Bradley A. Buckles interview

Monday, November 29th, 1999 - 20:00
Bradley A. Buckles
Radio show date: 
Fri, 05/19/2000
Intro text: 
Bradley A. Buckles
Magazine profile: 
Complete transcript: 

Arlington, Virginia

Friday, May 19, 2000

Mr. Lawrence: Welcome to The Business of Government Hour, Conversations with Government Leaders. I'm Paul Lawrence, a partner of 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 www.endowment.pwcglobal.com.

The Business of Government Hour focuses on outstanding government executives who are changing the way government does business. Our very special guest tonight is Bradley Buckles, director of the Bureau of Alcohol, Tobacco, and Firearms. Welcome, Director Buckles.

Mr. Buckles: Thank you. Glad to be here.

Mr. Lawrence: Well, in this first segment let's find out more about the Bureau of Alcohol, Tobacco, and Firearms. As I recall, the agency can trace its history to the Revolutionary War and the Whiskey Rebellion in 1794. Perhaps you could tell us a little more about the history and bring us up to date.

Mr. Buckles: Well that’s right. Some people have also remarked that we were the Internal Revenue Service before there was an Internal Revenue Service. The very first taxes laid by the Federal government were taxes on alcohol. During a large portion of the early United States, excise taxes on alcohol and tobacco formed a major source of U.S. revenue. Income taxes, which, of course, are the major source of Federal Revenue, were a relatively late development during and after the Civil War.

Mr. Lawrence: You began your career at ATF over 25 years ago. Could you tell us about the various positions you've had during your career.

Mr. Buckles: Well, I've had a slightly different career for someone who would be the head of ATF, or the head of an agency of this sort. I entered the government in 1974, in a position of an attorney advisor in the office of chief counsel in our headquarters office and spent my entire career there until I was named the deputy director in 1996. In the chief counsel's office, I held a variety of positions of assistant to the chief counsel, assistant chief counsel for litigation. I was the deputy chief counsel for twelve years and then served as the chief counsel before becoming the deputy director. But, my entire career up until that time was on the legal side of ATF.

Mr. Lawrence: You are currently one of the highest ranking career officials in the Department of Treasury and I'm curious, could you tell us about your role as a career official in a very political town and very high profile agency?

Mr. Buckles: Well, it's what makes the job interesting. Let's put it that way. I'm a career employee and I love the fact that I do it. I've worked with Republicans and Democrats throughout my career, probably more Republicans than Democrats to this point in time, and our issues are controversial with both sides of the aisle.

In Congress, they don't necessarily fall along party lines when it comes to issues surrounding alcohol and tobacco and firearms. So, it's an interesting challenge to be able to work with those issues and everyone on them. It's why I believe the ATF's primary value is to be depended upon by the political leaders of either party as someone who tells it straight, deals with the issues fairly and frankly, and doesn't attempt to carry its own agenda onto the sensitive issues that follow these products.

Mr. Lawrence: Are there different management perspectives, based on where you are as a career official versus a political appointee -- that we expect different management styles, perhaps.

Mr. Buckles: Well, I don't know that it would be so much different management styles because there are political appointees who would be running agencies of ATF's size -- throughout the government. I think, as an executive, they probably would face the same challenges that I would face.

One thing that is different is that they would normally carry the responsibility of setting the administration's political agenda on different offices and programs that they were responsible for, whereas that is not our responsibility to set the political agenda. Our responsibility is to execute on the agenda set by the Congress and the administration.

Mr. Lawrence: A few minutes ago, when you described your career, you said you had spent some time as the deputy director. How did that prepare you to become the director?

Mr. Buckles: That was probably the most important time. I served as deputy director for four years. One of my principal roles as deputy was to chair of our strategic leadership team. That's almost like a board of directors, if you will, within the agency that we use to set our strategic plan and insure it's being implemented throughout the agency. That was the first direct management position that I was in at ATF and it was probably the most important in terms of setting me up for my job now as the director.

However, one of the advantages of working in the chief counsel's office and being in headquarters was that I had been part of the executive staff and strategic leadership team in various forms for probably about 15 years prior to becoming director. So, I have a good history on what we've done in the past, why we did things in the past, what worked, and what didn't work. The deputy director job then set me up where I was in the position of actually making the decisions about those as opposed to being in an advisory capacity.

Mr. Lawrence: What were the lessons you learned from actually having to make the decisions, as opposed to being an advisor?

Mr. Buckles: It's always easier to give the advice. I can tell you that. Even the transition from deputy to director… as deputy I was often in a position where I was advising and recommending to the director what kind of positions to take and I am now in a position where I don't make recommendations. I have to make the decisions and carry them out. It's a different mind frame that you must be into, but I've enjoyed it and it's new challenges that I've found very exciting.

Mr. Lawrence: One of the things I found interesting is that you bring a legal background to this position, rather than, I think, a more traditional law enforcement training. So, I'm curious how your legal background has helped you as director?

Mr. Buckles: As I've watched this city change and government agencies change over the years, everything you do in the management area is becoming more and more a legal issue. I'm sure it's the same thing in the private sectors where counsel are playing a much greater role in almost everything a corporation has to do because of the legal implications.

The same is true, and probably even more so, in the Federal government where personnel decisions, procurement decisions, the whole range of things that would normally be management issues, are all very heavily laden with legal requirements. Having that background and understanding the legal implications of different aspects of our work, I think, is something that helps me tremendously in dealing with and understanding the implications of the problems that we face as a bureau.

Mr. Lawrence: I've also heard it said that the study of law just makes an individual more rigorous about approaching problems as well.

Mr. Buckles: Well, I think that is probably true because of the way we learn things as lawyers. The way we learn to analyze and break things down -- test theories. It is a different way of thinking than you would quite often see in some traditional management approaches which can be somewhat more rigid in terms of the decision making process.

Mr. Lawrence: Speaking of management, a minute ago you talked about the strategic leadership team. Could you tell me a little bit more about this team and its role?

Mr. Buckles: We sat down five years ago to set out a strategic plan for ATF -- this was a task that we were set to by then Director John Magaw who had joined the ATF from Secret. When we sat down at that time, part of the structure we came up with to carry those plans out into the future was that we had to operate as a team on the executive level to see any of those plans through. If we simply came up with grand schemes and then everybody went back to their office and took care of their own business, the strategic plans would not be met. The day-to-day demands would continue to govern the decisions that were being made as opposed to the long-range goals.

By setting up a strategic leadership team, which was composed of all of the assistant directors who were required to be thinking beyond their particular business operation, everyone was required to be thinking of larger bureau issues and the implications of all of the decisions we were making. It forced us to make more strategic investment decisions about where we were going as an agency and, by using that larger body, make sure that everybody was pulling in the same direction and achieving those goals.

Mr. Lawrence: Well, great. It's time for a break. We'll be right back with more of the Business of Government Hour.


Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner of PricewaterhouseCoopers, and tonight's conversation is with Bradley Buckles, director, Bureau of Alcohol, Tobacco, and Firearms.

Well, on this second segment, let's talk about ATF. I'm curious, what are some of the biggest changes you've seen at ATF since you've started?

Mr. Buckles: Well, it's hard to know where to start. When I arrived at ATF in 1974, it had only been an agency for two years. Prior to that, it had been a division in the Internal Revenue Service. As a two-year old agency, it was still searching for exactly what it was supposed to be, what its mission was. And it had a lot of people who had worked at ATF during days when moonshine liquor was the highest priority of the bureau, going back into the '50s, when that was a very big part of what ATF did. That transition, moving from a focus on alcohol issues to the firearms and the explosives area, and on top of that, being a bureau that was set adrift from the Internal Revenue Service, was quite a challenge to figure out how to pull all that together into a cohesive fashion.

What I saw over the years, I once used the analogy of a child growing up… that as part of an agency in trying to be able to know where we're going you have to have a sense of your past. There was so much of ATF that was new at the time. We were trying to learn what we were without really having a past to work from. Firearm laws were new. Explosive laws were new. It took quite a while for us to have a real sense of our mission and what we needed to be doing and for that to start to jell.

Again, using the analogy of a person, which I've used a couple times in different speeches, if you think about when we started the strategic planning mode, it would have been when the agency was about in its early '20s. Just like people, sometimes you have to get through those early times of groping, not sure of what you want to be and how you ought to get there. And by the time you're in your 20s is when you really start having a sense of what you want to be in life.

As an agency, that was a period of time when I think we were able to jell, to have a vision for what we wanted to be, a vision for how we were going to use the laws that we had under our jurisdiction and accomplish important public policy goals. So, that's kind of what I saw with ATF… a growing posture where we were making mistakes sometimes going in wrong directions, learning from those mistakes and going in another direction, until finally it all began to come together, I think, just five or six years ago.

Mr. Lawrence: I was going to ask about the management challenges the agency faced when its mission began to expand or get other emphasis in the firearms example you indicated?

Mr. Buckles: That was a difficult one. Now one of the things that have alcohol, tobacco, and firearms together is the similarity in the statutory structure of all of those laws. It's how it all ended up in the same place in the Internal Revenue Service, for example. Each of the products is heavily taxed. Each of the products has a regulatory scheme that calls for licensing. Each of them has various controls on them from a regulatory fashion that the license businesses need to comply with. They have a lot of criminal misuse issues surrounding them.

So, they all have those common themes and that’s how they ended up in the same agency. From a technical point of view, the types of tasks being carried out under those laws were quite similar. But the philosophy behind each one of those laws and the purposes were different. When I first came, there was a heavy emphasis on the alcohol work. Trying to translate that… having inspectors who had worked in alcohol plants suddenly go into firearm dealers. It’s the same kind of work, but it's a very different thing walking from a large alcohol plant or winery into a retail firearms business in terms of your sense of yourself.

That took a long time. It was a tough transition as I watched it happen. As a matter of fact, when I first came, we still had inspectors who were in distilled spirits plants with government locks on all of the warehouses. And distilled spirits plants couldn't even take the distilled spirits they produced unless a government storekeeper would come and unlock the warehouse, let them have a certain quantity of liquor that would be measured at the time -- and then it would all be locked up again under government lock.

So, these were people who were working in this field suddenly dealing with issues surrounding firearms and explosives. It was a management challenge to figure out how to get your work force retrained and reoriented towards new work. But all of that boiled down to, as much as anything, people issues in terms of training and development of people.

Mr. Lawrence: There are several Federal law enforcement agencies, as well as many state, that work closely with you. I wonder if you could talk about who they are and what those relationships are?

Mr. Buckles: Probably almost every Federal and state and local agency. ATF is in a position where the laws that we enforce… for example, the gun control act, the actual title of that statute was the State Firearms Assistance Statute. Because that's what it was designed to do, to put a Federal overlay on top of state laws that basically requires dealers and others to comply with state laws, we could deal with the interstate aspect of that. So, anytime you are dealing with that kind of law, everything we're doing is basically trying to assist state and local enforcement authorities. But when firearms are involved -- people rob banks with firearms -- drug dealers use firearms. Almost any other kind of crime, even at a Federal level, is quite often going to involve firearms or explosives. So that requires us to work closely with a variety of other federal agencies as well.

It's something that is part of ATF's culture. We have a saying that we have a history of partnerships that goes back even into the '50s, the old moonshine days. We've always had very close relationships with state and local agencies. That's basically part of our standard operating business, getting along and assisting others.

Mr. Lawrence: A lot of Federal agencies don't work well with other agencies. I'm wondering what the lessons learned are from your experience?

Mr. Buckles: I would leave that judgment as to whether some of them do or don't to others. But I will say this. I think that in law enforcement and in government in general, the old paradigm was that everybody had their responsibility and you could basically carry out your responsibilities and didn't need other people to do it.

But the world has become too complicated, too fast moving. Everything is done too quickly and people can't operate in that environment any more. So, the challenge of every law enforcement agency is to be able to get along and cooperate with others.

The only solution to that would be, for example, a national police force and nobody believes that's the right direction for this country to go. So as long as we believe for a lot of reasons there shouldn't be a national police force, then that makes it all the more incumbent upon Federal agencies to learn how to deal with each other and cooperate. I'm very optimistic about how things are working in that area.

Mr. Lawrence: It's time for a break. We'll be right back with more of the Business of Government Hour.


Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner of PricewaterhouseCoopers, and tonight's conversation is with Bradley Buckles, director, Bureau of Alcohol, Tobacco, and Firearms. One of the things I was interested in is that ATF has published a customer service plan. I was curious if you could tell us about the plan and who your customers are.

Mr. Buckles: Sure. Maybe before I talk about that plan, I'll mention some of the backdrop on developing that. ATF has, I think, been in the forefront on trying to redesign, re-engineer the way we operate and operate more like a business. Traditionally, governments didn't have to operate like a business because, unlike a business, they didn't have competitors and they also were a creature of statute or law that fixed what their responsibilities were and how people had to deal with them.

We've seen over time that more and more of the government is being expected to act like a business, to prove its value every day. I think that an agency like ATF that has had a history of people challenging whether or not we should exist, how we do our business. That has, from a government agency point, been very difficult.

Not every agency has had to face what we have. But what we've tried to do is turn that challenge about our existence and our worth from a liability to an asset. That asset being that we're going to be able to prove our worth. So we are going down a path that's going to attempt to hold ourselves more accountable, to make ourselves accountable publicly, in order to prove our worth.

Customer service plans is just one of those elements. We have performance plans and goals that arise out of our strategic plan as well. But the customer service plans deal with both internal and external customers to get back to that question. Basically it's going to cover anyone that we have to do business with. That's going to be people that we license, people that pay taxes to us, people who have to file different kinds of applications and approvals that were required to make in almost all the industries that we regulate. So that's the major part.

In the law enforcement arena, we also have customers, customers of our firearms tracing capabilities, customers of other law enforcement services that we can provide the state and locals. With those, we're trying to set plans on each one to measure what it is the customer wants and whether or not we're delivering what the customer needs. Then, when we are asking for money and appropriations we can show to the Congress what it is we're doing with the money they gave us, who the customers are, and whether or not we're satisfying that need.

Mr. Lawrence: You also mentioned in the list of plans a performance measurement plan. Could you touch on that too, please?

Mr. Buckles: Sure. That's a requirement of the Federal government that every agency is supposed to set up some sort of performance plans that show how they are meeting their strategic goals. I like to think that we've been out front on that at ATF. We're going beyond simply performance measures of what we're doing and trying to show the actual outcome of what we're producing as well.

Again, it's very important. When we go to the Congress and are asking for money, we're almost challenging them. Look at what we do… look at how much money you're giving us to do it. We'll challenge you to go anywhere else and see that somebody else can do a better job at this or do it at a better value. That's the challenge that we want to be able to put forward. We're confident if we're measured against other people on those goals, people will readily see the value and worth of ATF.

Mr. Lawrence: A key factor in the success of any organization is its people. Could you tell me about the ATF personnel system and the career path of an ATF agent?

Mr. Buckles: Sure. I'll start with the second one, the career path of an ATF agent. Normally we're hiring as agents people at a fairly young age, generally straight out of school or, perhaps, with two or three years of law enforcement experience, quite often at the state and local level. One of the challenges we have on attracting people is that since we're a nationwide organization, we need a work force that's mobile.

So, we have to attract people who are willing not only to suffer the challenges, the threats, and the dangers of being law enforcement officers, but the disruption of being moved and what that does to one's family. And so, it's a difficult challenge that we have. Normally, an agent, if we have somebody who rises to the level of an assistant director, has probably moved at a minimum seven times in their career to go through progressively higher level positions.

They'll generally have to move when they are going to become a supervisor. They'll move again when they are going to become a manager. They'll move again when they are going to become an executive in the field. Somewhere in there they are going to have to have come in and out of headquarters a couple of times before they reach the higher level of operation within the bureau.

But throughout that, what I think gives us an advantage is that people drawn into the law enforcement profession, unlike others… there's a certain dedication to the profession that allows them to put up with some of those problems. They believe in the larger mission that they're trying to carry out as law enforcement officers. We wouldn't have the same success with people in other fields in ATF. If we were uprooting people who were personnel specialists or contract specialists, we wouldn't see that same willingness to go through the moves and suffer that kind of disruption.

We've got two or three work forces within ATF, agents are one major portion. They make up slightly less than half of the bureau's total population. We have inspectors that are not sworn law enforcement officers, but they inspect license premises and ensure compliance with the regulatory requirements. We have chemists, auditors. We have lawyers. As you can see, lawyers haven't been required to move, unlike agents. So, it's a very diverse work force that we deal with at ATF and the agents are just one segment and they tend to be what people see because they are our most public segment of the bureau.

Mr. Lawrence: Have you had problems recruiting?

Mr. Buckles: Not too much. It's surprising. It's a dangerous field to move into. There are a lot of law enforcement agencies that are trying to hire these days. But ATF's reputation within the law enforcement community seems to always give us a leg up on hiring. I know even other Federal agencies sometimes groan when they hear ATF's hiring because there are agents in other segments of the Federal government who have left other agencies and come to ATF.

Mr. Lawrence: What are the challenges of managing an organization that is nationwide, as I understand it, with something like 331 field offices. How do you manage a decentralized organization like that?

Mr. Buckles: That is one of the greatest challenges. Now, when it comes to law enforcement operations, the business is driven by what the problems are in each location. We can have law enforcement officials who are basically empowered to respond to the problems that are taking place in a given area.

It becomes more of a challenge when we talk about our regulatory responsibilities where we're licensing somewhere in the neighborhood of 80,000 businesses around the country. We have offices all over the country that are interacting with those businesses, advising them on how they are to conduct business to make sure they’re in compliance with the Federal law and regulations. It gets much more difficult to keep the consistency that you have to have in a regulatory environment which is different than you have to have in a law enforcement environment.

That is the greater challenge that we face with a decentralized organization and we try to carry that out through a whole variety of things. But I have to tell you, information technology, Internet, and similar communications systems are rapidly improving out ability to get information out and to maintain consistency without trying to direct every single decision out of headquarters.

Mr. Lawrence: How about the training of ATF employees. I'm just curious -- what kind of training is offered?

Mr. Buckles: One of our major directorates is an office of training and professional development. We consider that a major part of our business, both training our own employees and we do considerable training for state and local and other Federal officials as well. So, with that office, we are able to provide extensive training, for example, with agents and inspectors.

The main occupation series have very detailed, long term training programs that they have to go through before they can even be an ATF agent, and the same would be true of inspectors. The time period is not quite as long. But the office of training is also responsible for ongoing training for all of the other professions in the bureau. We do our own agent and inspector training, but when it comes to other forms of training, we outsource a lot of that -- rather than trying to reproduce it ourselves.

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


Mr. Lawrence: Welcome back to the Business of Government Hour. I'm Paul Lawrence, a partner of PricewaterhouseCoopers, and tonight's conversation is with Bradley Buckles, director, Bureau of Alcohol, Tobacco, and Firearms.

On this last segment, I'd like to look out to the future, but first start by looking back. ATF recently celebrated its 25th anniversary. As you look back, what are some of the milestones and achievements that stand out to you?

Mr. Buckles: Well, over the 25 years, I think that if you look at the enforcement of firearms laws, the collection of taxes, that ATF is an agency that has had tremendous amount of successes. Man for man, dollar for dollar, our tax collection is difficult to surpass.

We only have a couple of hundred people that are dedicated to the collection of approximately $13 billion in taxes. We do it very efficiently, very effectively. We've changed the system where in 1979, we still had inspectors in the plants keeping a proprietor's stock of liquor locked up behind a government lock to a system where we can now collect all of these taxes with a relatively small number of people.

Our goal, of course, is to collect the most taxes with the least amount of people and the least amount of grief on the part of the people who have to pay the taxes. We've been making great strides along those lines over the whole course of that 25 years in modernizing the collection system. In firearms, we've moved from a nation that basically had no firearms laws on a Federal level in 1968, to a system now where there are 103,000 Federal firearm licensees.

There are very controlled systems through which firearms are sold. We've implemented -- successfully implemented -- the Brady law, the Federal assault weapons statute, and a whole variety of laws over those years. We've also grown during those 25 years by receiving responsibility over the explosives industry through the Federal explosives laws. And the work that we've done in the area of bombings and arson, which flows from the explosives laws, has been a source of great pride with ATF.

Federal arson investigators from ATF were responsible for a lot of the work on the church arsons that were occurring a number of years ago, and we had a very high success rate in bringing those to conclusion. We now have a fire research laboratory that is being built out in Beltsville, Maryland. That's going to provide state of the art fire research for arson purposes… that we're working with the U.S. Fire Administration and others to have a world class facility. So, we've accomplished a lot over these 25 years from the days when we were pulled out of IRS and told to figure out what we were supposed to do to where we are today.

Mr. Lawrence: What are the key challenges for the future?

Mr. Buckles: Well, the key challenges that ATF faces are probably what every industry faces and that's technology and information. That is the direction that we need to be going where we can make the biggest impact, whether it's our revenue responsibilities, or consumer protection responsibilities, or our crime fighting responsibilities.

What we can do from a technology point of view of providing information and knowledge into the right hands is going to make a difference. Our technology and information area is allowing us to setup a national crime gun information center in West Virginia. It will allow people for the first time to really understand the movement and the trafficking of crime guns, where they come from, where they're going, in a very systematic way. Before, when we dealt with the problem, when a crime gun was used, we worried about trying to catch the person who committed the crime.

This will be a system that will allow us to take a more proactive approach to crime guns. We also have technology systems that are going to allow us to identify firearms on the basis of ballistics evidence. Today, you can -- if a firearm fires a round -- look at the projectile or the shell casing from that firearm… and it's like a fingerprint for a human being. People can look at those and identify it.

Technology is going to allow us, I'm sure, in the not too distant future, to be able to have that shell casing fingerprint associated with the serial number at the manufacturer level. We have a pilot project going on with one of the manufacturers right now to do just that. That means when a shell casing is recovered from a crime scene there's no suspect, there's no gun found, but if there's a shell casing left behind, we would be able to look at that shell casing and identify the firearm that it was fired from. And then from that, go back and trace the ownership record of that particular firearm.

Our ability to be able to provide this type of information to local law enforcement trying to solve a murder, is going to be a critical part of our future business in ATF. In the tax area, there are alcohol taxes and tobacco taxes collected -- not only at the Federal level, but also at every state level. And we're looking for ways in which, using technology, we can start blending those systems together to have a system that works more or less seamlessly to collect both of our taxes without causing duplicate efforts in 51 different locations.

Mr. Lawrence: What are the challenges for the employees? In one of your examples you spoke about it a minute ago, you described a system where employees were manually locking up stock. Now it sounds, from a description of the technology and the science brought to it, it's a very different employee now.

Mr. Buckles: That's right. The employee that we're going to be looking at is going to be much more information based as well. The service that they're going to be providing is not necessarily unlocking a lock or always helping physically investigate a crime scene, although that will be necessary. The tool that we will bring will be a greater level of expertise. I think that's what our value will be in the future. It’s not just the individual helping and doing the work but the expertise that's going to be behind every ATF agent and they'll be carrying with them.

Every ATF agent has a laptop computer today. That laptop computer is locked into virtually every database we have as a bureau. An agent arriving at a scene to help a state and local officer today, and even more so into the future, brings with him every piece of information that the bureau has with them in terms of helping solve that crime or deal with the situation they're looking at. The employee of the future is going to be the employee that has that laptop computer and brings with him the entire expertise of the bureau each time they show up.

Mr. Lawrence: Just to give our listeners a sense of perspective, the United States isn't the only government that faces challenges on alcohol, tobacco, and firearms. So, I'm curious, how do we fare compared to other nations dealing with similar problems?

Mr. Buckles: Well, as I explained, we have, I think, a very efficient system these days for collecting the alcohol taxes. If you -- just to digress for a second -- if you remember back in the '50s when there were the moonshiners, one of the reasons is that the tax on alcohol at that time was $10.50 a gallon on distilled alcohol.

If you think about what $10.50 was in 1951, compared to what it is today. Today the tax is only $13.50, so it hasn't gone up very much. It would be like if the tax was $50 a gallon or something today. So part of our system has been that the tax burden isn't there and we get much better compliance. But, we've been working with a few countries that are decades behind us when it comes to establishing these systems. We've worked with a number of the former eastern block countries, with Russia, Hungary and a number of other countries to help them try to set up a tax code that's never existed on alcohol and tobacco products.

The problems they're having with widespread diversion of the product, widespread illegal activity is reminiscent to what we would have faced many years ago, in some cases, reminiscent of the Whiskey Rebellion.

Mr. Lawrence: Well, I'm afraid we're out of time. So, I want to thank you, Director Buckles, for spending some time with us this evening. I've enjoyed our conversation very much.

Mr. Buckles: Thank you for having me.

Mr. Lawrence: This has been The Business of Government Hour, Conversations with Government Leaders. I'm Paul Lawrence, a partner of PricewaterhouseCoopers, and the co-chair of the PricewaterhouseCoopers Endowment for the Business of Government. To learn more about the Endowment's programs and research into new approaches to improving government effectiveness, visit us on the web at www.endowment.pwcglobal.com. See you next week.

Barbara L. Burkhalter interview

Monday, November 29th, 1999 - 20:00
Barbara L. Burkhalter
Radio show date: 
Wed, 05/03/2000
Intro text: 
Barbara L. Burkhalter
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 at PricewaterhouseCoopers, and 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. To find out more about the endowment visit us on the Web at www.endowment.pwcglobal.com.

The Business of Government Hour focuses on outstanding government executives who are changing the way government does business. Our guests tonight are D.J. Lavoy, director of HUD's Real Estate Assessment Center.

Mr. Lavoy: Thank you.

Mr. Lawrence: We are also pleased to welcome Barbara Burkhalter, deputy director of REAC. Welcome Barbara.

Ms. Burkhalter: Hi. Thank you.

Mr. Lawrence: Joining me tonight is Barry Dennis, also a partner at PricewaterhouseCoopers. Hi, Barry.

Mr. Dennis: Hi, Paul.

Mr. Lawrence: Why don't we begin this first segment by talking about REAC and your careers. I guess we'd be interested in finding out more about REAC.

Mr. Lavoy: The government always likes acronyms. REAC stands for the Real Estate Assessment Center. And what is the REAC? It is an organization that was created by Andrew Cuomo, secretary of HUD, with the sole purpose of looking across all of HUD’s program areas and assessing the property and the management of the property across that entire portfolio — new concept in government, not so in the private sector. Basically, cross-matrix management is the model.

Mr. Lawrence: Barbara, any thoughts?

Ms. Burkhalter: Well, I think we had some problems, and REAC was set up to solve a lot of those problems, and to achieve a more efficient, streamlined, centralized government.

Mr. Dennis: Each of you I know has had a really diverse career path. Each of you has gotten to the positions you're now in following a different path. Could you each tell us something about how you got to where you are?

Mr. Lavoy: Sure. The goal that has brought me to this point, or to this post, has been an interesting one. My career started out a long time ago as an aviator in the Marine Corps. I also had a background in finance and a background in management that has brought me to numerous reorganizations and building of organizations. This has been somewhat the poster test, if you will, for 25, 28 years of government service.

I left the Marine Corps a few years back, and at the invitation of the secretary came in to build this organization. The background of being in leadership positions, of being involved in change management, building IT systems, and being involved in the change dynamic are things that I have been fortunate enough to be involved with.

Just by beautiful coincidence I think, and probably the secretary's insight, those four criteria or qualifications are what I brought to the game. I'm sure Barbara can tell you that she has similar ones, which she will in a minute.

This has been probably a textbook case of being able to take an organization that didn't exist and bring it into an operation capability as a function of having those unique backgrounds. Barbara?

Ms. Burkhalter: My background is primarily as a financial manager. I started out working for the budget office in the state of Wisconsin. After that, I went to a large public accounting firm for 12 years as a financial manager. So the whole financial assessment business was one of the things that HUD saw from me to put me in this position.

I’ve also spent about 8 years with public housing programs, another piece of the puzzle and knew how the programs actually operate. Then the third piece was designing systems. One of the things I had done at HUD was design a large financial management system, install it and implement it for hundreds of users. I think all of those pieces together were why I was plucked out of the program and put in this position.

Mr. Lawrence: This is an interesting combination. D.J., you had no HUD experience, as I understand it.

Mr. Lavoy: None.

Mr. Lawrence: Barbara, you had a lot.

Ms. Burkhalter: Yes.

Mr. Lawrence: I'm wondering the pluses and minuses of having people from both outside the organization and inside the organization starting REAC.

Mr. Lavoy: It has proven to be extraordinarily complementary, and I'd have to defer to my partner here to see if she had the same opinion. In my view it has been, because I brought a fresh view and the background that saw the change that was required as an outsider.

I would offer that Barbara has for some time been frustrated, as are many of the managers within government, at not having the opportunity to put change in place. I think that, in itself, was one of the things, because an opportunity came, and when the stars align and everything looks right, then those opportunities are rare, and that's what I think the REAC is all about. We've had that kind of opportunity.

Ms. Burkhalter: I guess the way we've divided up the work, in some ways, is I focus on the financial work and D.J. focuses on the construction side because those are our two prime businesses. The other way was I handle a lot of the internal work of the REAC and he handles a lot of the external work of the REAC. So we have those talents. Also, I'm much more interested in dealing with the people, the contractors, building systems, and I like that role. And he likes the role -- I hope he likes the role, because that's role he has -- that deals with the constituents and the politics and the external side of the business.

Mr. Lawrence: Did you both come as a package, or who was hired first? How did this come about?

Mr. Lavoy: Barbara had been here, as she said, for 8 years.

Ms. Burkhalter: I was at HUD for 8 years, and I was brought in to kick the REAC off. It was a little but staggering at the time, and they needed new people. So I was brought in first, probably a month to two months ahead of D.J.

Mr. Lavoy: Right. One day the secretary called me in and said you've done quite a few things for me already, but I think there's one more thing you can do that will make a big difference to this country and to the future of HUD. Then, he asked if I would mind being in charge of an organization called REAC. He explained to me what it stood for, and the two of us met each other there the next morning, Barbara and I. And here we are today.

Mr. Dennis: It sounds like the secretary specifically wanted to bring in the diverse backgrounds you have.

Mr. Lavoy: Yes, without question.

Ms. Burkhalter: New people that had no real connection with even the thought. It was a new thought that had been set up say 6 months earlier, but we were there to implement it, to make it happen.

Mr. Lavoy: In Washington (and many people will smile to themselves in acknowledgement) people appreciate, and my own experiences amplify this for me, the mantra that you should get things done quickly and you do them as accurately as you can to get the 80 percent solution and then refine. You can say, anecdotally, that's to fire, ready, then aim, if you will.

And that all comes about because many people don't want to see change. And it's not because they are bad and you're good, it's just that they're comfortable with the way business works, i.e., HUD and some of the things that were working and not working, and the Secretary being the visionary he is, I think quickly understood that.

As Barbara said, 6 months prior to REAC there had been a lot of looking at what had to be done to fix a "troubled agency" that had been in fact declared so, and that's what his success story and what I think his legacy is. He has turned around an agency that was basically on its knees into something now of a benchmark, and the REAC has been a big part of that. His vision, him being able to take the players, myself, Barbara and other key people, and put us together, to say this is what needs to happen, then give us the resources to do it has helped us be successful.

Mr. Dennis: Again, you each do bring a very different background to the job. I know you've worked very effectively together. It's clear you guys have taken different roles but meshed well in accomplishing what you have. What in each of your backgrounds has prepared you to do that so well?

Mr. Lavoy: Good question. I'll ask Barbara to answer that one first.

Ms. Burkhalter: In other words, to be compatible?

Mr. Dennis: To take a jet fighter pilot and a financial analyst in different roles and to do it so seamlessly.

Ms. Burkhalter: Well, you know what? We're actually having fun. I have to tell you that it's been the best job I've ever had. It's been the most fun I've ever had, and I think it's because things happen every single day. Every single day we're able to make a difference and we're able to make something happen. So that's part of it. I think both of us just enjoy that process.

Mr. Lavoy: I'd concur with that. I think that philosophically we both, as do most of, in fact all the people that are there, believe in good government. That may be a high-sounding statement, but you have to have that understanding or philosophical underpinning. We believe that this project is important. There are 6 million people who depend upon the housing provided by HUD. And the look of satisfaction on the faces of almost everybody who sees the things we've been able to accomplish is probably one of the real drivers for us. There is a definite outcome; people's lives are affected, and we are making change.

More personally, we both are committed to excellence and we both believe in making things happen. And that is probably the real strong point that enables us both, from different backgrounds, diverse if you will, work together; that philosophical point is the one that I think really gives us the most symmetrical application to this.

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


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with D.J. Lavoy, director of HUD's REAC, and Barbara Burkhalter, the deputy director, and joining me is Barry Dennis.

Well, we know that REAC is an E-business, and you've won an award from Government Executive magazine. Could you tell us about that?

Mr. Lavoy: Happy to. The award recognized our excellence in creating a system by which we electronically record the condition of properties. That sounds kind of technical, but the E-business in a bigger perspective is one that really tells the story of the new HUD and the REAC specifically.

As in many parts of government, what the problem has always been is that we've known how to do the job, but we basically have done it using paper, and paper by virtue of the volume and handling and logistics makes information retrieval less efficient. Picture a warehouse full of material provided every year. Say then you have a question and you have to go back and retrieve from this warehouse full of material an answer.

Knowing that was a problem and knowing what business areas we had to be in as assessors, we decided from the very beginning to build our entire REAC using the E-commerce model, in which everything is done on the Internet using electronic medium. As a result, we are able to take data, reams and reams that has now been put into data warehouse format for us, and do incredible amounts of analysis, including accurate, reflective, portfolio management, et cetera.

Let me defer to Barbara at this point just to add to that, but this has been the part that has been the most successful for us is creating this environment.

Ms. Burkhalter: I guess I was thinking back to the very beginning when we first started looking at the systems. At various times, as the system didn't seem to be working perfectly, we were tempted to use paper. I think several times along the way someone would have wanted to use a piece of paper to do an inspection or to take the financial statements, but we had to resist that at every turn because the volumes and the management of that would have been impossible. We had to insist on the electronic even if it was harder than maybe we were able to handle at the time and really push for it.

Mr. Lavoy: That's certainly true. We have been tempted, but we have been able to avoid those temptations for the most part. The volumes I speak of and the data? Just to make it relative for the audience; we perform 40,000 physical inspections of 6 million units and produce 22,000 financial statements, many, many pages in each provided by CPAs, IPAs, et cetera. Taking that in a standardized format and then coalescing it to get integrated risk analysis is what we're all about. Just to look at it from the logistics side, it has to be electronic or it can't be done.

But look at where it takes us in the future in terms of government. REAC is really the model for what the future HUD needs to look like, and other agencies of government as well. That same physical inspection that we won the award for is the same one that the Department of Agriculture is getting ready to partner with us and start all their properties. And we are in consultation with the U.S. Marshall's Service to start doing all of their properties using this electronic medium, and the IRS and their tax credit program as well.

What does that say? It's a successful program and all of government is understanding the importance of E-commerce in doing all of their transactions, in this case really E-business, business-to-business, using the electronic medium and all the things that it brings to the table.

Mr. Lawrence: How did being an E-business change the work? I get a sense obviously that it went faster and easier, but how else did it change the work?

Mr. Lavoy: The quick answer is, it has enabled us for the first time to be able to do real-time analysis by enabling us to have visibility of the key factors.

Ms. Burkhalter: In the past, the employee would receive a hard copy or paper version of a set of financial statements. They would probably, in turn, create some ratios; typical to the banking industry, they might record a quick ratio or current ratio. And then they would do something about that, all at their desk with paper, but people in headquarters wouldn't know anything about the results of that work if they even did it or how they did it, because it was all in different formats. The opposite is everything electronic. The computer does the math and the employees then do the specialized innovation to solve the problem. Intervention to solve the problems. That's the big change in the work product.

Mr. Lavoy: I have to bring in an additional point to go with that. You asked, how does it change the work. Well, that is really the fundamental piece and I kind of glossed over it, and I shouldn't have because it is the first time a government employee, or any employee for that matter, has been able to have all of the base line analysis done for them. So all they have to do is focus on what are the problems.

We have basically removed all of the cursory work and gone down to hard analysis with all of the individual efforts being focused on that. And you can truly, for the first time, do good risk analysis because you can remove those non-problem areas and focus your efforts on areas that are, in fact, in need of more human intervention.

Ms. Burkhalter: Even with a reduced work force, if you're focusing on just the problems, you can actually have a reduced work force and get more done.

Mr. Lavoy: Right.

Ms. Burkhalter: If that 5 percent of the problems is your focus as opposed to the 100 percent.

Mr. Lavoy: True risk analysis. Yes.

Mr. Dennis: REAC is implementing an E-business approach that is a new approach for everyone, private sector or public sector. Do you see any challenges that you're facing implementing it within a government context that are special to the government contexts that you don't see in the private sector? Do you think it's pretty much the same exercise?

Mr. Lavoy: By no means. We do a lot of benchmarking, and I'm a member of CAMI, the Consortium of Advanced Manufacturers International and two or three other professional organizations. In the private sector, it usually takes 6-8 weeks from the time that you want to institute a change to the time you have to put the change in place. You meet the pace of business, and I'm talking modifications here, and a bill is a little bit longer.

In government, because of the contracting issues, because of the existing infrastructure, because of the requirements for efficiency and broad application, there's a much more difficult problem you encounter. You have an existing structure, if you will, a large moving train, and to get it to change directions you have to put an incredible amount of personal effort into it to make it work.

Ms. Burkhalter: On the people side, on the technology side, I'm not sure it is different. I suspect the private sector has the same problems with the Internet access. That's one of the problems we have is our constituents are only moderately able to use the Internet. So we have to help them acquire an Internet service provider to use our data. They're coming of age with us. The technology is very new, so we experience problems with its stability in terms of application and software development.

Then the infrastructure, I suspect a lot of private-sector companies have mainframe systems that are still a little slower, a little older, a little more cumbersome to use, just like we do. So, they may have the same problems too.

Mr. Lawrence: It's time for a break. We'll be right back with more of The Business of Government Hour.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with D.J. Lavoy, director of HUD's Real Estate Assessment Center, known as REAC, and Barbara Burkhalter, the deputy director. Joining me is Barry Dennis, also a partner at PricewaterhouseCoopers.

We understand, Barbara, that REAC is very young, only 2 years old, but you've been able to successfully meet several aggressive deadlines. Could you tell us about that?

Ms. Burkhalter: I think D.J. mentioned before the 80/20 rule, and that's really what we follow constantly as our overriding principle. We try to get 80 percent done in 20 percent of the time and then move on because technology moves that fast. If we put all that extra time into that extra 20 percent of value, technology has gone beyond us and we've lost our edge. So we're very aggressive about how much, and when we call it quits and move on to the next one.

One of the ways we've been able to move fast is we have a very flat, simple organization. Everyone works directly for the two of us. We just have business product lines, and we have support lines. Everyone knows what their job is and they're all empowered to produce what they have to produce. They understand a very simple business of a production business with a system to support it.

We have very common business processes. We collect data, we process it, and we report it, and we don't change that. We make everybody follow the same model. We've even named all of our business systems with common-sounding names, except we changed the first letter. I think a lot of that simplicity is what's helped us keep going fast.

Then there is the issue of our contracting. We have very aggressive, flexible contracting so we can move contractors in and out as our business needs changed. Those were my thoughts on meeting aggressive deadlines.

Mr. Lavoy: The aggressive deadlines in themselves are interesting. They make for sometimes working beyond the traditional 8-hour day and the other things that go with it. But as you've heard from our previous comments, it has been a challenge that we enjoyed in our team, and I mean that in every sense of the word.

At REAC, we have a lot of government employees that are people very knowledgeable in resources and in programs in the traditional areas who are perhaps not completely up to speed on some of the latest uses of technology and all the enablers that go with it. On the other hand, we have a gifted bunch of young people who are very, very up to speed on the use of computers and all the tools that are provided via that medium.

Our approach is that we team these two constituencies together, sitting side by side in an open environment, team arrangement the program individual, knowing the subject, is enabled and assisted by a contract individual many times, and then many times government people. But in both cases they work together as a team, work to come to that same conclusion that Barbara is speaking.

That has been something on the visible side. Many times you walk into an office and you'll see government employees who are sequestered in an area and you'll have people who are providing contract support almost sitting on the floors, trying to do the job, and that is exactly the waddle that we would never follow. What we want to see happen and what does happen in our case, is that everybody sits side by side, everybody in the same equal compartment, everybody working on the same type of problems, putting those two very strong skill sets together and coming to the same joint solutions.

As to the timing of it, yes, we've done an awful lot in 2 years, and once again, it gets back to the fact that this is a secretary with a mandate who is looking to be able to accomplish this during this administration.

We know that the fire, ready, aim rule is alive and well and the 80/20 guides us to that point. I think that compression is probably in combining with the individual talents that we've been so fortunate to have with us here in the REAC, has enabled us to get to where we are so far.

Mr. Dennis: You mentioned several times and I think appropriately that to accomplish what you've accomplished in such a short time period has rested on the people you have and being able to use them effectively. Looking at it from their perspective, you've implemented an E-commerce model that is very different from the typical government model. What implications does that have for the employees in the way they do their work?

Ms. Burkhalter: I think this has been hard for our employees. Coming from the other government sectors as well as from HUD, they're used to being policy specialists, they're used to attending meetings, and they're used to advising and guiding somebody else, and we are totally not about that. We are about production, output, and outcomes. We're not as interested in they attended the meeting, but what did they go to that meeting for and what are they going to do with that information in terms of bringing it back to their business and producing a better product.

We're not interested in them showing up every day. We're interested in them actually producing a result. So I think it's been hard for them in some ways, but I'm actually happy, and I think they are too, once they change because this is a more job satisfaction type of a work environment.

Producing something every day is much more valuable I think to a person than just sitting waiting for the phone to ring, coming up with a policy or a thought. I think that after about a year and a half of doing this now, most of our people are pretty happy with what they're doing, and succeeding at it.

Mr. Lavoy: In the dynamics of change, as we all know, the cultural change is the hardest. This has been the real gratifying piece, I think, for both Barbara and myself because we have seen a very, very observable cultural change. Where people used to answer the phone and do the traditional perception of government, everyone now understands that they are part of a team which is different, that they are accountable and will be held accountable to a set of specific metrics. And they're all focused on an outcome that is an outcome that affects an awful lot of people.

I think it's that combination that has enabled us to be able to make the changes we've accomplished so far. People want to succeed and be part of a winning team.

Mr. Lawrence: REAC is a new organization, relatively speaking. Where did the employees come from?

Ms. Burkhalter: I took a look just roughly, and I'd say about half of them are HUD employees and the other half are either private sector or another government agency, and that's really helpful too. Not just private sector, but another government agency having people come to us really brings some new ideas as well. It's probably half-and-half, internal/external.

Mr. Lavoy: Department of Defense, Treasury, Department of the Navy, Interior, and Agriculture¼ . I mean, smatterings here and there. As Barbara said earlier, what we're about is we collect data, we analyze it, and we create knowledge and disseminate it. That's our core competency. It's about financial, about physical, about many other subject areas, we are bringing in people with basic skill sets, financial analysts, engineering analysts, et cetera, and then team them so that we can get to those outcomes.

Mr. Lawrence: Were they aware of the changes that were going to take place, or were you all aware?

Mr. Lavoy: I don't think so.

Mr. Lawrence: For example, I understand there are but two offices in your organization that you both have and the rest --

Mr. Lavoy: Are open.

Mr. Lawrence: Are open?

Mr. Lavoy: Correct.

Mr. Lawrence: Was that because there was no space, or was that by design?

Ms. Burkhalter: Actually we had the luxury, and I'm not sure very many people have this in their career, of being able to design the space to suit the business. We looked at several pieces of property in the city and we picked the one that was totally empty. It was cement blocks, wires hanging from the ceiling, and we designed it from scratch to suit the way we wanted to do business, which was open.

We could have put up walls if we wanted to, but we put the money into the furniture and the aesthetics of the building, and everyone has light, everyone can see a window, and the managers are not up against a wall. The managers are away from the wall, and the employees are close to the windows. We completely turned it around. I can't say that we've had people come in and say they hate working there because most people love it.

Mr. Lavoy: The open environment, when I was working with the Department of Defense doing programming which is interesting work where you're looking at the 5-year budget all the time, and teaming was something that I really saw the value of. You'd bring together 15 to 20 people looking at diverse programs and have to make hard decisions. But being able to communicate real time and work together, everybody rose to the highest common denominator of the team.

I've seen that work and I have used it in two other models, so that is kind of where I wanted to start.

As Barbara said, we were very fortunate. We are in a building that it was hard-wall cement and nothing there. We were able to acquire that property and have it built out so that we enabled teaming with communication built to an E-commerce model. That is a unique opportunity, where you can start from scratch and build your environment to your business model. Because, as you know, in most cases you have to adopt, and if it's going to be established government offices, you're going to have the traditional honeycomb. That just does not enable real-time communication or individuals to be able to do real-time knowledge sharing which is part of the strength of our organization.

Mr. Dennis: You both have mentioned lack of walls organizationally, I think, essentially, lack of walls physically to facilitate teaming within the office.

Mr. Lavoy: Right.

Mr. Dennis: I've witnessed that you've done, also, an unusually good job of developing teaming among the REAC employees and the contractors you use. That's not that normal in the government or anywhere else that I'm aware of. How have you accomplished that strong teaming between the contractors and your employee?

Ms. Burkhalter: I think one of the things we did, again, we build systems as our primary business, building automated systems to collect and process data. We put programmers right in the work areas alongside of business people. Just think of what that does. Typically you'd put your computer programmers in a wall-less, windowless cell some place.

Mr. Lawrence: That's where we'd put them. Yes.

Ms. Burkhalter: Right. You hide them because --

Mr. Lavoy: They look at little different sometimes.

Ms. Burkhalter: You might think that that's the best way to do it. We have them right out in the open and we watch programming as it's occurring. D.J. and I can walk through these hallways through their work areas and we can watch what they're doing so we know that they're actually working.

Secondly, if they have a question about the requirements, am I programming this correctly, all they have to do is spin their chair around and talk to a business analyst and ask "is this what you meant?" Or come over and look at the screen. Does this look like a screen that would work for you to do your business. Just think of the power of that real-time programming and systems development in production support.

Mr. Lawrence: It's time for break. We'll be right back with more of The Business of Government Hour.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's guests are Director D.J. Lavoy and Deputy Director Barbara Burkhalter of HUD’s REAC. Joining me is Barry Dennis, also a partner at PricewaterhouseCoopers.

You spent some time so far talking about the data you collect and the analysis you do, and I'm just curious looking out, what do you think the potential uses and additional analysis are for such information, both within say HUD and other organizations as well?

Mr. Lavoy: Let me just take a stab at that first and then defer to the rest of the table here because I know there's going to be a lot of good opinions on this. And it's really what the future of the government is about and, I believe where the current administration is heading.

Having the responsibility to the citizens of the country and to account for the dollars that are spent is an awesome responsibility. And it's one that is a lot of times not really understood by even government employees in terms of what you really do with your dollars and where they go.

The recipients, on the other hand, are expecting services. In this case, the mission of HUD is to provide housing. Traditionally we serve the lower one-third of our social stratum that need that hand up, that first start, that FHA starter house, that public housing for those that are going to transition into our economy.

Being able to actually do good risk analysis so that we can look at those providers that are doing what we are requiring of them as a government agency has been something that has been elusive at best in the past. Our data, we believe and know already, just by virtue of being able to do projections and risk analysis, trend analysis, et cetera, can tell us how many of all the properties we've inspected are in good shape. For example, 85 percent of the 6 million properties may be in good condition, another 10 percent are in need of very immediate repair, and 5 percent are in desperate shape. And in fact, the individuals managing them probably don't need to be in the business with the government any longer. The residents there certainly need to have their lives amended quickly so that their standard of living can be better.

I think, in short, the future is that credible government is based upon having good information so that government can make good decisions and that we can provide the services that we, in fact, are responsible for providing and that the Congress intends and provides the funds for.

Ms. Burkhalter: I was thinking about some specifics that our data could be used for — and we're not yet ready to do it — but as soon as our data is fully collected we'll be able to predict defaults on certain loans. With good data and with correlation, we can maybe do some things like that as opposed to reacting after the fact. Can we be on the front end of business decisions?

The same applies to income verification. Our families have to pay rent based on their income. Wouldn't it be nice to be able to report on the front end whether someone was eligible before they get into the program and then have to evict them or collect back rents from them. To the extent we can use our data up front because we have good predictive early-warning systems, I think that would be really valuable to the government and to the taxpayers.

Mr. Dennis: You're collecting large amounts of data that HUD has never had before, allowing HUD to do a much better of ways than they've been able do in the past. But a lot of this data has also never been available to the private sector. Do you see applications or uses for the data in the private sector as well as in the government?

Mr. Lavoy: Without question. Of course, we have to be very careful of the data and we want to make sure that all the particular applicable laws are applied in terms of privacy, et cetera. Barbara touched upon one that really points this out, income verification. There are 6 million families living in HUD housing and those people are deemed eligible by a congressional formula.

One of the things that's been problematic in the past is being able to determine on the front end that they are eligible and that they're paying the right rent. So, we want to make sure that when we use the information provided to us by the Internal Revenue Service and the Social Security Administration we're protecting the rights of the individuals and getting to that end point.

Now, that's kind of round circle to your question, what does the future show. As I said in an earlier comment, working with three agencies already, they are looking at these same models of taking data and using it to be proactive in making sure that we are accomplishing the intent of the Congress. From the business perspective E-commerce side, the private sector, we are in frequent conversation with the lender industry, with the mortgage bankers, with the inspection industry and with the appraisal industry. For the first time we have put electronic inspections together and now the entire industry is going in that direction and using our model unique for government, but it's good for HUD and I it's to show that we are a benchmark organization.

The appraisal industry, we're getting ready to go the same direction where we're going to be developing an electronic appraisal that will be then used in value estimations and conditions of the property and going the same direction with it. So there's a lot of future to this and it's once again collecting data in an effective way so that we can utilize it.

Ms. Burkhalter: We have lots of claims on our data. Everybody wants it, and we have to constantly balance that with Privacy Act issues as well as just pre-decisional. Not everything is releasable as raw data until it's been through all the process for follow-up refinement, quality assurance. We don't just release raw data to the public or even to our partners.

Mr. Lawrence: In an earlier segment we talked about REAC being an E-business. Seems to me, that everybody would say that all government would be an E-business one-day. But I'm curious, from your perspective, what are the special challenges the government faces in this area?

Mr. Lavoy: Many. The ability to exchange information and, more importantly, to provide to the public that information in a timely basis. Let's just use what's happening with the IRS right now with filing taxes. The IRS has seen, I think, a tripling of the amount of people electronically filing.

What does that mean? That means that our country is becoming much more E-commerce aware. Look at our ability to share with a reporting entity the results of their financial physical analysis giving them the remedy electronically, and then in a real-time fashion being able to monitor that. It portends much more efficiency. It portends better communication. It portends a government that is truly responsive to what individual taxpayers and regulated people and entities are expecting from government.

Mr. Lawrence: How about the special challenges to government managers?

Ms. Burkhalter: I think the special challenge with anything electronic is technical support.

Mr. Lavoy: Amen.

Ms. Burkhalter: We all have really lofty ideas. In fact, we haven't even tapped some of the things that we want to do. We have backlogs of ideas. What is holding us back is technical support and the infrastructure and the attitude toward making technology efficient, fast, and user friendly. It has to be easy for the users on all ends to get at it, and reliable. If it's not reliable, I think we're going to have more problems than we need. So, we're held back at the moment from all the things we want to do by the technical support that we need to keep it moving.

Mr. Lawrence: If it's challenging to get good employees, it's even more challenging to get good technology employees. So I'm curious, how do you get around that, or what special challenge does that pose to the government?

Ms. Burkhalter: We advertise in the Wall Street Journal. We do the best we can to hire and tempt people to come. I think we have to be more innovative though just like everybody and perhaps even provide our own training. We might have to train and grow some of our own people in that area.

Mr. Lavoy: We do face challenges just like everybody. The fastest-growing segment I think in the job market is probably people who are technologically proficient and have people skills. That's quite a combination.

We have been very fortunate in that we have acquired as part of our team, some key individuals who bring that to the table. But in the end, most people will tell you and I think most studies will carry out, that it's not so much the dollar that an individual receives because the private sector can reward more in terms of dollars. I think the big thing that brings everybody and keeps him or her there is job satisfaction.

As I think you can tell by our tone, is that the REAC is about job satisfaction. The environment, the way that we treat people, the ways that we team build. It really pays off for us because we have a lot of individuals who give us 110 percent, are always there, and provide incredibly good advice, and their credibility in the industry is such that it gives us a very strong position.

Mr. Lawrence: I'm afraid we're out of time. So, I want to thank you very much, D.J. and Barbara for joining us. Barry and I have very much enjoyed our conversation. This has been The Business of Government Hour, conversations with government leaders. To learn more about the Endowment's programs and research into new approaches to improving government effectiveness, visit is on the Web at www.endowment.pwcglobal.com.

Richard D. Calder interview

Monday, November 29th, 1999 - 20:00
Richard D. Calder
Radio show date: 
Fri, 04/14/2000
Intro text: 
Richard D. Calder
Magazine profile: 
Complete transcript: 

Arlington, Virginia

Friday, April 14, 2000

Mr. Lawrence: Welcome to The Business of Government Hour, conversations with government leaders. I'm Paul Lawrence, a partner at 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 www.endowment.pwcglobal.com.

The Business of Government Hour focuses on outstanding government executives who are changing the way government does business. Our guest tonight is Dick Calder, deputy director for administration of the Central Intelligence Agency. Welcome, Dick.

Mr. Calder: Good to be here tonight, Paul.

Mr. Lawrence: And joining me in our conversation is Ian Littman. Ian is a partner at PricewaterhouseCoopers and also the co-chair of the Endowment for the Business of Government. Welcome, Ian.

Mr. Littman: Great to be here.

Mr. Lawrence: Well, Dick, in this first segment why don't we begin by finding out more about the Central Intelligence Agency? The public clearly knows the brand, and we've read the books about it, but I don't think many of us know how the Agency is organized. Could you begin by talking about the organization?

Mr. Calder: Yes, I'll do that very briefly, Paul. The Agency is really built on four pillars. One of those pillars is the Directorate of Intelligence. That is really responsible for the evaluation, analysis, production, and dissemination of all source intelligence on key foreign-policy issues. This is really the key analytical core of the Agency, and they provide all source products to consumers throughout the government.

The second pillar is the Directorate of Operations, and they do clandestine collection of foreign intelligence, including human source intelligence. This is the directorate that does clandestine operations overseas and provides the product that our analysts find critical to doing the analysis and reporting that they do.

The third pillar is the Directorate of Science and Technology, and they're responsible for creating and applying innovative technology to meet today's intelligence needs. They are engaged in all phases of the intelligence process.

And the fourth pillar is the directorate for which I am responsible, and that's the Directorate of Administration. And while we do not do mission we enable mission. We do provide all the critical infrastructure pieces, and this is from finance to human resource to logistics to medical services, information technology, and communications, all of those things that make any vibrant organization work well.

Mr. Lawrence: Dick, you've had a distinguished career at the CIA. Can you tell us a little bit more about your career at the Agency and the various positions you've held?

Mr. Calder: Yes. I've actually been with the Agency for about over 30 years, hard to believe. Started in the mid-1960s actually as a communicator. I worked one overseas tour and decided to go back to the university and finish my degree. I came back to the Agency again in 1973 as a career trainee.

Following about a year of training I took Arabic language training and then spent six or seven tours overseas, mainly in the Middle East but some tours in Europe as well.

After that I came back and ran some of the senior offices in the Directorate of Operations, mainly for human resources and operations and management issues. And then I moved into the job that I'm in today in 1995.

Mr. Lawrence: Was it difficult to shift from field operations to administration?

Mr. Calder: Initially, yes. I had been a customer of the Directorate of Administration, so I understood how it worked, but now actually becoming the provider of those services and having to deal with some of the very difficult issues that we deal with in a demanding, ever-changing environment, it took me a little time to actually to begin to understand and figure out what areas I wanted to focus on. But because I understood the culture of the organization, the culture of the Agency, the change wasn't that difficult.

Mr. Lawrence: What are some of the biggest changes that you've seen in the CIA since you started, and what changes have you seen in the federal government overall?

Mr. Calder: In many ways I think the Agency has changed more in the last decade than it did in the previous 40 years. For up until the start of the 1990s the biggest strategic threat was the Soviet Union, and that's really gone and that's not going to come back.

Threats today are more diverse and dispersed. Our intelligence priorities shift continuously, presenting a much tougher environment for our collectors and for our analysts. The post-Cold War challenges are increased by the information revolution and by telecommunications. Fundamentally, all those issues are transforming the globe, transforming the way that we look at policy concerns and the way we look at security issues.

And the one thing that I think is really critically important is that everything seems to be moving much faster today than it ever did before. We seemed to have much more time to plan, much more time to make thoughtful considerations. Today we just simply don't have that luxury any more.

The one thing that I see is that Director Tenet has recognized this clearly and has really set a strategic direction for the Agency that calls on us to try and step up to these challenges in ways that we haven't done before. And he recognizes more than ever that the intelligence business is fundamentally about skills and expertise, and this really means it's about people, people in whom we need to invest more in order to deal with the vast array of complex challenges we face over the next generation.

And he has made this the center- piece of his strategic direction, and the centerpiece of what we're trying to do right now is develop the skills, develop the talent, develop the people that we will need to meet the many challenges that we are going to have to face in the next decade. And, of course, there are new technologies out there that we are going to have to master as well. So these are the kinds of changes that I'm seeing today at the Agency.

Mr. Lawrence: How about the changes that you've seen in the federal government overall, the entire government operation?

Mr. Calder: In some ways I think that those are some of the things that we're talking about, particularly in the information revolution. I just filed my taxes and I filed by e-mail. Today you can go online to just about any government organization and pull down the information that you need to get whatever thing that it is that you have to have done. This is a much different world that we're living in terms of the government's need to meet the consumers' demands in different ways.

No longer are people content with 800-numbers. No longer do people want to write letters and wait 3, 4, or 5 weeks for responses. Again, it's that speed issue. People want to deal, they want answers to their questions, they want those now, and over and over I see the government trying to respond to this.

Even the CIA has a Web site today. In fact, if I can plug it, I'd like to do that for those that would like to have a look at that Web site. It's www.cia.gov. All of us are trying to reach both the consumers of our products and those interested in us in a variety of ways that just simply weren't there 4 or 5 years ago.

Mr. Lawrence: What are the challenges managing at the CIA versus another organization? I mean, I think it is interesting that you have a Web site, but I would expect that the Web site is somewhat particular and unique given your mission. So what are the challenges of managing in this environment?

Mr. Calder: Well, one, I think it's the shifting and the uncertainty of the external environment which requires the organization to be much more flexible today than I think we were in the past. As I said, when the Soviet Union existed that afforded us a certain degree of stability, a certain degree of ability to focus on a single target. Today those targets are much more diverse, the interests of our policy community is much more diverse, and the time float, if you think about a crisis that erupts in one part of the world, CNN and others are almost immediately there.

So the pressure on our policy makers to make decisions, the pressure on our customers to respond, are much greater. Therefore, we have to be much more responsive in terms of being able to meet the needs of those customers as they try to address these issues.

In terms of the administrative side, this means that as our internal customers respond to these issues we also have to be there in a more agile fashion so that we can enable them to do the kinds of things that they understand have to be done from information technology, our communications, even being able to help them file travel claims more quickly. The expectation is that we will be much more responsive than we have been in the past.

It's the dot-coms that are killing us. Everybody has experience. Today if we put out an application that is three mouse clicks or more there's little tolerance for that. So people say why can't you do it better, why can't you do it like I do Amazon.com or one of those others that people are familiar with? So that's a real challenge for us.

Mr. Lawrence: It's time for a break. We'll be back with more of The Business of Government Hour in just a minute. (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 Dick Calder, deputy director for administration for the CIA. And joining me is Ian Littman, also a partner at PricewaterhouseCoopers. Ian?

Mr. Littman: Dick, let's spend some time talking about your current experience in reinventing the CIA. Before you took your present position in the Directorate of Administration, the Washington Post reported that you'd spent a lot of time criticizing it. What motivated you to take your present position, and what did you want to change within the directorate?

Mr. Calder: Ian, before I answer, I don't want to misrepresent myself. I'm not really trying to reinvent the CIA. It really is the Directorate for Administration over which I have responsibility. The Post did, I think, accurately capture what I said, but I want to really clarify that I wasn't criticizing the people in the directorate. It was really the bureaucracy that we have to deal with.

As someone who had to travel often, as someone who had to deal with a series of regulations often in environments where the regulations didn't quite apply it was always that battle back and forth about how do you fix this or how do you make it work here, and that was always a little bit frustrating for me. So that was the criticism.

And as I came into the job I said how can we make ourselves much more responsive, how can we take people who are imprisoned in this hierarchy that they work in and make them understand better what our customers need from us and therefore be able to shape and formulate policies that made the most sense to the people that were really depending on us.

And I think that in general I've read several articles of late that talk about the death of bureaucracy, people trying to move out of this command-and-control hierarchy of trying to restore some authority down into the ranks, and that was really what I was looking to do. Instead of having a series of policies and procedures that force things to march up through the organization, to try to restore to people who really work the front lines and understood the issues, to give them the authority and the capability to take care of problems on their own. That's what I was looking to do.

Mr. Littman: We note that one of your first actions was to perform an activity-based costing study. So I'm wondering for those of us at home if you could explain what that is and how you used it to drive your change initiatives.

Mr. Calder: Very, very simply, activity-based costing helped us to understand the cost of our processes. I think that one of the biggest problems with government is the free good syndrome. We could talk a lot about this, but basically I don't think any of us can get enough of a free good, and the administrative processes that we do, the services that we provide, were basically free to our customers.

And what I was trying to do was begin to understand what those processes, what those services, cost so that we could understand how better to deliver them. We could do some benchmarking outside.

For example, we learned very early on that a corporation, I guess I can mention the name, Hewlett Packard, has a very low transaction cost for some of the vouchering that they do, when compared to ours significantly lower. And it was only by beginning to understand the individual or incremental process costs that we were looking at that we could begin to see how we might do ours differently. So we needed to know those costs in order to drive some different behaviors within the organization.

Mr. Littman: Dick, as we all know, organizational transformation can be very difficult. What have you learned about changing large organizations?

Mr. Calder: Not enough. I would say Machiavelli says that change has no constituency, and I don't know when he said that, obviously many, many years ago, and I think that's very, very true through today. Change is great as long as it's happening to somebody else, and I think that what I have learned, one thing, is that change is never an event. It's a process, and it's a process that takes some time to get through.

What I found was that many of the things we were doing were more or less on auto-pilot. We had done them so well for so many years that the idea of thinking of doing them even slightly different was anathema to some of our people. What we had to do was to try to get people to reframe issues, get people to reframe problems, get people to think differently about what they were doing.

The biggest problem that I see in the government right now, though, is that we really do favor incremental change. I remember Nicholas Negroponte who wrote the book Being Digital. I think he argues that incrementalism is the worst enemy of innovation.

Now, there is a reason for this. Incrementalism limits the downside, but incrementalism also doesn't get you to where you really want to be. It makes change I think sometimes much more difficult, and it makes you have to settle for a solution that is probably less than where you really want to be.

I've had some luck in trying to push beyond the incremental change, but this seems to be the preferred road and this is going to make change, I think, in the government more difficult down the road, particularly as we have to deal with external changes that are even more different, more demanding, than we face today.

Mr. Littman: One of the things we noticed was that a major part of your strategy was to create an internal market for administrative services. Could you tell us more about this, what it is and how it works?

Mr. Calder: Basically, this is complicated, but let me just say this. What we did was take the money that was appropriated to our components after they had written a business plan, after we were satisfied, and after we had approval from our executive board, take the money that was given to those components to do their services and return all of that money back to the customers.

In other words, the customers now would have an opportunity to spend some, all, or none of those resources on us as providers. They could go to alternative providers, they could spend less for a certain service or a certain good, but they had the option.

And the reason here is we were looking at two behavioral changes. One, the incentive on us was now to deliver our services, our goods, much more effectively, much more smartly, much more competitively than we had in the past. So this forced us to look at our processes. It forced us to look at really trying to understand what our customers wanted.

It also had the effect of changing the behavior of our customers because now that our customers had the opportunity to understand cost-benefit analysis, the opportunity to make decisions and have an actual incentive for making a smarter decision, they chose to do the kinds of things that made the most sense for them and could use the savings, if there were savings, to be driven back to mission.

Mr. Littman: And did it change behavior?

Mr. Calder: It did in many, many cases. We found that a lot of our customers stopped doing some things. For example, we recently put telephones into this environment and we found that we had a reduction of around 8 percent in usage of telephone lines. People just gave up telephone lines. We had people now going back trying to figure out how many cell phones they had, how many beepers they had.

So it drives changes, it did drive people to focus on this, primarily because they would benefit from making a smarter decision.

Mr. Lawrence: It's time for a break. We'll be right back with 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 Dick Calder, deputy director for administration for the CIA, and joining me is Ian Littman. Ian is also a partner at PricewaterhouseCoopers.

Well, Dick, let's talk about the employees at the CIA. What are you doing differently today than what you did in the past?

Mr. Calder: Well, basically, what we're doing is challenging people to think differently about how they do their work. Historically, we have worked in this bureaucratic pyramid which had very well defined rules, procedures, processes, and in some ways was frustrating. If I looked out at all the things that we've tried to do over the past, things like total quality management, business process reengineering, all those things were attacks and how you get around this bureaucracy, how you get around this hierarchical structure.

What we decided to do was to really drive decisions down to the employees. I hate to use this word, but what we're really talking about is empowerment, try to give to the employees the opportunity for them to make the decisions about how best to deliver their services, about how best to deal with the customers, about how best to do their individual processes.

I think that this is working. We have seen people really engage. In fact, if I had a meter, say, to measure where we see the most innovation today within my directorate I would argue that it's in those areas where we have moved them into a business environment. These are people that are constantly focused on the customer, and these are people that are consistently looking at how they do their business, consistently thinking about how they might do things differently.

Again, I was talking in the previous segment about our telephone people. They, on their own, started to monitor cellular bills in the Agency, taking the top 100 phones each month just to try to understand how they could help the customer perhaps drive their bills down. Why did they do that? Because I think that they have a better sense, a better linkage, with the customer but more importantly because they feel they actually have the authority, the power, to make those decisions.

So I think that what we're seeing is that people are finding novelty, they're finding meaning, they're understanding that they're having impact, and I think that these are very important elements in making a work force content, making a work force really feel that they are needed and that they are valued.

It's not just salary. Today the government, I hear this over and over and over doesn't compete well if you're looking at salaries compared to the private sector. At the Agency we have a tremendous work force, a very, very good work force, and I think what they are looking is to add value to what the mission of the Agency is. I believe the way that we are trying to organize them today allows them to feel that they are really adding that value.

Mr. Lawrence: Dick, what kind of changes have you wanted to make in the way employees at the CIA are hired, retained, rewarded, and developed?

Mr. Calder: Let me just if I can take one little quick diversion here. A lot of people talk to me about job security, job security being an organization that will offer you a job for life. I think in the world that we live in today any organization that offers that claim has to be suspect, even at an organization like CIA.

To me an organization that really offers you job security is an organization that if you choose to leave tomorrow you can walk across the street and feel assured that you can get another job commanding a salary that is commensurate with whatever you were making when you left or maybe even at a higher level.

In other words, keeping people so that their skills are marketable, so that they're marketable, so that they feel like they are constantly performing at the top edge of their business. That's how you retain people in any organization, and that's how we are trying to retain people at the Agency; the CIA is giving people opportunity, making sure that they have the skills that they need to do the job that is required, making sure that we give them opportunity to train and develop new skills, making sure that we are using them in a team format, making sure that we reward and recognize them when they add significant value. It is all of those issues.

It's not just a simple training program or a sheep dipping in some new technology that allegedly makes them more capable. It is really having them feel that they have an impact and making sure that we give them the opportunities to continue to expand their own skill base and do that regularly, and that's what we're doing at the Agency.

Mr. Lawrence: Are you worried about attracting young people or new people into the organization?

Mr. Calder: No, in fact we have a major recruitment campaign we have had and have had for the last couple of years. Again, the director, George Tenet, has really made this a centerpiece of his strategic direction. He wants to bring the right people into the organization and, quite honestly, part of it may be just the simple brand name, CIA, the attraction of what that might represent. But I think that gets them in the door. What really keeps them there is the wonderful mission that the Agency has, and our capability of really challenging people to perform at levels that probably surprise them.

Mr. Lawrence: And is that true for technology people? We noticed from talking to a lot of people in the federal government that it's particularly difficult to hire technology people. You mentioned earlier the dot-com environment. Is that also true?

Mr. Calder: It's true that we do attract people that have excellent skills in the technology areas. We do it both in the scientific area and the technical areas. And we do retain them. I would say that we probably lose some people to the private sector. Frequently we will get people already trained in certain technologies, only to find the company that trained them to come along and perhaps turn their head.

But I would say in the main we are as good as any other government Agency at being able to give people the types of jobs that are so attractive to them, putting them in teams that they feel so committed to that they are quite willing to turn their head at an offer that might exceed the salary that they are making today because of the satisfaction they are getting, because of the work they are doing.

Mr. Lawrence: Dick, coming from operations you knew your customer well. You were your customer. How do you get those folks to become more cost-conscious and efficient?

Mr. Calder: I wish I had a silver bullet that I could talk about here. I really think the issue here is the incentives. If you're going to ask people to think more critically about how they do something there has to be something in it for them. And one of the things that we have tried to do through having an internal market in CIA is to make sure that those people who are making smarter decisions, those people who sit down and do that cost-benefit analysis, those people who think through how they want to use our services and as a result effect a savings, that those people are able to benefit from those savings.

And the Agency I think has been very forward leaning on this. I know the comptroller and others have made sure that we have set our systems up such that those people who are making the right decisions are benefiting from those decisions, and I think it's the incentives that are more than exhortations, more than promises. It is seeing the benefit from the incentive that really does make a difference.

Mr. Lawrence: Do those internal customers resist change when you've presented it to them?

Mr. Calder: This whole effort, yes. As I think I said before, change has no constituency, so there has been some resistance. Everybody today is from Missouri - everybody says "I hear it all, but you got to show me." So it has taken some time to convince some of our customers that we are serious and that there are benefits to be had from using this internal market.

Not everybody is on board. We still have some work to do. I really believe that we what we're involved in is not a mile race, it's a marathon. We're only several miles into it. This is going to take some time. This is about changing cultures. A whole variety of issues are involved here.

But I think over time, if we can be consistent in the quality of the services that we deliver, and if the customers can come to recognize and trust in the way we are running these internal markets, I think more and more will sign up to the benefits of them and more and more will really engage in this change process.

Mr. Lawrence: You just mentioned it takes time. How long does it take if someone were to undergo the kind of changes you've just talked about, costing, internal markets, and incentives?

Mr. Calder: I've been at it now for 50-plus months and, as I said, I don't think I'm at the halfway point in this marathon. I think it takes organizations a significant amount of time to get there.

One of the things I think that is needed, and unfortunately in many organizations it's very difficult to get, is the persistence of leadership on these issues. I have been fortunate. I have had the backing of my director in what I have been doing.

I have been around for over 4 years now. I have been fairly consistent in the values that I have espoused. I have been consistent in the formulas that we have used or the methodologies that we have used. I have been blessed to have a wonderful team to work with. So it has been that consistency and also, quite honestly, we have been buoyed by the fact that it does seem to be working.

I can honestly demonstrate that we are saving the organization money, and I think that I am getting better returns out of our employees. The people who are engaged in this as they come up I can see it in the excitement. I can see it in some of the successes that we're having.

Mr. Lawrence: 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 Dick Calder, deputy director for administration for the CIA. Joining me in our conversation is Ian Littman, and Ian is also a partner at PricewaterhouseCoopers.

Well, Dick, that's just finish what we were talking about in the last segment as you were reflecting on your pushing the CIA towards entrepreneurship and forward thinking. Any lessons learned that we can summarize?

Mr. Calder: There are a lot, but let me just pick out a couple here. I think one is the willingness to talk about things that don't go well, the mistakes. Let's say it as the right word here.

Historically, bureaucracies, particularly federal bureaucracies, don't tolerate many mistakes, and I would say at the Agency we have to be very careful about the mistakes that we make. But when you're trying something new, when you're trying to work through new issues, you're not always going to calibrate correctly.

And we have made an effort to be straightforward about good tries, talking about good tries, things that didn't work; things that we thought would work. We put the planning into it, we thought it would be the best way to approach it, but it just wasn't.

And I think we have developed a little bit of an ethos now, I don't want to over-exaggerate this, of being able to say hey, let's try this. Let's not be timid about this. Let's try this, and if it doesn't work too quickly, go back and make sure that we recover and that we give people credit for the trying, not necessarily only for getting it right.

The other thing that I would say is that I believe new ideas come from new voices, and the new voices tend to be on the periphery of the organization. And so one of our challenges has been to try to reach out to those new voices to try to be sure that we are getting their ideas.

One of the things of living overseas is that you get to see a lot of different cultures, a lot of different hierarchies, a lot of different bureaucracies. And I can remember working in one particular government. Its' economy was booming, it was really quickly coming into the 20th Century, and it didn't have sufficiently trained people to do all the things that the economy demanded of it.

It reached out and hired people from a variety, from Europe, from South Asia, from all over the world, and I was struck by how effective having that broad base of people was in making this work. And, in fact, I thought there was a richness of ideas there that I didn't see in some of the other environments that I worked in.

So I've become a believer in trying to reach out and bring together as diverse a group of people as possible to try and solve ideas, and I think that's been one of the factors that have made us successful, that we have tried to cut no one out but to try to be very inclusive.

Mr. Lawrence: Dick, let's talk a little bit about technology in the future. Technology has become increasingly important to the success of all government agencies. Can you tell us what role technology has been playing at the CIA?

Mr. Calder: Absolutely, a critical role. One of the things, I will again take it down to where I am, which is in the back- office business, and whole world of doing back office, of doing the support work around not only in our organization but in the private sector and other elements of the federal sector as well, there has been an increasing use of technology to dis-intermediate, to take people out of the circuit that historically were there when we were passing paper from-out box to in-box to out- box, et cetera.

We have been trying to leverage that technology to drive process costs down, to actually take steps out and in fact to blow up processes. Instead of just going down and trying to automate the status quo, we have been trying to use the technology to force us to rethink how we do processes.

We instituted a new payroll program not too long ago, and part of that whole effort was aimed at using the actual technology to drive us to think differently about how we did payroll. And we've seen this in several other areas. Technology, to me, is a real force multiplier in how we look at processes and how we're doing business at the Agency.

Mr. Lawrence: Now, technology often cuts two ways for employees, right? First, it's hard for people to learn because it's new. And, second, you just described a process where you could imagine fewer employees as a result. How does that work for you?

Mr. Calder: This is the real conundrum of government. If you think about government, government is basically people, most of your costs are people. If you now think about technology and you now think about making improvements, what you're really doing is threatening employees.

So, the issue for many of us who are trying to manage is how do you get people to engage when the outcome may be a real threat to their job? And what we have tried to do, particularly at the Agency as I said earlier on, is to make sure that we have outlets, to make sure that people understand that the way that they continue to add value in the organization is to be as flexible as possible in learning new jobs, in cross-training.

In our directorate we have a lot of guilds. We have logisticians, we have finance officers, we have people who for a career have worked within these small silos. And what we are trying to do now is to move, using technology, using information, and allowing these people to have broader opportunities. And, not surprisingly, we're seeing a lot of people step up to that challenge.

So that's how I think you deal with that dichotomy of all of your costs are in people, if you drive the costs out, you're going to put people at risk. How then do you ensure that people will play? I think it's by making them comfortable that they will have other opportunities as they work through some of these issues with you.

Mr. Lawrence: Dick, commercial organizations are deeply involved in the new economy. How do you envision e-commerce playing any type of role at the CIA?

Mr. Calder: Many of the ways we provide services in the Agency today have moved to having Web pages, and this I think is becoming very common across the federal government, certainly in the private sector.

One of the issues that we are struggling with and we want to fix very, very quickly is that you can get all the information on our Web pages that you want, when a service is available, how much a service costs, how to actually sign up for the service, how best to get it delivered to you. What you can't do today is do the transaction.

And we are working on it. We are spending a lot of time on this. If we can develop that final step so that you can actually do the transaction, this will be of enormous benefit to our clients, to our customers. But much more importantly, I can see thousands of process steps. I can see paper being saved, trees being saved, forests being saved, by not having to do much of the processes that we do today by using the technology as the process enabler rather than having paper backup, and that's really where we're trying to get to.

This means the use of credit cards, the use of other devices. As I said, we are fairly close, and we have a lot of people that are working on this, a lot of experimental ideas going on, and it won't be that long before I think we are on that edge.

Mr. Lawrence: Dick, what are some of the other key issues the CIA will be facing in the future years to come?

Mr. Calder: Well, we wrestle with a variety of new issues today. We have weapons of mass destruction. There's international terrorism. We have narcotics. We have organized crime. I think it was former Director Woolsey that talked, in referring to the Soviet Union, that we had managed to slay the dragon and what appeared in its stead were literally dozens of venomous snakes.

I think the challenge for us is almost impossible to predict. If you look out there you have information technology, you have telecommunications, biotechnology and robotics. You have all those issues out there. None of us can predict what they're going to be. I think the real challenge for us is to develop the agility and the adaptability so that no matter what happens we are capable of addressing it.

Mr. Lawrence: I'm afraid we're out of time. Thank you very much, Dick, for spending time with us tonight. Ian and I have enjoyed our conversation very much.

This has been The Business of Government Hour, conversations with government leaders. To learn more about the Endowment's programs, visit us on the Web at www.endowment.pwcglobal.com. See you next week.

Samuel Chambers, Jr. interview

Monday, November 29th, 1999 - 20:00
Samuel Chambers, Jr.
Radio show date: 
Thu, 04/20/2000
Intro text: 
Missions and Program ...
Missions and Program
Magazine profile: 
Complete transcript: 

Arlington, Virginia

Thursday, April 20, 2000

Mr. Lawrence: Welcome to The Business of Government Hour, Conversations with Government Leaders. I'm Paul Lawrence, a Partner at PricewaterhouseCoopers and a 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. To find out more about the Endowment, visit us on the web at Endowment.pwcglobal.com.

The Business of Government Hour focuses on outstanding government executives who are changing the way government does business. My special guest tonight is Sam Chambers, administrator of the U. S. Department of Agriculture's Food and Nutrition Service. Welcome, Sam.

Mr. Chambers: Thank you.

Mr. Lawrence: In this first segment, let's begin by talking about FNS. Can you tell us a little bit about it, its functions and its budget?

Mr. Chambers: The United States Department of Agriculture has approximately 29 mission areas. We are a part of one of those mission areas. The Food, Nutrition and Consumer Services includes our agency, the Food and Nutrition Services, along with another organization known as the Center for Nutrition Policy and Promotions.

Our primary responsibility is to administer the Department's $39 billion in financial assets that go expressly toward supporting the nation's 15 domestic nutrition assistance and nutrition education programs. All of the programs that typically feed America's hungry and needy individuals principally come out of that $39 billion that we are responsible for.

In terms of rough statistics, we have approximately 1,660 staff located here in a headquarters operation in Alexandria, Virginia and seven regional and sixty field offices throughout the United States. The $39 billion or so that we are responsible for annually represents about 70 percent of the Department of Agriculture's budget. So, essentially, what you have is a situation where two percent of the Department's staffing resources is responsible for 70 percent of all of its financial resources.

The kinds of programs that we are talking about include the National School Lunch Program, which is operating practically in every large, small, medium size as well as rural community in the United States. Wherein, essentially, young children have access to either free, reduced or in some cases, a few cases, meals that they have to pay for in their entirety. But these are nutritious meals that are offered based on planned menus that we produce, along with other organizations, produce that schools' food service professionals provide.

We also operate the School Breakfast Program, which operates in about half of the programs, or school districts, that operate school lunch programs. So that there are some school districts that operate school lunch programs that don't necessarily operate school breakfast programs.

We have as our flagship program the National Food Stamp Program, which is approximately 50 percent of our entire expenditure. Of the $39 billion or so that we administer, $19 billion of it goes to the Federal Food Stamp Program.

We operate the Women and Infant and Children Special Nutrition Program, commonly known as WIC. We have a number of other small programs, such as the food distribution program on Indian Reservations, which is essentially a commodity program. We have a nutrition assistance program for the elderly and a number of other smaller nutrition assistance programs, including one that is not commonly well-known, and that's the special milk program. We have some school districts that don't operate a national school lunch or a school breakfast program, but do participate in our special milk program, where youngsters have access to low-fat skim milk as a part of their lunchtime meals. And that's provided through, as I said, the Department of Agriculture.

So we have a large mission that is responsible for providing access to nutrition assistance benefits, as well as nutrition education resources, and these are all national programs.

Mr. Lawrence: Well, Sam, I see that you have some 30 years of public sector service. I was wondering if you could tell us about your career, prior to becoming administrator.

Mr. Chambers: Well, this September, September 3rd, I'll actually have 32 years. I started out in Michigan, in Detroit, Michigan back in September of 1968 as a public welfare trainee. Often times people will ask me, well, how did you come to be involved in public welfare programming? Quite by accident. I had completed my undergraduate degree at Southern University in Louisiana. I had a young family and one child and one more on the way. I had an undergraduate degree in Psychology, with a minor in Philosophy, and I was working at Continental Trailways Bus Lines, making $1.77 an hour, which, at that time, was top wages for somebody working as a porter. And because I had worked as hard as I'd worked to secure my undergraduate degree, I simply could not see having a college degree and working for $1.77 an hour. So, I knew that if I went to the North, where I had cousins in Detroit, I could at least get a better paying job in the automobile industry, until such time as I could get a professional job.

Well, two weeks after getting to Detroit, I was offered a job as a public welfare trainee, making $3.64 an hour. And the young lady who made the job offer to me was somewhat embarrassed and thought that I would reject the job because of the low wages. She couldn't imagine my excitement at being offered a job paying $3.64 an hour. And when she wanted to know why I was so excited about it, I said, "Lady, at best I was making $1.77 an hour. You just doubled my income."

So, to make a long story short, that was my first awareness, actually my first awareness of welfare programs. Because, at that time, welfare programs were not well instituted in many communities in the United States, particularly in the southern communities. And it was an opportunity for me to begin to practice some of what I had learned as a part of my undergraduate training.

Throughout the years that I remained with that state system, for 30 years, throughout the years I had an opportunity to move into other areas of work including supervision and administration. I did public affairs. I did constituent work for the agency. I did administrative support. I was an investigator and auditor, a policy analyst. And eventually in 1991, I was named the executive director for the agency of about 4,600 people at that particular time. I served as the executive director for seven years, prior to taking this assignment with the Department of Agriculture.

Mr. Lawrence: Can you tell us about that experience? I understand you were the director of the Michigan Family Independence Agency for Wayne County, formerly known and the Michigan Department of Social Services. Could you tell us about that experience?

Mr. Chambers: Starting out as a public welfare trainee, with no experience with welfare programs at all, was an eye-opening experience for me. I came from a poor community in New Orleans, Louisiana. But unless you had something to compare with, and because everybody lived the same kind of lifestyle in that community -- at least the part of the community that I lived in -- there was no sense of being poor. We thought everybody lived like that.

So, when I completed my undergraduate work and then moved to the north and was exposed to the fact that some people lived better than I was accustomed to living, and then began to work with the Department of Social Services, as it was known at that particular time, and then became a caseworker trainee and subsequently moved up in the organization, I became sensitized to the fact that there really were gradations of poverty that were much more severe than anything I had experienced. And that there were programs, such as the ones that I was involved in, that could in fact be a means to an end or a way for individuals and families to live a richer life.

It was during that experience that I also became aware of and worked with families that were experiencing even more trauma than typical poor families, most poor families, experience. And I'm talking now about instances of child abuse, neglect, or serious child sexual exploitation. This was something that I had no familiarity with, because I grew up in a very loving family, a poor family, but a very loving family in which children, as well as elders, were respected and revered. I had no context for child abuse at all. So, when I became a child abuse worker, you can imagine my shock and surprise to realize that there were children who were treated as poorly and as devastatingly poorly as some of the children that were on some of the caseloads that I was responsible for.

So over that 30-year period of time I had an opportunity to have a number of rude awakenings with regard to the quality of life or I should say the very low quality of life that many of our citizens experience. I became familiar with some of the terrible plight of many of our senior citizens and our home-bound who are exploited on a regular basis by other adults in the community, who steal from them, who sexually abuse them, who subject them to all kinds of cruelties and indignities. And so that, over time, really made me sensitive to the calling that I had and the need for me to continue to grow in this work that I was doing.

Mr. Lawrence: 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 Sam Chambers, administrator of the Food and Nutrition Service. Sam, in the second segment, let's talk about FNS. Let's spend some time talking about your experience. What was it like when you arrived, and what changes have you made?

Mr. Chambers: Well, this is a rather mature organization that has a staff of exceptionally competent and well-educated and well-trained professionals. It is a relatively small organization in terms of the numbers of employees that are within the entire Department of Agriculture. But it is one that is very rich in terms of its experience base and the longevity of the employees that work in that organization.

We found an organization that was, unfortunately, rooted in its culture, somewhat resistant to change. It has, as a part of its cultural orientation, some resistance to outsiders or people who come in from the outside, particularly people who are appointed as a part of a political appointment process. And so, I found an organization that was not tempted by my experience and by my holy words of encouragement that we could do better as an organization. So we had a very rocky start, in terms of some of the things that we wanted to do and some of the things we felt we needed to do.

We knew we needed to address the culture of the organization and help them understand that the organization had before it a number of challenges that could only be overcome if its management and leadership structure and its management and leadership style were more flexible and more open to change. So one of the first things we did was to introduce a total quality management process. Heretofore, they had been working with a consultant for about a year and a half, without substantive results, and the undersecretary who appointed me was very frustrated. And one of the early requirements that she placed on me was, "I want a total quality management culture established right now."

We began to work immediately upon arrival, and by February the 1st of 1999, we implemented that new cultural change process. And that has led to significant redevelopment of the culture of the organization. Our staff has now been empowered at the most elemental level, the individual employee level, to be creative. We have a number of reinvention efforts that have already begun. Some have, in fact, been completed. We have revolutionized the entire training process, rebuilt that. We have totally redone the strategic plan, made it simpler, streamlined it, and made it integrated in terms of its focus and its core mission. We have now developed the first ever integrated planning process, so that all of our planning in the agency, regardless of where that planning emanates from, will have to fold in with our strategic plan and the major goals and objectives that we've established with that plan.

We are about to announce the institutionalization of a planning structure, so that there will be an individual in my office, who reports directly to me, who will be responsible for keeping us focused with regard to our plan and updating our strategic objectives. We have also created the first ever Leadership Institute, and the first 21 of our potential new senior leaders are going through an intensive fifteen-month program, which is designed to create the next bevy of senior leaders for this organization.

We commissioned the first double succession plan, recognizing that this was a mature organization, we wanted to know what would be the short and long-term implications of retirements, normal attrition, in our organization. Only to discover, as a result of that, that over the next four to five years, we're going to lose 40 percent of our middle-to-senior management. The organization had no plan for addressing that. The organization had no awareness of its vulnerability. But once that information was available, then we immediately went into a planning mode, and so this Leadership Institute will produce some of that cadre.

We are about to institutionalize a new program, whereby we are going to improve our recruitment strategies. We're going to introduce a brand new strategy for recruiting beyond what I refer to as "The Shores of Gitchee Gumee." We're going to go to the non-traditional sources for future employees, so that we have a bevy of employees available who've been pre-screened, pre-certified, and pre-interviewed in terms of their interest in coming into the federal government. And these employees, along with those that we are developing in-house, will provide us with a richer mix of employees who have significant leadership skills, who have strong commitment, strong educational backgrounds, strong experience bases and who come in ready to take names and get the job done.

Mr. Lawrence: I've read about your Leadership Plan 2000 and Beyond. As I understand, it was adopted to help bring about quality and implement the strategic plans. What were the driving forces behind the development of this plan?

Mr. Chambers: Actually, three things: one, the assignment that was given to me by my undersecretary, who gave me very explicit instructions. She did not tell me what it should look like. She simply told me that she wanted it. Secondly, I've had experience in my previous life of having developed a total quality management process. I've done a lot of study. I've trained organizations and people around the entire United States. I still do that as a part of this assignment.

I've done strategic plans in the past for the organization I came from. And so, we had a process that I developed a number of years ago, known as the five "P"s of quality management, which is based on, as I said, my 32 years of professional experience in what works and what doesn't work. It’s based on the philosophies of Juran, Deming and Ishikawa and all of the great thinkers in this area. But practicing and developing processes that really, over time, have proven to be meritorious in my review that was the second thing.

The third thing was just the imperative. Recognizing that this was an organization that has been under siege, it has been under an experience of at least five years of continuously declining resources, but at least five years of escalating expectations and requirements for products. So, that argued for efficiencies. That argued for rebuilding. That argued for a reorientation of the culture and mind-set of the leadership. It argued for a constancy of focus on purpose and mission and objectives.

And so, we used Leadership 2000 and Beyond, which is basically an eclectic approach to quality management processes based on a set of principles that I've practiced myself, and developed it into this cohesive concept of the five "P"s of quality management -- which has worked, over time, for me and has worked in the organization that I came from and, miraculously, is working in this agency today.

Mr. Lawrence: It is time for a break. We'll be right back with more of The Business of Government. (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 Sam Chambers, administrator of the Food and Nutrition Service. Well, Sam, in this third segment, let's talk about managing FNS and dealing with employees. In our last segment, you described tremendous changes that take place. And my first question is, how do the employees deal with all this?

Mr. Chambers: Initially, I think the employees at the lower levels of the organization looked at this with great skepticism. They've had administrators come and go. If there's one constant, it's change, for them. And they've had prophets come and make prognostications about change in the past and the benefits of adopting change and so on and so forth, without much popular result.

They looked at me as the next person in a line of people who will come in and attempt to produce change that would not result in any change at all, or certainly no improvement in the quality of their lives. People at the middle, and even some people at the top, looked at me and some of what we were offering as a threat, a threat to their homeostatic and comfortable lifestyles. Many of these people have been in the organization for 20, 25, 30 years. They were comfortable doing things the way they were doing it. As far as they were concerned, and at least several people said to me openly in meetings, "If it ain't broke, don't fix it." My retort to that was, "If it ain't broke, then break it." Nothing remains constant in this life. We all age, whether we like it or not. And there's a significant amount of beauty products on the market that are available to attest to that.

So, there was skepticism. There was fear. There was panic. And there was some out and out disgust and outrage with the fact that we were introducing all of this change and promotion that we were going to do this within the life span of two years. That is the maximum time available to me as a part of this current administration.

Overcoming that, of course, required several things. It required one that I continue to be committed to the charge that I have been given by the undersecretary. Two it required that I continue to be committed to myself and the expectations that I've always lived by myself in terms of being productive and having something to show for my efforts at the end of every day. And three, it required proof. I had to establish rapid results for staff. I had to appeal to them at their basic levels, and then I had to "walk the talk." And we constantly talk about "walking the talk." They had to have evidence. They had to see change, and they had to see it in their lifetime. And they had to believe that they would benefit from it.

One of the first things that we did was make them a part of it. The license to improve a process that is a part of our TQM process itself. It is a mechanism by which we provide local empowerment for individuals to look at their work, the way their teams work, and then look at outdated processes, and new methodologies that they can sponsor, that they can author, that they can create, they can divine and innovate. And without needing to get extraterrestrial approval from higher ups in the administration, go about the business of making those changes. Since February the 1st of 1999, we've been able to document 165 locally inspired, individual employee-directed licenses to improve, where individuals, as far as our administration is concerned, simply have to acknowledge what they're doing. And as long as they have the blessing of their immediate supervisors and they can identify other individuals who have an interest in working with them, they are free to innovate.

Mr. Lawrence: What kind of changes have those projects brought about?

Mr. Chambers: Those projects have brought about simplifications in work processes and work methodologies. They have brought about major changes in terms of how we recognize employees. We have a recognition campaign right now that is pre-funded. It has resulted in major streamlining, in terms of workspace requirements.

I'll give you an example. I was down in Florida visiting one of my offices, one of my field offices, an office with about 15 people. And I was introduced to a student assistant, a summer assistant, who was aware of technology and presented to me an idea for taking all of the many files that we have currently stored in file cabinets and managing that paper using CD-ROM technology. I came back and talked about that. I said to him at the time, "You have an automatic license to improve. You don't even need my permission. We will procure the equipment. You demonstrate the technology and produce the savings, document the savings, and then we'll empower you to go forward and do this." That office did not move swiftly, but in talking about it, a young person up in my northeast region, up in my Boston region, heard about the idea, and now they have actually implemented it.

Again, it did not require any official approval or sanctions from any higher ups in the organization. It just simply required that folks consider the opportunity available to be creative.

Mr. Lawrence: I notice with your quality management effort that you also invest in employee training. What's your strategy for training?

Mr. Chambers: Our strategy for training is based on an idea that was given to me some time ago that says that every employee who joins an organization has a right to expect some opportunity for personal actualization as a part of their commitment, when they join that organization. We may hire an individual as a program analyst. But over the lifetime of that individual's career service with this agency, one would hope that that person would become agitated enough to want to grow in the organization. That means that they are going to go outside and get some professional training and some job-related training on their own, perhaps, even pursue advanced degree work in a college setting or university setting.

But we have an obligation, I think, to also meet that person halfway and provide them with the tools and resources that would help them develop, so that they could aspire to do more in the organization. Recognizing that the organization that I inherited had a very low visible commitment to professional development, we pumped some money, dedicated some money, to training and professional development.

We took the very limited resources that were, at that time, housed in our human resources development that really were not being exploited as well as I thought they should, and relocated them to my office personally to be managed and developed. I assigned them to my quality manager so that he could ensure that the training that we did was consistent and compatible with our overall goals for quality management and leadership development.

We then went out and procured the services of an organization to produce a Leadership Institute, based on proven design work that had been developed in another sister agency. We then front-funded 15 months of that program as a demo. We put in place a recruitment strategy for the best and the brightest of our young people in the organization, and then we committed them to a 15-month aggressive, leadership development program.

We then developed a strategic plan for professional development for all of our staff. And our senior leadership team has now recently blessed that plan, and we are very aggressively moving to put that plan in place and to have the first training available late summer of this current year. All of this was done within two years of having signed on to this job.

Mr. Lawrence: The agency is committed to quality management, because you believe it will help the agency improve the nation's nutritional health and end hunger. How do you feel that FNS is doing in terms of moving closer to this mission?

Mr. Chambers: In the last two years, we have galvanized our work force. We have developed a community, what we refer to as a community food security strategy. We have empowered and required every one of our staff, throughout the entire system, to become personally involved in working with those local communities, being creative, providing leadership.

We have re-honed our agency's vision and the new vision challenges us all to end hunger and to improve nutrition and health as our primary objective. This is what we do every day, day in and day out. We are moving further along those lines. We have created new resources, new tools. Many of those are up on our public website. Individuals and organizations throughout the United can learn more about what we're doing and actually pull down information that would demonstrate to them our commitment as an organization, and as individual professionals, to achieving this particular vision for our organization.

So, we're moving aggressively forward. The newly reformatted teaching plan is now in place in our organization. Every one of us who goes out and does any public speaking tries to find some way to highlight that strategic plan and that vision. And as I said, we now charge all of our administrators and all of our staff with the responsibility for living that vision through their professional connections and personal relationships as a part of their job.

So, we are moving forward. We've given ourselves five years to show significant benefit, but we're not waiting for five years' proof before we feel that we are moving in the right direction. So we are, each year going to be readjusting and fine-tuning our objectives, so that we make certain that we are moving aggressively toward that end.

If you're interested, I can give you an example of what one of our managers is doing down in the southeast region, which is headquartered in Atlanta, Georgia. Virgil Conrad, regional administrator, has convened all of his commissioners from the states that he is responsible for and gotten their agreement to sign on, at the highest levels of government in those states, to a campaign to end hunger by the year 2005 in the entire southeast region. This has heretofore never been done before, that one of our offices and one of our management teams has been able to get agreement with state officials to end hunger by the year 2005.

Mr. Lawrence: An admirable goal. We'll be back with more of The Business of Government Hour in just a minute. (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 Samuel Chambers, administrator of the Food and Nutrition Service. In this last segment, Sam, let's look ahead to the future, and let's talk about technology. Technology is becoming an increasingly important part of the success of all government agencies. Can you tell us about the role of technology at FNS?

Mr. Chambers: Just like many other levels of government, we are finding as our staffing resources diminish, but the work load and work expectation continues, that technology offers us significant benefits in maintaining an adequate work flow and producing the quality of products that are required to support these nutrition assistance and nutrition education initiatives. One of the things that we've done is we've continued to upgrade the quality of the technology, the computers and the other technological aids that our staff use in order to do their work.

We are limited in staff resources and the availability of computers and, even in my case, the availability of a laptop computer or the availability of a cell phone or the availability of a pager. In more recent cases, the availability of a Palm Pilot makes my work a lot more efficient and provides me with additional opportunities to access staff and to respond to requests for information and to react to the additional challenges and assignments that I have. So even in my own work life, I can see significant advances in terms of my ability to do the many things that I have to do efficiently.

We have found that in order to meet the increased and oftentimes more rapid demands for access to information about our services and programs, we have been able to increase client access or customer access significantly by the internet and by the development of additional websites within our internet. In the very near future, we'll be introducing extra-net that will allow us to communicate in real time with our principal state cooperators or state agency providers, providing them advanced information about changes in regulations, changes in new policies and so on and so forth. So they'll be able to introduce those things and react to them, where appropriate, as quickly as possible.

We are also relying upon technology to expedite access to program benefits into reduced waste and reduced fraud in our programs. By the year 2002, October of 2002, we will have our entire food stamp program up and all of our benefits being authorized electronically. There will no longer be any food stamps. In fact, we're looking right now at re-titling or renaming the program because there will no longer be any coupons.

Individuals will be accessing their program benefits in the Food Stamp Program by use of magnetic cards, similar to the ATM and credit cards that you and I use today for transacting much of our economic transactions. Welfare recipients, food stamp recipients, social security recipients, VA benefit recipients and many others in the foreseeable future will be transacting all of their business exchange with us by way of electronic media.

And so, we have a deadline to meet just in terms of the Food Stamp Program, which is half of our program benefits of October 2002, when all of those benefits will be transacted electronically. We're looking at our farmers market program, where essentially farmers, community farmers, are actually able to provide access to program recipients to fresh fruits and vegetables through a local farmers market. We're looking at how we can utilize technology to increase participation and to make that participation more efficient than currently is available utilizing paper and coupons.

Technology and e-commerce is breaking new ground for us in this environment. Eventually, I can foresee the day when there will be no paper, card stock, being used at all in the transaction of any of our business. With the electronic benefit transfer program, for example, in food stamps, we're able to more quickly and more accurately reconcile transactions. We can look for transaction patterns that illustrate or provide evidence that there is some sort of trafficking, illegal trafficking going on or misappropriation or misdirection of program benefits. It allows my investigators more data than they've ever had available to them to track down those individuals who are trafficking in program benefits and to shut down those operations more quickly than we ever could have shut them down in the past.

Of course, having electronic data available to us in real time provides more accurate and more assurance of being able to get speedy and positive convictions in those situations that are most egregious. So, we are looking at providing faster access to information, faster access to program benefits, more efficient administrative processes for ourselves, more efficient staff work within the organization, more efficient communications. And more frequent and assured access to the benefits, the $39 billion worth of benefits, that we administer every year.

Mr. Lawrence: In our last segment we talked about dealing with change. Certainly it sounds like the technology you describe will bring about tremendous change in FNS. I'm wondering how are the employees dealing with it and how are the customers to not have stamps any more when they get food stamps? Sounds like a very different thing than I might be used to. How are they dealing with it?

Mr. Chambers: Well, there are some challenges. As I said, we have a very seasoned work force. Many of these individuals within the next four to five years are going to be leaving us. And unfortunately, many of them have had some difficulty with adopting, accepting some of the new technology. For example, we are about to pilot the use of the Palm Pilot or personal data assistant for our senior managers as a way of being better informed and having access to more accurate information, program information and the like. We've actually had some of our managers express complete disagreement with this technology, indicating that they have had no interest in it in the past, they have no utility for it, and it is something that they are not going to introduce.

I once said to some staff in reaction to complaints about requirements to use new technology that that may in fact explain what happened to the dinosaur. When the environmental conditions changed, the dinosaur couldn't adapt. At least that's one explanation as to what happened. And so, what we've said to them is, you can adopt the dinosaur mentality if you choose, but progress will move forward, and this agency will move forward. So, there's been that reaction. There's also some negative reaction out in the consumer community, because we have a lot of consumers that have not really been introduced to this technology and it does in fact produce some fear, some scary prognostications for some individuals.

There is a lot of education that needs to be provided to the consumer community. There is even some education or re-education that is going to be required for some of our staff. But I have to believe that the great majority of our staff have adopted the technology generally.

Many of them are pushing for the creative and innovative ideas that we're now testing and attempting to put into motion. The concept of the extra-net was designed by one of our high-impact work groups, one of our staff work groups. This was not an idea that I produced. The staff themselves felt that we needed to improve our communication in real time with our providers and other state collaborators and cooperators.

And so, the great majority of our staff has responded tremendously. The great majority of our consumers have responded. Many of our larger providers have responded very well. The large grocery chains, for example, have found that they can be much more efficient in their management of our program benefits through magnetic cards technology.

And so, overall, I would say 80 percent of the reaction has been very, very positive. It's been the outliers that have really posed some temporary problems for us. But I view these as temporary problems.

Mr. Lawrence: How about some other key issues facing FNS in the future?

Mr. Chambers: I think there is a major issue that is going to confront us even more in the future than today and that is the adequacy of staff resources. This agency has taken significant hits in the past. I believe, personally, that we are significantly underfunded, and significantly overcommitted. And so I think at some point, we're going to have to seriously consider scaling back the mission of this agency or increasing its staff resources.

Mr. Lawrence: Thank you very much, Sam. I've enjoyed the time you've spent with us today. It's been a very good conversation.

This has been The Business of Government Hour, Conversations with Government Leaders. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and the co-chair of the PricewaterhouseCoopers Endowment for the Business of Government. To learn more about the Endowment's programs and research in new approaches to improving government effectiveness, visit us on the web, www.endowment.pwcglobal.com. See you next week.

Dr. Thomas L. Garthwaite interview

Monday, November 29th, 1999 - 20:00
Dr. Thomas L. Garthwaite
Radio show date: 
Mon, 08/21/2000
Intro text: 
Missions and Programs; Organizational Transformation; Strategic Thinking; Leadership; ...
Missions and Programs; Organizational Transformation; Strategic Thinking; Leadership;
Magazine profile: 
Complete transcript: 

Arlington, Virginia

Monday, August 21, 2000

Mr. Lawrence: Good evening, and welcome to the Business of Government Hour: Conversations with Government Leaders. I'm Paul Lawrence, a partner at 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 improve government effectiveness. Find out more about the Endowment by visiting us on the Web at endowment.pwcglobal.com.

The Business of Government Hour focuses on outstanding government executives who are changing the way government does business. Our special guest tonight is Dr. Thomas Garthwaite, Acting Undersecretary for Health at the Veterans Health Administration.

Recently, the PricewaterhouseCoopers Endowment published two reports on the VHA. The first is called "Transforming Government: The Revitalization of the Veterans Health Administration," and the second, "Transatlantic Experiences in Health Reform: The UK's National Health Service and the U.S. Veterans Health Administration."

Tonight, we want to find out more about the VHA's transformation and reform. Welcome, Dr. Garthwaite.

Dr. Garthwaite: Good evening, it's a pleasure to be here.

Mr. Lawrence: And joining us in our conversation is another PwC partner, Greg Greben. Welcome, Greg.

Mr. Greben: Good evening.

Mr. Lawrence: Well, Dr. Garthwaite, as Acting Undersecretary for Health, you're the chief executive officer of the VHA, the nation's largest integrated health care system. Can you tell us about the VHA?

Dr. Garthwaite: Sure. The VA is strikingly large - it has a budget of about $19 billion, and provides health care to veterans through approximately 180,000 staff, 172 medical centers, over 650 ambulatory care and community-based clinics, 134 nursing homes, 40 domiciliaries, 206 readjustment counseling centers, and various other facilities.

In addition to its medical care mission, we provide a significant amount of graduate medical education and it's said that over half of the doctors in America have had some part of their training in a VA facility.

In addition, we're one of the nation's largest research organizations and do approximately $1 billion in combined research across the country. And finally, we back up the Department of Defense and the National Disaster Medical System in times of emergency.

Mr. Lawrence: Your career with VA is quite long, dating back to 1976, what changes have you observed in the 25 years?

Dr. Garthwaite: I even did a little bit of my residency training in VA, so it goes back slightly further than that. It's interesting to think about all the changes in medicine during that time and the changes in VA.

Clearly, the VA used to be predominantly an inpatient health care system, and over the last 20 years, but especially in the last five years, we've moved to provide a significant amount of care in the outpatient setting. At one time, about 30-some percent of our surgical procedures were done in an outpatient setting; we're closing in on 80 percent of our surgical procedures as an outpatient.

We've gone through changing reimbursement schemes. When DRGs came in the private sector and Medicare in the mid-'80s, about a year after that, the VA adopted a reimbursement scheme.

It was originally called Resource Allocation Model, it became known as RAM. And it worked variably well, I think, in the VA, but ultimately kind of pushed us to do too much with too little. We were just dividing up a fixed pie.

We've gradually emerged to a reimbursement scheme that mirrors managed care. We used a larger population base capitation model and that has allowed us to move some dollars around the system and put it more appropriately where veterans live.

We certainly had to adapt to the use of technology and that's a constant across all of health care. A unique part of the VA, I think, has been the emergence of health services research in VA and what we've done in the last few years is try to push health service researchers to communicate better with managers.

You know, managers make a lot of very important decisions and control a lot of dollars and do that with relatively imprecise data often - data that's not subject to statistical scrutiny.

Health services researchers carefully analyze the data, design experiments, apply rigorous statistics, publish it in a journal and often it sits in the journal for many years before anyone acts upon it.

We didn't think that either of those was the ideal state. We really thought that managers should use as much statistical and analytical rigor as researchers and we didn't think researchers should find out important things and not have them acted upon. And we really worked hard to drive together health service research and management and have several major initiatives along that regard.

Another thing that we've done, that I've noticed changing dramatically in the VA, has been the emphasis on prevention. Years ago, I think we waited until the end of a disease and we came in with tubes and scalpels and tried to save the patient at the end-stage of an illness. Last year, we had immunization rates approaching 90 percent for pneumonia and influenza and we believe that in patients who have lung disease, and who are elderly, that every time we give a shot, we not only save lives and prevent hospitalizations, we save $294 with each shot that we give.

So there's a dramatic evolution from care at the end of a disease towards care across -- all the way from detection and prevention of disease, all the way through more aggressive treatment.

The final thing that's I think really dramatically different in the years that I've been in the VA is the emergence of information systems and the VA's really been a leader in information systems dedicated to patient care.

You know, we didn't have to bill for many years, so in the private sector, the computer systems were developed and maintained primarily around billing. Since we weren't billing, we developed and maintained them primarily around the delivery of health care. And if you think about it, ultimately, the most effective and efficient and the highest quality way to deliver health care would be supported by good informag systems around the process of delivering care. So I think we're a little ahead there.

Unfortunately, we had to begin to bill and so we're catching up with the private sector in how to bill, but I think we're ahead in how to use computers to deliver care.

Mr. Lawrence: You served as the chief operating officer of VHA during the greatest period of transformation in the organization's history. Could you tell us about the challenges and the results of this transformation?

Dr. Garthwaite: If you can imagine walking into probably the second-largest bureaucracy in the United States government; at the time we had 205,000 employees and ran a system that was largely centralized, that is, policy came from Washington and although we originally, I think, had some input from advisory groups in Washington, a lot of this was centrally driven policies.

When Dr. Kizer came in and I joined him as his deputy, one of the key underlying tenets of the reorganization and transformation of VA was to decentralize. We believed that, although the broadest policies had to be set in Washington, the implementation of those policies almost certainly has to occur much closer to where the action is out in the field. And although we can see the major policy decisions, the implementation would be quite different in the Bronx than it might be in Boise.

So that was really a challenge. And to do that, we reorganized into 22 networks and each network, then, was responsible for not just the facilities, but the people, the population we were covering within those geographic areas.

That's really a critical change, as well. In the past, it was competing facilities; each trying to have all the programs that were possible in medicine; each trying to have the tertiary care; each trying to have the latest-and-greatest technology. But what was missing was the coordination of care and the preventive medicine, the primary care for the rest of that population before they needed that tertiary care.

So, in the end, what we were able to do was to refocus all of our staff on the concept that it is really about that population, not about the facilities. Now, I don't say we're 100 percent there today, but we've come an awful long way. That is really one of the fundamental tenets.

That also changed us from specialty care to primary care. It changed us from inpatient care to outpatient care. It changed us from end-of-disease care to prevention. So it had dramatic effects just going from a facility-based organization to a population-based organization.

The real key to the change, I think, in making it all happen was the use of performance measurement. And the use of performance measurement did several things for us. One, it forced us to have conversations about what's most important, what the real goal is. Secondly, it forced us to then say, what would be a measure of that. And, third, it said what kind of progress have we made? It gave us an opportunity to chart our progress towards those goals. So, I think, more than anything else, performance measurement really led to the dramatic changes we've seen.

Mr. Lawrence: Interesting. 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 The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers and tonight's conversation is with Dr. Thomas Garthwaite, Acting Undersecretary for Health, Veterans Health Administration.

When we closed out the last segment, Dr. Garthwaite, and I wanted to get your perspective on 25 years of government service, what qualities have you observed as key characteristics of good leadership?

Dr. Garthwaite: Well, I guess the thing that stands out to me is, the quality of a good leader is to have clarity of vision, because if you don't have clarity of vision, it's hard to develop a shared vision with all the employees of the organization. I think if you don't have a shared vision with all your employees, you can only get them to go part way towards any goal.

I mean, we really only go where we believe we want to go. We can be ordered to go someplace, and we'll go reluctantly if there's enough of a power structure there, but when we really go enthusiastically somewhere, it's because we see the goal, we agree with that goal and that vision, and that's how we get there. So, to me, the first part is to really have that clarity of vision.

I also believe that people need sound principles and integrity, I think that's a critical piece because no one will follow anybody they don't believe in, and I think that's another critical piece.

Finally, the ability to listen. It's impossible to know everything, but in an organization of 180,000 people, for instance, we have somebody who has a good idea about almost everything. The hard part is to listen. You can find a lot of people who will be quiet while you're speaking, but you find relatively few people who actually listen to what you have to say, incorporate that into thinking and then turn it into a true dialogue with you.

So, I think that's another key piece of leadership, especially in today's society, which I think is moving from a kind of hierarchical command and control structure to more integrated and virtual organizations and more democratic leadership.

Mr. Lawrence: We discussed earlier the reorganization of VHA into the 22 veterans integrated service networks. How do these networks operate and make decisions and what have been the results of this reorganization?

Dr. Garthwaite: It depends a little bit on where you sit, how you believe how they operate. We believe that we've given them a significant amount of authority and control to operate relatively independently. We give them broad national policy. We occasionally step in and try to guide them back on the straight and narrow.

Others haven't been quite as complimentary as that. I think the Congress has been a little concerned that there's a little too much authority and independence. But my take is that they've done very well, given the rapid evolution of an entirely new structure.

One of the things I think has helped us a lot in moving forward the networks was that during the early implementation, and even to this day, we meet frequently. We have a monthly leadership board meeting with the key headquarters leadership and the network directors, all 22.

We did that monthly, in person, for the first several years, and I think that helped minimize the competition and maximize the collaboration. I think it helped each learn from each other's mistakes and implementation difficulties. I think that really allowed us to do reasonably well in the implementation networks.

Mr. Lawrence: VHA places a strong emphasis on patient safety and has created four patient safety centers of inquiry. Could you tell us about these centers?

Dr. Garthwaite: Sure. The centers are really part of a comprehensive strategy in patient safety. Probably three or four years ago, we looked at what was happening in health care and challenges we had in providing consistent care across all the facilities that we operate and began to take on a systematic approach to improving outpatient safety, which included an advisory group to help set up the program; a center for patient safety; a handbook; a mandatory reporting system; the Centers for Patient Safety and, more recently, a voluntary reporting system.

The Centers are looking specifically at what we can to do to engineer in safety in health care. And they look at things from human factors analysis - Do we have enough people? Are they overtired? Are the machines too confusing? Are they designed to be easy to use or is a mistake almost inevitable based on the design of those things?

In addition, we're looking at things like the role of the environment on worker performance; things like simulations. We have an anesthesia simulator in Palo Alto, where a team from an operating room can go in and this simulated patient can have all sorts of difficulty and even die in front of the doctors and nurses, if the right actions aren't taken. Now, when I say die, I mean, figuratively. But you can simulate almost everything and you can watch and even record on TV all the interactions of the people and the kind of things they need during an emergency and whether they're there.

It's really led to some, I think some important understandings about how teams work together; how teams function in emergencies; and how to provide the needed tools to respond to an emergency in a better fashion than they would when they started the simulations.

In addition, we can also see if people are up to date on their training, know what to do and whether our training needs to be modified to improve that. So, a lot of exciting research and actions being taken in the patient safety arena.

Mr. Lawrence: Related to the area of patient safety, VHA recently launched a three-year $8.2 million program to set up a system to reduce medical errors in conjunction with NASA. Can you tell us more about this?

Dr. Garthwaite: NASA for years has run an aviation safety reporting system, which seeks to minimize the personal inhibitions to reporting close calls or actual errors.

It's been found that if you're involved in an error, an adverse event, or a close call, you make a mistake. You're inhibited by a fear of the consequences if you talk about that. You're also inhibited somewhat by the shame of having to admit you made a mistake. So there's a series of reasons that people aren't quick to point their mistakes.

But most people would like to see the systems get better. They would like to see the situation they found themselves in where a mistake was possible, be fixed. And so, it's been found that if you can make the culture right, the people will readily report anonymously the situation that led to this near miss or this adverse event.

That's what we're setting up with NASA. If something happens, you give the wrong medication, but no one was injured but you know they could have been, you can write that up. You have your name and phone number on there. You send it in to NASA; NASA will call you back and make sure they have the story right, so they can interpret it. They will tear your name off and they'll send that back to you.

Then that information about that event is entered into a database, it's computer searchable and NASA has set up computer programs that have allowed them to look for patterns in this description of these adverse events in aviation and we'll be able to use that programming expertise in medical care, as well.

So we're real excited about this. We think it will be the perfect complement to our mandatory reporting system where an actual adverse event did injure a patient and where we need to get to the root cause of that.

In addition, we'll have this voluntary reporting system that will get to near misses, minor adverse events that might otherwise go undetected and allow us to identify as many possible vulnerabilities in the system so we can get about the business of fixing them.

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 Dr. Thomas Garthwaite, Acting Undersecretary for Health, Veterans Health Administration and joining me in the conversation, another PwC partner, Greg Greben.

I wanted to close on one last thing we were talking about in the last segment, which is, one of the innovations under discussion at VHA is Web pages for individual patients to store their medical information electronically in a single place and I'm wondering about the hurdles that need to be overcome before that becomes a reality.

Dr. Garthwaite: Our vision is that the only person that really owns the complete medical record is the patient and the people the patient gives permission to own it. So that, as the VA health care system, we would have all the records on an individual that we had created during our care for the patient; anything they ask us to use in the assessment of their care and the delivery of their care.

Once you make that sort of leap into the patient owns the record, then you have to start talking about how do you, where does he store it, or she store it?

Our vision is that we might help provide veterans that opportunity of a place to store it, especially for the patients that use us for the predominant part of their medical care. So we see a Web page or something like that, a very secure place where electronically the data can come together and where the security is tightly controlled and where the access is controlled by the patient's wishes.

We call that Healthy Vet for the main Web site area, where they can get health information and have their records stored, and right now using the name Healthy Vault for where it's stored, because, in a way, we want to think the medical record as stored every bit as securely as your money and your other valuables.

So that, to us, is a key piece of future. The neat part about this is, once you have your medical record electronically, then instead of this very hard to read, nonstandard information on paper, you now have something that you can analyze much more readily; that you can share much more readily; that you can get a second opinion on much more readily. And you can begin to group together with other patients and look across patients inwardly at the health care system and ask what kinds of quality outcomes does that health care system have.

So when I talk to people about the revolution in the electronics and information in health care, it's not so much just about the fancy stuff people can do, which is, move or do telemedicine, and teleconsultation and a variety of other things.

I think the real revolution will come when the patients own the record and can band together and hire somebody to help them pick the providers, because suddenly, for the first time, capitalism will really rain down and health care will force people to provide quality that they can demonstrate and not demonstrate to themselves or to an accrediting body, but demonstrate to a group of consumers who are looking in at them. That will, I think, dramatically change for the better, our health care system.

Mr. Lawrence: Well, what about the privacy concerns of having all that information? I imagine that's a big hurdle to overcome.

Dr. Garthwaite: I think privacy concerns are a hurdle but I think they're much less of a hurdle, if you go into it with the fundamental belief that the patient owns the data. So that the patient wouldn't join a consortium that they didn't want to.

The patient's data wouldn't go to a pharmaceutical company to market to them their newest products. It wouldn't go to a health care organization just because they had contact with a health care organization. You'd have to specify that you want to share all your record with that health care organization.

And so, if the patient owns the record, I don't think that it will get out of whack. It's when the hospital sells to the pharmaceutical company who then comes back and markets their medications and begin to sell these databases for other reasons that there are really going to be concerns, or if someone from an insurance company can come in and exclude from coverage people who have certain diseases or conditions.

I think those kind of things are the fear that drive the privacy concerns. As long as the patient owns that record and the other people that have parts of that record aren't allowed to sell that information off, I think the rights and privacy of the patient can easily be protected.

Mr. Greben: We've discussed some of the complexities of VHA: The sheer size, the number of facilities, et cetera, as well as the various missions: medical care, medical graduate education, and research. How do you manage such a complex organization?

Dr. Garthwaite: Wish I knew. Well, you obviously have to get a lot of people involved and we've tried a couple of things. We've tried to hire the smartest people we could from wherever they are. In the past, the VA was, I think, guilty of being a little insular and hiring from within. We have hired whoever we could find we thought could do the best job. So, we've hired a significant number of our leaders from outside the VA and I think that's been helpful.

A second piece that I think is helpful in management is the development of the performance measurement monitoring system. We've been able to focus people on key measurements that we think really reflect our progress, both as facilities but also as a larger system.

By picking things to monitor and to measure that are critically important to patients, we've turned the focus of what your job is from the old days, where it was kind of impressing the person higher than you are in the hierarchy to now making some measurable change in the life of a veteran, their immunization rates, their surgical mortality, the number who are put on aspirin and beta blockers after a heart attack. You go down the list, the customer or patient satisfaction scores for your facility.

All those things that we measure, you're going to have to change how you do the process of care and make it better to make them change. So that's made for a lot of focus in local facilities and nationally, on how to make that happen, which is all about the process of delivering care and I think it's made us a much better organization.

Mr. Lawrence: How does VHA attract, hire, and retain top performers, especially in the area of quality health care?

Dr. Garthwaite: Well, that's getting harder and harder. One thing we have on our side is we have a wonderful mission. It's pretty noble to take care of America's heroes, do research, train tomorrow's health care providers. But altruism only goes so far, if the salary structure isn't any good. So we've tried to make sure that our salary is the best that we can make it within the current legislative mandates that we have.

We also try to challenge our employees. We want them to feel like it's fun to come to work. We want them to feel that it's challenging to come to work, that it's a good thing that they have a noble mission.

We'd also like them to believe that, for working with the VA, they will grow as professionals and as people, that they will have an opportunity to learn things and at their level of confidence and the things that they know that are marketable inside the VA, and outside the VA, will grow as they've come on.

I would say we have a lot of work to do in this area. Although that's a belief system we have and although we've taken some significant steps in that regard, I think that's a part that's lagged a little behind and is a major initiative that I've started working on in my new capacity.

Mr. Greben: How has VHA handled reductions in staff?

Dr. Garthwaite: Most of our reductions have been through attrition. We've proposed some involuntary separations, or as the government calls them, reductions in force, or RIFs, but we've ended up separating relatively few people via that mechanism. We've used buy-outs, early retirements, and general turnover to try to restructure the workforce.

One thing that doesn't show up on our FTE statistics has been the use of contracting, and in many areas where we've put in community-based outpatient clinics, we've ended up contracting for services. And so, there are several additional FTEs that are contracted for. That's a different way of doing business for us.

Mr. Lawrence: You described a period of tremendous change in VHA. How have you worked with the unions, during this period?

Dr. Garthwaite: We've had a national union partnership that I think has helped get national issues out on the table and debated. We've sought local partnerships in all of our facilities and I'd say the vast majority have working and relatively good union partnerships.

Clearly, there are some areas where we still have either no partnership or less than ideal partnerships with the union, but we continue to try to work through those areas individually.

But I think, overall, our record's been pretty good. We've brought the union into our national meetings. We've brought them in to advisory boards at the national and local level and we've also sought their opinion as we send out policies.

Our instinct is to send out all our policies during development for comment to all the stakeholders that are important to us.

Mr. Greben: VHA has launched many new initiatives and changes in the recent past, can you describe some of these initiatives and specifically comment on the challenges that you faced?

Dr. Garthwaite: Yes. We've had an incredible number of things we've tried to put into place. For example, a recent one has been implementing bar code medication administration. We've asked that all the medications that are given in the VA health care systems are checked by bar code between the drug itself, the medical record and the bar code that's on the patient, so that it's the right drug, it's the right dose, it's the right time, and it's the right person.

The challenge with that, especially, has been vendor problems getting the stuff on time, technical issues, but incredibly, trying to teach every nurse who gives out a medication across our large system to go with the new technology has been especially challenging.

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 Dr. Thomas Garthwaite, Acting Undersecretary for Health, the Veterans Health Administration and joining me is another PwC partner, Greg Greben.

We were just closing out the last segment talking about the new initiatives and changes. Want to continue?

Dr. Garthwaite: Right, in addition to the bar coding, we've had to do a variety of other things, from computerized patient record to pain as the fifth vital sign, to implementing reasonable charges in our billing system.

I know the latter one has been especially challenging because we have no culture for billing so we've had to train coders, we've had to train clinicians to document in the chart. We've had to train others to make sure the codes are correct and justified by that documentation. Then to get the bills out, to make sure they're collected and all that process is pretty hard when you start, really, from ground zero.

Mr. Greben: What do you think are the major challenges that VHA will face going forward?

Dr. Garthwaite: Well, you know, I often see more challenges ahead than others because I've been fighting the current challenges and have a sense of those. Clearly, the emergence of technology and how to use it, how to deploy it, how to pay for it, how to kind of get over the hump from the old technology to the new technology safely, and efficiently and effectively is certainly a challenge.

That's both computers, but also fancy diagnostic machinery, and fancy therapeutic machinery, and new medications, and genetic testing, and all those sort of things.

I see huge issues in workforce, from challenges to competition for workers with the wonderful economy that we're experiencing, finding people that want to go into health care and nursing and a variety of the professions that health care has been challenging. That competition for workers has an upward pressure on pay.

All of the government workers have been noted to be getting older and being closing in on retirement, so there's some very special issues related to the federal government and the retirement systems and the age of the average government worker and that's even worse in VA for nurses. Some real issues in workforce for us.

We have huge infrastructure issues. We have a lot more buildings than we need but it's not a simple process to talk about closing those and it's not a cheap issue to think about how to take them down and how to restructure our infrastructure to meet the needs of today's veterans.

There are clearly some veteran demographic issues. In the future, around 2010, there's a significant drop off in the number of veterans in the United States and we anticipate a drop off in the need for medical care by veterans. So one has to either imagine a different, or emerging role for the VA health care system, or significant changes in its size and scope.

Our sense is that it's been a real investment for the taxpayer to build this large system. It provides some valuable functions in addition to providing the health care and its research and education missions and that there are potential other roles that will provide taxpayer value on their investment.

The good news is that, by reinventing and transforming the VA, I think the potential roles that the VA could take on in the future have expanded. I mean, I think five years ago, one wouldn't look to a large lumbering bureaucracy that couldn't demonstrate the quality of care that it gives for any new tasks. But, today, I think you have a much leaner VA that's very responsive, that's high technology, that's high touch, that can demonstrate to anybody who wants to look, the kind of quality-of-care we're capable of providing. We're having trouble finding systems out there that have benchmark performance measures as good as ours. So I think that we have the potential of really being a model system and one that also provides valuable service in research and education.

Mr. Lawrence: When you change the way you do business, there tends to be resistance. How have you dealt with this and what advice would you give other leaders of change?

Dr. Garthwaite: Well, I'm not sure how well we've done in overcoming resistance. I would say, for sure, we've seen resistance. Clearly, our strategy has revolved around the traditional things, such as communication, where everyone tries to convince people that the change is for good reason; that to share the successes frequently, often, and to try to maintain an upbeat attitude about why the change is necessary. I think we've done that reasonably well, but I think that we still have a significant amount of resistance.

The unique aspect to the VA is that we've changed dramatically at a time when health care's changing dramatically, as well. Part of our strategy has been to remind folks within the VA to talk to their colleagues in other health care systems to understand that it isn't all just VA changing, but all of health care is undergoing dramatic change.

Most recently, we're really trying to arm our employees with some information about the quality measures that have changed so dramatically and so we've given all our employees a little folding card that essentially tells them the key positives about the transformation that we've used to sell the improvement in quality.

The fun part about that is that we did that and the Veterans Canteen Service, which operates all our cafeterias across the system saw that and said, "Hey, that's a great idea," so they made tray liners that have that on it and they printed 4 million tray liners. Sometimes when you're sitting back, you have an idea, you never know how it's going to be taken by other parts of the organization and operationalized.

I think the important point is that you've got to give people a reason to change. You have to make sure that they understand the importance of that change and that it makes sense to them. I think by and large what we've tried to make changes in, has made sense. We've tried to say, you know, everyone should get immunized, why aren't they? Everyone should get these medications, why don't they? Patients should feel that we're compassionate and courteous, why don't they and how do we get better at that over time?

If you define those goals carefully, I think most people get on board with them if they see the same vision and I think if you keep your focus on the patient they usually do.

Mr. Lawrence: How about advice for the people working in the organization, for the managers or leaders of the future in terms of dealing with this new environment?

Dr. Garthwaite: Well, again, I would just go back to a very simple premise. You know, I think in a previous presidential election, I think the phrase, "It's the economy, stupid," was used and I tell people, "It's the patient, stupid." If you really focused in on the patient, if you're worried about their waiting times and if you're worried about our communication with them, if you design systems that make sense to the patient, then you're going in the right direction.

Whereas, if you just say well, we have to preserve this old structure that we've had for so many years because my goal in life was to be the assistant chief of that structure, that's not the same as saying, you know, it doesn't matter what my title is as long as the patients don't have to wait in line, that they are treated with courtesy and respect, that they get the proper diagnosis and proper treatment.

That's what we're really about as an organization. We're not about creating management structures and titles that people aspire to, we're about creating outcomes that patients care about.

One of my favorite analogies is that when you fly in an airplane, you may not crash, you may get from one point to another, but your satisfaction may not be perfect all the time. And you can imagine what the executives must be measuring in certain airlines versus others. There's one that I used to fly often in which the CEO of the organization knew how long it takes from docking the aircraft at the jetway until the bags appeared on the carousel. Now, that's different than knowing whether or not you had empty seats, because, as you and I know, that if you had empty seats, we're happier, but the CEO's not happier. But we also know, because empty seats mean we're sitting in the middle.

Whereas, you and I can probably predict which airlines actually know and measure how long it takes the carousel to get there, because we're standing down there for a half an hour waiting for our bags to appear. With the airline that I know measures that, you don't wait.

So, the real issue is how do all of our employees really believe and measure things and try to make those change that are important to the patient. So, it's not so important to the patient whether or not the person above you in the hierarchy thinks you're a good person and that you wrote a nice report, they do care if they wait. They do care if they're treated with courtesy. They do care if they get the right medications. They do care about their visit to the medical center. That's what you have to be focused on, always.

Mr. Lawrence: Well, that's a good point to end on. Greg and I want to thank you for spending so much time with us this evening, Dr. Garthwaite. Thanks for joining us.

This has been The Business of Government Hour. To learn more about the Endowment's programs and to obtain copies of the two reports on the VHA, "Transforming Government," and "Transatlantic Experiences in Health Reform," visit us on the Web at endowment.pwcglobal.com. See you next week.