Model 1: Performance Administration

Thursday, December 24th, 2009 - 17:44
(a continuation from the December 23, 2009  blog on “Managing Performance”) Bouckaert and Halligan call their first idealized performance management model the “Performance Administration” approach.

Performance Reporting: Insights from International Practice

Thursday, December 17th, 2009 - 20:00

Happy Birthday GPRA

Wednesday, December 16th, 2009 - 15:41
The Government Performance and Results Act (GPRA) was enacted in 1993 to bring about a greater focus on results in the federal government.  GPRA's requirements have built a strong foundation for results-oriented performance planning, measurement, and reporting.

Performance Management Advice: Build on Foundation

Friday, July 10th, 2009 - 10:38
Last week, another consortium of good government proponents released a report, “Building a Better Government Performance System: Recommendations to the Obama Administration.”  Sponsored by the Accenture Institute for Public Service Value, the Georgetown Public Policy Institute, and OMB Watch, the report reflects the results of a workshop they hosted last year as their public service contribution to the transition effort.

The "New" Transparency

Friday, May 15th, 2009 - 13:46
A couple weeks ago, I attended the Mercatus Center’s 10th annual ceremony releasing their assessment of how transparent agencies were in reporting their performance via their annually-required performance report under the Government Performance and Results Act. It made me think about how far the whole transparency movement has come.

Working With Career Executives

Tuesday, July 22nd, 2008 - 14:05

Adding a Player

Tuesday, November 27th, 2007 - 15:44

Donna McLean interview

Friday, September 13th, 2002 - 20:00
Donna McLean
Radio show date: 
Sat, 09/14/2002
Intro text: 
Financial Management Managing for Performance and Results...
Financial Management Managing for Performance and Results
Complete transcript: 

Arlington, Virginia

Friday, August 23, 2002

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

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 Donna McLean, Assistant Secretary for Budget and Programs and Chief Financial Officer of the U.S. Department of Transportation.

Good morning, Donna.

Ms. McLean: Good morning.

Mr. Lawrence: And joining us in our conversation is Dave Abel, another PwC partner.

Good morning, Dave.

Mr. Abel: Good morning.

Mr. Lawrence: Donna, perhaps you could start by giving us an overview of the activities of the Department of Transportation and its different agencies.

Ms. McLean: Well, the Department of Transportation is just as it sounds, the Department that oversees our modes of transportation. We have 14 individual modes in the Department, some that you might recognize, some you might not. The Federal Highway Administration. So basically, we're responsible for pulling in the taxes off the gasoline that you buy, and putting it towards concrete, and distributing that money to the states. And that's quite a big bit of our budget.

FAA, the Federal Aviation Administration. Obviously, most people think of FAA as the Air Traffic Controllers, who make sure that we fly safely, and that they in fact control those planes, and we pretty much have the safest aviation industry in the world. And that's something that we're very proud of.

But there are some other modes that you might not realize that we oversee. Coast Guard right now is part of the Department of Transportation. And they're responsible obviously for the safety in the seas, but also for saving folks if they are at sea and have trouble. And we also have the MARAD Administration, and we have the Federal Transit Administration. And, you know, several other modes. But that gives you a flavor of what we see.

Mr. Lawrence: You have a very interesting title. You're the Assistant Secretary for Budget and Programs and the Chief Financial Officer. That's a mouthful. What are your roles and responsibilities?

Ms. McLean: Well, let me just say, I didn't give myself my own title. It was there before I came to the Department. And lately, I must say, with the issues on the chief financial officers of WorldCom and some of these other organizations, I tend to use right now the Assistant Secretary for Budget and Programs, and not happen to mention the CFO part.

But at any rate, under my office is both the formulation of the Department's budget, and also the actual execution of the finances of the Department. So we have the accountants under our department as well. That sounds very boring to most people, but the advantage of the Department, or being in the Department and in the budget area, obviously is that if anybody needs money, they need to come to us, either to propose for additional money, or see if we have any additional money. And so, as a result, the budget office gets involved in a lot of issues.

Mr. Lawrence: How large is your office? And is it just all accountants, or are there other skill sets?

Ms. McLean: I've got about 50 folks working for me at the actual department. But then we have a CFO in each of the modes. So there's a CFO at FAA and Highways. And where we set at the Department the policy, so the accounting policies, maybe travel policies, how we use credit cards, what you can use credit cards for traveling, and that type of thing; that type of policy is set in my office, as well as the formulation of the budget that DOT sends both to the President and then finalizes it and it goes to the Hill.

So we have a mix of folks who are more policy accountants, I'd say, and more larger, bigger budget picture folks, where the more detailed folks reside in the modes.

Mr. Lawrence: You've had an interesting career leading up to your current role. Can you tell us a little bit about your career progression?

Ms. McLean: Actually, right out of graduate school, I graduated from Indiana University. I got my undergraduate in political science there, and then I went on to get a graduate degree in public policy at the School of Public and Environmental Affairs, also called SPEA, at Indiana University.

After graduating there, I actually came and worked for the Department of Transportation for the Assistant Secretary for Budget and Programs. So I worked in the office I'm now heading up. And the woman who was heading it up at the time was Kate Moore. And it was a wonderful beginning into government, because like I said earlier, the budget office often has so much exposure to a lot of the policies. It's just not crunching numbers.

And I only did aviation. And then I went from there to the Office of Management and Budget. And these were all career positions. I went to the Office of Management and Budget, and was the budget examiner for FAA at the time, so I was looking at policy more from the Executive Office of the President.

And then from there I went to the Hill, and actually started a political position, working for the House Transportation and Infrastructure Committee, again on aviation policy, and was there for about 6 years. And that was a great, wonderful opportunity to work for Congress.

And then I actually went back to a career position, which is a little bit unusual. And I started -- I was the CFO at the Federal Aviation Administration. And then from there went back to a political position, which is where I am now, the CFO of the Department. So actually, this job that I'm in right now is the first time I've had transportation experience beyond aviation. So this last year and a half has been fantastic, because it's just really opened my world, and my knowledge of transportation, so it's been great.

Mr. Abel: Let's talk a little bit about that transition from FAA to being CFO of the Department of Transportation. What are some of the differences in working at the agency level versus the department level?

Ms. McLean: Well, the agency level, obviously, you're a little more concerned as a CFO on budget execution. So, you know, are we paying our bills on time? Are we making sure that at the end of the year, we haven't inappropriately spent something? Obviously, there's policy involved as well.

When I went to the Department as the CFO, it's much more policy-oriented, and probably more politically influenced. And part of that is because, like I said, I went from a career job to a political job. And so I'm a little more involved in policy I think at the Department than I was at FAA. But at the same time, FAA has a very strong group of career experts, with some phenomenal skills.

So when I went to FAA, sort of I was competing, I guess I'd say, for the administrator's time with just some excellent career folks that just had such strong backgrounds. It was a little bit harder for me to push into policy. And that I think maybe has less to do with an agency versus a department level, and more to do with just the personalities of FAA, you know, at the time that I was working there. There's just some phenomenally dedicated and very smart career folks there.

Mr. Lawrence: How about the differences from being a career versus being a political appointee?

Ms. McLean: I guess, you know, since I, like I said, flip back and forth, it's all public policy to me. And everything I have been involved in, I've been fortunate enough to feel like the decisions are made on their merits. Whether I'm in a career position or a political position, I am unbelievably honored to work for this President, George Bush. I have so much faith in him, and I'm just thrilled that at this point in my career, I am able to work for this President. So in that sense, that's just fantastic for me personally.

But for my day-to-day decisions, like I said, I think Transportation is, unlike some of the other departments, is less political. I mean, we are, at the Department of Transportation, promoting safety. It doesn't matter if you're a Republican or a Democrat. You're promoting safety. And as a CFO, I'm very interested in making sure the money we spend is spent wisely and most effectively. And again, I don't think that has a difference between whether or not you're a career person or a political person, or if you're a Republican or a Democrat.

Mr. Lawrence: And you've worked on the Hill. How would you contrast your experiences as being in the Executive Branch and being in the Legislative Branch?

Ms. McLean: I think in the Legislative Branch, you set policies, obviously, when you pass a bill. And sometimes, a committee may not pass a bill for, you know, a matter of a year or so. Or you might be working on a very large bill, and it passes -- you know, reauthorization for the Federal Aviation Administration, for instance, may only come along every 4 to 5 years.

So you're making policy, and you're setting large policy, and you're helping the members of Congress, you know, put into law their ideas. But it tends to be on a little bigger picture, and on a little longer time horizon. Once you get in the Department, I think you're taking those larger picture decisions from the Congress, and putting them in place in, obviously, more detail.

So you're setting policy, but it's on a smaller scale and more detailed scale, and so you're diving into really how does the aviation industry work? Really how does the trucking industry work? And when I make this decision, how does that really affect the industry?

And so I think it's a level, a degree of granularity, I guess I'd say.

Mr. Lawrence: Do you find that your management skills are the same in both settings, or were there different tools used based on that?

Ms. McLean: I think in the Department -- well, on the Hill, you know, the staffing size is so small on the Hill, that even those folks who do have management positions are managing a handful of people. Maybe on the committee level, you're managing, you know, 60 people. But in the Department, you can have -- you know, you're managing hundreds of people at a time.

So I think in any case, communication skills are important. And obviously, in the Department, while I'm saying I'm doing a lot of policy decisions, it's also a very fast pace. And so one of the things that is incredibly important is making sure that your staff is up to date on the decisions that are being made, so that they can understand why these decisions are made and not feel like this decision came out of the blue.

So I think as much as I can, and as much as I can slow down and talk to folks and make sure they feel like they understand what's been happening and why the decisions are made, I think communication is probably key in both places.

Mr. Lawrence: That's interesting, but we've got to stop for a break. Come back with us in a few minutes as we continue our conversation with Donna McLean of the Department of Transportation.

How does one get a clean opinion? The Department of Transportation just got one, so we'll ask Donna when The Business of Government Hour returns. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And today's conversation is with Donna McLean, Assistant Secretary for Budget and Programs and Chief Financial Officer of the U.S. Department of Transportation.

Joining us in our conversation is Dave Abel, another PwC partner.

Well, Donna, the Department of Transportation just received its first clean audit opinion on the financial statements for 2001. What steps did the Department take to achieve this?

Ms. McLean: Well, I have to be honest about this. We actually received a clean opinion in 1999, and lost it in 2000, and got it back in '01. And it I think just simply proves that a clean opinion is, once you get it, you don't rest on your laurels, because it's hard to maintain it, particularly with -- we are just now modernizing our accounting system. And we are trying to keep our clean opinion with a rather antiquated system. And it results in a lot of good people working phenomenal hours at the end of the calendar year to basically make sure all of our documentation is in order.

If I can talk for a minute about why we lost our clean opinion, because I think it's sort of interesting. At least for a budget geek like me, I think it's sort of interesting. Anyway.

In 1999, we got our clean opinion, sort of, like I said, by the skin of our teeth, working very, very, very hard. In 2000, we lost it, because in 1999, we got our clean opinion. And the way the accountants look at this is obviously, when you finish your clean opinion, then they don't look back again. They're just looking at your clean opinion then for that current year.

And what happened in FAA, some good people just made some wrong decisions. Some folks who managed property for FAA and were trying to make the documentation even better and clearer changed some documentation that actually affected some of the calculations on property values from 1999 and prior.

So what basically was happening was, let's say that you had a radar. And there was -- we were making sure that our documentation was clear and clean. And we had some kind of a new feature added to the radar. So there was an upgrade. So the value of that property in fact increased.

Well, if somebody logged in and actually changed the value of that property that affected prior to 2000, that basically took a database that was clean, according to our 1999 audit, and degraded it. Again, these are people thinking they're doing the right things, but we just didn't realize this was happening until late in the year and we couldn't correct it. And so the accountants, or the auditors, looked back and said, hey, this has now been violated, this clean property information.

So we actually lost it because people thought they were doing the right thing. Well, we've got that a bit under control now, and we were able to pull our property back into shape at FAA. And we did gain our clean opinion in 2001. I think we're working very closely with our inspector general, who's helping us do the audit, or who is doing our audit. And I think we're going to have some real risks in 2001, in part because the Department of Transportation has had some big changes to it, which you've probably noticed.

And in part, that's the establishment of the Transportation Security Administration. And this is basically the screeners at the airports. And that right now is part of the Department of Transportation. So we have had to set up, and we are hiring, depending on whose opinion of how many staff there are, we right now have the authority to hire up to 45,000 people. But it could be larger than that.

You know, we've got new equipment and property we have to keep track of. So that's going to be a big risk for us for 2002.

Mr. Lawrence: Well, how about the OMB scorecard for financial management? How are you doing getting to green?

Ms. McLean: Well, I'm a fortunate CFO, because, you know, obviously I started with the Bush administration just a year and a half ago or so. And our predecessors had worked very, very hard to put in, or to start putting in a new financial system. It's an Oracle-based financial system we call Delphi. But we are progressing pretty well on that. We now have 10 of our operating administrations out of the 15 on our Oracle financials. And so as a result, we're doing pretty well on the getting to green financial. You know, we had a status grade of yellow for the Department of Transportation on financial management.

Mr. Abel: Let's talk for just a second about Delphi. Delphi, as we understand, is an integrated financial management system. Can you explain to us a bit about what that means? What does it mean to you to be rolling out this integrated system?

Ms. McLean: Well, in short, it means that we can have our consolidated financial system really at a push of the button. So previously, we had several accounting systems that were online, and we had to then have these interfaces that pulled numbers and data together, and then had a financial system that pulled all those numbers, and in fact created our financial statement.

Now it's all in, or will be, once we finish, will be all in one system. And so it obviously reduces the possibility for errors. But it also increases the reliability from the standpoint of managers logging in and getting information up-to-date, accurate.

Mr. Lawrence: How is your progress in rolling it out through the Department?

Ms. McLean: Well, a couple of years ago, the prognosis was not good. We were pushing ahead, probably more aggressively than many other departments. And we had an IG report that came out saying that in fact, I mean, that we were moving too fast. And I mean, how often does the IG or GAO come out and tell a department they're moving too fast? Not very often. They're usually saying you're behind schedule.

So, we were pushing very, very hard and very fast to get this system up and running. Oracle has upgraded its financial system. We had 11.03, and now we're at 11i, which basically means that Oracle had some problems with the older version, and they fixed some of those problems.

And we've got three big pieces left. That's our Federal Aviation Administration, Federal Highway Administration, and Coast Guard are all pending to be turned over to our Oracle financial. So in the next 5 months, we'll see how we do with these large organizations. We're doing well. Up to this point, we're doing really, really, really well. I'm just always concerned about the next milestone.

Mr. Abel: The progress is good. For those that are out there listening that may be thinking, I want to do this, I need to do this in my organization, what lessons learned or what recommendations would you give them as far as this transition and rollout is concerned?

Ms. McLean: Well, I think it is really, really hard to do this. But you have to do it. If you have an old accounting system that isn't FFMIA-compliant, or JFMIP-compliant, then you obviously have to upgrade. If you have a system that is homemade and made for your own department, you obviously have to get an off-the-shelf-type system.

And I think the biggest recommendation I would make would be that the person that heads up this transition does not necessarily have to be a financial manager. This is a big data change. It is like installing new air traffic controller computers or new high-tech equipment in a Coast Guard vessel. So you need a project manager that has some financial experience, but really has that project management, because it is driving this project to the finish line that's so important that, you know, financial managers on a day-to-day basis don't necessarily have that skill set.

So I would say that you really need to make sure that you get a project manager that has pushed a big project through to the end.

Mr. Lawrence: That's great advice. Let's go in a little bit different direction for a minute, and move from systems into some accounting methods. Some organizations have been implementing activity-based costing and other cost-accounting methods. Is this something that the DOT is currently using, considering?

Ms. McLean: Actually, whether we wanted to consider it or not, it was in legislation that FAA establish a cost accounting system a couple of years ago. And in fact, I was working on the Hill at the time. So I think I somehow was involved in that, writing that legislation. But anyway, now I'm living it.

FAA actually has put into place a cost accounting system that is quite impressive. It's not completely finished, but about 75 percent of its costs right now are -- FAA is able to produce in a cost accounting monthly data. FAA has taken that information, and has been able to provide some great incentives for its employees.

For instance, they've been able to make sure that the en-route facility in one location, which is, you know, basically a facility that controls the airplanes when they're in the high altitudes, and they sometimes will have, you know, 300 people in these facilities, or 500 people, that they understand what the cost of providing per operation is. And then that's compared to another facility that has similar responsibility.

And you sort of set up a competition, really, between these organizations, or these locations. And you sort of question, you know, why does Joe at his facility have a lower cost per aircraft operation than Bill does? And let's start looking at what are the operational changes that we can make to be basically most cost effective in all of our facilities? So it's set up some really good dynamics. And we're just scratching the surface on being able to use that.

For the rest of the Department, we are beginning to use, and we will be using the Oracle financials for our cost accounting. But we are just beginning that. Obviously, FAA is one of our more businesslike models, because they provide air traffic control on a daily, 24/7 situation. So they were the right place to start for cost accounting.

Mr. Lawrence: That's a good stopping point. It's time for a break. Rejoin us in a few minutes as we continue talking about management with Donna McLean of the Department of Transportation.

What does the CFO Council do? We'll ask Donna, who serves on the Council, when The Business of Government Hour returns. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And today's conversation is with Donna McLean, Assistant Secretary for Budget and Programs, and Chief Financial Officer at the U.S. Department of Transportation.

Joining us in our conversation is another PwC partner, Dave Abel.

Mr. Abel: Donna, you mentioned earlier in one of our earlier segments the tremendous challenge that the DOT has faced this year in bringing up the Transportation Security Administration. What have been some of the challenges that you faced in overseeing the Department's budget in bringing up the TSA?

Ms. McLean: Can I first say that even though it's been really very, very challenging to set up TSA, or the Transportation Security Administration, it has always also been extremely rewarding. I think that a lot of us felt, after September 11th, it was so devastating. And we all had a life-changing experience, and, you know, how can I help this country heal?

And at the Department, you know, we have been working phenomenal hours. But we have been doing something, I think, to help us all heal. And part of that is, you know, if it's not sounding too -- I mean, too -- I don't know, self-important or something. But I just mean I think we all feel very strongly that setting up TSA has been both a huge challenge. And we have all sacrificed time with our families because of the hours we're working. But it's also been very, very rewarding, and something that we all feel very strongly about.

But what our requirement from the law is to set up a federalized screening workforce by November 19, 2002. And that is in a year, basically, hire enough screeners at airports, train them, change the equipment so it's improved to cover 429 airports that are just scattered around the country.

We didn't even know what that meant. We still don't know completely how many people we're talking about to complete this effort. So usually, when you establish a budget, you say okay, this is our mission. This is how we're going to achieve it, which is usually pretty well laid out. And then this is how many people we need to achieve it. And, you know, maybe there's some gray area.

But the whole thing in setting up the TSA was a gray area. You know, yes, we knew that we had to have federal workers in place screening passengers by November 19th. But we immediately went out and tried to survey how many screeners were in place at the time the bill was passed. And we couldn't get a handle on how many people there were in fact physically screening people in airports. And so the estimates have gone from you know 20,000 people to 70,000 people.

And of course, it's not just screening the passengers. Because there, at least we could go out and get a feel for what's happening today. The law also requires that all baggage be screened by explosive detection systems by the end of this calendar year. We are building that as we speak.

So we had to take existing technology or any technology that's perhaps on the edge of becoming certifiable, and effective, and try to put that in place and to deal with screened baggage. So setting up a budget of how much that all costs has been a huge challenge, just because you have to have the information, obviously, to set up the budget.

And I'll just say I've had several people, several of my bosses say, you know, Donna, we need to get this budget number nailed down. But it's not the budget number. It's all the policy that goes into creating those budget numbers. And it's just been a huge effort to - because everybody has a different opinion on how to get the job done. And I mean by everybody people in the Department of Transportation, people in the White House, and people on the Hill, the Congress. Everybody has a different opinion on how to get the job done.

So it's been a great challenge. But, you know, an experience I will look back on and say, wow, how lucky I was to be in the middle of such a huge challenge.

Mr. Lawrence: How are you balancing it? You gave an interesting description. How are you balancing what I imagine is a need to go quickly, but a need to be, I guess, as the CFO, to be precise and then prudent with money? I mean, what skills do you use to sort of make those two mix?

Ms. McLean: We're not the only department that's facing this. I mean, this has been just an unfortunate, crazy year for budget cycles. I mean, we had the first supplemental before the end of the fiscal year, and then we had the December supplemental, and then we just passed another supplemental.

And then the President made a choice on whether or not he was going to initiate and use the $5 billion in the second supplemental. So in fact, we didn't actually know what our '02 budget final numbers were until about 6 weeks before the end of the fiscal year. I can't imagine that we have many situations where you're going through to the end of your fiscal year, and you don't even know what your budget is until 6 weeks before it ends.

So it has been a year of -- you know, we have numbers, and we're telling you these are the best estimates we have today, but we're collecting information as we speak. And you've got to help and understand that these numbers could change. And that's been hard for everybody, including me. Budget is a sort of world where you think of it as being precise and something that doesn't change. But it's been a little bit fluid this year.

Mr. Lawrence: Let me change subjects a little bit. You're a member of the federal CFO Council. Can you give us an overview of what the Council does?

Ms. McLean: I think the purpose of the CFO Council is to oversee, obviously, deal with sort of the issues that all the CFOs are facing. But the CFO Council was fortunate enough, again under the Bush administration, to have a very significant role, because of the Presidential Management Agenda that was laid out by President Bush very early on in his administration.

And two of the five Presidential Management Agendas had to do with issues that usually affect the chief financial officer: one on the financial management, improving financial management; and the second one on linking budget and performance integration.

So the CFO Council has taken those PMAs and broken them up, and there's been different councils basically trying to help the government as a whole achieve the goals of the President in those five Presidential Management areas. So that's certainly one of the main efforts and benefits of the CFO Council.

Mr. Lawrence: You're chair of the Budget and Performance Committee within the Council. Can you tell us a little bit about the objectives of the committee and perhaps some of the best practices that you've identified?

Ms. McLean: Yes. Well, let me also tell you how I became the chair. Mark Everson, who is at the Office of Management and Budget, he's sort of the CFO of the entire government. I talked to him about this Presidential Management Agenda, which was to link budget and performance. And basically, the concept was, you know, if you're going to spend a dollar, tell me what I'm going to get for it. That's a totally reasonable, wonderful philosophy.

But I said to Mark, listen, this is great, but how do people get there? I understand the concept, and I've been trying to do this for several years. And I don't get how you get from the theory into the practical world. And he said, well, Donna, I think you're right. And I think you should chair this group and figure it out.

So I guess unfortunately, I complained, and then was asked to head up the group. So it wasn't out of a skill set, necessarily. It was probably more out of complaining.

Anyway. So I was fortunate enough to have worked with a lot of great departments. And we worked with the Department of Energy, and EPA, and some folks from SBA and Interior. I'll probably forget some of them. But we all got together and basically said, you know, we really need a path to get from the theoretical to the practical.

And so we put together an approach that perhaps isn't pretty. But we have some more specific guidelines for the departments on how to get from the theoretical to the practical. And that can be a whole hour radio show in and of itself.

So, I'll just say that Office of Management and Budget decided to put it in their A-11 Guidelines, which are the guidelines on how you develop your budget. So there is some more information that you can find on the website.

Mr. Lawrence: Were there any best practices or particular tools and techniques that were being done that are worth mentioning?

Ms. McLean: To be able to link budget and performance, you have to have a new financial system, or you have to have a new budget system, or you have to have a system to help you do this. And I strongly believe that's a way to procrastinate. And it is really something that I think we just should not have as an excuse for not linking budget and performance.

Now, don't get me wrong. Linking budget and performance is extremely difficult. But I don't think we necessarily need new systems to be able to do it. At least maybe in its perfect end state, yes. But in getting there, we don't necessarily have to do that. So, best practices. I think, you know, again, I don't want to go into so much depth that we get off all the other topics.

But the general practice that we're trying to push people towards is first, they have to have a performance report that is strong, and is something that both is acceptable to OMB and to the White House and the administration, but also to folks on the Hill. Again, I'm fortunate that I am CFO of a department that has a very good performance report. And these are the performance reports that were required by GPRA.

For the last 2 years, DOT has had the second rating from the Mercatus Institute for their performance report in government. And this year, we were fortunate enough to have the number one rating. So we start with a very strong base. If you don't have a strong performance report, then I think you need to just, first off, make sure you've got a solid -- go back and look at your strategic plan, and re-evaluate whether or not you have the right performance report. Because I think that's where it all starts.

Then, I think you need to make some hard decisions on looking at your budget items. You can start from the bottom up, which is sort of the way I like to look at it. And look at each of your requests, and ask yourself two questions: what is this request going to do to improve one of your GPRA goals? Now, you might say, well, how can you answer that question for research? How can I answer that question for a long-term capital procurement project that I'm not going to see finished for 5 years? That's a very good question. But then you ask yourself the second question, which is what is the milestones that I am going to see from this additional $100 million, $5 million, take your pick.

So, you kind of have to force yourself to say yes, I know that, in the terminology of performance, we have outcome goals, and you have output goals. I think you have to ask yourself both. What is the output, meaning what is the milestone in the short term, and what's the outcome? So is this investment in fact going to reduce the number of fatalities on highways? And then build up from there.

Mr. Lawrence: That's a very good answer, and a good stopping point. Rejoin us in a few minutes as we continue talking about management with Donna McLean of the Department of Transportation.

What are the biggest management challenges ahead for the Department? We'll ask Donna for her thoughts when The Business of Government Hour continues. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And today's conversation is with Donna McLean, Assistant Secretary for Budget and Programs and the Chief Financial Officer of the U.S. Department of Transportation.

Joining us in our conversation is Dave Abel, another PwC partner.

Well, Donna, in the last segment, you talked about the importance of financial management. And I'm curious. In the future, will program managers assume more responsibility for financial management?

Ms. McLean: I think they have to. I think there are many program managers who definitely have their eye on their budget and their eye on making sure that each dollar they spend is as effective as possible. But I think when you're talking about, again, one of President Bush's big initiatives, which is his Presidential Management Agenda, it's trying to force government into a more businesslike fashion. So that's not -- I've got $20 million to obligate during this fiscal year, because I've got one-year money.

That may be the sort of mindset that we have in government. It needs to be I've got $20 million, how efficiently and effectively can I spend that money to get to my output goal, which would be, you know, again, improving safety, or whatever your -- I always talk about safety in transportation. There's a lot of other areas in Transportation and in other departments.

But so I think that as financial managers, and as the CFO office, we have to encourage program managers to have as much financial information as possible. But we also have to hold people accountable. And that's part of budget and performance integration as well. It's sort of, you know, what did you promise you were going to do with this money? And did you in fact do this? And if you didn't, that needs to be reflected in your performance evaluation.

So if the theory on performance and budget integration really works, it should go all the way down to the program manager and his or her employees, and their, you know, specific program evaluations on an annual and bi-annual basis.

Mr. Abel: So what does the pipeline look like for future financial managers in your office, recruiting them, and how hard do you think it will be to be able to continue to bring in people into this role?

Ms. McLean: Well, I think, again, the Department is going to be at an advantage, simply because we're going to have the Oracle financial system up and running. And I think that's going to be appealing to a lot of folks, that we have, you know, right now state of the art. And because we took the Oracle financials, and we didn't alter it significantly for our needs, we'll be able to upgrade it easily. Because of course, if you customize these computer systems, forget it. As far as upgrades, they're going to be costly and time-consuming, and you'll probably, with budget crunches, end up not in fact doing those upgrades.

So I think the Department is going to be an attractive place to come. But I also think that we have to look at, with the new financial system, we're going to need two kinds of people. We're going to need the important folks who sit there every day, they come into work, they log on, they spend their time in Oracle financials, making sure that the books are right, making sure that we don't over-obligate, making sure that, you know, whatever you have put on the books, you and your program office, whatever you've put on the books is accurate. You know, our hardcore accountants.

But we're also going to need another level. The philosophy of the Oracle financials is that you can pull data out, and you can pull data out easily, and you can pull out data in useful, helpful reports. But the CFO's office has to be the liaison between the accounting information and the program office. And we have to be teachers, and help program managers understand their financial information better, and use it to improve, again, how we manage programs, and how we get progress and best performance out of the money that we spend.

So I see a future sort of workforce in any CFO office is going to have these two layers. And it's the sort of financial management area that I think DOT, in the next couple of years, that's going to be key.

Mr. Lawrence: What big challenges lie ahead for the Department?

Ms. McLean: I think one of the biggest challenges is, of course, we just talked about setting up the Transportation Security Administration. But that now is going to move, or the President is proposing that it move to the Department of Homeland Security along with the Coast Guard, which is part of the Department of Transportation. And so if that proposal is accepted, which it certainly looks as if it will be by Congress -- but I don't want to be presumptuous -- but assuming that in fact occurs, we have to make sure, from a financial management standpoint, that we send both Coast Guard and TSA with the most solid financial system possible.

We've got TSA on Oracle financials, because they just started. So we put them on Oracle financials. But Coast Guard is still on our old customized DAFUS (?) program, which is -- you know, only the experts in the Department that have been working on it for years know about.

So it's unfortunate the timing is such that we're going to be sending two of the biggest chunks, single chunks of the Department of Homeland Security on two different accounting systems. So it's unfortunate, but it's a situation of timing. And then of course, we don't know what's going to happen at the Department of Homeland Security, and what the needs are of that department, and what kind of financial system they'll be putting in place.

Obviously, the other thing that we're going to be making sure, we've got to deliver success to Homeland Security here. And property management in TSA is going to be a big issue. So again, you know, I said that was going to be an issue for our clean audit. But it's also going to be an issue for Homeland Security, too, when we transfer.

So, you know, those are in the short-term, 12-month sort of time frame. In the longer term, I think, again, making performance and budget in fact a reality, and not theory is going to be a big challenge for the long term.

Mr. Lawrence: You mentioned property management, which we covered a little bit when we talked about the clean audit opinion in the FAA. Do the lessons that you learned in recovering your clean audit opinion around property management apply to the TSA? How does that solution relate to what you need to do in TSA?

Ms. McLean: Focus, focus, focus. We have to make sure that absolutely, that we keep track, have a good solid system for tracking that property. And let me just explain what some of the property that TSA will be having to keep track of.

You know, you've got the magnetometers, which is what you walk through at an airport. They're probably not going to move. But you've got all those wands that, you know, we don't -- they're very movable. And if you don't like property, that's very movable, because it's harder to keep track of.

We've got air marshals that are armed. So suddenly, the Department of Transportation, it's new for us to have to keep track of a lot of guns. We've got them in Coast Guard, but that's about it. And we've got, also, explosive detection systems, some of them that are huge, and we will know where they are, because they are the size of SUVs. But we've also got some smaller explosive detection systems that are called trace detectors. And they are more like the size of the top of a table, and can be moved, and will probably, part of the purpose will be to be on rollers, and be able to move them.

So we've got a big challenge on making sure that we keep track of all of that, and of course, any upgrades and valuation to that. So we have set up a property system that should be able to handle that. But it's obviously something that's on my mind and I'm worried about.

Mr. Lawrence: What advice would you give to a young person considering a career in public service in, say, perhaps the Department of Transportation, or even Homeland Security?

Ms. McLean: Well, I think you have to ask yourself, obviously, what makes you happy? And if you decide -- what made me happy before, when I was, you know, in school, in high school, thinking about what do I want to do for the rest of my life? I was a volunteer. And I won't go into all the places.

But it was incredibly rewarding to me. But by definition, you don't get any money out of being a volunteer. So public service I think is probably the best substitution for that. It's incredibly rewarding. And if you have decided that public service is something that you want to do, I would highly recommend getting as much education as you can before you begin your career path.

So if you can get a graduate degree, particularly if you're interested in going to Washington, I think it gives you a huge step up. And then, I'd say take as many -- don't be frightened. Challenge yourself as much as possible. Don't be fearful. I think government actually rewards you for taking challenges, and in fact changing jobs.

You could say, if you look at my career and how many years I've stayed in one career versus another, that I can't keep a job, because I think my longest job was 6 years in one place.

But I think the government is very good to folks who are willing to take challenges, and women and minorities. I think I've been very blessed, looking back on my career. But I think I've had opportunities I might not otherwise have had in the private sector, because government is conscientious about making sure the workforce is diverse.

Mr. Lawrence: Donna, I'm afraid that will have to be our last question, because we're out of time. Dave and I want to thank you for being with us this morning.

Ms. McLean: Thank you. I really enjoyed it. I'm not a radio person, so it's been surprisingly enjoyable.

Mr. Lawrence: And if anybody's interested in some of the things you said, is there a website or anything they could go to to find out more?

Ms. McLean: Yes. Again, you can go to the Office of Management and Budget website. It will have the A-11 guidelines, which will show our approach to getting you to green on our budget and performance integration. Also, the DOT website has some information specifically about our financial office as well.

Mr. Lawrence: Great. This has been The Business of Government Hour featuring a conversation with Donna McLean, Assistant Secretary for Budget and Programs, and the Chief Financial Officer of the U.S. Department of Transportation.

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

Again, that's

This is Paul Lawrence. See you next week.

Thomas H. Fox interview

Monday, November 29th, 1999 - 20:00
Thomas H. Fox
Radio show date: 
Wed, 05/03/2000
Intro text: 
Thomas H. Fox
Magazine profile: 
Complete transcript: 

Arlington, Virginia

Wednesday, May 3, 2000

Mr. Lawrence: Good evening, and welcome to the Business of Government Hour, conversations with government leaders. I'm Paul Lawrence, a partner in PricewaterhouseCoopers and the co-chair of the PricewaterhouseCoopers Endowment for the Business of Government. The Endowment was created 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

The Business of Government Hour focuses on outstanding government executives who are changing the way government does business. Our guest tonight is Tom Fox, Assistant Administrator for Policy and Program Coordination at the US Agency for International Development. Welcome, Tom.

Mr. Fox: Thank you, I'm glad to be here.

Mr. Lawrence: And joining me is Kevin Bacon, also a partner at PricewaterhouseCoopers. Welcome, Kevin.

Mr. Bacon: Thanks, Paul.

Mr. Lawrence: Well, Tom, in this first segment perhaps you could tell us a little bit about USAID. We know that it administers economic and humanitarian aid worldwide, but what else goes on at the agency?

Mr. Fox: USAID is the principal vehicle by which we deliver what is commonly called foreign aid, particularly the foreign aid that we administer as a government rather than through international organizations like the World Bank or the United Nations institutions. USAID administers about two-thirds of our total foreign aid program.

We work in most of the developing countries in the world, often with in-country staff. We are also responsible for activities that we carry out after discussions with local governments and with other elements of the private sector.

We are always trying to support programs that are going to lead to a better life and economic growth for the people, and for the country overall. One, that means the best combination of supporting the development of open government, open-society, promotion of democracy, and so forth. Second, we support an educational system to promote human capacity including training, development, health, the stability of the environment, the protection of the environment, and the general economic growth of the country itself, which includes agriculture as well as other forms of economic growth. Third, we administer a very substantial program of humanitarian assistance and disaster assistance. That's more short term in its focus than the longer-term development focus that I was describing.

Mr. Bacon: About how big is the budget for AID and for foreign aid in general? I think a lot of people are not really very clear on that subject.

Mr. Fox: The overall foreign aid budget of the government is somewhere around $10 billion a year. That's a bit less than 1 percent of the federal budget, which is dramatically less than most people think it is.

Mr. Bacon: Yes, I think so.

Mr. Fox: We administer almost seven billion of that ourselves. As I said, the rest of it is administered through most of the multilateral and international development organizations like the United Nations Development Program or the UN, UNICEF, and the World Bank.

Mr. Lawrence: Can you tell us about your career and how it prepared you for this position?

Mr. Fox: I've been involved in developing countries for thirty-five years. I started as a staff person for the Peace Corps back in 1965. At the time, I was a teacher supporting Peace Corps volunteers who were teaching for the first time. I then just got caught up in the general challenge of developing countries and decided that I wanted to commit myself to that, and not go back to my teaching career, which is what I'd originally planned to do. So I worked for the Peace Corps for seven years overseas, mostly in Africa.

Returning to Washington, I worked for a nonprofit that works in developing countries called Volunteers in Technical Assistance. I worked there for about six years, and I ran the program for the last five of those years. Then I was with AID for about four years as director of its office working with nonprofit organizations like CARE and Save the Children. Returning to the private sector, I worked for the Council on Foundations where I was vice president for their international programs and activities supporting grant- making foundations that were involved internationally (obviously my focus was on what they might do in developing countries, but there were other things, too.) And then I was vice president of the World Resources Institute for the last ten years before I came to AID. WRI is a policy research organization that specializes in the relationship between economic and environmental questions, and I was the vice president for developing countries.

In all these cases, I had a fair amount of association not only with developing countries but also with AID itself. In particular the last four years before I came to AID, I was chairman of an advisory committee that advises AID on its relationship with the international not-for-profit organizations and universities, so I had a lot of association with AID in that capacity, too. I came to AID in December of 1997.

Mr. Bacon: Well, tell us a little bit about what you're doing now at AID and how all of this thirty years of experience maps into what you're trying to work on now with the agency.

Mr. Fox: Good. The bureau that I direct, Policy and Program Coordination serves an overarching function for the agency. We try to fill in holes and interpret policy when there is some ambiguity about what our policy is or should be. That's certainly a function.

We also try to relate policy questions with administrative questions. That's called operational policy — how we can do our business better, how we can do our programming better — and that's been a major part of what we've done in my two and a half years.

We're also the center of the agency's performance measurement, monitoring, and evaluations. We carry out a lot of crosscutting evaluations of what the agency does. And then, finally, it's in our bureau that our relationship with other development agencies takes place, including, mostly, the foreign aid programs of other countries, but also the UN agencies and the World Bank.

Mr. Lawrence: You have a lot of experience in the nonprofit world so I'm wondering what are the differences between being a manager and a leader in the nonprofit setting versus in the government?

Mr. Fox: Well, how much time do we have? There's a dramatic difference. The government, first of all, is huge, and for any part of the government to function effectively it really has to interact with many other parts of the government, so the complexity of management is dramatically different from anything that you have in a 100-staff organization, which is what I'm used to. So the complexity and the consensus-building process, the stakeholder stroking, all that range of questions that have to do not only with a relationship with the Congress but also with other parts of the Executive Branch. It's a dramatically more complex, much more time-consuming, much more inefficient means of management than in the not-for-profit sector; that is, it has far fewer of those kinds of constraints and certainly not the same kind of complexity.

Also, the government just by the way it was set up initially by our founding fathers puts an enormous amount of protection into the way we spend money and make decisions so that there's the least possible chance of fraud or corruption or tyranny, which was their original focus. And all of that in turn means that it's harder to do something, to work through that. It's appropriate that the protections be there, but there are also, of course, costs in terms of what we call efficiency.

So I would say that it's the combination of those two things that makes it dramatically more complicated to manage in the government than in the private sector or certainly in the not-for-profit sector and I think in the private sector as well.

Mr. Bacon: Well, one other topic maybe just in terms of setting the context for the challenges you deal at AID is how has the agency changed as the Cold War ended and we moved into the last decade? Thirty or forty years of post-World War II foreign policy environment has changed. What have been the big challenges from the point of view of AID in the past few years that you've migrated from a kind of Cold War era to where we are today?

Mr. Fox: Well, there are two. One has to do with the view of AID in the world and the second has to do with the program itself. Going to the latter one first, we now have a substantial program in the countries of the former Soviet Union and of the former Soviet Bloc in Eastern Europe with a particular focus on assisting in opening markets and opening societies and governments. So that's been a huge major addition to the program. Secondly, the rationale for a foreign aid program is dramatically different. It used to be couched in Cold War terms. It no longer is. There's not a replacement vision that everybody accepts.

Mr. Lawrence: Well, great. And it's time for a break. We’ll be right back with more of The Business of Government Hour (Intermission)

Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner in PricewaterhouseCoopers, and tonight's conversation is with Tom Fox, Assistant Administrator for Policy and Program Coordination at the US Agency for International Development, and joining me is Kevin Bacon.

Well, Tom, just before we went to commercial we were talking about the changes that have taken place over the last half-century at USAID. Anything else you want to add on that?

Mr. Fox: Sure. The foreign aid program was initiated way back in the 1940s. It was a Point Four program in Harry Truman's Inaugural Address in 1949, but it really got its greatest momentum at the very beginning of the Kennedy Administration and was clearly a part of our overall Cold War strategy. We were trying to support the aspirations and the needs of developing countries in large part to make sure that they stuck with us and didn't join with the Soviet Union in what was then such a global competition. That unifying thread brought together all the various people that looked at foreign aid from their various vantage points, and it always provided the cover and the political support for the foreign aid program.

Since the Cold War ended that overarching rationale for a foreign aid program that everybody accepted no longer exists, and it's therefore a much more complicated story. Some people support foreign assistance, foreign aid, because it is the right thing to do. It reflects our values, the generosity of the American people, and it's another form of leadership. That's a powerful motivation for some. For others it is clearly related to helping developing countries advance to the point where they will be effective partners with us for commercial reasons, trade reasons, and indeed other reasons, political reasons. So there is that factor.

There are others whose view is primarily to protect us against global problems, be they environmental questions or infectious diseases or whatever. So there's not a single purpose not a single rationale. And because there is not just one rationale, there is much more emphasis on developing coalitions without a single consensus vision, which I think exacerbates the management challenge that the agency has in getting support for what it needs or wants to do in any given situation.

Mr. Bacon: Tom, you mentioned earlier that one of your roles is to help the agency in reengineering. In light of what you were just talking about, the changing context within which the agency exists, could you tell us a little bit about reengineering, which has been something central to the past seven years in Washington? Here all across the federal government agencies have been looking at reengineering, how they do things, and sharpening their focus on customer service and mission that they're here to serve. Could you talk a little bit about how reengineering has played out at USAID?

Mr. Fox: First, I think what's called "managing for results" is something that the agency was starting to embrace even before the administrations changed back in 1992-1993. And it was in part because there was a recognition that there wasn't adequate broad political support for foreign assistance, foreign aid. Therefore we needed to be smarter about answering the "so-what questions." In other words, we did this and this, but what actually has changed as a result?

And so the focus on longer-term results, on outcomes, was something that actually started at AID quite early in the 1990s before the administrations changed. But then as the administration changed the combination of the enactment of the Government Performance and Results Act and the administration's focus on the reinvention of government combined, and AID took that very seriously, both those things very seriously.

Both predated my coming so I can't speak about all of the origins, but the responsibility and the focal point for the agency's working on both those things are very much in my bureau, in some cases in close association with our management bureau, too, but the focal point is clearly within my bureau.

And at the time the agency developed the basic values that it was going to try to adhere to as closely as possible. One was managing for results; the second was customer focus; a third was a focus on teamwork; a fourth was empowerment and accountability; and the fifth was respecting and valuing diversity. Then, using those principles, a number of basic systems has been examined and in some cases really dramatically improved, but in others they are still not what they might be.

Similarly, in working with the Government Performance and Results Act we have vigorously embraced the notion of setting and establishing objectives, doing strategic planning, setting ways to measure, and introducing systems that do that efficiently and effectively. So those are the broad lines, but I can get more specific if you need me to.

Mr. Lawrence: What would you think would be an example of where you've made notable success, and conversely where's an example of an area where you think you've got a lot more work to do in what you're talking about here?

Mr. Fox: Right. Certainly the success and the thing that I'm the proudest of is establishing a planning process that is measurable and is now increasingly realistic. It was not so realistic, I think, a couple of years ago or three or four years ago because we were trying to pitch everything at such a high level that it was virtually impossible for us to see what our role was with some success.

But we've made huge strides on that and established a system of planning and programming by strategic objective, reporting in that way, corresponding with Congress about that, and developing our systems around that kind of a model, as opposed to little project by little project by little project. It's saved colossal amounts of time, is much more focused, I would say, even visionary, and is certainly more forward-looking.

I think that where we have not yet succeeded is maybe in two areas. One is what sorts of things require our staff to oversee and manage and what can we do in other ways, what are alternative ways to staff our program. Related to that is, because so much of our work is by grants and contracts, there's a huge pressure on the procurement and contracting process. We haven't solved that problem yet, either.

Mr. Lawrence: Well, it's time for a break. We’ll be right back with more of The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Tom Fox, Assistant Administrator for Policy and Program Coordination at the US Agency for International Development, and joining me is Kevin Bacon, also a partner at PricewaterhouseCoopers.

Well, Tom, we left the last segment talking about managing for results, and one of the things I've always been curious about is how do measure the results of our foreign aid?

Mr. Fox: There are two issues here. One is how we measure what we do in a given country in a given activity, and the second is how we aggregate it in a way that people can understand it and get some overall vision of how effective our foreign aid program is.

On the first, each of our programs in every country, each of them, has three or four strategic objectives that they are managing against and that they are devoting resources to. They establish annual targets and then targets at the end of the activity, which could be five years, seven years, whatever. And they measure against those targets every year, carefully, and self-report. We will then go back sometimes and double-check from Washington, but by and large we are usually doing pretty well. We measure against performance measurements such as how many schools have been strengthened in this or that way, to what degree has primary school enrollment increased in a given region where we are active, that sort of thing.

The aggregation problem is much, much more difficult because there are so many factors that influence the big picture other than simply what we are doing. I just came back from a conference in Dakar, Senegal last week called Education for All, a big international conference where everybody got together and reviewed what are the overall targets that were established by the foreign assistance community several years ago. Among them is the goal to eliminate the distinction between girls and boys enrollment in primary school by the years 2005, and to allow for access to primary school education for everybody by the year 2015. So this group came together and said why aren't we making better progress toward that objective.

We can point to what we've done in a given country and to many different countries and see progress in several of those countries, but to meet the overall target that the community of development agencies working with developing countries have established is a much more complicated question because there are so many factors that we have no control over whatsoever.

For instance, those figures include primary school education in China. However, we have no program in China. So the aggregation problem's a very serious one. We can point to lots of general successes and know that we had a huge role in it, that Thailand is no longer considered a developing country, Korea is no longer considered a developing country, Costa Rica, on and on and on.

There are a number of stories where we had a major role in helping that country achieve a middle income category, and we can also point to where we've had huge successes in terms of something like how many women now have access to contraceptives and can thereby make their own choices about the rate at which they're going to increase the size of their families. But, again, to add that all up on a global level so we can say what's happening in the whole world and have that be influenced by this or that conflict, this or that war, this or that drought, which, of course, just wipes away things, it's very, very difficult to do.

Mr. Bacon: You know, one of the key aspects of any organization is the people that work in the organization, and I'd be interested in your thoughts about the employees at USAID. How are they expected to be different today than they were perhaps a decade ago, and, looking forward, what kinds of knowledge, skills, and abilities are the people who work for AID going to need to help you achieve your very ambitious goals that we've set for our foreign assistance program?

Mr. Fox: There's been a lot of evolution over the years. Twenty years ago, AID was dominated by people that had not only good generalist programming skills but also had particular technical capacity, technical skills. They were, in most cases, the primary providers of the cohesive development message or technical capacity. That's not the case today. Largely, the technical capacity that AID delivers comes through other organizations that we enable, that we support, that we complement.

Mr. Bacon: Do you use contracting or other kinds of grants?

Mr. Fox: Yes — universities or nonprofit organizations or whatever. As a result, our staff are now much more enablers for the provision of technical assistance. They are enablers and they are synthesizers. They are also the vehicle by which the technical cooperation, the technical assistance, is used in policy dialog. In other words, our staff will play the role of talking with the local government about what the implications might be for their policies and their institutions. So it means that the staff is much less technical than it was and much more involved in the skills of enabling.

Mr. Bacon: So they have to have much better partnering and management skills?

Mr. Fox: No question. Our staff is also substantially smaller; that is, the career staff is much smaller than it was several years ago.

Mr. Bacon: How much?

Mr. Fox: Well, we've lost 35 percent in the last seven years, roughly that figure in roughly that time frame, so our reliance therefore on contract staff and on associations through grants with universities and nonprofits is greater than it was. That's a strength, too, because we are tapping expertise of many diverse organizations.

Mr. Bacon: It would be hard for you to gather all that.

Mr. Fox: That's correct. There's strength in that evolution, without any doubts whatsoever. But there are still functions that only a government employee can perform — sign something and that sort of thing — so we have to still have that capacity. And we also need to have the memory that permanent career staff provides. That's terribly important; otherwise, you just lose the capacity to learn from what you did three years ago.

Mr. Bacon: With the shrinkage of your permanent staff, which is something other government agencies, other federal agencies, have experienced as well, I imagine that has really limited your ability to recruit new people into the agency.

Mr. Fox: No question, because we are not expanding. If anything we are contracting a little bit every year, and we are. It means it's very difficult for us to recruit. We have made a very conscious effort in the last two years to recruit young foreign service officers, and last year was the first year that we brought in a significant number of people, and we're giving that a very, very high priority.

There are still a number of really, really fine people that want to work for AID and go overseas. It's a more competitive market because there are lots of other ways by which people can go overseas or have an international career rather than just work for the government unlike what it was thirty years ago when I started in this business. So there is much more competition with the private sector in particular for good, strong people.

Mr. Lawrence: And that was a question I was going to ask you. What's drawing these people to government service because, as we hear, there's tremendous opportunities? I wasn't surprised to learn that you began or virtually began in the Peace Corps, and I think a long time ago a lot of people went to the Peace Corps quite early and it was a very almost patriotic thing to do, and now I'm not so certain people are talking about it that much any more. So I am curious what's drawing people.

Mr. Fox: Altruism is still alive and well. It's not talked about enough, but it's still alive and well. There are a lot of people that are very motivated by simply doing what they believe is the right thing. And the right thing corresponds to that first argument that I used about why people support AID, that it reflects values and so forth, a vision of what we want American leadership to be, that it's more than simply economic and military muscle and influence and ideas. It's also a generosity that is in our self-interest and so forth.

And I think a lot of people are very motivated that way and can only express that through either government service or through nonprofit organizations. And so there's always going to be a community of people that feel that way and are motivated for that reason.

Mr. Lawrence: And how about just the sheer numbers of the way it worked? I mean, there was very little hiring, perhaps even none, for quite some time. You might even say a generation of employees. And so, if AID is like elsewhere, a number of people are getting ready to retire and there's no real team coming up behind them and there's a much younger group right behind them.

Mr. Fox: You're absolutely right, and that is indeed the issue, one that we have moved very, very aggressively on in the last couple of years to try to build up, as fast as we possibly can, a younger generation. We didn't lose a generation but we lost a few years, and as a result, particularly the Foreign Service employees of AID, which is not the majority of the direct hire because most of the people back here in Washington are more likely to be civil service, but having a Foreign Service that was getting increasingly old and closer and closer to retirement without a corresponding class or generation of people to catch up with them and replace them was a dangerous situation. I think we've caught it in time. And we're just getting some outstanding people because we can offer them a very exciting career.

Mr. Lawrence: Great. And it's time for a break. We'll right back with more of The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner in PricewaterhouseCoopers, and tonight's conversation is with Tom Fox, a system administrator for policy and program coordination at the US Agency for International Development. And joining me is Kevin Bacon, also a partner at PricewaterhouseCoopers.

In this last segment, Tom, we'd like to look out to the future, so I'm wondering if you could tell us about what the future has for USAID.

Mr. Fox: My crystal ball is not real good, and my own time with AID is likely to end January 20, 2001, because I am a presidential appointee. But I expect to stay involved somehow. As I hope I've conveyed, I care deeply about the agency and its mission.

I think there are a number of huge issues. The most important of them is can we achieve a consensus about why we have a foreign aid program and what is important about it? What interests, what taxpayers' interests, are served by our having a strong foreign aid program? A lot of it has to do with what vision of American leadership do we embrace as a people.

That sometimes looks like a partisan question, but I don't think it needs to be. It hasn't always been in the past. So I think that how it's played at the beginning of a new administration is going to be very important, how an attempt to achieve a consensus is dealt.

I think you're going to see a greater relationship between AID and our foreign policy apparatus in the State Department. I think that's healthy. We've been working on it a lot this year. I think we will also see a greater synergy between how we operate and how we view the world in our bilateral program, that is to say, the AID program but also what is happening with the World Bank and the International Monetary Fund and the UN agencies and all that.

And it might be that there will be more of a division of responsibilities than is currently the case. I'm not necessarily an advocate of that, but I think it might well be a conclusion that comes out of it which will assist in specializing and not trying to do everything at once, which is, of course, what we try to do now because we are a big enough agency and have a view of ourselves that we should be able to play a leadership role in almost any situation.

But there's probably a limit to what we can do. There is a limit to what we can do. So I think there's going to be some sharpening, and it's going to depend, I think to a large degree on the effort to develop a stronger, a clearer consensus on what the role is, the importance of it, the place of it in the taxpayer's priorities than is currently the case.

Mr. Bacon: There are some big things, obviously, many big forces at work in the world. Two of them that everyone talks about are the globalization of the economy; and the other is, of course, technology and in particular the Internet and the ability that gives people anywhere in the world to begin to participate in not only intellectual exchanges but economic and other kinds of exchanges. Do you see a role for AID in helping the developing world deal with these courses of globalization and the spread of technology?

Mr. Fox: Right. Several questions embedded in that but we are certainly, particularly in Africa, deliberately trying to encourage the use of the Internet as a teaching tool and a development tool. There's a limit to what we can do there, but that is, I think, going to be viewed at the end of our time as a legacy, particularly the last few years here, of trying to use the Internet as a development tool and to spread its use.

It is likely to be a major topic of discussion among the Group of Seven leaders in Okinawa in July about how all of the major donor countries can cooperate on that field. So I think that's a very promising area, particularly in the use of Internet.

As to the broader question about globalization, our particular role in that, particularly if you're talking about economic globalization, is in helping developing countries better participate and better benefit from globalization. By that it means do they have financial systems and transparency systems that can withstand the kinds of pressures and speed that take place in the moving around of money and ideas? Do they have an institutional and a policy base that allows them to take advantage of it? Do they have it in a way that will allow for some equitable distribution of the benefits and not simply those that are the most ready to take advantage of the immediate opportunities that come from globalization?

So a capacity-building role is what I think our niche is in that. Both the private sector and the multilaterals are the more direct players in the movement around money and so forth, but capacity building is a particular niche of ours and a very important one.

Mr. Lawrence: What about the future of things like managing for results or even GPRA? I mean, these were born in the Clinton Administration and shortly it'll be coming to an end and people wonder will they continue or should they?

Mr. Fox: I think they're here to stay. I don't think the GPRA has yet been fully institutionalized within the whole of the Congress. It is part of the Congress. It supports it very strongly and others that would like to stick with the same old way of doing things, but I think that is going to continue to evolve.

The GPRA is clearly going to be a very, very important thing for AID. We've got it so much now institutionalized in our own reporting and measurement systems that we're not going to walk away from it. We're still learning from it. It's still hard sometimes, but we've made a huge institutional investment in taking advantage of GPRA without getting so lost in it that we do get confused.

I just learned before coming here that Senator Thompson, who is the father of GPRA, announced that our annual performance report for 1999 was the best of all federal agencies. That was just announced this noon. That's a huge tribute to our agency, and they particularly cited the customer-focused, the forward-looking quality of it as well as the transparency of it.

So, no, I think our commitment to that is clear. I would be very surprised if a new administration, whether it's Democratic or Republican, would walk away from a focus on trying to make government work better and using the principles of the private sector and reengineering as a basis of that.

Certainly it's a major focus, obviously, of the vice president. But my understanding is of Governor Bush's administration in Texas he's results-oriented as well, so I think the focus on how to make the government work better for both the efficiency of the government overall but also for the service to the taxpayers is here to stay, and so it's a much more constructive way of looking at government than simply bad-mouthing it, which all too often has been current in political dialog.

Mr. Bacon: One question. As the change of administration comes upon us what kind of advice would you give your successor in terms of helping her or him succeed in the post similar to the one you've filled for the last three years?

Mr. Fox: The beginning of a new administration is always a wonderful opportunity for new ideas. And similarly toward the end of an administration is much harder because you have no sense that there's going to be some sustainability in what you might want to initiate. So I think it's terribly important that whoever comes into AID as our generation leaves that they come with a vision and with the courage to try to support it even against all of the many obstacles that are going to be there to any significant change and really stick with it because change is needed. Consensus must come. We waste too much time now in trying to overcome the absence of consensus.

Mr. Lawrence: Well, how about some lessons learned for those organizations that are not as successful with their GPRA plans as you've been?

Mr. Fox: I think the important thing is to view GPRA as an opportunity, that it's not an imposition from the Congress. It is rather an opportunity to take advantage of management principles that have been fully established in other sectors of our society, and all of it won't work and to be very deliberate about what you're going to build on, what you're going to capitalize on and use, and what you are going to only almost put to the side but do the minimum. In other words, pick and choose where you're going to take advantage of the tools that GPRA provides.

Mr. Lawrence: And is there a time frame they should understand as well in terms of how long it takes to really get your hands around it?

Mr. Fox: I think it took us four years. But all agencies now have gone through a learning process and are much wiser. We actually started earlier and submitted these annual performance reports and plans earlier than others just to get practice, and so this one that we just cited as Number 1 was the first official one.

Mr. Lawrence: Well, great, but I'm afraid we're out of time. I want to thank you, Tom, for spending time with us tonight. Kevin and I enjoyed our conversation very much.

This has been the Business of Government Hour, conversations with government leaders. To learn more about the PricewaterhouseCoopers Endowment for The Business of Government, visit us on the Web at See you next week.