the Department of Commerce.
Good morning, Anne.
Mr. Lawrence: Great. And joining us in our conversation is another PWC partner, Steve Watson.
Good morning, Steve.
Mr. Watson: Good morning, Anne, thanks for joining us.
Ms. Chasser: My pleasure.
Mr. Lawrence: Well, Anne, intellectual property is a complex field that's probably not well understood by many outside the community. Could you describe the PTO's mission and activities within the intellectual property community for us?
Ms. Chasser: Yes, Paul. The mission of the United States Patent and Trademark Office is to administer the nation's laws on granting patents and trademarks and to advise the Executive Branch in the intellectual property protection.
Mr. Lawrence: Why is protecting intellectual property so important?
Ms. Chasser: Intellectual property is the economic capital of the United States. Inventions lead to innovation. It's very important to protect the innovation for those that have developed the intellectual property. American brands all over the world speak to the vibrancy of the economy, plus it protects consumers as well. Copyright, the third form of intellectual property, is thriving throughout the world with the radio and movie business and music business as well.
Mr. Lawrence: How many people work at PTO, and what type of skills do they have?
Ms. Chasser: We have a very, very interesting workforce at the United States Patent and Trademark Office. We have a highly trained, highly educated workforce. We have about 6,000 employees, most of which are professionals. We have scientists, Ph.D.'s, engineers in our patent side of the house. And on the trademark side of the house, we have a staff of about 800 employees, 400 of which are examining attorneys, so they have law degrees.
Mr. Watson: What are some of your responsibilities as commissioner for trademarks?
Ms. Chasser: Well, as the commissioner for trademarks, my responsibility is essentially the responsibility of any chief operating officer, which means I'm responsible for the overall strategic planning for where the trademark operation will be going, and that includes areas involving human resource, resource management, looking at future assumptions about where we will be going in terms of the amount of work coming through the door, how we'll process that work and deliver high-quality and timely products to our customers, who are the owners of trademarks.
Mr. Watson: Can we spend some time talking about your career prior to your appointment as the commissioner for trademarks? How did you arrive at your current leadership position?
Ms. Chasser: Well, it was a very interesting journey, quite unplanned and quite unexpected, to tell you the truth. I got a call out of the blue, in November of -- I believe it was 1998, asking if I might be interested in considering this position. It took me completely by surprise, and I decided that I would just follow through the doors as they opened.
My background is very unique, and I think somewhat unusual for someone in this position. I had come to the Patent and Trademark Office as a customer of the Patent and Trademark Office, in that my most recent position, and actually a position I held for most of my career, was with The Ohio State University. I was the director of trademarks and licensing for Ohio State University, and as a matter of fact, developed the program which was one of the first programs in the country at an institution for higher education to register its trademarks and develop a program to promote and market the trademarks for the university through products and services.
Mr. Lawrence: Are you a lawyer by training?
Ms. Chasser: No, I'm not. That's the other interesting aspect of this position. I think that I probably have the distinct, unique opportunity of being the first person who is not a lawyer to serve as the commissioner for trademarks.
And I think there was a little bit of concern in the early days, because as I mentioned, our responsibility in the trademark operation is the legal examination of trademark applications. Part of what my job is, is not a legal job per se, it's running a business. And having built a business at Ohio State -- and actually, it's very interesting because it was a business enterprise within the context of a public institution, which was very different because, as you know, the mission of a university is academic and learning, and to build a for-profit enterprise within the context of a nonprofit institution was a bit unusual. But the skills that I learned in building a business from the ground up, I think, have come to serve well in this role as chief operating officer for the trademark operation.
Mr. Watson: Can you tell us a little bit about the types of things you trademarked when at Ohio State.
Ms. Chasser: Well, yes. We used to joke quite often, because we would license products that would take you from birth to the grave -- I mean, from baby bottles to requests for the university logo on a casket, which of course we didn't license. We refused those kinds of things. But we literally had thousands and thousands of products at Ohio State. And the trademarks that we would use on these products of course were the institutional name, the logo, the mascot.
So I saw first-hand the value of a trademark registration, because, as you know, one of the most important aspects for an owner of a trademark, the onus of protecting the right falls on the owner of the trademark. Once you receive a registration, the responsibility falls back on the trademark owner. So that's why you're seeing companies all over the country spending millions and millions of dollars to advertise their brand, as well as to enforce their brand. It's a very important aspect of trademark protection, is the enforcement and protection of the brand or of the trademark.
Mr. Lawrence: You received the call to join PTO. What was it that drew you to public service?
Ms. Chasser: Well, I've been in, as I mentioned, the public service literally my entire career. I've had a very interesting career of well over 25 years in the public sector, having been at Ohio State for about 25 years.
And what I like best about the public sector, the work that we do is so vitally important, but I also like the spirit of camaraderie and the spirit of working together. You don't have the bottom line profit-and-loss kind of situation. I find the collegial atmosphere -- what I found coming to the PTO was that it's a very collegial senior executive group and collegial group within the PTO. On the trademark side of the house, it's very much a community and a sense of family, and we're all in this together. And I think that's a very rewarding way to work.
Mr. Lawrence: What of your jobs in the different positions you've held have best prepared you for your present position? And I know there's subject matter expertise, but I'm also thinking about the management skills that are required.
Ms. Chasser: Well, I think the skills that helped me the most coming to this job, I mentioned the aspect of building a business and communicating with a whole host of different kinds of constituency groups, senior leadership in the university. We were selling an idea that was a little revolutionary back about 25 years ago. I know now that it doesn't seem that odd, because colleges and universities, now, people recognize the value of their trademark licensing program because often it generates significant revenues that go back to the educational mission.
What I also did, I think, that was very, very helpful that has prepared me for this job is, I have been very involved in the community of trademarks and professional associations. Early in my career, I was instrumental in forming an association of collegiate licensing administrators, which is an organization today that has over 300+ universities and colleges all over the world. And we formed this as a clearinghouse for information and exchange of ideas. But what that did was, there was a group of individuals that had a shared interest in promoting college licensing. And it's very energizing, I think, to work with people that have a shared vision in the importance of what we're doing and sort of feeding off one another.
From there, I got involved with the International Trademark Association. I think the common theme throughout my career has really been the connection with people and groups and threads and things of that sort, where one thing leads to the other. In the early days of collegiate licensing, we felt it was important to affiliate with groups to give us credibility, because after all, we were just lowly college administrators, and nobody at our institutions understood what we were doing, and so we were trying to get credibility and acceptance. And we heard about this organization called the International Trademark Association, and one thing led to the other, and we built alliances, because it was useful for the International Trademark Association to recruit an interesting constituency, which were colleges and universities who valued trademarks in an emerging group.
And so one thing led to the other, and I got involved with the International Trademark Association and eventually became president of that organization, and that's what put me on the landscape for this position, no question about it, was my work in the trademark community.
Mr. Lawrence: That's a good stopping point. Stick with us as we continue our conversation with Anne Chasser of PTO. When we come back, we'll ask her to tell us about getting applications to be processed online. Come back in a few minutes when The Business of Government Hour continues.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner of PricewaterhouseCoopers, and today's conversation is with Anne Chasser, commissioner for trademarks at the U.S. Patent and Trademark Office, which is a bureau of the Department of Commerce. Joining us in our conversation is another PWC partner, Steve Watson.
Mr. Watson: Anne, we know that the Trademark Office implemented the Trademark Electronic Application System, TEAS, to allow trademark applications to be processed online. What were some of the management challenges associated with implementing this technology change?
Ms. Chasser: Well, Steve, change is never easy. And, interestingly, the concept of transforming the way we do business is not a new idea. As a matter of fact, back in the early 1980s, a mandate was made by the then-commissioner Jerry Mossinghoff, who is a very well respected commissioner and member of the patent bar, who decided that the United States Patent and Trademark Office would become a paperless operation. Now, that was back in the early '80s, and that's an indication of how difficult change is.
Well, the reality is that the technology really wasn't there 20 years ago. The trademark operation, though, took this challenge very seriously and, in the early '80s, began to transform the way it was doing business with electronic searching back in the mid-1980s. And our plan to transform the way we're doing business from a 19th-century paper-based process to a 21st-century process maximizing information technology has really been part of the trademark plan of operation since 1994.
And how we began, this was working closely with our customers from the early days where literally the office had focus groups with customers all over the country, and established a pilot program back in, I believe it was, 1997 with 50 participants in the pilot. And based on the success of the early pilot, we launched the Trademark Electronic Application System back in 1998. So we've had about 4 years of experience on our electronic processing of trademark applications.
The key, I believe, to the success of the Trademark Electronic Application System is that it's an Internet-based system. And so, because it's based on the Internet, it's a continuously improving process. We get feedback from our customers, we get concerns about different aspects of the application system, and we're able to make adjustments and changes fairly quickly, so that the system that our early adapters used back in the ancient days of 1998 in this Internet society, it's a very different process. The beauty of our system is the simplicity, as it's an Internet-based process. We heard loud and clear from our customers that we needed to make it a simple process.
Now, on the trademark side of the house, we don't have many of the proprietary issues that the patent side has. So ours is quite a bit more simple than the Patent Electronic Application System.
Mr. Watson: What was the push-back when the idea was first talked about? It sounds like it's worked out great, and I'm just surprised that there was push-back when the idea was first introduced. What were the concerns?
Ms. Chasser: I think change is very difficult, internally as well as externally. And I think one of the biggest challenges is that we're asking our customers to do business differently and to change their behavior. And I think oftentimes, it's a challenge to maybe adopt new ways of doing business.
Mr. Lawrence: Were the expected benefits realized?
Ms. Chasser: Oh, I think that many of the -- I keep calling them as the early adapters, companies, oh, such as GE, as a matter of fact. We, this past June, celebrated the 100,000th trademark application received electronically through our award-winning TEAS application. And the recipient of that "award," I guess you might call it, was General Electric. As a matter of fact, in one day General Electric filed 52 trademark applications in a matter of minutes with the press of a button, and one of those 52 happened to be our 100th.
Well, in the ceremony that we had and the celebration, the trademark council for GE said that GE won't stand doing business the old way anymore; that they see the internal value from a cost-saving perspective, from an efficiency perspective of filing electronically. And, as you know, I mean, Jack Welch, the former CEO of GE has made digitization one of his primary goals, and GE is following through its electronic filing of trademark applications.
Mr. Watson: What percentage of the trademark applications are currently processed online, and how do you promote and encourage your customers to use online processing?
Ms. Chasser: Well, I was talking before about the value of selling. And an important part of my job I see is sales, quite frankly, and selling our electronic application system, because, really, my overall goal is to transform the way we're doing business and to be a leader in the federal government and eGovernment.
But having said that, how we promote it: Many different ways. We promote it through customer sessions throughout the country. As a matter of fact, next weekend, beginning a whole series of presentations all over the country where we go and we meet with large groups of our customer basis, and this time we're working through our Patent and Trademark Depository Libraries. There are 88 all over the country. So we'll be working in concert with the Patent and Trademark Depository Libraries and with local practitioners and corporations that are using our electronic application system and those that are not, to sort of give a balanced approach of the pros and the cons. We promoted heavily through these kinds of interactions, publications, opportunities like this to really spread the word of how we're transforming the way we do business.
Mr. Lawrence: One of your goals is to reduce the amount of paper files at the PTO, and I can't help but think that, given all that's gone on in the past, there is an enormous demand for space to store paper files, and we've been reading that you're getting ready to move.
So I'm curious to know, what are the challenges of coordinating this move and all this paper?
Ms. Chasser: Well, you're absolutely right, Paul, that storing paper places tremendous demands on space. I mean, you should visit the Patent and Trademark Office sometime and you'll see how we are literally drowning in paper at the Patent and Trademark Office. And that's why it's so important that we move into an electronic processing, because the cost of maintaining paper, as you can imagine, is tremendous.
But the process of transforming how we do business will be all part of our move to Carlisle as well. I mean, there will be space there to house paper, but it's a big concern.
Mr. Watson: What sort of benefits and cost savings do you anticipate with the consolidated building move?
Ms. Chasser: Well, one of the biggest challenges in planning the balance of the United States Patent and Trademark Office space at the Carlisle is to really lay out the space so that it's provided for future flexibility.
For example, the Patents is planning their space so that the square footage will initially house paper but then can eventually be recaptured for office space quickly and at a minimal cost, so that as the increased use of electronic processing increases in the future, we'll be able to adapt that space.
Mr. Lawrence: What are the management challenges surrounding this move? Is it easy just to pick up and consolidate, or --
Ms. Chasser: Oh, my heavens, no. It's a huge undertaking.
Think about this. Right now we occupy over a million square feet of office space in 18 buildings in a campus that spans about a mile in Crystal City. So thinking about literally picking up and moving, plus moving all of the paper files, is an enormous, enormous challenge. And I think we've got a really great team together that is heading the move. Fortunately, that's in another area. So I just have to worry about the -- my job is to get the work through the process of the trademark operation, but we have a wonderful team that's working very diligently in trying to figure out all of the possible contingencies into the move.
Mr. Lawrence: Let's keep pushing along on technology. We know that PTO has initiated a multi-million-dollar project to supply employees with things like desktops, laptops, and hand-held computers. How will this improved technology impact the way you do business?
Ms. Chasser: Well, again, now, this is a procurement issue and, again, that's not really my area. But we are always looking for ways to improve the efficiency and the effectiveness of our operation.
And just for example, on the trademark side of the house, when we are examining trademark applications, oftentimes there are design elements within it, and if you have a larger screen in order to examine the design element, it makes the job a lot easier.
Thanks to technology, we're able to literally -- I don't know if I mentioned this or not, but one of the advantages of our transformation to a fully electronic workplace is a very successful work-at-home program. And so literally, our examining attorneys could be anywhere in the United States. Right now we have one that lives in Boston, Massachusetts; one in Harrisburg, Pennsylvania. But in the near future, I could literally see our examiners anywhere in the country if, for example, a spouse has to move for a job. It's a great way to maintain a highly trained and skilled workforce. But the capability of examining and dealing with customers electronically is all made possible thanks to the innovations in our office.
Mr. Lawrence: That's a good stopping point. Rejoin us in a few minutes as we continue our discussion with Anne Chasser of PTO. PTO was one of the first performance-based organizations. We'll find out what impact that had on PTO when The Business of Government Hour Continues.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner of PricewaterhouseCoopers, and today's conversation is with Anne Chasser, commissioner for trademarks at the U.S. Patent and Trademark Office, which is a bureau of the Department of Commerce. Joining us in our conversation is Steve Watson, another PWC partner.
Mr. Watson: In 2001, the number of trademark applications was significantly less than what was projected. What steps are you taking to adjust human resources to the reduced demand for your services, and how are you managing this impact on your employees?
Ms. Chasser: It has been a real challenge. What we saw in the trademark -- I keep calling it the trademark side of the house -- was, in terms of the level of our trademark filings, we found that we reflect the economy. For example, we did a tracking, and we saw that the trend lines in trademark application filings mirrored the NASDAQ from the 1990s. So as you can imagine the NASDAQ graph and the bubble in 1999 and 2000, we experienced that bubble where we saw unprecedented growth of 27 percent compounded 2 years in a row now. Can you imagine running a business that grew with that kind of a rate?
Well, then, what we saw in 2001 as the bubble burst, we saw that happened to our trademark application as well. This past year, we experienced a 21 percent decline in trademark application filings over the previous year. Now, having said that, that was still the second highest level in the history of the office.
But in terms of how do you manage that exponential growth and then retrenchment, what we were able to do was -- thanks, actually, to the performance-based organization status that we achieved through the AIPA, which is the American Inventor Protection Act of 1999 -- we were able to certain flexibilities in terms of incentive pay for performance, and we had certain incentive programs for our examining attorneys, plus I mentioned our work-at-home program, which resulted in higher productivity, the fact that we had more seasoned examiners.
So we were literally able this past year to work through our entire backlog, which was the first time in 13 years that we achieved a first-action pendency, which is a term of art that means the first time a customer receives an office action indicating the likelihood of their application becoming a trademark, and we refer to that as pendency to the 3-month period. We were able to achieve that, and then we saw this drop in filings.
I might also mention that we were able to achieve that with a net gain of only six examiners from the beginning of the fiscal year to the end of the fiscal year, so I'm very proud of that process. But what happened was, we didn't have the backlog to work off it, so we right now have more examiners than we need when you run your economic model. But how we're dealing that, we have made a commitment to work as diligently and as hard as possible to retain our highly trained effective workforce, because we know that the patterns of filings are inconsistent and up and down, and so when the economy recovers, we want to be prepared to maintain that level of customer service that our customers are expecting now, receiving actions in a timely way.
So what we have done in the short run is that we have been able to redirect some of our highly trained examining attorneys to other areas within the trademark business that we haven't been able to pay attention to these last several years, because we've been so focused on getting the work out the door. So we're working on infrastructure activities. We have detailed our examiners to the Office of General Council, to various offices that the trademark user's fees support within the USPTO. So it appears to be working well. We're monitoring this very, very closely. We are communicating very closely with our examiners and our employees, because after all, our employees are our most valuable asset, and so it's very important that we keep the lines of communication open. But it's difficult.
Mr. Watson: You mentioned some of the flexibilities you have because PTO is a performance-based organization, or PBO. How else has being a PBO affected, say, culture or the day-to-day operations?
Ms. Chasser: Well, the Patent and Trademark Office was actually the second performance-based organization designated, the first being in the Department of Education, Student Financial Aid. So we had a great opportunity, I think, to define what a performance-based organization is. And I think what it allowed us to do is really talk about how we're doing business and look at running the business as a business from a sort of strategic perspective. And it provided certain flexibilities, as I mentioned, with regard to pay for performance through incentive programs and so forth.
We are still, though, subject to Title V under the federal legislation. We're also subject to the appropriation process.
Mr. Watson: Measuring performance has become an increasingly important part of doing business in the public sector. We know that the Patent and Trademark Office has developed a balanced score card performance measurement system. How do you measure customer satisfaction, and what results have you seen today?
Ms. Chasser: Well, Steve, I mentioned earlier that we are an organization of engineers and scientists and lots of analytical kinds of professionals that work in the Patent and Trademark Office. So measurement is something that we are outstanding at. And we're very good at measuring all kinds of processes. You mentioned the customer satisfaction. We have an annual customer satisfaction survey that goes out every single year, I believe, for 5 or 6 years. So we have historical data, and we're very specific with our customers in terms of key drivers and what leads to customer satisfaction. So we have our external customer satisfaction survey, as well as a number of internal measures that we look at to evaluate how we're doing business. So when there's a disconnect between our internal measures and our customer satisfaction numbers, we know we have to laser into that area and try to meld the perception and the reality closer together.
Mr. Watson: Congress has mandated a reduction in the application processing time to 3 months. Could you describe how employee incentive programs are aligned and how they contribute to meeting this goal?
Ms. Chasser: Well, I did mention my little bragging rights a little earlier about how the 3 months for application processing time was achieved this past year. And we're very proud of it, because it was the first time in 13 years we have met that goal.
And I did mention a little earlier some of the incentive programs that we worked on in terms of productivity awards and so forth, which were very successful.
Mr. Watson: The agency's balanced score card system also measures employee satisfaction. I think you mentioned a few internal measures you have. What results have you seen in your employee satisfaction survey, and how does a program such as your work-at-home program help the PTO to attract and retain high-quality workers?
Ms. Chasser: Well, our work-at-home program is one of the most successful programs. And we have, actually, examiners lining up to work at home because of the tremendous -- not only the ability to work at home, but it actually provides more time to get the job done, because you're not sitting there in traffic, and we are able to measure the work being done because, as I mentioned earlier, we are an operation that has a deliverable, so we're able to measure the deliverables.
And having a highly professional work force, the ability to work on your own, without supervision and all those kinds of issues, is very, very positive. And so we're very pleased with our work-at-home program.
Mr. Watson: You mentioned you had employees lining up to join the work-at-home program. Why not roll it out quicker?
Ms. Chasser: Well, there's a cost associated with the work-at-home program, because we literally replicate the desktop in their home. And so we're talking about resource needs. We're also looking for broadband lines to the home. It's a resource issue at this point in terms of setting it. We currently have, I believe it's about 28 percent of our examining corps is working at home, and we're actually developing a new program, a pilot program, a hotelling concept. And I actually believe your company has a successful piloting program that we'd love to visit some time. But the hotelling program for your audience, it's literally -- think of it as five people sharing one office. And so what that is going to enable us to do is to eliminate valuable office space and turn it back for other uses, either within the PTO or through GAO.
Mr. Lawrence: Have you had any untended consequences or any disappointments with the work-at-home program? Often people like to work in teams together and meet at the coffee pot and discuss stuff, and that just can't be done. Have there been discoveries like that?
Ms. Chasser: Yes. I don't think that work-at-home is for everyone. I personally think that I probably wouldn't be able to work at home, because I'd find other things to do besides my work if I was at home. I don't think work-at-home is for everyone, because some people thrive in a more collegial environment and talking around the coffee pot and so forth.
What we have found is a community springing up among our examining attorneys through listservs or coming to the office one day a week and meeting colleagues and friends. One of the requirements of our work-at-home program right now is that you need to come to the office 4 hours a week to take care of administrative functions and training sessions and group meetings and so forth. So we try to provide some opportunities for interaction. And one or two of our examining attorneys who have worked at home have decided that it's not for them, that they prefer being in the office. So I think what we're trying to do is develop a menu of opportunities and choices of how to get the work done.
Mr. Lawrence: That's a good stopping point. Come back as we continue our discussion with Anne Chasser of PTO. How does one recruit, manage, and motivate such a highly skilled work force? We'll ask her when The Business of Government Hour continues.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner of PricewaterhouseCoopers, and today's conversation is with Anne Chasser, commissioner for trademarks at the U.S. Patent and Trademark Office, which is a bureau of the Department of Commerce. And joining us in our conversation is Steve Watson, another PWC partner.
Well, Anne, your position as commissioner of trademarks used to be a political appointment. However, you were hired on contract. Could you tell us the impact of your ability to manage and the way you approach this position?
Ms. Chasser: Yes, that's right. As a matter of fact, with the implementation of the American Inventor Protection Act, my position as commissioner of trademarks changed from a presidential Senate-confirmed position to a 5-year term position where I actually have an employment contract with the Secretary of Commerce.
How are things different? Not much different at all, because when I came in as a presidential appointee, I came in with a very clear idea of my job was to get the job done, and as a 5-year term employee, I still have that same perspective. It's to get the job done.
Mr. Watson: How will TEAS and other eGovernment programs change the way citizens interact with PTO?
Ms. Chasser: Doing business electronically is very different than doing business in a paper-based process. And I invite all of our listeners to visit us at our website, which is www.uspto.gov. And our website is really the portal to our customers' interaction with the United States Patent and Trademark Office. For example, our customers can check the status of their pending trademark application. They can search through the website and -- I'm not going to give the acronyms, because it's too confusing -- can search for marks that are used in commerce through our website. Every week the trademark operation -- and the patent operation as well -- publishes an Official Gazette, and the Trademark Official Gazette is a publication that lists all marks that are subject to registration as a trademark, and it provides an opportunity or public notice for those that believe that the mark may be confusingly similar with the trademark owned by an individual; they can challenge that potential registration. That's called the Official Gazette. You can check that every Tuesday on the web in PDF format, which is searchable, text searchable. You can find your trademark registration certificate through the web and print it off of the web. You can get information on how to file a trademark application.
It's a whole host of information, a clearinghouse of information through our website, and we believe that working through the website really will enhance your experience of working with the Patent and Trademark Office. And we're very pleased, again, with the USPTO website. It's an award-winning website, recognized by Yahoo! magazine as one of the best government websites available.
Mr. Watson: Throughout our conversation this morning, you've described a highly skilled and highly educated workforce. What are the challenges of managing these types of employees?
Ms. Chasser: Well, it's actually a joy to work such a smart, energetic group of professionals. As I mentioned, we have about 400 examining attorneys, attorneys that work in the trademark side of the house. We have paralegals. Our technical support staff is highly trained. It's really a joy, because you have individuals that see the importance of the work that we're doing at the Patent and Trademark Office and do what it takes to get the job done.
Mr. Watson: We hear a lot about the coming government retirement wave and the expected impact on Federal agencies. What kind of challenges will this present to PTO?
Ms. Chasser: Well, I think like all Government agencies, there's, what, 56 percent of the senior management will be gone within 5 years. So I think it's very important for leaders of any organization to be identifying and working with future leaders of the organization, because that is the future.
And so we try -- I personally try -- to identify those that have the spark and the passion, and you can just sense when someone is going to go places, and to sort of work and mentor. And provide opportunities, provide opportunities to succeed as well as to fail, because I think you learn a lot through the failure as well.
Mr. Lawrence: Do you have formal leadership development programs?
Ms. Chasser: Well, actually, we instituted a program just 2 years ago where we're working very closely with the Council on Excellence in Government where we've identified five Fellows in the trademark operation last year and this year. And I see them sort of as the sparks of energy throughout the organization. We've selected individuals from not only the examining corps, but from management and from technical support as well. And so I sort of see them as sparks throughout the agency, and we're going to start building circles and circles, and pretty soon we'll all be speaking the same language of where it is we're going in transforming the way we do business.
Mr. Lawrence: Why are they sparks? What are the characteristics that leads them?
Ms. Chasser: Well, I think oftentimes, when you step away from your workaday world, and you're involved with other organizations and other groups, and you learn what's happening in other areas in the Federal Government, and you take time to study leadership and what it takes to be a leader, and you step back and learn about yourself, often these programs involve self-evaluation -- for example, Myers-Briggs -- in how you put together teams and how it's important to have individuals with differing points of view, and differing perspectives only makes a stronger team.
All those kinds of skills, I think, eventually, as people are recognizing this and building, and we're speaking the same language, I think it's going to have a huge effect. At least I'm banking on that right now. We'll see what happens.
Mr. Watson: Earlier in the hour, you were describing your career, and you mentioned you were a customer of PTO's for many years. Now you're its commissioner. How have your perceptions of the organization and mission changed, going from customer to commissioner?
Ms. Chasser: Well, I think it actually helps me when we're making decisions, because I think that actually gives me some credibility within the trademark organization, because I can speak as a customer and how the customer would view it. So I see it as a real advantage.
Mr. Lawrence: Throughout our conversation this morning, you've described the tremendous technological and organizational changes that have taken place at PTO. What's your vision for the next 10 years? How might it change?
Ms. Chasser: Well, I think our workplace will be very different. I mean, when you look at how much it has changed in the last 10 years, 10 years ago examiners -- I wasn't there then, but people talk about standing around the bullpen, which was the one sort of search engine, to try to get -- I mean, and now we literally have examiners working all over the country. Eventually we'll probably have examiners that might be working on their boat in Key West. And so I think the whole issue of bricks and mortar will be very different in the future for us as we move into an electronic-based process.
Mr. Lawrence: How are those changes that we might imagine going to affect the people who manage or lead the organization? Normally we talk about increasing skills. We talk about the skills that the staff have, and we build those and train them. But it seems like the way organizations like what you're describing, would be managed and even led might be different too. What are your thoughts on that?
Ms. Chasser: Oh, I think so too. I have to keep going back to my sports day at a Big Ten university, and it really is all about coaching and teamwork. And I think it will be very different, because decisions will be made very differently. I mean, much less hierarchical and more on front-line decision making, which I think will happen.
Mr. Lawrence: And will the leaders of the future and the managers of the future learn those skills by being in those teams, or how will they --
Ms. Chasser: I think by providing as many and as varied opportunities as you can. And we often talk about getting people outside their comfort zone and putting them in positions where they don't feel comfortable, which is hard; you're asking people to do things that they don't feel comfortable doing. But I think that's where you learn the most, to sort of be in an uncomfortable position or a situation, because you find skills that you didn't think you had.
Mr. Lawrence: Interesting. Well, Anne, I'm afraid we're out of time. Steve and I want to thank you for being with us this morning.
Ms. Chasser: Thank you. It's been my pleasure. I've really enjoyed this time together.
Mr. Lawrence: Did you want to mention the website one more time?
Ms. Chasser: Oh, yes, thank you for that opportunity: www.uspto.gov. Come see us there.
Mr. Lawrence: This has been The Business of Government Hour, featuring our conversation with Anne Chasser, commissioner for trademarks at the U.S. Patent and Trademark Office, which is a bureau of the Department of Commerce.
Be sure and visit us on the web at endowment.pwcglobal.com. There you can learn more about our programs and research into new approaches to improving Government effectiveness, and you can also get a transcript of today's very interesting conversation. Again, that's endowment.pwcglobal.com. This is Paul Lawrence. See you next week.