Forum Introduction: Toward Greater Collaboration in Government

Thursday, April 12th, 2007 - 15:43
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Robert Shea interview

Friday, March 23rd, 2007 - 20:00
"My job is to make performance an increasingly important factor, and the PART is a very powerful tool. There's a tremendous opportunity to make greater use of this on the Hill."
Radio show date: 
Sat, 03/24/2007
Intro text: 
Managing for Performance and Results; Leadership; Collaboration: Networks and Partnerships; Strategic Thinking; Innovation...
Managing for Performance and Results; Leadership; Collaboration: Networks and Partnerships; Strategic Thinking; Innovation
Complete transcript: 

Originally Broadcast Saturday, December 9, 2006

Washington, D.C.

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

The Business of Government Radio Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is Robert Shea, Associate Director for Management at the U.S. Office of Management and Budget.

Good morning, Robert.

Mr. Shea: Good morning, Jonathan.

Mr. Breul: And joining us in our conversation is John Kamensky, senior fellow at The IBM Center for The Business of Government.

Good morning, John.

Mr. Kamensky: Hi. How're you doing, Jonathan?

Mr. Breul: Let's begin by talking about the Office of Management and Budget. Robert, could you tell us about OMB, what is its mission, how is it organized, and give us a sense of the size of the staff?

Mr. Shea: OMB is a great storied institution, part of the Executive Office of the President. It's got about 500 employees. Its primary responsibility is to serve the President in executing his budget responsibilities, his oversight of the Executive Branch and the implementation of programs, and ensuring that regulations are issued in compliance with the law in an effective and efficient way.

It has the most talented group of employees in the federal government. It was rated recently by its own employees as the best place in government to work. It's a great place to be, very exciting. You have a very high sense of purpose at OMB, because you are every day trying to figure out how to serve the American people better every day.

Mr. Breul: Now that you've given us some sense of the larger OMB organization, could you elaborate on the management side of OMB, its specific purpose, its role within the larger organization?

Mr. Shea: Sure. The two big sides of OMB are the budget side and the management side. Most of the employees work on the budget side; that is, they prepare the budget, work with agencies to enact and implement that budget. But they also oversee the management of agencies. And the management side helps them to do that better.

We have an Office of Federal Procurement Policy, an Office of Federal Financial Management, an Office of Information Technology and E-Gov, and an Office of Personnel and Performance Management. Those all fall under the Deputy Director for Management, Clay Johnson, and are headed by folks who implement laws that have been enacted over time to improve government management, including the Office of Federal Procurement Act, the Chief Financial Officers Act, the E-Gov Act, the Clinger-Cohen Act.

All of these are intended -- and of course the Government Performance and Results Act, which really is the foundation for all of the management improvement acts that have been passed over time -- all of them are designed to make programs work better, more efficiently, and effectively on behalf of the American people. And we have chosen to implement those statutes, and measure implementation of those statutes, with the President's Management Agenda scorecard.

So for each of those offices, there is also an initiative on improving financial performance, strategic management of human capital, expanded electronic government, competitive sourcing and budget and performance integration, all of which have clear definitions of success criteria which we use to judge agency performance every quarter, so that we are improving the timeliness and accuracy of financial information that agencies can use to manage, that agencies have the employees they need to accomplish their missions, that they're reducing duplicative IT systems, managing IT projects more effectively and securely, that they're setting clear outcome goals for their programs and working to achieve them better and more efficiently every year, and reducing the cost of commercial activities.

So we've got about 60 people, all of whom are working diligently with their counterparts on the budget side of OMB and individuals and agencies to improve agency and program performance.

Mr. Kamensky: Well, that's a broad scope of responsibilities that the management side has. What are your specific responsibilities as the Associate Director for Management in OMB?

Mr. Shea: I often say that my duties are as assigned. But I lead the -- my primary responsibility is leading the budget and performance integration initiative, which implements the spirit of the Government Performance and Results Act.

Agencies have to have clear outcome-oriented long-term goals and measure their progress achieving those goals on an annual basis, and reporting on how well they're doing and identify strategies to do better, to do more for less. So I work with agencies to achieve the specific criteria for that initiative, and we measure and report our status in that initiative through the scorecard.

But I also -- because I've got some experience working on Capitol Hill -- help my colleagues work with the Congress in reporting on the extent to which we we're complying with the various management statutes in place. I also advise on various policy matters, particularly in Executive Branch organization and personnel policy.

Mr. Kamensky: You also chair two councils -- you just mentioned one of them -- the Council on Budget and Performance Integration. The other one is this Credit Council. What are these two councils, what is the role, and how do they tie back into this President's Management Agenda?

Mr. Shea: I'd like to say there is no activity in which the government is engaged where there aren't multiple players trying to achieve the same objective, and those are two examples. Every agency is trying to do a better job of setting clear goals and reporting on the extent to which they are achieving them, and trying to do the more efficiently.

Likewise, we have a massive number of loans and loan guarantees that we issue every year. Multiple agencies are doing that. We get each of these groups together to come up with and share best practices on how to achieve those objectives. We've got a meeting with the budget and performance integration leads. And two of the things we'll talk about are making sure that agency congressional budget justifications integrate performance information in a way that is both useful to them and useful to their primary audience on the Hill, the appropriators, but we'll also come up with ways to reduce duplicative reporting requirements.

Everybody wants agencies to report on how they're doing, how efficiently they're performing. I mean, sometimes we get carried away. So we want to make sure we are not creating duplicative reporting requirements that detract from an agency's ability to focus on what they should be doing, which is actual program performance.

Now, the Credit Council is made up of representatives from the major lending agencies: SBA, the Department of Agriculture, the Department of Education, Housing and Urban Development, the Veterans Affairs Department. These are folks who manage massive loan portfolios. And we want to make sure that they are working together to find the best way to assess the creditworthiness of individuals and manage their loan portfolios so that the risk to the taxpayer is not too great, while at the same time, we are reaching our target borrower population, that the program goals of these loan portfolios are achieved in the most efficient way possible.

Mr. Breul: Let's step aside for a moment and look at your career. How did you begin your career and how did you get to OMB? What was the path that took you to where you are now?

Mr. Shea: I started with the House of Representatives Committee on Government Reform and became passionate about improving agency and program performance there. I then spent a couple of years working for my good friend, Congressman Pete Sessions of Dallas, as his legislative director, and got some good experience advising a senior political leader on a broad array of public policy. But this fellow had an intense interest in improving government results. So it was a good match.

I then had the privilege of working for Senator Fred Thompson as Chairman of the Senate Governmental Affairs Committee, another dynamic leader committed to improving government management and program performance.

As a staffer on that committee, I got the privilege of working with agency officials, Executive Branch officials, particularly those from OMB in their Senate confirmation process. That's where I met Mark Everson, then-comptroller at OMB, now IRS Commissioner. And he asked me to come work for him at OMB.

He was then promoted to Deputy for Management, left OMB and was replaced by Clay Johnson. And Clay asked me to stay on, lead the Budget and Performance Integration Initiative and help him administer the President's Management Agenda as Associate Director for Management. I've worked with three directors of OMB, two deputy directors for management, a senator and two congressmen, and all of them committed to -- not only public service, but service that contributes to the improved performance and service to Americans. So I am proud to be associated with people who I know the American people would be glad to know are working on their behalf.

Mr. Breul: How has OMB's Program Assessment Rating Tool changed the way government does business?

We will ask Robert Shea, Associate Director for Management at OMB, to tell us about this, when the conversation about management continues on The Business of Government Hour.


Mr. Breul: Welcome back to The Business of Government Hour. I'm you host, Jonathan Breul, and this morning's conversation is with Robert Shea, Associate Director for Management at OMB.

Also joining us in our conversation is John Kamensky, senior fellow at The IBM Center for The Business of Government.

In 2003, OMB initiated its Program Assessment Rating Tool, commonly referred to as PART. Robert, would you tell us about PART: its purpose, its scope, how is it designed, and what's the overall status of the PART initiative today?

Mr. Shea: The Program Assessment Rating Tool is a simple device to guide agencies in OMB in assessing the management and performance of programs. It's comprised of 25 or so basic questions: asking whether a program's purpose is clear and it's well-designed to achieve its objectives, whether it's got outcome-oriented long-term and annual goals and aggressive targets, whether it's well-managed. Most importantly, the tool asks whether a program achieves its goals.

We've asked these questions of virtually every program in the government now. We've assessed 100 percent of government spending, give or take 5 or 8 percent. And the purpose is to ascertain what barriers exist to improving a program's performance, and once we identify those barriers, come up with strategies to overcome them. The way it works is agencies tell us what the right answers to these questions are, like any self-assessment that's going to appear more generous than it should be.

So we at OMB kind of look at the evidence that has been provided and try to work with the agency to come up with the right answers to these questions, and then come up with a reasonable, accurate, and objective overall assessment for a program. Once OMB and the agency staff arrive at the right answer, my staff does an audit of all the parts to make sure that they are consistent with the rules, whether we've applied the questions consistently to programs across the government. After that, if an agency didn't like its overall assessment, it can appeal to a high-level committee comprised of deputies from various agencies in the government.

And then we arrive at a final rating. We use that not only to identify strategies to improve programs, but to make decisions about programs, about whether we need to propose legislative fixes to make them perform better, what their budget level ought to be, is this program performing at a high enough level where we can invest more, or do we need to fix something before we scale it up.

Hopefully, we can make more and more of those decisions. But for the first time, we've had this uniform set of assessments to make decisions like this across government, so we can see the performance of programs within agencies, but also perhaps more importantly, like programs across government -- programs with similar goals.

Mr. Breul: How has the PART introduced a new level of transparency and led to a more citizen-centric government?

Mr. Shea: As long as we've been doing the Program Assessment Rating Tool, we have published all of the answers and the evidence upon which those answers are based on the Internet at OMB's website. But it was so difficult to navigate that you might as well not have been posting it at all.

Analysts might have been able to look at the data and made some use of it; people familiar with a specific program might have found it useful. But otherwise, it wasn't very accessible. So we stepped back and launched a website called to sort of summarize all of the program assessments in a language that was more easily understandable by the average reader or visitor to the site, and made it searchable by a common search tool.

But all the evidence is there. We haven't reduced the amount of information that's there. We've just summarized it in a way that's more accessible, readable, understandable so that people can make greater use of it.

We've had more than a couple of million visitors to the site, which is more modest than I would like it to be, but is a lot more than visited in the past. And I hope that that information could be much more usable in the future; that people will visit the site as a way to look at how other programs are finding out how to do better and better every year.

But also, the whole program is accountable. You know, ultimately we ought to be candid about whether or not we are achieving our objectives on behalf of the American people and trying to collaborate on ways to do better in the future.

I will tell you one of the most visited sites on is the Gallaudet University PART. We are the federal investment in Gallaudet University. Taxpayers invest $100 million a year in Gallaudet. So we thought it was a useful program to assess, and when you look at the data, it shows that graduates in jobs or degree programs commensurate with their degrees from Gallaudet reduced by a dramatic amount -- and the PART makes you ask why, what's causing that? And there has been a lot of discussion between us and Gallaudet. Gallaudet is an important storied institution that is serving a pivotal role, educating deaf people, both from K through 12 all the way through the postgraduate level, doing very important research on deaf education.

But the PART highlighted what really was invisible to most, and that was a decrease in some of their performance. And so hopefully, we will come up with ways to improve. That's the most high-profile assessment we've done, but all of these programs provide an opportunity to identify weaknesses and strategies to overcome them.

Mr. Kamensky: Well, in the first year, I have noticed that it was treated largely as a compliance exercise, and the next year, it seemed to be that a lot more senior executives were paying attention to the process. How does this PART score wind up influencing an agency's budget, either in the President's budget or up on the Hill in the appropriations process? And are you trying to generate more interest up on the Hill on this?

Mr. Shea: Well, starting with your first point about the compliance exercise, PART is what you make it. The Program Assessment Rating Tool can be a very effective way to drive greater performance in your organization, because it's really basic questions about a program's performance and management that we all ought to be asking whether or not we are achieving.

As far as the use of this as a device to make budget decisions, we ought to be making decisions based on performance and management of programs. This just gives us a uniform way to produce that evidence and use it as a factor in decision-making. But you know, John, that we don't make these decisions based on one factor alone, there are a lot of drivers to decisions about program budgets.

My job is to make performance an increasingly important factor, and the PART is a very powerful tool. But decisions will be made to increase funding or decrease funding for a program that are not related to performance. A program may have outlived its usefulness. The original purpose might have gone away, or the program may not be a priority for a particular administration or committee chairman.

So a lot of factors go into the decision-making about program funding. A program that is rated ineffective may need additional funds to address a particular weakness. And a higher performing program may, as I say, have outlived its usefulness or not be a high priority, and therefore its funding can be diverted to other uses. And if you look at the PART ratings, there is a slight correlation: higher performing programs tend to in the aggregate get higher budgets, and programs in the lower rated category tend to get less funding. But there is no direct correlation between a program's rating and its funding level.

There's a tremendous opportunity to make greater use of this on the Hill. Some resist it -- I fail to understand why except that I think some may view criticism of a program that they created as a personal slight. And I can't say enough or clearly enough or repeat enough that this is intended to be a characterization of the status quo about a program's performance and management, and we want these programs to work as much as anyone else. And the path forward is to address whatever weaknesses we find, not ignore them.

Mr. Breul: Last year, in 2005, the PART won the prestigious Innovations in American Government Award. Could you tell our listeners a little bit about the award and what the significance is of receiving it?

Mr. Shea: The Ash Institute, in collaboration with the Kennedy School of Government and the Council for Excellence in Government, every year receive nominations for innovations in American government, things that they think ought to be replicated because of the promise of the particular innovation to improving the lives of Americans for the performance and management of government.

And in 2005, they recognized the Program Assessment Rating Tool as one of those innovations worthy of replication. It was a high honor to have received that award. It was not received by me. It was -- rightly went to the folks at OMB who developed the tool. It was an important recognition that I think validated for all of us who have been toiling at this the methodology we're using to assess program performance and management. The program comes with a $100,000 grant, which because we are OMB, we couldn't receive, we had to take the award alone as compensation.

Mr. Breul: What is, and how does the PART facilitate budget performance integration?

We will ask Robert Shea, Associate Director for Management at OMB, to share with us the answers to these questions when we return and continue our conversation about management on The Business of Government Hour.


Mr. Breul: Welcome back to The Business of Government Hour. I'm your host, Jonathan Breul. This morning's conversation is with Robert Shea, Associate Director for Management at the Office of Management and Budget.

Also joining us in our conversation is John Kamensky, senior fellow at The IBM Center for The Business of Government.

Robert, during our last segment, you mentioned a new website, What are the plans to expand the application of, and what are your plans to use it in the future to share information on programs, and specifically to assist Congress during the reauthorization of programs?

Mr. Shea: Well, now includes all the programs that have been assessed to date. The remaining programs we've assessed will be posted there early next year. So you'll have the most comprehensive information on the performance and management of federal programs anywhere. It's an incredibly comprehensive site, useful information if you want to fix a program, if you want to identify what other programs are doing particularly innovative things to improve their performance, the relative performance of like programs.

We can do a lot more of that. We can identify or make it easier to find similar programs so that a poorer-performing program can go to one of its partner programs or a program with a similar missions to find out better ways to crack the nut. I think it can be a particularly useful source of best practices for programs across the government.

As far as congressional authorization is concerned, I am trying to figure out a way to link a program's statutory authorization on the site so that folks who are involved in the reauthorization program of a program either at the agency or in the Congress, or anywhere for that matter, can go not only for the statutory basis for the program, but also to find out when its authorization might be up and when the right time might be to interject some reforms into the reauthorization process.

We're not there yet. I hope it will be part of the site when it's refreshed in the early next year, but certainly in the near future, it's something that that site ought to provide, I encourage everybody to visit now and often.

Mr. Breul: How has the PART submission process evolved? Originally, it was a paper exercise. Now, you use a PART web application, it's web-based. What are the future plans to further enhance the PART web application?

Mr. Shea: We used to submit PART answers over the Internet on an Excel spreadsheet and then have to convert that so that we could publish it online. Now, we have evolved to an online collaboration tool that allows agencies to input their answers and evidence more easily, and then for OMB and agencies to collaborate on what the right answers are to those questions online.

It's much quicker, much more collaborative, but even that can be better. For instance, right now, you really can't see what the specific edits are that somebody made to the data in the application. And we want to make sure that people can have an easy way to track what's going on with their program assessment. And we also want agencies to be able to more easily access data about other ongoing assessments so that if they are having a particular challenge, whether it's the right performance measures or efficiency improvement strategies or reform efforts, we want them to access that information more readily. PART web is a tool that's in its future evolution can facilitate that to a much greater degree.

Mr. Kamensky: I see some really big differences between departments in the program assessment ratings under the PART process. Is this because of the inherent nature of the programs these departments have, or is it related to something else?

Mr. Shea: The differences in the application of the tool are probably as varied as the difference in departments themselves. A large department can have pockets that embrace the tool and really use it to aggressively drive performance improvements or reform strategies when the rest of the department might not do quite as much as you would hope to use the tool. And so we try to be as uniform in the application of the tool as possible through the process I described of auditing PART results and giving agencies an opportunity to appeal to a high-level board that's overseeing the whole process so that it's consistently applied throughout the government.

Each of these program's assessments, like programs themselves, can be better. And we ought to be as critical as we can about the status of a program so that we can drive it to improve even more. And everybody who looks at a PART ought to be highly critical of the assessment. They ought to question the answers to the questions on the PART, don't give us the benefit of the doubt, because the more and more people who provide their input into this process, the more accurate and reliable and useful it will be.

Mr. Kamensky: One of the key initiatives in the President's Management Agenda is the Budget Performance Integration Initiative. Could you tell us a little bit more about this initiative and how PART plays a role in helping that particular initiative be successful?

Mr. Shea: The Budget and Performance Integration Initiative is one of the five initiatives on the President's Management Agenda which each major agency is complying with. It ensures that agencies have a strategic plan that's got really good long-term outcome-oriented goals, that it uses data on a regular basis to make decisions about how to improve program performance and efficiency, that individuals in the organization are assessed based on their contribution to the achievement of the agency's and program's mission and goals.

The Program Assessment Rating Tool gives you a really good way to assess the performance and management at the program level and then to use that improvement strategies that you've identified through that tool to improve strategic goals, individual performance goals, and efficiency efforts. We just want to see the PART as another source of information agencies can use to improve their performance.

Mr. Breul: With all the success that you have had with PART, could you tell us whether its success has piqued the interests of other countries? Have other countries come to you and sought to emulate or imitate the PART tool?

Mr. Shea: Yes. In fact, I was surprised several years ago to learn that the Scottish EPA had applied the PART. I am less surprised with the successive governments that come to me asking for information on how they can apply this tool to their affairs. I was recently at a meeting of OECD in Paris, in which my partner representatives were all very eager to learn about this tool. Australia, Canada, Korea, Thailand, all have expressed an interest in applying this precise tool.

I had a visit, far less exotic, from a local government near us right now that wanted to consult with us on how they could apply this tool to their affairs. It's really simple. A set of questions that asks of federal programs, what could legitimately be asked of any activity. Do you have clear goals, and is your program well-designed to achieve those goals? Do you have long-term and short-term targets? Are you well-managed? And are you achieving your goals? Those are basic questions that we ought to be asking about what we're doing so that we can do it better.

Mr. Breul: Are you finding similar interests by state and local governments? Has anyone from a governor's office or a mayor's office come to visit, sought to pick up the essential elements of the PART?

Mr. Shea: I have had some modest interest -- not a lot -- but like I say, one of the local governments from the Washington, D.C. metropolitan area approached me about applying the tool there. So I think that would be very exciting.

Mr. Breul: And what about interest from Congress? Have you had any particular entrees or invitations from them to follow-up and dig more deeply into or how the PART tool itself operates?

Mr. Shea: There is increasing interest from the Congress in the Program Assessment Rating Tool and our conclusions about programs. Some of that interest is good; some of it is not so good. I'd like to hope that more and more in Congress find this information useful in performing their jobs in reauthorization, oversight, appropriations, because like us, they want the programs that they authorize and fund to work better every year.

And you see increasing citations to assessments of programs in congressional reports and the like -- hearings. So I hope that grows. And I hope it grows in a positive way that people really find this information more and more useful.

Mr. Breul: What's next for PART and for other government management reforms,? We will ask Robert Shea, Associate Director for Management at OMB, to share this with us when our conversation about management continues on The Business of Government Hour.


Mr. Breul: Welcome back to The Business of Government Hour. I'm your host, Jonathan Breul, and this morning's conversation is with Robert Shea, Associate Director for Management at OMB.

Also joining us in our conversation is John Kamensky, senior fellow at The IBM Center for The Business of Government.

Robert, with the forthcoming Fiscal Year 2008 budget, which is going to be released in February of 2007, the Administration is going to release the results of the fifth round of the PART assessments, completing 100 percent of programs and dollars. What are the plans for PART next year, and does OMB plan to go back and re-PART specific programs? Are you going to go look at programs that got low scores, or are you going to take a look at programs in various cross-cutting areas?

Mr. Shea: I hope we're going to do all of those things, having assessed virtually 100 percent of the federal budget, have improvement plans for most programs. Everybody has identified steps that they are going to take to improve the programs they manage. So we need to track those; we need to ensure that people are being as aggressive as they can in implementing those improvement plans. So that's the first thing we'll do, make sure everybody is doing what they said they would do to improve their programs.

Programs that have done enough to warrant a reassessment will get reassessed, and hopefully their ratings will improve. But then we'll have to identify improvements that the programs will have to take again to improve even more. So this is a continuing cycle of improvement that we can engage in now with the PART.

Now, as you say, having assessed 100 percent of the programs, what is the opportunity for looking at cross-cutting areas? I think the highest value use of the Program Assessment Rating Tool is in getting like programs together, programs with similar missions, and collaborate on better ways to jointly improve their performance. We've done this in a myriad of areas. In grant programs, for instance, we've come up with a common strategy that programs can use to share information about specific funded activities that are more effective than others so that we can scale those up.

We have collaborated this past year with programs aimed at improving achievement in math and science among America's youth. And you will find a real lack of clarity about the goals of those programs. We've fixed that. And now we are going to get more and more evidence about which math and science programs are most effective so that we can share those lessons with the hundreds of other programs that are aimed at improving math and science achievement. That's the real potential for the future of the PART. I intend to drive its use for collaboration among like programs.

Mr. Breul: The President recently signed into law a new piece of legislation, the Federal Funding Accountability and Transparency Act. What does this legislation envision? And can you tell us something about the role of the blogger community in the passage of this new act?

Mr. Shea: That was something to behold. This was a piece of legislation which had a very noble purpose but which I didn't give very high odds of passage, because I knew the opposition among many in Congress was great. What it does is it requires us to post on a regularly updated basis those federal expenditures and grants and contracts and loans, et cetera, to organizations other than to individuals, and to post that in a searchable, easily accessible format on the Internet. And we are going to implement that Act as the authors of that Act intend it to be created. We will collaborate with them in the development and planning of that website.

Now, one of the forces that helped this bill get enacted was the blogger community on the Internet. They were passionate, both on the left and the right, for this legislation, because they saw it as a way to improve accountability of government for taxpayer spending. And they got wind of efforts to defeat it and shined the bright light of the Internet on those activities and overcame them -- by sheer force, got very powerful members of Congress to relent and in the end support passage and enactment of this legislation.

Mr. Kamensky: This has been, you know, a fascinating phenomenon, that this has happened. The question then becomes, is there the ability to leverage this kind of change in the culture of Washington and new ways to focus attention on management issues that might otherwise not have been paid attention to?

Mr. Shea: I think one of our watchwords in implementing the President's Management Agenda has been transparency. We grade agencies every quarter, post their grades on the Internet. We also assess programs and post all of the evidence on which those assessments are based in easily accessible websites, searchable and understandable by the American public. The reason we do that is because we think we're on the side of right. We think what we're doing is the best way to achieve our goals. And if others disagree with us, we want to know that. If they have a better way to achieve the goals, we want to know that, because no one wants to achieve our mutual goals more than we do.

So I think the blogger community, just like any other media outlet, is a great way to both communicate and collaborate on our plans to achieve goals. So we have a new vessel for communicating our plans. I anticipate that the feedback we get might be a little more aggressive than we're used to, but bring it on. We want feedback so that people can buy into what we are doing.

Mr. Kamensky: And do you have some plan for leveraging this?

Mr. Shea: Well, I think that's it. I think regularly communicating with the folks who are involved in that website, not only on the implementation of the plans to comply with the Act, but also in the implementation of the President's Management Agenda overall.

Mr. Kamensky: Separately, how significant is the proposed Program Assessment and Results Act, which is a proposal in Congress, to the continued and future success of the government management reform efforts?

Mr. Shea: Well, I think one of the questions the Program Assessment Rating Tool asks is whether a program's statutory design adequately helps it achieve its goal or whether it's flawed in some way. If it's flawed, I generally suggest that we try to remedy that flaw in statute. So there are a number of statutory reforms that have been proposed as a result of the PART highlighting a flaw. We've not been that successful in getting those reforms enacted. So in the future, there's a great opportunity for improvement.

And when you see like programs that suffer from generally the same flaws, you can accelerate the performance of those programs by perhaps reforming them all at the same time. Reauthorization, as we've talked about, is an opportunity to tee up those reforms for agencies and the Congress, and the President as well.

Mr. Breul: Let me turn the conversation back to OMB for a moment. OMB has a reputation for being a very demanding and stressful place to work. And yet to the surprise of many, it achieved the number one ranking in the Partnership for Public Services' best places to work in the federal government survey.

What are some of the benefits of working in such an environment, and in particular, what advice would you give to a person considering a career in the public service or possibly even being interested in joining OMB?

Mr. Shea: OMB is a very demanding place to work, just like any federal job. We are doing a better job at telework. So I'm able to spend more time with my beautiful wife and charming three girls. But it's still tough -- the hours are long, and there is no downturn in the workload throughout the year. There's always something going through OMB. When every policy matter, legislative matter, budget matter, management matter, regulatory matter comes through OMB, there's just no let-up in the workload. But that's also why it's an attractive place to work.

But the work we are doing will have an impact on the performance and management of the federal government, and therefore, the lives of the American people. You can have a real impact on mission at any job at OMB. And that is an incredible reward. There is a challenge of staying the best place to work, because while our employees are the most talented, there's a limit. You've got to have a reasonable workload-family balance. And so that's a continuing challenge that we have to confront.

But the advice I'd give to people who are considering a job at OMB is to come. If you're talented and have an interest in public service, serving the American people, OMB is the most exciting place to be because it's where I think you can have the greatest impact.

I would recommend you visit for more information about not only OMB in general, but opportunities to come work there.

Mr. Breul: Robert, that's great advice. We've reached the end of our time, and that will have to be the last question. I want to thank you for fitting this into your very busy schedule today. And more importantly, John and I would like to thank you for your dedicated service to the public.

Mr. Shea: Thank you very much, Jonathan, John. This has been fun. And for those listening, if you want to get more information about the President's Management Agenda, I invite you to visit, where we update regularly the status of the scorecard and other President's Management Agenda initiatives.

And not to sound like a broken record, but for more information about program performance and management and our assessments in general, visit

Mr. Breul: This has been The Business of Government Hour, featuring a conversation with Robert Shea, Associate Director for Management at the Office of Management and Budget.

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

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Bradford R. Higgins interview

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

Originally Broadcast Saturday, August 26, 2006

Arlington, Virginia

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

The Business of Government Radio Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is Mr. Bradford R. Higgins, Assistant Secretary of State for Resource Management and Chief Financial Officer for the Department of State. Good morning, Brad.

Mr. Higgins: Good Morning, Al.

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

Ms. Glick: Good morning.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Morales: Certainly, a phenomenal accomplishment. What are the goals and priorities for the State Department's Bureau of Resource Management? We will ask Assistant Secretary and Chief Financial Officer, Brad Higgins, to share with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Assistant Secretary and Chief Financial Officer, Brad Higgins. Also joining us on our conversation is IBM Project Executive, Bonnie Glick.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Morales: Great. How is the State Department integrating budget and performance information? We will ask Assistant Secretary and CFO, Brad Higgins, to share the details with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I am your host, Albert Morales, and this morning's conversation is with Assistant Secretary and Chief Financial Officer, Brad Higgins. Also joining us in our conversation is Bonnie Glick, Project Executive for IBM.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Morales: What does the future hold for the State Department and its Bureau of Resource Management? We will ask Assistant Secretary and Chief Financial Officer, Brad Higgins, to discuss this with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I am your host, Albert Morales, and this morning's conversation is with Assistant Secretary of State and Chief Financial Officer, Brad Higgins. Also joining us on our conversation is IBM Project Executive, Bonnie Glick.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Morales: Great. Thank you. This has been The Business of Government Hour, featuring a conversation with Assistant Secretary, Bureau of Resource Management and Chief Financial Officer of the Department of State, Mr. Bradford Higgins. Be sure to visit us on the web at There you can learn more about our programs, and get a transcript of today's conversation. Once again, that's

As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad, who can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support. For The Business of Government Hour, I am Albert Morales. Thank you for listening.

Lisa Fiely interview

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

Tuesday, February 7, 2006

Arlington, Virginia

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

The Business of Government Radio Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is Lisa Fiely, Chief Financial Officer at the United States Agency for International Development or USAID.

Good Morning., Lisa.

Ms. Fiely: Hi, Al.

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

Ms. Feller: Good morning.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Morales: It's really portable.

Ms. Fiely: Uh-huh.

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

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

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

Mr. Morales: Well, we'll certainly know after your employees hear this show. How does USAID prepare its PAR report? We will ask USAID CFO Lisa Fiely to share with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host Albert Morales, and this morning's conversation is with USAID Chief Financial Officer Lisa Fiely. Also joining us in our conversation is Lori Feller.

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

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

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

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

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

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

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

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

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

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

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

Mr. Morales: Right.

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

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

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

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

Mr. Morales: It's a collateral duty.

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

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

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

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

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

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

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

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

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

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

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

Mr. Morales: That's good advice. How is the Agency handling accelerated financial reporting this year? We will ask USAID CFO Lisa Fiely to share with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host Albert Morales and this morning's conversation is with USAID CFO Lisa Fiely. Also joining us in our conversation is Lori Feller.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Morales: What does the future hold for USAID, we will ask Chief Financial Officer, Lisa Fiely, to discuss this with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I am your host, Albert Morales, and this morning's conversation is with Lisa Fiely, Chief Financial Officer at USAID. Also joining us in our conversation is Lori Feller.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mr. Morales: Great. Thank you.

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

As you enjoy the rest of your day please take time to remember the men and women of our armed and civil services abroad who can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support.

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

Phyllis Scheinberg interview

Friday, November 4th, 2005 - 20:00
Phyllis Scheinberg
Radio show date: 
Sat, 11/05/2005
Intro text: 
Scheinberg discusses how her office works with DOT's 12 operating components, including the Federal Aviation and Federal Highway Administrations, on budget and program issues. In her four and a half years at DOT, Scheinberg has helped appoint a CFO in...
Scheinberg discusses how her office works with DOT's 12 operating components, including the Federal Aviation and Federal Highway Administrations, on budget and program issues. In her four and a half years at DOT, Scheinberg has helped appoint a CFO in each of the operating components. Scheinberg talks about how her input on the selection, performance evaluation, and budget of the DOT CFOs is essential to maintaining a "dotted line" relationship with DOT's 12 operating units.
Complete transcript: 

Wednesday, October 26, 2005

Arlington, Virginia

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

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our special guest this morning is Phyllis Scheinberg, assistant secretary for budget and programs, and chief financial officer for the Department of Transportation. Good morning, Phyllis.

Ms. Scheinberg: Good morning, Al.

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

Ms. Cammer: Good morning, Al.

Mr. Morales: Phyllis, as I look at the Department of Transportation organizational structure, it looks a lot like a holding company. Can you give us a little insight into the activities of its 12 operating components?

Ms. Scheinberg: Certainly, and you're absolutely right, it is like a holding company. It's a very diverse department. We range from activities like the 24/7 air traffic control operation in FAA to pipeline safety inspectors and to $38 billion a year in the highway grant program. When people ask what the largest organization in the Department is, I have to ask, "What do you mean; what is your context," because FAA has most of our employees -- 47,000 out of the Department's total of 57, 000, but the Federal Highway Administration has the majority of the funding, $38 billion out of about $60 billion a year.

We also have several regulatory programs in NHTSA, FAA, motor carriers -- I don't know if you've heard of the Hours of Service Regulation -- this is for truck drivers and how long they can be on the road in any one week, and that's been very controversial, and FRA with the railroad regulation. So we get into a lot of regulations that affect the public, the traveling public and the working public. We also do a lot of inspections or control a lot of inspections: railroads, pipelines, motor carriers, aviation, airline inspections, and number one mission of the Department is safety. But this has always been the case, and this is really why we exist. Just another example is that we have four credit programs. Most people don't think of the Department of Transportation as a loan or a lending agency, but we do have four loan and loan guarantee programs. So when you look at that as a portfolio, clearly we have quite a diverse department.

Mr. Morales: Phyllis, I'd like to probe the four credit programs, because I wasn't aware of that, but before we do that, can you tell us about specifically the mission of your office, the Office of the Assistant Secretary for Budget and Programs and CFO within the Department of Transportation?

Ms. Scheinberg: Well, I work for the Secretary, Secretary Mineta, and my responsibility is to oversee the flow of all the funds in the Department, $66 billion this year. I'm responsible for the budget preparation and execution of our funds. Also responsible for the preparation of the consolidated financial statements and the coordination of the financial audit, which is going on right now, also the oversight of the Department's program performance. And it's my role to interact with OMB and the appropriations committees in the Congress.

Mr. Morales: Tell us a little bit more about your own specific role as assistant secretary.

Ms. Scheinberg: Well, I think of myself as a problem solver. One of the things that really is important to me is to help the staff, my staff and the financial staff throughout the Department, be able to do their job and help them get their job done. So I take on the role of solving the problems that are standing in the way and impeding the progress.

Another part of my job is to implement the President's agenda. Certainly, the President's Management Agenda and other policies that come out of the White House, and to support the Secretary; everything has a budget and finance component to it, so every time he testifies, speeches he gives, interactions with the White House when he goes to a cabinet meeting, and help him prepare and certainly any policy proposals that come up through the Department and go to the Secretary come through me for comment.

I consider my strongest role in the Department that of building a strong team of financial professionals throughout DOT; it's very important to me that we have a strong team and that the financial professionals see themselves as a component, not just that they're -- the individual operating administrations don't feel connected to each other.

Mr. Morales: And approximately how many professionals do you have in your organization?

Ms. Scheinberg: The office of the assistant secretary is about 55 people, but I have a dotted line relationship to the financial folks in each of the 12 operating administrations.

Ms. Cammer: Now, we understand that you came from or have some experience working with DOT programs when you were at GAO.

Ms. Scheinberg: Uh-huh.

Ms. Cammer: And that you evaluated transportation programs. How has that helped to prepare you for your current assignment?

Ms. Scheinberg: It was excellent preparation. I was at GAO for 11 years, working almost the whole time on transportation programs. My responsibility was, most of the time, surface transportation, and I became one of the directors of transportation issues at GAO. So in that capacity I managed program reviews that GAO did. These were not financial audits; they were program audits. And I was responsible for testifying before the Congress on those reports and on the subject areas, and I also did quite a bit of a speaking to conferences and interest groups.

What this did is gave me a level of knowledge of DOT programs, transportation programs, that I would never have been able to acquire just through a financial job or working on the budget. And so when I came to the Department, I was able to help people in the operating administrations in the program side of things, and I saw the connection -- I knew how their programs worked and I knew what they were trying to do and I could help them with the budget and the financing and put it together with the program knowledge.

My other experience was nine years -- before I went to GAO, I had spent nine years at OMB as a transportation budget examiner, and that experience was invaluable. I use that experience all the time. Knowing what goes on inside OMB and how OMB thinks is just really important when you work in a department CFO.

Ms. Cammer: And now I'd imagine in particular with those 12 operating units, the people who have dotted line responsibility, that that's particularly helpful when you work with them. Could you talk a little bit about what that's like to have a dotted line responsibility into those places?

Ms. Scheinberg: Yes, I'd like to very much, because that was not the case when I first went to DOT. I've been at DOT for 4-1/2 years, but I've been the assistant secretary for about five months. Before that I was the deputy assistant secretary, and when I first was there, we did not have this dotted line relationship. And in fact the capabilities in some of the modes were not what they are now.

One of the things that we have done is set up a CFO, a chief financial officer, in each of those 12 operating administrations. When we first went there, 4-1/2 years ago, the only operation that had a CFO position was the FAA, the Federal Aviation Administration. And it's only been recently that the Federal Highway Administration, with $38 billion in grants, has a chief financial officer.

So that was one of the goals that I and my predecessors have been able to implement, is to develop the caliber of staff and the professionalism of the staff in each of these operations. And in doing that, it was very important to me that these people have a connection to me, in addition to their connection to their administrator, and part of this is done through the selection process that I have approval and input into the selection of these folks. I have input into their performance ratings and I have input into their bonuses. These are the senior level financial folks in each of the operating administrations.

And I don't see this as a negative thing, I think this shows the connection, that these people want to work with me and I want to work with them and not just that there's some kind of a remote connection. They're really a part of my family and my team. So that's how we've been able to do that and all this has been accomplished in the last four years. So I'm very proud of that.

Ms. Cammer: It sounds like it's done wonders to strengthen the financial management at DOT. Now, you've mentioned how you were at GAO and at OMB in a career position, and now you're a political appointee. Could you talk about the significant differences between those two roles?

Ms. Scheinberg: If you don't mind, I'd like to tell you how this happened.

Ms. Cammer: That would be great.

Mr. Morales: Sure.

Ms. Scheinberg: It's kind of personal, but I'd like to share it with you, because it's something that's been very meaningful to me. I never had intended or had even any interest in becoming a presidential appointee. As I said, I worked at OMB as a budget examiner for nine years. I worked at GAO for 11 years. And while I was at GAO, and the beginning of this administration, the nominees for my current position, the assistant secretary for budget and the deputy secretary nominee, called me and asked me to come talk to them, and I assumed that they wanted to talk to me about what I knew about the Department, given my role at GAO, because I knew them and I knew people who -- we had friends in common and so the fact that they would call me would be logical. I had talked to the transition team and others.

And when I came for the meeting at DOT, I was immediately approached and they said, "We know that you know what our problems are, and we want you to come and help us solve them." And that was a very meaningful moment for me, because it made me realize that I could stay at GAO and audit these folks and review them and continue to throw arrows at them, or I could go and sort of put the money where my mouth was and actually address these issues.

So I made it a quick decision and made a quick move, but I did say I had one condition: That the position had been a political position, deputy assistant secretary. And I said I did not want to have a political position, I wanted to continue my long federal civil service career, and so they changed the position for me and made it a career. It was an optional kind of position and so I came to DOT 4-1/2 years ago as a career deputy assistant secretary, which is quite unusual, and worked in that capacity for four years.

I always felt part of the circle on the Secretary's team, so much so that last January, when Linda Combs was nominated to be the controller of the United States, Secretary Mineta asked me if I would consider replacing Linda. That's a quite a thrill when a cabinet secretary says, "I want you to do this." And, of course, I had been doing -- I'd been Linda's deputy and before her Donna McLean's deputy, and so I felt it was -- the Secretary knew what he was getting, and he asked me to this. He clearly knew who I was and what I would do and I said, "yes." And so I went through the White House process, was nominated and had a Senate hearing, a Senate Commerce Committee, and was confirmed by the end of April. So that was quite a thrill after 26 years of federal service to go through all that. It's been pretty exciting to have the top job for the last five months or so. And because I was in the office before -- it's the same, but different than it was before. It's always kind of a -- it's a neat experience for me.

Ms. Cammer: What things do you notice about the difference between being a presidential appointee and civil servant?

Ms. Scheinberg: Well, clearly, I'm involved in more issues, beyond the issues that I was involved in before, that I'm involved in issues that would not just be financial issues, and that's true for the White House and the President's priorities and the Secretary's priorities and how he fulfills his job, vis-a-vis the White House.

So I have a heightened awareness of what's going on in the White House and how the Secretary is interacting with that. And I also, as the assistant secretary and CFO, have a greater accountability for the work that we do in the office. I would say that I definitely feel that the buck stops at my desk. If, God forbid, we shouldn't get a clean audit, it would be my -- I would be the one who would have to go to the Secretary and explain what happened, whereas before I might have gone with the assistant secretary.

Mr. Morales: That's great. What is the Transportation Center for Excellence and how does it impact financial operations? We will ask Transportation Assistant Secretary Phyllis Scheinberg to share with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Transportation Assistant Secretary Phyllis Scheinberg. Also joining us in our conversation is Debra Cammer.

Phyllis, now that you have been completing the financial statement audits by OMB's accelerated due date, can you tell us what you believe the keys to success are in getting a timely and clean opinion?

Ms. Scheinberg: Well, Al, as you know, OMB moved the due date for the financial audit from January 30th to November 15th. Last year was the first time we had to meet the November 15th date, and we were able to do that, but it used to take us four or five months to do this after the close of the fiscal year, and now we have to complete this whole process in 45 days.

In order to do this, we have four auditors at DOT and they focus the main part of their audits on our third quarter financial statements, which come out after June 30th. And they do just a rollup testing for the fourth quarter, in order to be able to finish the audit in time in this 45 days. So it is quite a compressed schedule and quite an intensive process.

One of the things that we developed in order to be able to do this, is that we developed through our Oracle financial system, a way to produce financial statements overnight at the end of each month and at the end of the fiscal year. So we were able -- when the fiscal year closed Friday, September 30th, Saturday morning we had all our financial statements except for FAA, and that FAA we had Sunday morning. This was just phenomenal compared to a couple years ago. So this helped us in meeting this accelerated schedule because we were able to turn our financial statements over to the auditors in less than a week.

The reality of all this is that now that one financial audit starts right after the next, that this is a year-round activity, not a seasonal surge. So on top of everything else we do, we do financial audits all year-round.

Mr. Morales: We understand that the Department of Transportation was the first cabinet level agency to have a single financial system for all of its operating units. How is DOT's new financial management system doing?

Ms. Scheinberg: It's doing great. Two years ago, that -- exactly, November 2003 was when DOT finished converting the last of the organizations within the Department to our new financial system, which we call Delphi.

DOT was the first cabinet level agency to finish converting to a state-of-the-art financial system using a commercial off-the-shelf software. In other words, we have a single production and it's very cost effective. The biggest advance is when -- one of the things I just mentioned is that we are able to develop our financial statements overnight every month. So we now have monthly financial statements and then also at the end of the year, able to produce financial statements quite quickly.

You wouldn't be able to do that if you had multiple systems, because we have to do a consolidated audit where all of the 12 components have to be combined into one financial statement. This past year, Congress reorganized part of DOT, and we have two new organizations. One is the Pipeline and Hazardous Materials Safety Administration and the other is the Research and Innovative Technology Administration.

When we had to set up the books for these two new administrations, we took a step back and looked at our chart of accounts and decided to update them to reflect all the lessons learned that we have accumulated during the last 5-1/2 years of implementing our new system. And we developed what we now call a model organization, and we set the new agencies up under that model organization, and we'll be gradually migrating all the other organizations to this new chart of accounts over the next couple years.

Again, we wouldn't be able to do that unless we were all on the same financial system. And we're planning to upgrade this software again in February '06. And we've successfully upgraded the software four times already, but it's important, we feel, to keep up with the new releases from the vendor.

Ms. Cammer: Now, all this talk about financial systems makes me think about internal controls. So could you talk about what DOT is doing to address the government's Sarbanes-Oxley requirements or A-123?

Ms. Scheinberg: Last spring we set up an internal controls working group to develop our plan for implementing OMB's updated circular A-123. And we have established a senior advisory team for internal controls this summer. What we're trying to do is use a centralized process and build on work that's already underway, not to duplicate what we've already done. We've hired a consultant to help us identify any gaps in our process, help us assess risks, and ensure that we have complete documentation for all of our controls.

As you probably know, we have a deadline, June 2006, that OMB has set for assurance statements. And so we have less than a year, it's about six months now, to reach that deadline, and the key here is upfront planning and identify the actions required, and we're going to use probably a three-year schedule to complete all the work and not try to do everything in one year, but it is quite an undertaking.

Ms. Cammer: Do you have any advice for any federal agencies just getting underway to address it?

Ms. Scheinberg: Well, I would say it makes sense to me for a large department to use a centralized process rather than have, in our case what would be 12 different agencies going their own way. And also to avoid duplication and try to do things in a way that you're building on what you've already done.

Ms. Cammer: Could you talk about what it means for DOT to be named as one of OMB's four Centers of Excellence for the federal government?

Ms. Scheinberg: DOT is very pleased to have been designated this last year as one of the four financial management Centers of Excellence. We call our center the enterprise service center, and it's located in Oklahoma City at the Mike Monroney Aeronautical Center. Being designated as a center of excellence recognizes that DOT is out in the front on financial management and has a great deal of experience and expertise to offer other federal agencies.

First new external customer was the National Endowment for the Arts, which started working with DOT in October 2004, so that was about a year ago, and just this September we've added two new customers who have selected to use our system and they are the Commodity Futures Trading Commission and the Institute for Museum and Library Services. And they'll start using our financial system in mid fiscal year 2006.

Ms. Cammer: Now, what are you doing to go out and market for customers and then how do you provide customer service to keep the ones you have.

Ms. Scheinberg: The way we're working on the marketing -- because clearly, there's several issues in this whole process, is that we cannot afford to take people away from working on our financial system to do the marketing. So we have awarded a contract to a private sector business partner who is helping us market to new customers, but is not costing us anything, because they will be paid by the customers that they bring on. So we're getting assistance without a cost, so we feel like that's a pretty innovative way to do the marketing. And as you can tell from the folks who have joined us, we're starting with smaller agencies. And part of that is because these agencies will be easier to absorb and work into our system before we would -- we are in discussion with some larger agencies, but I think this is the right way to go, to start with small agencies.

Ms. Cammer: Sounds like a good plan.

Mr. Morales: Well, certainly assistance without paying for it sounds like a best practice to me, also.

Ms. Cammer: Absolutely. Now, we understand that all the agencies under the transportation umbrella have recently migrated or are migrating to the new federal personnel and payroll system. Could you describe why the switch was made and how it's been going?

Ms. Scheinberg: A few years ago OMB looked around in the government and saw about 20 legacy payroll systems, and saw that they were mostly pretty getting old and needed to be rewritten into modern systems and the thought was instead of wasting money or spending money to rewrite basically the same payroll system 20 times, the thought was to consolidate to four centers. Again, this is like the center of excellence that we have for financial systems; this is a consolidated center for payroll. And OMB assigned DOT to the Department of the Interior's Federal Personnel and Payroll System, what we call FPPS. And last April DOT successfully migrated all of our organizations, except for the FAA, which as I have mentioned is most of our people, but we did successfully migrate 11 of our organizations to FPPS. And the transition was so smooth that most of our employees didn't even realize that it had happened.

This past month, we're finishing the job by migrating the Federal Aviation Administration's 45,000 employees to FPPS. We did two parallel tests before we migrated, and the whole process has gone exceptionally well. As part of this migration, DOT upgraded our time and attendance and labor distribution system to a modern web-based system that is interfaced with the FPPS payroll system and with DOT's financial system. We call our new system CASTLE. But what it does is let employees enter on a single screen both their time and what projects they've worked on. This supports our efforts to expand cost accounting throughout DOT.

Mr. Morales: How is Transportation staying green on the President's management agenda? We will ask Transportation Assistant Secretary Phyllis Scheinberg to share her secrets with us when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Transportation Assistant Secretary Phyllis Scheinberg. Also joining us in our conversation is Debra Cammer.

Phyllis, over the past several years George Mason University's Mercatus Center rated the Department of Transportation's performance and accountability report to be one of the best in government. Our listeners should note that these reports are required by the Government Performance and Results Act. What contributes to the success at DOT, and what advice would you give to agencies whose reports were not scored as well?

Ms. Scheinberg: Well, DOT tries to use some of these same criteria that Mercatus values in producing our PAR, the Performance and Accountability Report: transparency, the benefit to the public, and forward-looking leadership. Mercatus' criteria focused on the usefulness of the PAR to the public. That is, how well does it explain to the citizens of the country the outcome of the Agency's programs and activities. And DOT's PAR goes beyond the Mercatus expectations to reflect the Agency's fundamental commitment to improving organizational performance, which is a very strong goal of Secretary Mineta's. DOT leaders use a variety of performance metrics to support business decision-making, and we're constantly looking for opportunities to innovate and improve performance. Excellent data collection and analysis over time adds to our successful PAR, I believe.

We used the Mercatus ranking factors as the basis for creating and improving DOT's PAR every year. And agencies that are dedicated to using performance metrics to support their management processes have traditionally rated well with Mercatus.

Mr. Morales: How is DOT using financial and performance data to make decisions about programs and projects?

Ms. Scheinberg: The primary reason we have strong financial systems is to provide information to support business decisions about DOT's programs; that's really the reason we go through all this financial work, is to help our program managers make good decisions. Over the last year we've prototyped, piloted, and implemented the first phase of a dashboard that presents both financial and performance data on a single screen to help managers make better business decisions.

The first phase includes status of funds reports, and information on DOT's performance on OMB's metrics. These are for things like financial systems such as the percent of payments made on time each month and our travel card delinquency rate. And just for an example, we've lowered our travel card delinquency rate from double-digit several years ago, to less than one half of one percent in the last several months. And most of that was done because people became aware of it, and this is part of what a dashboard does as you become aware of these things and you can focus on it.

Now that phase one is in production, we're evaluating how well it's doing and planning how to grow and expand the dashboard by adding a variety of other information, including program performance information, human resource information, and information on contracts. When the budget is first being formulated, the Secretary considers many factors when he makes budget allocation decisions for each of the department's operating administrations.

Included in his decision making is program performance. That is how well programs are performing against pre-established targets. He looks at the results of performance measures that are tracked at the department level as well as program evaluation results from OMB's PART process. Following the President's lead, DOT wants to fund programs that are providing the greatest results for the taxpayers. And using performance information is an important factor in making those financial decisions.

Ms. Cammer: What are some of the challenges you've faced in linking the budget and the performance and the financial data together?

Ms. Scheinberg: Well, when we go and look and discuss linking budget performance and financial data, we first look to the Department's strategic plan, which highlights the Secretary's vision and priorities for the Department. And everything we do from a budget and performance perspective should link back to the strategic plan. Once the linkage is established, the Department's budget is where all of the budget performance and financial information come together.

In the budget in brief, the Department allocates its budget requests in two ways: It shows the amount of funding that is allocated to each of the strategic objectives as well as by the traditional appropriations accounts. At a more detailed level, each operating administration prepares an integrated performance budget that displays not only the resources being requested for each program, but also the performance goals and measures that will be used to track the progress. This combination of budget performance and financial information gives both OMB and the decision makers in the Congress the information they need to allocate and oversee DOT's use of taxpayer dollars.

DOT has faced several challenges in creating performance-based budget. Initially, we had to overcome the culture that was resistant to performance measurement. Most people's first reaction to being measured is to resist it, but once we demonstrated that the data being collected from performance measures was being used to help manage and improve our programs, and not being used to punish employees, people became more comfortable in using performance measures.

We also found that we could better justify our budget requests to OMB and the Congress when we presented program data and results to support our requests.

Ms. Cammer: What are some of the performance metrics that DOT uses to measure the progress of its programs?

Ms. Scheinberg: There's several tiers of performance measures that we use, some at the Department level, some at the operating administrations, and some at the program level. At the Department level, we track 40 performance measures to gauge progress. Performance measure results are published annually in our performance and accountability reports. I'll just name a few just to give you an example: One is on time performance of commercial air carriers, another is the fatality rate on our nation's highways, a third would be the pavement performance standards, and another is the number of rail stations and the number of bus fleets that are compliant with the Americans With Disabilities Act. This is just to give you a sense of the range of what we're looking at and how different they can be.

Department level measures are reviewed at quarterly PMA meetings and at other times of the year as appropriate. Each of our operating administrations track what we call supplemental measures to manage their own internal operations. Several of these publish these measures on their individual websites, and FAA posts performance results on a monthly basis. Program managers within each area of the Department also track costs, schedule financial and performance measures for their individual programs, and these are often reviewed on a daily or weekly basis.

Ms. Cammer: Phyllis, a lot of our guests have talked about the challenges of not only getting to green, but maintaining green on the President's Management Agenda. Could you talk about some of those challenges in staying green, and what steps that you're taking to ensure continuous improvement?

Ms. Scheinberg: Well, first I'd like to brag a little bit that we were the first agency to earn four greens on the status ratings for the President's management agenda. A lot of effort goes into meeting these OMB requirements, and to making sure that we keep our green scores as you mentioned. The one area that we're not yet green on is financial performance, which is one of my problems. Financial performance has a very high standard; it requires that you have no material weaknesses in our financial audit.

And even though DOT has received a clean audit opinion for the last four years, and hopefully for this past year well, and we have fully implemented a new state-of-the-art financial system, and we have improved our business processes, and we have been named a financial management center of excellence, we still have not been rated as green, and that's because we have the last couple of material weaknesses on our financial audit that have still some work to be done before we can clear them out.

Mr. Morales: Phyllis, could you tell us about the marginal cost of performance initiative at DOT?

Ms. Scheinberg: We started with a pilot program involving four agencies to launch a marginal cost of -- initiative. This was spring of '04 and that was when we were building our FY06 Budget and OMB liked our model and so this past spring we made it a requirement for all of the DOT agencies for inclusion in the President's '07 budget. Some agencies have found it a challenge to think in terms of marginal costs, especially since we don't have a fully mature cost accounting system with a lot of historic data.

But we feel that attributing costs to a particular goal is only half of the equation. In order to use marginal costs effectively, you have to understand how your agency's daily activities contribute to your program goals, and how those goals in turn contribute to the Department's goals. One thing that made DOT agencies more comfortable with marginal costs was the recognition that in this time of static budgets, marginal cost has to be about increases and decreases, and when they submitted marginal cost scenarios showing what would happen to program performance if they received less money, then they saw the value in doing this.

We feel that our understanding and use of marginal costs will evolve over time, just as the federal government's understanding and use of performance management has evolved. We're proud to note that OMB has asked DOT to share its marginal costs model with the rest of the federal government at a best practices seminar this past spring.

Mr. Morales: What does the future hold for the Department of Transportation? We will ask Assistant Secretary Phyllis Scheinberg to peer into her crystal ball when the conversation about management continues on The Business of Government Hour.


Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Phyllis Scheinberg, assistant secretary of the Department of Transportation. Also joining us in our conversation is Debra Cammer.

Phyllis, in our first segment, as you were describing the 12 organizations under the Department of Transportation, you had mentioned four credit programs. Can you tell us a little bit more about that?

Ms. Scheinberg: Sure. DOT has a couple of relatively new credit programs, and a couple of that we have had for years. The oldest one in the Department is called Title 11. This is a maritime loan guarantee program for shipbuilding, and that has been in place for many years.

A more recent program is called TIFIA; this has to do with intermodal surface transportation, and it is operated out of the Federal Highway Administration, but it's really an intermodal program that emphasizes public-private partnerships and places for projects that don't quite fit in the normal transportation funding program, so it's very interesting. We also have a relatively new program call in the railroad area, that came out of legislation just a couple years ago, and this was to help private railroads in capital investment. And the fourth program is a small and disadvantaged business program for making smaller loans and loan guarantees for small and disadvantaged businesses.

Mr. Morales: Great. Let me transition now to the future. What in your opinion are some of the key issues that will affect CFO and budget offices government-wide over the next year?

Ms. Scheinberg: I think meeting the requirements of OMB's updated circular 123 on management responsibility for internal controls is going to get a lot of attention over the next year, it's going to require a fair amount of work from all of us, and there's going to be a lot of attention. This is in response to the Sarbanes-Oxley legislation that the Congress passed and it's the government's response. So this is very important and it's very important for credibility in the government, and I believe that we all need to do a really good job on this.

One of the issues that some other agencies, maybe not DOT, is going to face is how to replace their outdated legacy financial systems. As we talked about, as a financial management center of excellence, DOT is ready and able to help out other agencies. And I think we will be hearing from some of those folks in the next few years.

Mr. Morales: Phyllis, on a broader basis, what do you see as some of the transportation-related challenges you foresee in the future for DOT, and how do you plan on overcoming them?

Ms. Scheinberg: In the larger transportation area we have quite a few challenges. I mean, certainly in the aviation community, the airlines in particular are facing major problems. We have three major airlines in bankruptcy, we have a merger going on, have rising fuel prices. Congestion is -- the aviation sector is faced with a lot of challenges.

On the safety issues, which are very important to us, especially the highway safety, where most of the fatalities occur -- while we've been able to make great successes in safety belt usage, it's that last 20 percent -- we've increased safety belt usage nationwide to 80 percent, but how to get that last 20 percent, and that is directly correlated to saving lives. And rebuilding the Gulf is a transportation issue. There are major roads that need to be rebuilt, and also the ports involved. I see those as some major transportation challenges.

Ms. Cammer: You mentioned the Gulf as something that is a transportation challenge, but could you talk more about how the events of 9/11 and the recent hurricanes overall have affected your office and how you plan to carry out the functions related to those?

Ms. Scheinberg: Yeah, they've had major impact on us as they have for many people in the government. I would say for my office, one of the most important things is the importance of internal controls, and this has folded right in with our attention to A-123, but we have to keep extra vigilance on keeping everything up-to-date, making sure that when we have these influxes of money and the speed at which we have to respond in some of these situations, that we are following all the internal controls and at the same time that we're responding quickly.

After 9/11, as you probably know, the Transportation Security Agency was established within DOT, and what not everybody understands is how that was done. It was basically established in the Office of the Secretary. We went from having no TSA to having a 60,000 employee TSA in just a few months, and that was all done within the Office of the Secretary, and that means it was done using my office, using the Secretary's procurement office, and just the folks on the 10th floor basically creating this from ground up. And we again tried to take advantage of the best practices in doing it the right way instead of having to fix a lot of, and update a lot of systems and processes of the older agencies. We said, "Let's do it right the first time." So we had very little time, but I think we really made an effort to set up the accounting practices, the procurement practices, in TSA in the very short time that we had; we tried to do it the right way the first time.

Ms. Cammer: Now, during this show you've talked a lot about the increased internal controls requirements around A-123 and the increased pressures around generating financial statements more quickly. Can you talk about the human resources aspect of how you're managing your financial organization?

Ms. Scheinberg: One of the biggest challenges in what we're trying to do is in the human resource area. I would say the biggest challenge is attracting and keeping quality staff. The staff need technical skills, and the workload is very demanding as we talked about with the year-round financial audit.

Good staff get burned out, they just get tired and they get stolen; that's really the basic truth. There are two key skill mixes that I deal with closely, and that's the budget analyst and the financial management folks and accountants in particular.

And on the budget side, it's just really hard to find a lot of people who are interested and trained to be federal budget analysts. We work hard, and you have to be a certain kind of person to want to do that. On the financial side, especially for accountants, we're competing with the private sector, who pay a lot of money for accountants, and we need different skill sets than we have in the past. We really do need CPAs and accountants, whereas in the past we might not have needed too many folks with that level of expertise.

I try to deal with these issues by creating a team environment, just to reinforce the fact that we're supporting the President's and the Secretary's priorities; we're not just doing backroom work that is invisible. I do this through recognizing achievements and contributions to the DOT's missions. And Secretary Mineta has been wonderful, and really shown his appreciation to the staff who make these contributions on the budget and financial side and how important it is to him and to the Department's goals.

Mr. Morales: Phyllis, you've had a wonderful career in the public service. In summary, what advice could you give a person who's interested in a career in public service?

Ms. Scheinberg: Well, I have enjoyed every minute of it; I just think the public services is a fantastic way of giving back to the government and learning -- it's a continuous learning process. I think that I would tell folks, you need to build your skill technical skills and your expertise, that is the key to getting ahead, is having strong technical skills. Also to be a team player, which means be reliable, be dependable, be ready and willing to pitch in. People need sometimes to, you know, volunteer to do the Xeroxing. It's just a matter of getting whatever it has to get done. If the budget is due and you have to get it over to OMB, you know. Yeah, we have to all chip in and roll up our sleeves. But it's a lot of hard work, but I think it's tremendously rewarding.

Mr. Morales: That's fantastic, and that's great advice.

We've reached the end of our time, and that will have to be our last question. First, I want to thank you for fitting us into your busy schedule today. Second, Debra and I would like to thank you for your dedicated service to the public and our country in the various roles you've had at the Treasury Department and now as assistant secretary for budget and programs and chief financial officer for the Department of Transportation.

Ms. Scheinberg: Thank you very much for inviting me, and I've enjoyed our conversation.

Mr. Morales: This has been The Business of Government Hour, featuring a conversation with Phyllis Scheinberg, assistant secretary for budget and programs, and chief financial officer, at the Department of Transportation. Be sure to visit us on the web at There you can learn more about our programs, and get a transcript of today's fascinating conversation. Once again, that's As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad, who can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support.

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

Andrew Maner interview

Friday, December 3rd, 2004 - 20:00
"This year we’re focused on visibility and common steps of financials that we can review and execute against. It comes down to having an integrated system such as eMerge2 that will provide better visibility on what is spent and what programs work."
Radio show date: 
Sat, 12/04/2004
Intro text: 
Financial Management Managing for Performance and Results...
Financial Management Managing for Performance and Results
Complete transcript: 

Friday, October 29, 2004

Arlington, Virginia

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

The Business of Government Radio Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation this morning is with Andy Maner, Chief Financial Officer of the Department of Homeland Security.

Good morning, Andy.

Mr. Maner: Good morning.

Mr. Lawrence: And joining us in our conversation, also from IBM, is Dave Abel.

Good morning, Dave.

Mr. Abel: Good morning, Paul.

Mr. Lawrence: Well, Andy, let's start by talking about the Department of Homeland Security and the Office of Budget and Finance. Could you give us some background and describe the size and composition?

Mr. Maner: Well, the CFO's office at Homeland Security really encompasses about five different functions: that includes budget, finance and accounting or financial management, strategic planning, financial systems, and GAO and IG audit liaison. So those are the primary functions that make up the office of the CFO at DHS.

Mr. Lawrence: What type of skills do you have on your team? What are the skills that people have on your team?

Mr. Maner: Well, it certainly varies, of course, by office. You would normally have quite a bit of budget expertise, both execution and formulation experience, in your budget office. In the finance office, you typically might have, of course, CPAs, accounting types. And then in strategic planning, as you move into financial systems, these are people with a broad background of either accounting, budget, or possibly systems experience. So it is a bit of a blend, but you do tend to find people who do focus on numbers or systems, per se.

Mr. Lawrence: And are they a tenured team? As you were describing the offices, I thought about level of complexity and imagined somewhat older, more experienced.

Mr. Maner: It's a range. Again, when you look at Homeland, really in any of our offices, where people came from, their age, their experience, it's a variety, because when we set up the Department, we inherited a lot of people from other departments. That was part of the transformation and how Homeland was created, and then we've hired a lot since then. So you would definitely find a blend of people. And as you know, I think good financial management personnel don't grow on trees, and so you have to work pretty hard to find good people, especially in a major metropolitan area like this, which you have to compete for resources quite a bit with private sector firms, et cetera.

Mr. Abel: Let's focus a little bit on you. What are your specific roles and responsibilities as the Chief Financial Officer for DHS?

Mr. Maner: Well, in a sentence or two, it's, of course, to be the steward of the financial resources that exist in the Department of Homeland Security. So it is certainly my job to obtain the financial resources that drive our department, but it's also to be the steward of those resources, to make sure they're spent in the right way and we execute according to regulations and laws that govern our department and others. So it's being the primary financial conscience, if you will, of the organization. That's how I describe it.

Mr. Abel: Let's talk a little bit about your background. What experiences did you have before being appointed to CFO?

Mr. Maner: My background is really about a 50-50 blend of private sector and public sector experience, and some of it revolved around financial management and some of it didn't. My career began in government. I was in the first Bush administration for a few years. And after we lost the election, I guess we say, I continued to stay with President Bush for about six months, six to nine months after that.

I stayed in government after that and went over to Somalia for a time to help set up the -- what is now called the Coalition Provisional Authority over there. It was really the civilian-military mix in Somalia. So I stayed there for a while doing just a little bit of everything in terms of running that organization. That was a U.N.-sponsored organization.

After coming back from Somalia, in fact, being evacuated from Somalia, I really focused on the private sector portion of my career. I was at the Chicago Board of Trade for a time. I got my MBA in finance and then really moved into more of an entrepreneurial phase of starting companies and managing those, growing them, merging them, et cetera.

After 9/11, I came back into government, was pulled back into public service, and I was at Customs, where I was the Chief of Staff there. But, you know, primarily, one of the great experiences of the Customs, couple years I spent there, was that after Homeland was created, I was in charge of the merger of Customs, which was the merging of Customs and many parts of the old INS and parts of the Department of Agriculture.

So, in a sentence or two, it's really a blend of private and public sector experience, which I just find fascinating, that mix.

Mr. Lawrence: What drew you back to public service?

Mr. Maner: Well, public service, there's just nothing like it in my mind. In fact, I hope my career continues to be that blend. The stakes that exist in public service, I think for people who have been in it for a long time, they often forget about the dollar amounts they're dealing with and the high-level stakes that they're dealing with, but I just find that public service is the most noble cause that exists. And it's hard, and a lot of times, there's not a handbook. You're constantly under scrutiny and you just -- there's not a lot of room for error. So I think it's the noblest calling, and I personally enjoy it very, very much.

Mr. Abel: With this balance between public and private sector work, what are the major differences in working in each of those sectors?

Mr. Maner: Well, I think there are a lot of differences. I think it's interesting in financial management, I actually kind of view the public and private sector as kind of coming a little bit closer together with Sarbanes-Oxley and some of the new requirements put on the private sector. The private sector's getting a feel for somewhat greater oversight, which certainly exists in the government. So there's a similarity there, or at least a growing similarity.

But in the private sector, accountability of people is a very important thing. You get issued a task and you have to do that task, and oftentimes your compensation rides on it or, in some cases, your job rides on it. That's one difference. I think you have to spend more time in the government cultivating and training your people, because that's going to be your team. And so I have found in the public sector, I spend more time on people issues, and that can be a positive and a negative, but I think you have to work hard to develop your own people.

I would say, I would have said three years ago, that the public sector moved at a slower pace than the private sector. But from my experience here at Homeland Security, I wouldn't say that anymore. We're moving at a very, very fast pace. So maybe I'm saying that some of the differences are narrowing between the two.

Mr. Abel: Has the experience in the Department of Homeland Security and the pace, with which it's moving, has that changed some of the challenges that the public sector faces in performing its mission?

Mr. Maner: Well, I think that there isn't room for error. I think we all come to work at DHS knowing that -- I mean, there's a lot of clich�s about Homeland Security, about, you know, you have to be right 100 percent of the time, you can't ever be wrong. But yeah, I think it's changed the complexity of government for sure, because my given day and that of my employees is we have a mission to carry out, and that is to support the Department and to make sure our frontline people have what they need to get the job done. But almost a secondary job, but takes just as much time, we have to build a department. Those are almost two full-time jobs right there. So the people that work for me and I think work in the Department, they have stepped up to that and it's not easy. And so it's not -- when they talk to their friends at other departments, it's not always the same lifestyle, for sure.

Mr. Lawrence: Andy, as you were describing your career, I couldn't help but think that you've had some pretty profound moments in your career, and thinking about those lessons learned. So let me take you through what I heard: part of an administration that was not selected to come back; being in Somalia, a very difficult situation; getting an MBA and a specialized career; and then sort of 9/11. I'm curious about, you know, the lessons you learned in a couple of those situations and how you're applying them now in your job.

Mr. Maner: Well, I think that it's interesting that my first job out of college was working for the President of the United States, and so what is something that you learn there? You learn a very high stakes existence pretty quickly. I think you learn to deal with adversity. I think you learn to deal with a look around you that is not complete; it's up to you to fill in the blanks. And that's what I think management and leadership is, is filling in the spectrum for your employees. And I think at an early age being in the White House taught that.

In Somalia, again, I actually did think that being in Somalia would be the hardest job I ever had in my life, but maybe Homeland might surpass that. But Somalia was -- there was no handbook. There was no handbook for how to achieve peace. There was no handbook for how to contain starvation. There was no handbook for how to do nation-building, as it was -- that was a new term back then. And you just had to figure it out. You had to get the resources and figure it out.

And so those experiences at a young age, for me, really taught me that it's really about initiative and about leadership. And people often ask me, well, you were the CFO, but you were in the press office in the White House. How are those similar? Well, to me, these are management jobs. What I'm in now, it's not important if I'm a CPA or an MBA, it's important that I manage, and that's really what I've been trying to build in my life is that capability.

Mr. Lawrence: Interesting, especially the part about filling in the blanks.

How is the budget for the Department of Homeland Security formulated and how is the money allocated? We'll ask Andy Maner, CFO of the Department, to take us through this when The Business of Government Hour continues.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Andy Maner, Chief Financial Officer at the Department of Homeland Security.

And joining us in our conversation is Dave Abel.

Mr. Abel: Andy, beginning with the budget for 2005, a performance budget is going to substitute for the annual performance plan required by the Government Performance and Results Act. Can you give us some details about this?

Mr. Maner: Well, the overall budget process is really quite intricate in government, and it's about getting the resources. But as you suggested, it's about providing the results for those dollars. And so we spend a lot of time in the Department formulating the budget and looking at what initiatives should the Department be doing. You know, of course, resources are not unlimited, and so we are trying very, very hard to put together a package that reflects the current threat picture against the United States, and that's really what we try and do.

And then, of course, once we move into where we have signed a bill, we move very hard into tracking that money and trying to make sure it's doing what it's designed to do. And there are many, many avenues in government to do that from when you send your 300 submissions over to OMB to Homeland actually has one more assignment, and it has to provide a future years budget, a five-year look at our budget.

So there are many acronyms and many papers that fly around, but what it all culminates with is on February -- the first Tuesday of every February, we will hand a budget to the Congress. The President will hand a budget to Congress. And by that point, it's obviously our goal to have it very tight, have there be no doubt what those resources are to be used for.

Mr. Abel: This whole process is very interesting, so maybe we can dive into some of those components. You mentioned that there's a strategic plan and a future years Homeland Security program. There's also the planning program and budgeting system. How do these components work together? What's the vision or view of how these components should relate with each other?

Mr. Maner: Well, again, as you suggested, there are lots of acronyms and lots of things. What we are trying to do, and we're not done, is to create a year-long calendar that everybody knows and everybody understands. And by everyone I mean the agencies, the agency heads, Congress, OMB. And so every department does it slightly different.

And so we've had to build ours, and so you begin really in the spring formulating for a budget two years from now. And so you would go through, and we will build our budgets off of a strategic plan. We want our budgets to reflect the strategic plans that we've put forth to the Congress so that people know, hey, we are trying to fund these types of initiatives.

And so you don't want to -- having to do a five-year budget allows you to not start from scratch each year. You know really, you have the base of your programs, but the threat picture may change. And so each budget cycle, you want to make sure you engage the agencies, you want to make sure they have a chance to make their pitch to not only me and our staff, but to the Secretary or to the Deputy Secretary.

So all of those things, and you mentioned, you know, PBBS, again another acronym for programming, planning, budgeting, and execution, which is really -- that's really important. That's a system, and we haven't perfected it, but we're trying to get to a calendar that everyone understands.

Mr. Abel: Yeah. How far along are you in the implementation of this method? How's it being received within the organizations at DHS?

Mr. Maner: I think it's being received okay. I think that everyone at DHS, you know, is used to new things coming at them, and we try and not tip people over with a lot of new requirements. We are really asking for the same thing we've asked for the last two years, but we're doing it in a more concise and a more transparent format. And, you know, as I say, it's all driven by the calendar. You have to submit your budget in the summer for two years from now, then you get your pass back, and then you submit on the first Tuesday in February.

So I think it's being received well. Again, most people have been in government. So as it relates to budget, they kind of know the drill.

Mr. Abel: So if we shift from the budgeting/planning side to the execution side, for 2005, DHS requested $40.2 billion, which is a 10 percent increase over last year. Can you tell us a little bit about how that money gets allocated on the bill side, and the operations then come after the planning phase?

Mr. Maner: Sure. Again, we allow -- you want people to begin to think about the budget in an unconstrained way first, which is if you had all the money in the world, what would you do to secure America? Then you hone it down. And then, of course, our '05 budget gets submitted by the President, and then the Congress really passes that. And of course, our '05 bill was just passed in October, so we're very pleased to have a 2005 appropriation.

But for us, we have many, many operating agencies and only a small amount of money. And so we allow people to pitch their budgets as to how they affect and better the strategic plan of the Department. And so for us, it's not any different than any other department. We want the people who have the most innovative programs, who do the most to secure and have the most performance metrics for those dollars to get the money.

In Homeland, we have such great agencies that we inherited, and some new very important startup agencies, such as IAIP, which an intelligence analysis unit; we have science and technology, which is an R&D component. So again, our funding is pretty well spread to all of our components, and again, the success for any budget is to work with the administration and then to work with Congress, and you spend most of your summer doing that and having hearings.

Mr. Lawrence: Andy, you talk about the fact that you would have many demands for the scarce resources you have. How is conflict resolved in that situation, conflict in the sense that, you know, everybody wants the little that's left?

Mr. Maner: We've had a very great -- we had a very -- and again, I've only been here for this budget cycle, the '05 and into the '06, so I can -- but we've had a great experience in that the Secretary and the Deputy Secretary have believed very strongly in bringing together the senior management team at every turn so that they are hearing the programs of all of the agencies. Instead of just coming in, and let's say I'm the commandant of the Coast Guard, and pitching my budget, I will actually hear at a forum everyone's budget. And I have found that everyone realizes that while they're not the only one doing great work, there's a lot of great work going on in the Department. So as it relates to budget, I think we've been able to really reduce that conflict that could exist.

And frankly, though, Homeland Security's been very well funded by the administration and Congress. So, you know, we don't have maybe as much conflict as we would if we weren't getting upticks in our budget.

Mr. Lawrence: You talked about execution at the end of the planning and allocating the budget, so I'd like to talk about one of the management initiatives that's going on, e-MERGE2, or the Electronically Managing Enterprise Resources for Government Efficiency and Effectiveness. Can you give us some background on this project that I believe just recently started?

Mr. Maner: E-MERGE2 is really a financial systems effort, but you could call it a financial transformation effort. It is Homeland Security's attempt to really cajole the financial systems, the many, many that we had inherited, into a more usable format. And I'm careful not to say that you want just one system, but e-MERGE is an effort to make sure that we have a way to very quickly have visibility into our finances and the billions of dollars of grants we give out very quickly, and to integrate that with our procurement asset management systems. So e MERGE2 is really our backbone for creating one DHS.

As a financial manager or as a secretary, if you don't have good visibility into how dollars are spent and you can't get a dashboard of what these things look like and how you're doing, you really don't have full control over your department. And so that's what e-MERGE is designed to do.

It's worth saying, though, that the government in general has struggled with these types of efforts. Some people have been very successful at rolling out and some people have not. We're trying, as in a lot of areas of Homeland, to not repeat mistakes of the past. We've spent a lot of time on due diligence and looking at what other departments have done, what's worked, what hasn't worked. And so we are trying to do this in a 21st century way.

Mr. Lawrence: Well, I'd be curious to learn about what you learned in the due diligence and also tie that into -- I thought your wording was interesting, that this is a transformation project. I'm sort of wondering what the vision here around those things are.

Mr. Maner: Well, we've learned that you can't just take systems, throw them out, and replace them with the perfect system, because it doesn't really work. Every -- anything you do in financial management revolves around the system and the process with which you use the system. So we're about the work of trying to, you know, create and market those processes in a way that says -- and how you bring the system in; the system is really just the -- that's the tool that allows you to do it, but you need to create a common set of practices and processes to do that, and that's what we're trying to do.

Mr. Lawrence: And the transformation comes from the new processes?

Mr. Maner: Yeah, the transformation is remembering that the financial management staff that we inherited at Homeland and my own staff and that in the Bureau's, they are from virtually five different departments, possibly even more, so they all have different processes. They think about things totally different. So transformation is to transform that thinking into one line of thinking. And that doesn't necessarily mean everyone needs to be on the same system at the same time, but it does mean that everyone needs to follow a common set of processes, and that's transformation.

Mr. Lawrence: How about a timeframe, where we are and how long this will take? Because I know everything at the Department of Homeland Security has to happen fast, but this doesn't sound fast the way you described it.

Mr. Maner: Well, again, I think this will take, you know, at least three years to get the roots deeply engrained, and this isn't going to happen overnight, as you suggest. However, I've often said that financial management is a journey and you have to make progress every year, but you don't need to make one great leap. This year, we're focused on visibility and making sure we have a common set of financials that I can review and see how everyone's doing against their execution; and we want to see -- have visibility into our grants. Again, one of the -- the Secretary says this all the time, one of the primary drivers of Homeland Security is our interaction with state and locals. We produce and provide a lot of money out there, and we want to make sure we have the right visibility into how that's being spent.

Mr. Lawrence: That's interesting, especially the point about visibility.

Management guidance for this administration comes from the President's Management Agenda. How is the Department of Homeland Security implementing the PMA? We'll ask Andy Maner, CFO of the Department, to explain this to us when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Andy Maner. Andy's the Chief Financial Officer at the Department of Homeland Security.

And joining us in our conversation is Dave Abel.

Mr. Abel: Andy, in the last segment, we talked a little bit about the due diligence that you did looking at other agencies' implementation of financial management systems. What are some of the things that you learned in looking at other organizations, and how did it change how you will move forward with e MERGE2?

Mr. Maner: Well, it's a good question, Dave. And first of all, I'd make the broader point that the words "due diligence" are often not well understood. Due diligence is something that the private sector takes very, very seriously, and earlier in the show, we talked about differences between the private sector and public sector. When you're taking on a task or a project this big, I think it behooves you to do lots of due diligence, as much as you can do. If you think about the private sector, before they acquire a company, before they do a system, they do lots of due diligence. It's where that word came from. The government I think doesn't take enough time to do it. I think there are lots of examples, and there's lots of data out there that you can learn from. And one of the things we've tried to infuse into e-MERGE and other places within Homeland is do due diligence, look around the federal government and find the best practice and find the things that didn't work.

While we were doing the e-MERGE procurement, there were some pretty high-profile stories out there about some systems that hadn't worked and some agencies that had failed. And what we did was just take a timeout and make sure we understood what was driving that. Again, I don't think that the press always reports these things; that they don't take the care to really dig into why a system's failed, because most people don't understand it. But we took a couple months to do that, and that really pushed our procurement back, but I'd much rather do that up front than somewhere in the middle or at the end of the program. So we've tried to infuse that into e MERGE.

Mr. Abel: Did that make changes to what you'll do going forward as well? Did it make changes to milestones or the direction of the program, what you learned in that research?

Mr. Maner: Most of what we learned, believe it or not, was about project management. It wasn't about technology. It was about how you manage a project of this size. And it gets back to some fundamental things, which is about project buy-in. And sure, there's a lot of data conversion issues, but, to me, what I learned, and this was both from the private sector and the public sector, I spent personally a lot of time talking to companies, all of their things revolved around management.

Mr. Abel: Speaking of management, Steve Cooper, the CIO from DHS, has a great quote on e MERGE2, that it's "changing the wheels on a moving car." What are some of the biggest management challenges dealing with the merging of 22 different agencies' financial systems?

Mr. Maner: You could actually take Steve's quote and blow it up to reflect the whole department. I mean, it's changing engines in mid-flight, changing the wheels on a moving car. Homeland Security doesn't have time to sit, make it perfect, and then relaunch. We have to move.

The biggest management challenges are about getting people to see and accept a one DHS vision, and that revolves around people, processes, systems, and locations. Those are the four ways that I look at our management challenges. And I'm careful not to try and attack all four at once. You know, you say where are the financial management people in the Department? Well, that one's really not important now.

What's important now is that we set up standard operating processes and we work the systems angle. There will be time to work on the people. Do we have the right skills sets? Are they in the right cities? Do we have too many of this, too many of that? One example I'd give you is when we created Homeland Security, we had 19 different financial management providers. We've consolidated that in one year down to 10, and this year we will be down to 8. So we're doing some consolidation, and that does remain to be one of the goals that I have.

Mr. Lawrence: The management agenda for this administration is in the President's Management Agenda. How's DHS doing implementing the PMA?

Mr. Maner: Well, there's really two parts of the PMA that I look at very closely, and, of course, that's budget and performance integration and financial management. And we talked a little bit earlier in the show about how you link budget and performance, and that's both a top-down and a bottom-up approach. And the second is financial management and making sure we have clean financials and we are stewarding the money properly.

DHS, in 2003, did a financial audit, as an example, when it wasn't required to. We did that to start getting people in the habit of financial management and accountability. We did another of course, we did an audit this year and, again, we were more ready for it this year. So the PMA drives a lot of what we do. We still have a long way to go on it. I think Homeland being a remember, I think one of the most compelling parts about Homeland is it is a collection of mergers; it's a collection of acquisitions, startups. It's really a conglomerate of a lot of different things. And we can't treat any of our agencies the same. We might have a startup over here or we might have the Coast Guard that is over 200 years old. So you have to treat them very, very differently.

Mr. Lawrence: I'm curious about your perspective on the linkage between budget and performance, especially around management. I mean, some argue that it's being done. But until we can link, you know, budget to sort of accountability at an individual level and begin to make some hard choices, and by that I mean not necessarily giving more money to programs that are in trouble, but maybe taking money and giving it to the programs that are really doing well so that we can be more effective, I'm curious about where you think budget and performance integration is relative to where it has to go.

Mr. Maner: Well, any CFO anywhere in the government, and I'm sure in the private sector, will tell you that there is no mountaintop, there is no peak, it is something that evolves, it is something that continues. One of the things we are trying to do at Homeland is get away from the belief that if it was in my budget last year, it's in my budget for the next year, and then I'll add some new initiatives on top of it. I call that mining the base. I don't think the government does that well enough. And that's one of the things we're trying to do at Homeland, to say we have, as you suggested earlier, almost a $40 billion budget, what was working in '05? What didn't work? What didn't secure the homeland? So that we can move those resources, and that's accountability. That's taking resources from a program that's not working and giving it to someone that has a program and a way to measure the program.

So again, I'll go back to my "it's a journey." You have to get better every day. We have a ways to go here, but we're pretty committed to it.

Mr. Lawrence: Well, let me drill more on this mining the base, because it sounds very -- tell us about some of the management challenges and what works doing that.

Mr. Maner: Well, again, mining the base, or whatever you want to call it, is all about visibility, and we talked about it. Now I'm linking e-MERGE into this discussion, because if you don't have visibility into the dollars, you are forever in an information-gathering mode, and I would rather be in an information analysis mode. We have, of course, a great staff who is constantly on the hunt for information, but it takes a lot of time in government to get the information, and I'd rather spend more time analyzing the data so that I can look at a secretary of my department and say let me tell you, I know this program, it's working and here's how I know it's working and I would recommend this to it the next year. So it's really, really about visibility.

Mr. Abel: Andy, technology is a leverage in most of the things that are done in the Department, and when we think of technology, we tend to think of the technology in fulfilling the mission in the field. But technology has to be a big lever for you, an advantage for you to getting visibility, to getting to analyze information in the way that you need to be able to make decisions. What are some of the ways that you're using information technology and e-government initiatives to enhance financial performance at the Department?

Mr. Maner: Well, technology is, as you suggest, the great lever for really moving successful programs forward. My reliance on technology will come down to systems, to the financial systems or to e-MERGE. Certainly you can have tactical pieces of technology that allow you to do budget formulation better or allow you to do a certain thing in finance better, produce your financial statements, that sort of thing. But really, for us, it comes down to having an integrated system that will provide us better visibility. So there's tactical things using technology you can, but you really -- for us, we are going to have to do a broader step, which is e-MERGE.

Mr. Lawrence: That's an interesting point, especially about the visibility and technology.

What are the implications and management challenges of being the CFO for a young or relatively new cabinet agency? We'll ask Andy Maner of the Department of Homeland Security for his perspective when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Andy Maner, the Chief Financial Officer at the Department of Homeland Security.

And joining us in our conversation is Dave Abel.

Mr. Abel: Andy, previously, we talked a little bit about in the development of the budget, developing the budgets for the mission without resource constraints. But in the real world, in the Department, there are resource constraints. How do you work collaboratively to be able to fulfill the mission of the Department with those resource constraints in place?

Mr. Maner: Well, the best thing you can do -- again, we're about the business of supporting the mission, and so the best thing you can do is run -- is you have to start a process that allows people to think uninhibited. You have great policy minds. There's a lot of great people in Homeland who have come from the intel community or DoD or other places. You've got to let them be thinking about how best to do this. Then -- and then you can put the box around it that says, well, we can only afford this much this year, but, hey, let's think about putting some of this in '07, let's build on this and start to show a vision that we're serious about this program.

And so Homeland and the way we do budgeting allows us to do that and allows us to show a commitment to a certain program. And I think that's good for the mission, because I think it allows people to come to Homeland and say, wow, I can get a program done here, funded and done here. So that's how we do it, and it really does start with, as any problem is ever solved in the private sector, you brainstorm first, unconstrained by things, and then you hone in on what you can do.

Mr. Abel: I would imagine one of the most difficult decisions that you have to make is to prioritize how you apply the resources of the Department. How do you make the determination and the tradeoffs of what to do now versus what to do tomorrow?

Mr. Maner: It is; it's very tough. It's very tough because we have some very compelling missions in Department of Homeland Security. We have the Coast Guard, which is fulfilling a very important port security role and really maritime security role. You have Customs and Border Protection, which is making great leaps on the border and really creating a border that's much more efficient and much more tighter against terrorism and other forms of illegal immigration.

So you have some great agencies, and so it is tough. But that's why, as we talked in the middle or earlier, that you have your whole management team involved. And the Secretary makes a decision based on his input from his senior management team, his or her senior management team, and that's what we've done and that's really worked for us. And because we're still growing and because homeland security as a term, it didn't even really exist before 9/11, we're still evolving. We still have TSA in a growth mode. We still have CBP securing the borders. We're going to need to be doing this prioritization for a long time.

Mr. Abel: When you turn on the television or when you read the newspaper and you read about the Department of Homeland Security, you often read about new technology, you read about new whiz-bang devices to be able to achieve parts of the mission. But when you really get down to it, the Department of Homeland Security is about people. It's about the right people in the right place to be able to protect our country. What is the Department doing to be able to invest in its human resources?

Mr. Maner: Well, as you suggest, the way we approach technology is technology is the enabler. We know we're not going to grow to millions of people in the Department. We have to make the people that we have more efficient, and there's a few ways to do that. The first and probably the foremost way to do that is give them technology that works. Give the Customs and Border Protection inspector the right radiation equipment. Give him or her the right entry system with US-VISIT. So the best way you can do it, in my opinion, is to give them the tools to do their job better.

When you take it off of mission and you take it into something, a mission support role, like our office, it's about investing in people. I don't want to be hiring 15, 20 people new every year. I want people to stay. I want people to want to work at Homeland Security because of the mission, and then I want to develop them. I want them to be able to say I was in budget last year; maybe I'm going to go take a tour and work in accounting or financial management. So I'm going to rotate people. I'm going to do all the things that I've learned in the private sector about job enrichment to make people want to stay with me or, at a minimum, in Homeland Security.

Mr. Abel: Now, the Department has unique flexibilities in the employment of civil servants. How does that program, the HR program, relate to you and the Chief Financial Officer's office?

Mr. Maner: Homeland Security has done a structure where a lot of our offices are under an Under Secretary for Management, and I think that allows us to really gather together with the CIO, human capital, CFO, chief procurement officer to make sure we're leaning forward on practices in government. And you mentioned the HR one specifically, but there's -- we do have some unique flexibilities, and I want to make sure we're taking advantage of those because, again, we say it all the time, we don't want to be another department of government, we want to be the leading department. We want to be a 21st century department that people want to work for. We're not there yet. People are still thinking, oh, Homeland, it's really hard, should I go there? But we think with our mission and the funding we've received, this is a really good place to work.

Mr. Abel: So shifting gears a little bit, in order to be able to effectively use the budget that you've been given and to work in a resource-constrained environment, you need to focus on efficiency and effectiveness of your programs. Currently, DHS is working to achieve that 100 percent of the programs will have at least one efficiency measure. What other steps do you think needs to be taken to be able to accomplish this goal?

Mr. Maner: Well, again, I think we're still in an education mode. We need to understand these programs, and you and I talked earlier about looking at past programs. And I think the one thing that we're going to make sure we're doing is looking at the past performance of programs, maybe they're even 10 years old or 20 years old, and make sure they're fulfilling their mission. I don't want to see us just looking at the new things and saying, well, how are we doing on baggage screening or on port security? I want to look at all of the functions, trade enforcement, all of the things we do, figure out if they are doing their mission. If not, close them down and do new things.

Mr. Lawrence: You're the CFO of a relatively young department. When you meet at the CFO Council and talk to the CFOs of more mature departments, how do your conversations reconcile? What are the management issues, and are they different or similar?

Mr. Maner: Well, those conversations usually begin with them, my counterparts, patting me on the back and wishing me luck. But again, I think we mentioned the idea of two full-time jobs, and right now, we do have two full-time jobs. We have to support the mission of homeland security, but we have to build a department, one that will stay if administrations change. This department's here to stay.

And so for me, that's about building and developing people; it's about providing visibility of financials and budget information; it's about integrating the financial management people within Homeland to make sure we're doing things one way; and dare I say this in the financial management community, it's actually about having some fun, too, while you're doing that, and certainly we try and do that at work. It's something that I've always done. I've had -- I've worked for some people who have had some serious jobs in their life. I've worked for two presidents, and I've always noticed that they have fun. And we deal with some pretty serious subjects, but if you provide a fun place to work, I believe that you can get a lot done. And if people -- if they dread coming to work and they don't understand their mission and they don't understand how they fit into the mission, you're not going to get good work out of them.

Mr. Lawrence: As you indicated in the first segment when we talked about your career, you've moved through both the sectors, public and private, about half the time. So I'd like to ask you to be reflective and what advice would you give to someone perhaps interested in or just starting out in a career in public service?

Mr. Maner: Well, again, I talk to my friends from business school all the time who are off making lots and lots of money and excelling in the corporate ladder. And I think we have equal respect for each other, because I believe that what's happening here in public service, here in Washington right now, is a redefining of government. And certainly this -- these last four years, we have a new focus in this country. Everyone, every American, is focused on security, somehow, some way. The financial viability of our companies all revolves around security. And so the government, the public sector, is leading the way in how we are going to do business and how these things are going to happen.

So at Homeland, I believe -- my advice to people is come, try out government. The money is good. It's not -- you know, as you move through your career, it might not stay, but in an entry-level position, you can make good money, you will get a higher level of responsibility, you will be dealing with bigger budget numbers, and you will just have a lot more interaction with I think policymakers than you would in the private sector. So I just think it's a wonderful place to start a career and to really, you know, immerse yourself.

Mr. Lawrence: Andy, that'll have to be our last question. Dave and I want to thank you for fitting us in your very busy schedule and being with us this morning.

Mr. Maner: Great. Well, I appreciate both of your time. And I would also mention that if people are interested in working in the government at all or, of course, working at Homeland Security, you could learn more about Homeland Security at and, of course,, which is a great place to learn about opportunities at Homeland and in the government.

Mr. Lawrence: Thank you, Andy.

Mr. Maner: Thanks.

Mr. Lawrence: This has been The Business of Government Hour, featuring a conversation with Andy Maner, Chief Financial Officer at the Department of Homeland Security.

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

This is Paul Lawrence. Thank you for listening.

Christopher Burnham interview

Friday, November 5th, 2004 - 20:00
"We’re completely upgrading our financial systems by building one global financial platform that gets data on a minute-to-minute basis while instituting internal controls. Part of leadership is making sure we have careful stewardship of public funds."
Radio show date: 
Sat, 11/06/2004
Intro text: 
Financial Management; Managing for Performance and Results; Leadership...
Financial Management; Managing for Performance and Results; Leadership
Complete transcript: 

Thursday, October 7, 2004

Arlington, Virginia

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

The Business of Government Hour features a conversation about management with a government executive who's changing the way government does business. Our special guest this morning is Christopher Burnham, Assistant Secretary and Chief Financial Officer of the U.S. Department of State.

Good morning, Chris.

Mr. Burnham: Good morning, Paul; good to be here.

Mr. Lawrence: Thank you. And joining us in our conversation, also from IBM, is Kim Hintzman.

Good morning, Kim.

Ms. Hintzman: Good morning, Paul.

Mr. Lawrence: Chris, let's start by talking more about the mission of the State Department's Bureau of Resource Management and its activities.

Mr. Burnham: Our mission is built upon the mission of the State Department. The mission of the State Department is to create a more secure, democratic and prosperous world.

Now, when I was on the board of a dotcom out in California before coming to government from the private sector, we all walked around in Silicon Valley, and on the back of our cards, we had mission statements on the back of them. From my experience as a Marine, we also know how important mission is. The mission of the Marine Corps is to locate, close with, and destroy. Every PFC knows that; every general knows that.

What we're trying to do is inculcate a culture where everybody within the State Department knows that our mission is to create a more secure, democratic and prosperous world. Therefore, even though my mission is, obviously, to go out there and do the strategic planning, the budgeting, budget and performance integration, gather the assets necessary to execute the President's and the Secretary's foreign policy priorities, it all ties back to that mission of creating a more secure, democratic and prosperous world.

Whether or not I have a travel voucher examiner, an accountant, a secretary, I want everyone within the resource management family to understand that our mission is not to do strategic planning, budgeting, and gather the resources; our mission is to create a more secure, democratic and prosperous world. So everybody throughout the department, from voucher examiner up to ambassador, up to the Secretary, like PFC up to general, knows exactly what we're there for and what the overall mission of the Department is.

Mr. Lawrence: Tell us about your team in the Bureau and the types of skills that they have, and even the geographic spread. I'm curious.

Mr. Burnham: Well, we have almost a thousand people spread out between Bangkok; Paris; Charleston, South Carolina; Washington, D.C., and then indirectly through the financial teams that exist at every embassy and post. They don't work for me directly. Only the thousand I mentioned first work for the Resource Management Bureau to aggregate all the information around the globe.

We have everybody in there, as I said earlier, from voucher examiners to accountants, to bookkeepers, cashiers. We have five Deputy Assistant Secretaries at either the SES or the senior Foreign Service level that are in the Bureau. It is widespread. We can talk about the structure of the Bureau in a little bit here, but it's really all kinds of skill sets that come to us, even though we have our primary focus on the financial sector.

Mr. Lawrence: Now, as I understand it, the Bureau has received numerous awards from organizations like the Association of Government Accountants and the League of American Communication Professionals, just to name a few. Could you tell us about these awards and accomplishments?

Mr. Burnham: Well, in fact, thank you very much for bringing that up, because it's a tremendous credit to the talent that we have within the resource management family.

Coming from the private sector, from Wall Street, as well as the government of the state of Connecticut, I really wondered when I was going to come down here, what we were going to find. Let me tell you that there isn't a corporation in this country that has a finer financial team than I do. I mean, they really are the tops.

They have delivered to us an unprecedented three CEAR awards. This is the Certificate of Excellence in Accountability Reporting. It's the number one award within the government CFO world. We now have won three. I think only two other agencies have won more than we have, and we're one of four departments that won the CEAR award, in fact, this year.

We've also, as all agencies and departments, are rated by the Mercatus Center from George Mason University. When I got here three years ago, we were second from the bottom, the penultimate. We have moved up from 20th just two years ago. We are now third. We're the most improved third of any major department. And so this is also a credit to the men and women I have working for me within the resource management family, just to name a couple of the rewards we've received.

Ms. Hintzman: Well, Chris, can you tell us about your responsibilities and duties as a Chief Financial Officer?

Mr. Burnham: Well, Kim, you know, it doesn't differ all that much from the CFO role at IBM. I think that knowing a little bit of something of IBM, because I used to live in Connecticut, obviously, and there are plenty of IBM ers around us, and the headquarters, of course, is right up there in White Plains. The responsibilities are similar in that we have absolute stewardship over the taxpayer dollars or the shareholder dollars. I like to refer to the State Department and what we do there in corporate terms. I guess some guys use football analogies or sports analogies. I like to call visiting an embassy visiting the factory floor, where the widget we produce is a widget called diplomacy.

So we have a bottom line responsibility; careful stewardship of the money, understanding where every dollar comes from and where every dollars goes. In addition to that, it's also the reporting. It's also the budgeting, creating the budget, proposing the budgets to the Secretary. The Secretary then submits the budget every September to the President, and the President, of course, submits it every February to the Congress. So it's budgeting.

It's also strategy, long-term strategy. My office has written the first ever joint strategic plan between the Agency for International Development and the State Department as we coordinate long-term strategic goals. And now we're breaking out beyond that, because there are about 30 other government departments and agencies that are co located with us abroad that have similar or parallel goals as we do, being the factory floor in a foreign country. Let me explain what that might be.

The Department of Agriculture has many, many hundreds of people, or dozens of people, overseas. The Department of Justice does. The FBI does; the Department of Interior, Homeland Security. Lots of people are abroad, and we have to make sure that all of that is coordinated. So as we have coordinated our efforts between State Department and AID, we're now trying to coordinate our efforts between other government agencies as well so that we're all on the same strategic vision.

Ms. Hintzman: We've talked a little bit about some of your previous experiences, but can you tell us more about your experiences before becoming the CFO at the Department of State?

Mr. Burnham: Well, you know, it's funny because I've now spent more time in public service with this job than I have in the private sector. It's about 10-1/2 years in public service and 10 years in the private sector.

After I got out of college, I joined the United States Marine Corps and was an infantry officer in the Marine Corps and the Marine Corps Reserve for 23 years. I always had a passion for Wall Street, and you can't grow up outside of New York City as I did, in Stamford, Connecticut, and not have an interest in Wall Street, because the whole economy is driven by FIRE: finance, insurance, and real estate that we have there.

In any case, between a career in investment banking at the First Boston Corporation in New York, at Advest in Hartford; I made the switch from investment banking to asset management; ended up running an asset management company, the equity arm of PIMCO, the Pacific Investment Management Company, called Columbus Circle Investors, and then the PIMCO family of mutual funds, where I was vice chairman.

I think it's a terribly valuable experience to have that kind of background. Of course, in between, I served three terms in the Connecticut House of Representatives and was elected Treasurer of Connecticut in 1994, so that experience as well, having the exposure to government. Government works differently. You can't run government like you run a business. There are a lot of similarities. We try and find those similarities so that we can bring proper management controls. Some of the other things I hope we can talk about this morning, such as The Sarbanes Oxley Act of 2002- like controls. But it's important when you're coming to government, particularly as a Presidential appointee, that you understand the difference between the world you're coming from and the world you're entering.

Ms. Hintzman: Well, you have a number of different positions. Can you tell us a little bit more about how those positions prepared you for your current position as CFO?

Mr. Burnham: Well, it's interesting. When you hear the letters CFO, you think, oh, my gosh, this has to be major accounting and what not, when in fact, accounting is just a portion of what we do. We obviously do global financial services. We obviously produce a clean, timely financial opinion with an independent outside audit. So of course, the CFO of the State Department has all those responsibilities.

But the primary responsibility is not being an accountant; the primary responsibility is being a manager and leader. You can't work for someone like President Bush or Colin Powell without bringing management and leadership skills to the job. I think working for Colin Powell-- that is the number one criteria that he has in choosing his senior team: are you going to be a manager/leader and give proper management oversight to the bureau or the division that you're in charge of? I look at my experiences from the private sector as well as my experiences as Treasurer of the State of Connecticut, that the most valuable have been the management challenges. And that is in fact what I think brings the best skill set to government.

Now, that's not just true for political appointees. That's also true for senior financial managers. You can be a great accountant. You can be a great examiner. You can be a great auditor, but if you don't have the management skills-- those are the most critical to entering into the senior levels of government, in my opinion.

Mr. Lawrence: That's an interesting point, especially about management and leadership. Integrating budget and performance information is a key challenge throughout the federal government. How is the State Department handling this? We'll ask Chris Burnham of the U.S. Department of State more about this when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Christopher Burnham, Assistant Secretary and Chief Financial Officer of the U.S. Department of State.

And joining us in our conversation is Kim Hintzman.

Ms. Hintzman: The Bureau of Resource Management has five major priorities: improving financial performance; streamlining budget preparation; integrating budget and performance; enhancing customer service; and promoting greater State USAID cooperation.

Let's begin with the first priority. Can you describe what it means to improve the Department's financial performance?

Mr. Burnham: Well, obviously, that has a lot to do with the President's Management Agenda item known as improved financial performance. It's part of the President's leadership in making sure that we have careful stewardship of public funds. You can't have careful stewardship of any funds, public or private, if you are not reporting on them until months after the close of your fiscal year; that you are doing it all on an antiquated financial system; that you're not aggregating on a daily basis, certainly weekly, but I would expect daily basis in a modern Internet based age such as the one we live in; and that you don't have the proper internal controls overseeing the funds to which you've been entrusted.

There is a little history, and it's urban legend far before I ever came to government. It wasn't too long ago, perhaps a decade and a half that the State Department literally had no general ledger, and they kept their books with paper and pencil; a little bit of the old green eyeshade, I guess.

It is true that when I arrived at the Treasury of Connecticut in 1995, I was shocked to see that we were running the financial system of the State of Connecticut on a Wang computer system. Wang, of course, had gone out of business a number of years earlier, and to have one of these great big boxes sitting there was sort of shocking to me. Little did I think that I would ever see a Wang again. Well, guess what? When I got here in 2001, there was a Wang. There was a Wang in the basement of the State Department, a Wang in our facility down in Charleston, South Carolina. And I am absolutely thrilled to say we have now gotten rid of that Wang.

We are building one global financial platform, getting the data that is no longer batched on a weekly or monthly basis but on a minute to minute basis all over the Internet through a new process we call Direct Connect. We're completely upgrading our financial systems. As we do that, we're also instituting the kinds of oversight and internal controls, assurance statements that we need to do. The one thing we have not done is create an internal audit capability, and that will be a goal, without a doubt, for the second half of the administration. That's, obviously, an essential ingredient.

Now, in the private sector, you have an audit committee, and you have a board of directors. And the audit committee will use the talents of the internal audit capability as well as the external auditors. We don't have that. We do have an inspector general. The inspector general hires the independent outside audit. But the next phase of sort of making sure we have the proper controls over these things is, no doubt, to bring in an internal audit capability.

Ms. Hintzman: Over the last several years, the Department has seen an increase in staffing and funding. Can you tell us, what are the factors that have led to this upward trend, and what impact has this had on the Department's mission?

Mr. Burnham: Well, when the Secretary got to the State Department, he found an organization that had suffered through pretty significant cuts in the 1990s. We had two things from a human resources standpoint. One, we had the bulge that was going through baby boomers who were reaching their 20-, 22-, 25-year point, and pulling the trigger and getting out. And we had great gaps in there where we hadn't recruited to smooth over that generational transition that began a number of years ago and will continue for another decade.

We also had an increase in our mission, but without any additional increase in personnel. So the Secretary launched the Diplomatic Readiness Initiative, which was a three-year program to bring in approximately 1,100 new people. And in reality, because of the increase to security requirements and the increased focus on our consular operations, the operations that issue visas abroad, we've brought in over 2,000 positions. In fact, it's 2,068 positions since fiscal year '02. It's a credit to the leadership of the Secretary, the support of the President, and the fact that Congress in fact, to our listening audience, I know we're in the general congressional area of Frank Wolf of Virginia, and Frank has been a tremendous supporter of the State Department in getting us these resources that we need.

Now, understand that literally the new mandates upon us in the last three years have included Afghanistan; Iraq; Libya, let alone what we would simply term "proper human resources management," which means that if you take someone back from post from an embassy and train them, you need to have a certain amount of training flow, or at least someone who could parachute in there and fill that gap while that person is back for training.

The military does this far better than we had done it. But we have a general for a secretary, and the general absolutely wanted to bring in and make sure that we had mid career development, and leadership development programs. And so we needed to also not only fill the gaps for the new mandates placed upon the Department, but we wanted to make sure that our people could take time off and be trained, and that was also a key ingredient in that human resources initiative of the Secretary.

Mr. Lawrence: Let's shift gears and talk a little bit about the budget process. Could you talk to us about the way the State Department has sought to streamline the budget process?

Mr. Burnham: Well, it goes back to improved financial performance, and it's also tied to the other Presidential Management Initiative, which is budget and performance integration. It is perhaps one of the primary cultural clashes that I've faced in coming to the State Department, which is to put the Department worldwide on a proper business plan footing.

When we enhanced the existing structure, what we call the Mission Performance Plan, the MPP Program, leading up to bureau business plans, the BPP, Bureau Performance Plan Program I call them business plans. There was, I think, a little bit of resentment that all of a sudden you get a guy coming in here from Wall Street who says we've got to all write business plans now, and let's face it, some of the smartest people in the United States are at the State Department. They have tremendous experience, and many of them have advanced degrees. Frequently, they speak numerous languages, and these aren't the easier languages or the romance languages. It's a lot tougher when you're trying to pick up Farsi, Urdu, Chinese and Japanese. And yet we have this kind of talent pool there. And then all of a sudden I come in and say, look; now I want you to write a business plan.

Well, we're getting there because what we've done here is we've automated the foundation, the first phase of that business planning process. All embassies around the world, 182 of them, now submit business plans to us every February. The vision for this was not "go out and write a business plan and send it to us," which was how it was in the past. I had the vision of the Turbo Tax model. I think the Turbo Tax, one of the greatest inventions in software known to man where I claim a 10-year-old could fill out their taxes on Turbo Tax and submit them electronically to the IRS. I wanted to make sure that we built a simple business plan process, where someone who had never done a business plan before, who had never taken a business course before, never taken a planning course before, could go online, fill out the questions, create a business plan, and submit it. So it's an online business plan template that we've created. That's the first phase.

The second phase was then also doing that at the bureau level. We have 38 different bureaus and groups within the State Department. They also particularly the regional bureaus, the western hemisphere, Asia, European bureaus, et cetera, Africa had to all then aggregate the business plans for the embassies in their region, and then bring those together and submit those, again, electronically, on the Web to us at the Resource Management Bureau.

That then culminates with the Deputy Secretary's, Rich Armitage, senior reviews, where he will spend anywhere from one to two hours with each bureau, where they have to come in, the Assistant Secretary has to come in, or the Under Secretary who oversees that general responsibility, will also come in, present, and talk about exactly, a) what their plan is; b) what their goals are; c) what their performance has been in the past; d) what they think their performance is going to be going forward; and then most importantly, e) what kind of resources, what kind of money, funding, do they need to get the job done.

Ms. Hintzman: As the CFO, how do you facilitate the process of integrating the planning and the budgeting process?

Mr. Burnham: I'm fortunate that I have an incredibly skilled Deputy Assistant Secretary, Sid Kaplan, who has been running the new Office of Strategic Performance Planning, a brand new office. When I got to the State Department, we had two people really working on the MPP/BPP process, the strategic plan process, the performance and accountability process from a strategic viewpoint. Now we have about 22 to 24 people, working full time to make sure that we are integrating, planning and budgeting.

My financial accounting back office, global financial services world works extremely well, doing great things. As I mentioned earlier, I'm rolling out one global financial platform. And then, of course, our factory floors continue to churn out great diplomatic efforts, great widgets of diplomacy out there. But no one was tying them together. My Office of Strategic Performance Planning is the one which is tasked with that.

I'm thrilled that OMB has recognized this, and not only initially a year ago gave us green for progress on the President's Management Agenda, but just recently gave us green for status as well. So we're now double green on the PMA for budget and performance integration, one of very few departments that have achieved that ranking.

Mr. Lawrence: That's interesting. Congratulations.

Many CFOs belong to the Chief Financial Officer Council. What's this group and what does it do? We'll ask Chris Burnham of the State Department to tell us about it when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Christopher Burnham, Assistant Secretary and Chief Financial Officer of the U.S. Department of State.

And joining us in our conversation is Kim Hintzman.

Well, Chris, in the previous segments, we talked about the Bureau of Resource Management's five priorities. In this segment, let's talk about some of the management challenges the Bureau faces. Can you describe the human resources challenges you face as CFO?

Mr. Burnham: The human resource challenge has focused primarily on the ever increasing demands for accounting, bookkeeping, and oversight capability. One of the most important things anyone can do in the public sector or private sector, but particularly the public sector, is not get a government job and rest on your laurels. You have to continually take advantage of the training that's available to you. You have to go out there and seek the training. I think the very best people within the financial community within government are those who also then take night courses or go out to pursue college degrees or graduate degrees in these areas. I think it's absolutely essential.

We obviously have benefited from the slowdown in the economy in 2000 and 2001. And then add post 9/11 into that; there was certainly a recession going on, and we were able to attract people with strong financial and accounting r�sum�s to come to work for us. When the economy really gets going again, we're going to fall back to what happens within government is that you're competing with the private sector, and the private sector is always able to pay more. That said we have more regular hours, the quality of life, the benefits of the government, so we do have certain advantages in attracting people.

Now, we've also had the additional management challenge in that we've been consolidating our efforts, not only here in Washington, D.C., but we had a very large office in Paris with 125 individuals over there, and we have consolidated most of that operation down to Charleston, South Carolina. So there is really quite a synergistic community now down in Charleston, where you have the DFAS, the Defense Accounting Agency. We're down there. Most of my global financial services folks are working down there. Doing that consolidation, while rolling out a single global financial platform, has been, I think, the greatest management challenge so far within the Resource Management Bureau.

Mr. Lawrence: In the earlier segments, you talked about some of the challenges about having a team deployed around the world, especially in hot spots, one might say. What challenges do you face balancing the immediate needs of, say, the Department's operations in Iraq versus sort of addressing some of the longer-term issues?

Mr. Burnham: Well, Iraq is difficult because not only are people operating in an environment where the security situation is a minute to minute issue and while we all anticipate that will improve dramatically after the elections in January, at least for the past few months, it's difficult.

By the way, it's not just applicable to Iraq; it's applicable to the rest of the world. We are looking for ways we can either bring those jobs back to the United States that we have overseas, or regionalize them so we don't need as many people in countries, a) because it's expensive to keep an American abroad; but b) because in some of the places, not just Iraq, but many others, there are real security issues associated with Americans living and working there. And if we can regionalize them or bring those jobs back to the United States, we're going to do that.

In Iraq, there are the two added areas that are a real concern. One is that the urgency of this situation requires that we do everything by yesterday, and that is not always conducive, a more slow and methodical application of financial oversight. The second thing is, there's just a huge volume-- $18.6 billion Iraqi Relief and Reconstruction Fund, and many, many others� The Development Fund for Iraq, which was the Iraqi oil money� all this stuff. We're not overseeing all of that, but we have a responsibility for overseeing a portion of that. Again, due to the security situation over there, how quickly we need to execute these programs to get the reconstruction going over there for the Iraqi people. Lastly, this sheer size of it has been a real challenge.

Ms. Hintzman: Well, Chris, switching gears a little bit from Iraq, one of today's hot topics in the financial management community is Sarbanes Oxley. I know you mentioned it earlier. Could you expand a little more on your thoughts on that?

Mr. Burnham: I'm one of those who come from the private sector and am not offended by Sarbanes Oxley Act of 2002. I think Sarbanes Oxley was an absolutely important application and focus on the kinds of internal controls, assurance statements, stewardship that we saw lacking in the Enrons of the world and in a slew of other lawsuits by the SEC and elsewhere against corporations that have either misstated their earnings, have to restate their earnings, or have to answer questions on why they use certain accounting techniques.

I think Sarbanes Oxley has been an important improvement. I understand there's a cost to the private sector, and there's going to be a cost when we apply Sarbanes Oxley-like applications to the federal government, but that's coming. If Congress doesn't mandate it, we certainly have to voluntarily do it. The most important, of course, being internal controls. It's one of the things we do within the CFO Council, not only in my own best practices committee that I chair, but also with a specific group within the CFO Council that is now focused exclusively on what does Sarbanes Oxley mean for federal financial managers, how can we take those pieces which are applicable to the federal government and begin to apply that so that we will be at the same level as the private sector in terms of the public's confidence in our numbers and in our reporting.

Ms. Hintzman: You mentioned the CFO Council. Can you tell us more about this group and what its objectives are?

Mr. Burnham: It is a phenomenal group. It's led by the Comptroller of OMB, Linda Springer, who brings all the chief financial officers of the major departments and agencies together once a month. And then there's an executive committee, which I'm thrilled to sit on, that meets a couple of weeks before the regular meeting. And we bring together all of us to talk about what's going on within the community, to get guidance from OMB, obviously, on their numerous edicts or circulars of different things that we have to do-- from cash reconciliation to getting our audited financials and performance and accountability report to them-- by November 15th of this year.

A little aside there� again, when we all got here with this administration, we weren't closing our books for weeks. We weren't reporting for months and months, really March 1st, February 28th and February 1st. Finally, OMB, under Linda's leadership and the President's leadership, we've moved back to December 15th last year, and it's going to be November 15th this year. So in other words, we are holding government to the same standards as the private sector, and that's an important leadership aspect of the CFO Council. When we get together, we talk about not only the struggle to meet these increasing requirements of OMB and the President it's also a matter of meeting the requirements of improved financial performance of the PMA, as well as budget and performance integration. We're also working on those things as well as a council.

Ms. Hintzman: What are some ongoing initiatives of the Department that have been the result of your findings on the CFO Council?

Mr. Burnham: Again, going back to what we call GFMS, the Global Financial Management System, when you require improved financial performance, and then you require budget and performance integration, you can't do this. You can't do the seeds of managerial cost accounting. You can't do the seeds of budget and performance integration or lay the foundation for that until you have accurate and timely financial data.

I think the number one result of the efforts that are being made within the CFO Council and OMB in the White House are that we have: a) laid the foundation by bringing in a global financial platform; b) we're now rolling that out on a direct connect basis, so we have second to-second, minute-to minute timely information. We've consolidated three legacy financial systems down to one. By the way, we're terribly lucky in that, because I understand the Department of Defense has a thousand legacy systems. Can you imagine anything more difficult? IBM, GE, Coca-Cola, Sony, they've all faced the same issues that we've had.

In fact, we've gone out there, as part of the CFO Council, and reached out to industry to come in and tell us what are your lessons learned, what is your best practice? We've met with companies like IBM and others to talk about that, because no one is really on the cutting edge here. We're really all in this together. Government, and particularly the State Department, though, is very lock step. I think we're leading government, and I think we're leading the private sector as well in this initiative.

Mr. Lawrence: The CFO Act is now 14 years old. What has happened to financial management in government since the Act was passed, and what's needed in the future? We'll ask Chris Burnham of the State Department for his perspective when The Business of Government Hour returns.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with Christopher Burnham, Assistant Secretary and Chief Financial Officer at the U.S. Department of State.

And joining us in our conversation is Kim Hintzman.

Well, Chris, you've talked throughout our interview about the importance of management. And in government, as you know, there's a lot of Cs: CIO, chief human capital officer, chief procurement officer, that work alongside the CFO. I'm curious. There's even been talk about maybe assigning a chief management officer to work with these; perhaps oversee. What do you think about that idea?

Mr. Burnham: I can't speak for other departments or agencies, but we certainly don't need that at the State Department. We have an Under Secretary for Management. That's a very, very important role. It's now filled by Under Secretary Grant Green. One of the rare joys of working in the State Department for the last three years has been that there's a leadership team there between Secretary Powell, Deputy Secretary Rich Armitage, and the Under Secretary for Management, Grant Green, and all three have worked together for the last 20-23 years. One person can start a sentence; the other person can finish the sentence.

From the standpoint of the State Department, we have a Chief Operating Officer; his name is Rich Armitage. We have a chief executive officer; his name is Colin Powell. And we have a chief management officer, really, who is Grant Green, except we call it the Under Secretary for Management. As far as I know, most other departments and agencies have the same thing. So I don't think we need to add chief to anyone's title, as long as, a) you have an Under Secretary or Assistant Secretary for Management; and b) that you then have the kind of leadership cohesion at the top.

Now, one of the reasons we have this at State is because Colin Powell is a brilliant manager and leader. He focuses on management, and human resources, and budgeting issues. I think he has, really, unprecedented focus on that within recent Secretaries of State. We're blessed with that at State Department. Other agencies have to make sure that their leadership team is also focused on management issues.

You just can't go out there focusing on policy. That may be the sexy stuff, but it's not what's going to get the factory floor humming. It's not what's going to produce the widgets day-in and day-out. And that's exactly what Secretary Powell's focus has been. And I'm going to tell you, this place is absolutely 0 to 60 in 3.2.

Ms. Hintzman: Since the CFO Act was passed in 1990, can you tell us a little bit about how the financial offices in government have evolved, and additionally, what do you think these offices will look like in the future?

Mr. Burnham: Wow. Well, that's a mouthful to answer. A lot of it goes back to the fact that, as I said, years ago, there was no general ledger at the State Department, and I would guess that that probably applies to other agencies and departments as well. So the CFO Act was absolutely necessary. That the CFO Act then required that the CFO, by law, report to the Secretary or agency head was also a very important thing here.

Corporate America has learned the dangers of a CFO that is not completely on top of all the accounting and reporting. And, obviously, the CFO has taken on one of the two or three most important roles in corporate America. That said, we live in a town that's built on policy, and so the CFO has not always had that kind of access to the Secretary. The law made it so, and that's been an important addition there.

I think that when you see Sarbanes Oxley, or increased focus on Sarbanes Oxley-like controls and reviews being applied to government; that that's going to increase the responsibilities of the office of the Chief Financial Officer. People are going to continue to look at us for increased management leadership and accounting and financial competence. I think that the responsibilities will increase, and reflective of that is the fact that we've gone from our financial reporting and independent outside auditor's report from months after the close of the fiscal year to six weeks after the close of the fiscal year. I think this is an important step. Again, going forward, only increased scrutiny and increased professionalism will be required, and increased importance placed on our financial managers and leaders our there across government.

Ms. Hintzman: Where do you see the Bureau for Resource Management in the next 5 to 10 years?

Mr. Burnham: I think the last three years we have spent inculcating a culture of planning, of budget and performance integration; of linking our performance to budget decisions. This is not -- again, like corporate America-- just because the factory is producing a widget that's not selling doesn't mean we're going to close that factory down.

Let me put that in terms of the State Department. We've had tremendous successes within the Administration, for bringing the Pakistanis and the Indians together, for decreasing the amount of tension between the two parties, particularly over the Kashmir region, in an effort to either denuclearize or at least stabilize the region and keep two nuclear powers from going to blows over the issues associated with Kashmir.

It has taken a number of years of hard diplomacy to get that done. Just because year one, or year two, or year three didn't produce any results, or the Clinton administration may have had limited results, does that mean that we're going to stop funding that? I mean, how do you measure progress when year-in and year-out, there's no progress?

When it comes to foreign relations, when it comes to diplomacy, you can't do that. In fact, the budget and performance integration means there that we look at how much are we spending and what we are earning in return what I call return on effort, ROE; return on equity in the private sector; ROE, return on effort in the public sector it may mean that we need to put more money at that, more resources at that, more personnel at that; that we're, in fact, not focusing enough on that. So it could be the other end of the spectrum, that we're not spending enough and not doing enough to meet those critical calls of diplomacy, of creating a more secure, democratic and prosperous world.

Ms. Hintzman: What advice would you share with other public sector CFOs and financial managers?

Mr. Burnham: I think my other public sector CFOs have in fact not learned from me-- I've learned from them. The CFO Council is made up of a tremendously talented pool of individuals; many, many career individuals. I think the political appointee is less prevalent within the group. You have these folks out there with 20 and 30 years of experience. They have tremendous insight. They're not lacking for innovation at all. Without a doubt, the President's Management Agenda I think has, at the very least, caused everybody to focus on innovating, improving, becoming more responsible and accountable, and greater stewards of the public funds. I am told by those who work for me who are members of the senior executive service, who have been here for many, many decades, that this is the first time we've had such a concerted focused effort on these kinds of improved financial performance and budget performance integration.

I think to anyone who is starting out in a career in the government financial area, again, going back to an earlier statement I made, the training, education, is so important to your career, so important to progressing in your career. The rules are changing. The technology is changing. The skill sets are going to continue to change going forward. You've got to stay on top of those things. You can't just take 12 hours of bookkeeping or 36 hours of bookkeeping, get your rating as a government accountant or government bookkeeper, and then stand still. You've got to continue to pursue all educational and training opportunities available to you.

Mr. Lawrence: Chris, it's clear that even though you spent a long time in the private sector, public service is an important thing in your career. You've talked to us about your military service, your time in elected office, as well as now, working for the federal government. I'd like you to reflect, and ask you, what advice would you give to a person interested in a career in public service?

Mr. Burnham: I think that it's a tremendous career to come here. We are in need of very skilled people who are dedicated, who don't mind that our work hours can go from very regular work hours to practically 'round the clock when we get to the end of the fiscal year; when we get to reporting time to OMB; when we get to budget time. So there are peaks and valleys in here. I don't know whether in the private sector, you have quite as much variety as you have here.

It's exciting, though. I don't want anyone out there to think that government accounting is boring; it's not. There are lots of challenges out there. I think that the greatest challenges are when you're trying to do that in the environment of the State Department, where you're operating in over 170 countries, 250 locations, and 131 different currencies. I can't even begin to count the number of languages. And, obviously, the State Department is just not made up of Americans abroad. We employ a lot of host nation nationals also to help us out specifically in accounting and reporting within the embassy staff. So it's just a really terrific and exciting opportunity to come and work at the State Department.

Mr. Lawrence: Well, Chris, that will have to be our last question. Kim and I want to thank you for joining us this morning, and squeezing us in your very busy schedule.

Mr. Burnham: Listen, Kim and Paul, this has been my great honor. Thank you.

If I could just say, if anyone wanted more information, we have an excellent website, I would hope that if anyone had any follow up questions, they could go right to that, particularly if they're interested in working at the State Department.

Mr. Lawrence: Thank you, Chris.

This has been The Business of Government Hour, featuring a conversation with Christopher Burnham, Assistant Secretary and Chief Financial Officer at the U.S. Department of State.

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

This is Paul Lawrence. Thank you for listening.

Mark Forman interview

Friday, September 20th, 2002 - 20:00
Mark Forman
Radio show date: 
Sat, 09/21/2002
Intro text: 
Technology and E-Government; Leadership; Innovation...
Technology and E-Government; Leadership; Innovation
Magazine profile: 
Complete transcript: 

Arlington, Virginia

Thursday May 30, 2002

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

The Business of Government Hour features a conversation about management with a government executive who's changing the way the government does business. Our conversation this morning is with Mark Forman, Associate Director for Information Technology and e-Government in the Office of Management and Budget.

Good morning, Mark.

MR. FORMAN: Good morning.

MR. LAWRENCE: And joining us in our conversation is another PwC partner, Dave Carr.

Good morning, Dave.

MR. CARR: Good morning.

MR. LAWRENCE: Well, Mark, let's begin by talking about the Office of Management and Budget. And I'm curious. Could you describe for us the management side of OMB.

MR. FORMAN: Very rapidly, this administration is changing the whole notion of OMB. So, it's hard anymore to differentiate OMB budget from management. In essence, for the last decade, several decades, the Office Management and Budget has focused on budget. In the typical approach, we had a policy priority, money was spent on that policy, and then the agencies would figure out how to manage.

In this administration, largely because of the President's background and Mitch Daniels's background as the Director of OMB, we've inverted that. So the policy priorities are set. We figure out how to manage it, that priority. And then we figure out how much money do we need to manage that priority successfully. So, OMB management is now surfacing as the primary function is management of the budget. And of course, that does carry the traditional budgetary functions with it. But, basically, we're focusing on driving results. Out of programs. Out of the budget. Productivity is my key focus on the management side.

The management side is largely comprised of the focus on financial management, the focus on

e-government and IT, the focus on human capital. That's very integrated with the budget, obviously, because, as you know, in any organization, your money, your people, those are key parts of your assets.

And the last piece of the puzzle that's important to understand, past administrations have focused on government reform by trying to do several thousand initiatives. This administration is very focused on a five-part management agenda. And that's run out of the Office of Management and Budget.

MR. LAWRENCE: Can you tell us more about the office you lead, the Office of Information Technology and e‑Government.

MR. FORMAN: I think we all have realized over the last 10 years that government is information-intensive. And so all the revelations, all the newness in the way people do their work in information technology, deployments through the management of information, the way we drive productivity and the economy really can be brought to bear in the federal government.

We spend now -- this year, it will probably be about $50 billion. That's dramatically increased. Almost doubled over the last few years. In that realm, we're not seeing the productivity improvement. My office was created to manage that President's Management Agenda item called e-government, by driving the federal information technology investment so as to drive more productivity, more results for government programs and the mission of the federal government.

MR. LAWRENCE: Could you tell us a little bit about the office. I mean, you just mentioned huge numbers in the billions. How do you do all of that?

MR. FORMAN: We have a staff of roughly 30 people. And we rely heavily, in supplementing our staff, on detailing in people from different agencies and rotating them in. Basically, I was hired to put in place the governance structure, how are we going to manage this $52 billion IT investment? So we do that with a small cadre of very specialized expertise. And we work very tightly, very closely, with the folks more closely aligned to the agencies, that you would call resource management officers, the traditional budget examiners who now increasingly have a management role.

Last year, as an example, in the agency budget process, we received on September 10th budgets from all the departments and agencies. Of course, there was an increase in IT. And that increase grew after September 11th. So, by the time that we looked across agencies and all the IT investments, we were able to do the first-ever IT strategy for the federal government.

In looking at that, we found a significant portion of large investments. And we had 2900 large investments. Did not have a business case. So we told the agencies we're sorry, but we made the policy fairly clear. No business case, no money. And the point was to drive IT investments to a clear audit trail; how was that IT investment going to change management, change the processes, the business processes of key programs so as to lead to an improvement in program performance.

When they were able to do that, and put that in their business case, we're willing to fund it. And so we told them no money, no business case. Six weeks later, 900 business cases showed up. Obviously, with 30 people in the time that we had to put together the budget, it was very difficult to go through that many business cases. But we have over 500 people at OMB.

And by working as a team between the specialized expertise in my group and the folks that work directly day-in/day-out with each of the agencies, we were able to go through those 900 business cases, the 2000 other major, what we call significant IT investments, and ensure that the IT money is aligned with the mission performance improvement in the agencies. It's very much team based.

Now, a key part of the government structure I've seen, not just in the U.S. federal government, but in the experience I had before I came into the government is, as others were trying to bring up their cadre of IT and change agents across the government, there was a need to get them to understand where the management philosophy was moving. So, we've used this detailee process as kind of an academy-style government structure, where people rotate in for 3 months, 6 months, they get involved in evaluating business cases. So, they understand where we're trying to go, what the criteria are.

They get involved in our architecture analysis. It's a component-based architecture analysis now. So, they understand a look across the agencies is a different view than you get if you're in one of the agencies. They can go back to their agencies, take back that view, carry with them that enterprise change management approach.

MR. CARR: Mark, what can you tell us about your specific responsibilities as Associate Director?


MR. FORMAN: I think there are five major ones that were laid out in the announcement for my job. I looked at them very briefly. One, I am the Director for the CIO Council. That comprises all the CIOs from the executive departments and agencies. Second, I'm responsible for the President's expanding e‑government management agenda items. So, I'm the e-Gov czar, if you will, for the federal government for the President. Third, I oversee all the IT spending in the federal government. And we base those responsibilities, essentially, on a GAO Best Practices Report. That's the General Accounting Office. And, for many years, they've done best practices work on how we should better do IT in the federal government.

So, essentially, I don't have the title of CIO. We don't have those kind of titles in the federal government. But, it's basically what you would see in a large enterprise as a corporate CIO.

MR. CARR: Mark, you've been in the legislative branch. You're now in the executive branch. You've been in private industry. Can you tell us a little bit about your career?

MR. FORMAN: I actually started out doing project or consulting-type work. And one of my summers in college, I had the opportunity to come to Washington to work at a Department of Interior agency on a project. And while I was there, I saw how they were doing budgeting. In school, we would have said, boy, that's erroneous. And, I thought, well, there's a career here; I could drive a lot of good reforms and do a lot of good things because I thought I had a good education.

So, I was lucky enough to get a second federal summer internship at another departmental agency. I went off to grad school. .Actually, I got my master's in public policy. I was going to stay in and get a Ph.D. and do tax policy and come back to the government and do tax and other economic policy, but while -- I went to school at the University of Chicago. And while I was there, we laid out very clearly in the economics training that you had to really want to get a Ph.D. Economically, it was not a good use of your time. You had to do it because that's what you really wanted for your career. And, so, I instead went more on an operations research track.

When I finished up at grad school, I was lucky enough to be offered a spot in what was called the Presidential Management Intern Program. And I went in to the General Accounting Office as one of the National Security Division Presidential Management Interns. That program gives you 3 to 6 month projects.

And you rotate through, generally, at a relatively high level. During that time, I worked on a number of major government planning acquisition reform-type studies. I stayed there for a little over 2 years. I left to go to a company called Task, which has since been incorporated two or three times over into other Defense consolidations.

But I was doing professional services operations research for the Defense Department. From there, I went to another Defense contractor. Did similar work for the Office of Secretary of Defense. And that was 1990. Peace was breaking out all over the world. And through my contacts from when I was at GAO, the Senate Governmental Affairs Committee and the Senior Republican, Senator Roth, was looking for someone who understood performance based management concepts and understood in a defense environment. I was heavily into that.

So for the next 7 years, that's what I did on the Hill. I went out into industry to help implement a number of management reform laws related to the Clinger-Cohen Act, also called the Information Technology Management Reform Act, the Federal Requisition Streamlining Act. A number of other bits and pieces of performance-based management concepts.  

While I was at IBM, the e-business wave hit the public sector. So, I led that for the public sector at IBM. I spent a few months at UNYSIS doing a very similar thing for them, when I got the call from the White House to come over and take this role.

MR. CARR: Big jobs and a couple of big companies before you came back in the government. Why did you come back to government?

MR. FORMAN: This was a once-in-a-lifetime opportunity for any good government reformer. As both of you know, the opportunity to have the senior policymaking position, to oversee and drive a lot of those reforms, is a once-in-a-lifetime opportunity. This is a new job. I'm the first person in it. And it is, I believe, a unique once-in-a-lifetime experience. And it has been, in the 11 months, today, that I've been there.

MR. LAWRENCE: That's a good stopping point. It's time for a break. But rejoin us in a few minutes as we continue our discussion about management with Mark Forman of OMB.

Do you know what e-Government is and why it matters to the President's Management Agenda? You'll find out when we ask Mark as The Business of Government Hour continues.


MR. LAWRENCE: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And today's conversation is with Mark Forman, the Associate Director for Information Technology and e-Government in the Office of Management and Budget.

And joining us in our conversation is another PwC partner, Dave Carr.

MR. CARR: Mark, we've heard a lot about e‑government. How do you define the term? 

MR. FORMAN: Our definition is the use of digital technologies to transform government operations in a way that improves effectiveness, efficiency and service delivery quality.

MR. LAWRENCE: We've heard a lot about e-government as part of one of the five President's Management Agenda items.  How does your office help make that come to fruition? 

MR. FORMAN: Well, it's through a number of ways. Overseeing agency approaches and driving across agency approaches is at the heart of it. Each of the management scorecard elements, and there are five elements, have a scorecard. And, indeed, when the President talked to the Cabinet secretaries about their budgets back in January, he talked to them about the management scorecard. He didn't talk about the money; he didn't talk about programs. He talked about how they were managing their agencies and their scores. In e-government, we have what I would call, two categories of scores. The first category is how is the agency doing at becoming an e-government? And the second is, is the agency participating in cross agency e-government projects?

Now, the reason for that is some of the work that we did last summer, the strategy led us to understand that we had tons and tons and tons of e-government investments. We had more than 22,000 web sites, 33 million-plus web pages. We're already online. That's not the problem. The problem is how smart are we doing that? Are we doing it in a way to drive productivity? 

Some of that productivity, some of that value is going to come in terms of the agency improvements and achieving their mission. And the heart of that is a modernization blueprint. The focus is on results   the focus is on the customers and citizens that get benefit from that agency operations.

And the other thing that we found in looking at that, out of the 24 Cabinet departments and agencies, 19 are doing any one on a business. So, when you've got three quarters of the agencies overlapping; take customer relationship management as an example. If you have 19 agencies out of 24 that are improving their relationship with the customer, and five or six of them are dealing with the same customer, it's kind of like going online and walking around five or six different web sites, five or six different buildings. It's not customer-centered at all.  

I use the moniker of "simplify and unify" to describe what we're driving. At the end of the day, it's got to be simpler for a citizen to get service, to get their results or to see their results. And that means that we've got to operate in a way that unifies our investments. Some of us say consolidate our investments around the citizen. So we're driving that within agencies, across agencies. We're evaluating how agencies are doing on a quarterly basis in both categories, and we're reporting that to the President, and then he discusses it at the cabinet meetings.

MR. CARR: Mark, you did a task force around e‑government, I think, developing a vision, if you will, for e-government. Can you give us a little bit of background in the genesis of that task force and what it accomplished? 

MR. FORMAN: The issue that was raised, when I first came in the government, in fact, I raised it before I came in the government, is that under the Paperwork Elimination Act, and under just good business practices by the federal agencies, there were an awful lot of e-government initiatives underway. But there wasn't a clear implementation of the President's vision for government management and management reform.

The President laid out very clearly that government has to become citizen-centered and not agency-centered. And the government has to focus on producing results. You can't do that en masse across a $1-� -- 2 trillion federal budget. You have to pick priorities. You have to know what to focus on. And you have to focus on the customer, the citizen, to get this to work.

So we laid out a strategy and a vision that said that we are going to achieve an order of magnitude improvement in value to the citizens. You know, things like reducing the cycle time it takes to respond to a citizen. How long does it take us to make a decision? And we needed to flesh that out.

So we created a taskforce. Mitch Daniels, the Director of OMB, actually did it, to pick the priorities. And we wanted parties to be picked within four major groupings of citizens: individuals, government-to-citizens, government-to-business. One of the things that we realized early on when we looked at the transactions of federal government, the bulk of those transactions are in the government-to-business base and government-to-governments base.

So, government-to-citizen, government-to-business, inter-governmental affairs or

government-to-government was the third category. And, then, we have 3 to 4 million government employees, depending on how you call the Guard or Reserves. That's a large segment of the populace. So, there, too, in the internal efficiency projects, focused on government employees as a citizen-centered group for making it easier and better for government employees to do their jobs.

When we set up the taskforce, we identified change agents, strategic thinkers, generally, the GS‑13 through the first-level senior executive service. They were pulled together from the different agencies. They were brought together under the notion that they put on a government‑wide hat, that they lose their agency identity. And we adopted a traditional, or a modern, e-strategy approach, a commercial practice as an approach to e-strategy.

MR. CARR: Now, were the members of the taskforce largely out of the chief information officers' organization? Or, did they come from other parts of the organization?

MR. FORMAN: It was a very broad mix. I don't know exactly how many were out of IT organizations, but if it was half, I'd be surprised. These were change agents that came out of programs, they came out of strategic planning organizations; a lot of them came out of customer service organizations within the department.

MR. LAWRENCE: You're the chief of the CIO Council. What is the role of the CIOs in e-government?  

MR. FORMAN: Within each department or agency, some of them were picked as the

e-government leader, but regardless, under the Clinger-Cohen Act, they all are responsible for leveraging technology to improve the business practices of the department, overseeing the IT investments, laying out the architecture to do that, ensuring that IT is used in the way that improves mission performance of the agencies.  

Now, in our world, and you know in the private sector, everything has become enabled. So, their role is to do that in their departments and agencies. A number of them are political appointees, a number of them are career officials. And, unfortunately, we do have still a couple of lingering vacancies.  

MR. LAWRENCE: What are some of the challenges they're experiencing as they're trying to execute e-government?

MR. FORMAN: Well, in a number of the departments, they still have not gotten control over the bureau-level IT spending. It's part of the preparations process in some cases, it's part of the management process in others. That's changed dramatically, I think, over the last 6 months. And, for my role, empowering them is a key part. 

One of the things that we've seen over the last couple of months operating the CIO Council as a body is zero transformation. We've done a lot of analysis using component-based architecture models to get a feel for the business architecture of the federal government. In other words, what are the similar processes, what are the similar lines of business, what are the similar functions of the federal government.

And, as a group, we've done that jointly between my office and the CIO Council, literally using this academy-style rotating people in, while my office has provided some consistency of resources. We've been able to understand that, as a group, the CIOs are quite powerful in driving a lot of the transformation and joining things up. That's going to perpetuate itself in the Fiscal Year �04 budget processing. 

In early September, we get the budgets. We get the business cases. For the first time ever, the CIO Council and the CIOs have agreed that we're going to see some joint business cases, agencies actually joining up around this business architecture to figure out how to transform the effectiveness and the efficiency of government.

MR. LAWRENCE: Let me just ask you a basic management question about how you work with the CIOs. What skills do you use in the relationship? They don't work for you directly. How do you make all this happen?  

MR. FORMAN: It's a mix of carrot and stick. The agencies that have career CIOs have gone through several months, with the new administration coming in, new deputy secretaries and secretaries, new assistant secretaries, new management. I'm essentially building a relationship with that career person. In that arena, it is an absolute role that I've had to play and that I should play, or whoever is in my role should play: A), to make sure that that CIO is capable of doing what needs to be done; and B), of making sure that the political official understands the role of that CIO. And the quality of that person and the ability of that person and the responsibilities of that person under the Clinger-Cohen Act.

On the other side, there are some core processes that CIOs have to set up under the Clinger-Cohen Act. And the agencies are just now at the cusp of really taking to heart those processes, as the new administration has become in control of those processes. I would say there are two, in particular, that we have focused on. And they show up, actually, in the scorecard as well is what we're leveraging by the budget process.

One is this concept of an enterprise architecture. Now the Clinger-Cohen Act talked about each CIO setting up an enterprise IT architecture. Well, we now know that that has to go way beyond IT if we're really going to drive performance improvement in the agency. It has to get into the business architecture. So, we've held the CIOs accountable for doing it. And we've seen anomalies. We've seen some very, very good IT architects that have put together an enterprise architecture, a detailed enterprise architecture, that is not aligned with the business in the agencies. The Treasury Department, where their enterprise architecture doesn't at all address accounts payables or accounts receivables. Or, I should say, didn't, before we engaged with that discussion.

Similarly, in the capital planning process, we want the IT architecture and the enterprise architecture to make the tough decisions and then the how, the risk management are supposed to be laid out in the business cases. And those can be embraced by our capital planning processes. The CIO has to enforce that to occur. They have to be involved in that process. And, again, it's a carrot and stick approach to getting that to occur.

MR. LAWRENCE: That's a good stopping point. Come back with us after the break as we continue our conversation with Mark Forman of OMB. We'll ask him to take us through the different categories of the e-government issues when The Business of Government Hour continues.


MR. LAWRENCE: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and today's conversation is with Mark Forman, Associate Director for Information Technology and e-Government in the Office of Management and Budget.

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

MR. CARR: Thanks, Paul.

Mark, in the last segment, you talked about the Quicksilver Government Taskforce, which created a vision, if you will, for e-government within the current administration. Hundreds, probably, of projects were nominated. How did you narrow it down to just 24?

MR. FORMAN: Well, you're absolutely right. There were hundreds of projects, a little under 400 to be exact. What we found is that we had to look at the business architecture and use that as the guideline. And when we started overlaying it against the business architecture of the federal government, we found a redundancy issue of 19 out of 24 agencies doing each initiative. And it gave us a framework then to whittle it down.

We whittled down the 400 to 33 initiatives. We used a steering group to help make the decisions. And we used some criteria and a scoring algorithm. But the criteria were: first, did it have a large impact in terms of how it affected the citizens and how many citizens it impacted? Second, did it save us in redundant IT investments? Third, did it free up government resources? In other words, reduce the expenditure, the cost of government operations, or improve the quality of government operations? Fourth, did it reduce the burden on customers, paperwork burden, filing burden, et cetera? Fifth, was it doable in 3-month increments? We wanted everything to be done within 18 to 24 months. And, then, finally, the risk management; did we have manageable risk?

And we scored it on those criteria. Put it through the model. So, we did an initial downselect from 33 to 30. And we went off and did many business cases, using our business case methodology for the federal government. Came back, put that back into the scoring algorithim and met with our steering group, our deputy secretaries, and asked them to first take a look at the scores we had come up with, discuss them. And we wanted to get down to no more than 25 initiatives per segment.

When we met at our second steering group meeting, the deputies decided to take a couple initiatives and basically turn those into a business case initiative. So we ended up with five initiatives per citizen center group: government-to-citizen, government-to-individuals, government-to-business, government-to-government and internal efficiency and effectiveness. There was five in each of those. And then we added in the implementations, the 21st, the two business cases, May 23.

After the taskforce ended, Mark Everson, who is the Comptroller for the federal government, the head of the Office of Federal Financial Management, and also the nominee to be the director of management for OMB -- he's the acting chair of the President's Management Council -- Mark and I looked at payroll processing as another issue where the same methodology could be applied. That became the 24th initiative, because there was so much money. But at the end of the day, these were initiatives that we found could either be simplified to drive benefits by focusing on the citizen, or unified. In all of them, it turned out, could be unified. We had five to ten projects each that could be consolidated around the citizen, around the customer.

MR. LAWRENCE: Well, let's go through one category. You mentioned government-to-business. And one of the projects is one-stop business compliance information.  Can you tell us about this?

MR. FORMAN: We create somewhere between $350 billion to $500 billion per year in redundant reporting requirements. Government thinks in the paper world. Business has largely embraced e-business approaches and thinks about electronic data transactions or data exchange. So the business compliance one-stop is an initiative to take and aggregate dozens of agency initiatives that essentially would take their paper processes and move them online under the Paperwork Elimination Act.

It turns out we had 6600 transactions or paperwork processes to be put online. If we just web-enable those, that's going to continue that $350 to $500 billion reporting burden into the electronic world. E-business is all about collecting once and using many; making it easier for citizens to apply, or businesses, small businesses, to apply, to comply with, to get service from the federal government. So the business one-stop really leverages a collect once, use many. It leverages XML technology. It also simplifies government so small businesses don't have to hire, sorry to say, accountants, lawyers, lobbyists just to deal with the federal government. So, collect once, use many; simplify dealing with the government.

MR. LAWRENCE: Another one of the groups that was described was Internal Efficiency and Effectiveness. What changes are federal employees likely to see as a result of this in terms of their work?

MR. FORMAN: Well, there's no question that the President's Management Agenda items fit together. The Internal Efficiency and Effectiveness is where we see the leverage between, for example, financial management, human capital, performance-based budgeting and performance integration initiatives in e-government. If you take those as a whole, that's enterprise resource management, or ERP in the private sector. In the federal government, agencies are investing in ERP. But, it works this way: the human resources directors buy a copy of the ERP, the financial managers buy a copy of the ERP, the payroll processing centers buy a copy of the ERP. So, we're buying enterprise resource management. But, we're not doing it.

What that means for somebody working in the program, or somebody working in one of these back-office operations in the federal government, is it's just as hard to do their work as it was in the old paper world. It came out very clearly in the taskforce that the federal employees want that modern work environment. They want to be a knowledge worker. They are a knowledge worker, but the infrastructure doesn't support them. So, these Internal Efficiency and Effectiveness projects really provide for that human capital, management, the modern ways people do their work. And it starts everything from their recruitment process, how they come into government through how they're doing work. Things like, just simple things, like, getting reimbursed for travel.

When I came into the federal government, I was shocked. I filled out 15 or 16 different forms my first day on the job, just to become a federal employee. So, after about the eighth or ninth form, I started counting, how much different data was there. And, of course, there's just one or two different data items. But, I was filling that out 15 or 16 times. Of course, that continued on wherever you worked. But, it's a paperwork process and we don't leverage information that we've all ready got. You know, each of those 15 or 16 different forms was then being keyed in by somebody to 15 or 16 different information systems. So we would continue these redundant information systems, it makes it hard for the employees to do their work. These Internal Efficiency and Effective projects all are simplifying that and making it easier for the employees to do their work, giving them that modern knowledge worker environment.

MR. CARR: Mark, there's a lot of people that I think relate positively to the notion of citizen-centric government. Which of these initiatives do you think address that area most specifically, and what are your expectations about the future in that area? 

MR. FORMAN: Well, we know that there are a couple truisms about the federal government that are unique to other governments that are becoming an e-government. First is that most of our transactions are with businesses; then, state and local government; then, federal employees; and finally, with the citizens. We rely on state and local government to actually build that interface with the citizen. So, we have to work with them much better than we have in the past. And this is one of the things that's new about the Bush Administration. So, part of becoming citizen-centered, and we see this significantly in how we're moving forward in homeland security; part of being citizen centered is that delivery channel.

The other part, though, is how we deal directly with the citizens. And one of the things that has been amazing to us --of course, in being citizen-centered, you have to look at what the citizens want. So we rely on survey data and studies for that, web analytics and so forth. It's turned out that there's a tremendous demand for citizens to see the regulations, the rules that are being promulgated and to get control over that. We saw that first in the studies from the Council for Excellence in Government. They went more in-depth in that this year.

They found out citizens want to drive accountability in government by actually seeing, being able to comment, being heard on their comments as it relates to proposed rules and regulations, the processes of government. The Pew internet report that came out a couple of months ago said, indeed, 42 million Americans have gone online to look at proposed rules and regulations. Twenty three million Americans actually have commented on that. Now, a number of people have said, oh, that can't be right. Twenty three million, that's tens of millions of Americans. Maybe that's who's sending comments to members to Congress or to government agencies, but they can't really be looking at rules and regulations.

I had a conversation with John Carlin, the archivist. The Archives are where we collect all the data that goes into the Federal Register and the Code of Federal Regulations. And he said, yes, indeed, he's seen the same trend. Sixty five million Americans last year downloaded documents from the Federal Register. Now, compare that to 5 years ago, 1995, 1996. Twenty thousand people got that information by ordering a copy of the Federal Register. Those numbers actually dropped to 15,000.

When we actually look at the Code of Federal Regulations, it gets even more surprising. There was over 3-� million people in 1995 and '96 who were buying copies of the Code of Federal Regulations, physical copies. That dropped to a million last year. So somewhere between a third to 25 percent of the people are now doing this in the paper world. A hundred million downloads, a hundred million downloads, of the Code of Federal Regulations from the Internet. The people are online, and they are using that free democracy. The online rulemaking initiative is the one initiative that we started out to let business, small business primarily, be able to comment on rules and regulations without having to hire a lawyer or lobbyist or go to a $3,000 or $4,000 conference.

We've realized since then that this is a fast moving issue in e-democracy for American citizens.

MR. LAWRENCE: It's a good stopping point. It's time for a break. Rejoin us as we continue our conversation about management with Mark Forman of OMB.

We've talked a lot about what's taking place now in terms of e-government. But what needs to be done going forward? We'll ask Mark when The Business of Government Hour returns.


MR. LAWRENCE: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and today's conversation is with Mark Forman, the Associate Director for Information Technology and e-Government in the Office of Management and Budget.

And joining us in our conversation is Dave Carr, another PwC partner.

MR. CARR: Well, Mark, in our last segment, you talked about the various e-government initiatives. And one of those initiatives, one of the family of initiatives, has to do with government-to-government. There's a lot of that discussion in that area now, especially around the issue of homeland security. Can you talk a little bit about that?

MR. FORMAN: As I mentioned, the government-to-government arena is so important to us because it is state and local government that really owns the delivery channel to the citizen. That's the same that we're finding in homeland security, and indeed, as we looked at the government-to-government initiatives, four of those were also incorporated in the budget as part of the homeland security initiatives.

Generally, the way I think you have to measure how well we're doing with e-government in the citizens' eyes is how responsive are we to their needs? As we looked at the homeland security arena and we look at e-government, one commonality came up, and it's the quality of decisionmaking across the various levels of government. Now, in homeland security, they call it vertical information sharing. In e-government, we just call it intergovernmental affairs.

But, basically, we have two key measures that we're focused on. One is that we're accelerating our response time. So it shouldn't matter if it's the response time for obtaining a benefit, getting unemployment insurance or some other safety net program, if it's the response time on a public safety issue, disaster assistance, law enforcement. If we can increase our response time, we know we'll be successful. And we know that we have to do that as a partnership. The collaborative tools, the knowledge management tools, and the workflow integration tools that have come out of e-business are tremendously useful to us in this arena of government-to-government. So they affect those projects.

Let me give you some specific examples, because the corollary to that, if this works, is to improve quality decisionmaking. One of the initiatives is the disaster preparedness one-stop; a portal, essentially, for working with state and local governments to prepare for and respond to disasters. This, too, like our other business architecture areas, is one where the federal government has lots of good silos of initiatives. But as a whole, we haven't done a good job in working together as a government with our delivery panels and our partners.

So when we had our partnership meeting in the disaster preparedness portal -- we had done this for each of the government initiatives -- we laid out a fairly clear set of objectives and goals on how we're going to better work with state and local government. And at that meeting, an emergency management director showed up. He laid it out very clearly. He told the departments and agencies in the federal government -- and we had roughly 50 to 60 people there -- he told them how difficult it was for the state and local folks to try to deal with a disaster. Fifty, sixty different initiatives. All good initiatives. But, they're making it so difficult on the state and local folks that have to respond to disaster that indeed, they may be hurting the ability to save lives and protect property.

He laid out very clearly and really motivated this group of federal employees to work together to define a very simple process and integrated approach for dealing with different elements of the disaster planning and disaster response delivery channel. So I think that's the type of thing that we see; obviously, that's about the homeland security function and e-government function. Because the way you do this now is you leverage mobile business or mobile-type technology. You leverage e-government, e-business-type approaches. And you leverage the workflow, the simple processes and so forth. And that's what you see in general as the nexus between homeland security in this vertical information sharing arena and the government-to-government portfolio.

MR. LAWRENCE: You've talked a lot about technology, but cyber security hasn't come up. So, I'm curious where it fits in these priorities.

MR. FORMAN: In an environment where we have so many services online that rely on the backbone of the Internet to perform the work of the federal government, security is tremendously important to us. In fact, it's important to us as a country. The President signed an Executive Order and created the Critical Infrastructure and Protection Board that many people call the Cyber Board, to focus on this issue. I sit on that Board and, indeed, chair a committee on that that focuses on executive branch information systems. But the bottom line is, for many years, we've realized that cyber-security is important for the economy, and it's important for the federal government and its role in the economy. We've adopted a five part approach for dealing with it.

First, through some recent legislation called the Government Information Security Reform Act, we've required the secretaries of the departments and agencies of the federal government to submit to us an evaluation of their security plan that's based on an independent evaluation by their inspectors general. Second, to put together an action plan that fixes the problems, the gaps identified in the current program. That, then, we worked in through the budget process for

FY �03. And we'll do the same thing in FY �04. Third, integrating into the business case process. So in these business cases, in these capital investment plans, we literally score each business case on how well they address security. Do they embed the appropriate security, because we don't want to pay for that after the fact. But we'd rather have that built in from the beginning.

Fourth, we've adopted something called "Project Matrix." And we've literally required each of the departments and agencies to do this assessment. It's a vulnerability assessment. It's a vulnerability assessment, a contingency operation and business continuity and planning initiative. It tells each agency what are the vulnerabilities for that department, how should they address that, what kind of contingency plan should they have in place, what kind of back-up. What we found is that we need now to look across the departments and agencies. I mentioned the redundancy. But we know that redundancy can be good if you have that integrated with your disaster recovery plans. So, indeed, we're doing a cross agency application of Project Matrix.

The final thing is to have an audit trail in place. So, literally, we focused the deputy secretaries of the President's Management Council, we're incorporating that into the scorecard to make sure that each of the agencies are addressing the gaps that they have and that they're continuing to identify and address those gaps.

People say, well, gee wiz, last year, you identified a number of gaps, but the gaps seem to be growing. We're at a point now where the gaps are growing because we're identifying them. And I think what's happening in industry and what we're bringing into government for this year's iteration of that approach is a 24 hour cycle time, the ability to respond quickly to vulnerabilities or threats as they are identified. So part of doing that is adopting a modern approach, a web services approach, for that. And we've set up at what's called FEDCRC, the Federal Critical Response Center, at the General Services Administration, that ability to have that 24 hour response time.

MR. CARR: Mark, we've talked about the Quicksilver initiatives, we've talked about the business cases that were developed in advance of these initiatives being funded. How are we going to measure success? I guess it's probably contained � the criteria is contained, identified within the business case. But how will you, how will I, as a taxpayer, know that things are different, things are better?

MR. FORMAN: Well, I hope you don't have any problems in your interfaces with the federal government right now. But, if you do, and there are quite a few programs and quite a few customers of the federal government, I have to say the state and local governments, especially in the post-9/11 environment, have been very vocal on where their problems, where their issues are. That is where we'll see some of the biggest change. So we are generally looking for some very simple measures. We're looking for an order of magnitude improvement.

But, we talk about things like the time it takes to get a decision. You know, in the past, even for benefits, it typically took the federal government months. We want to get that cycle time down to days or hours. Similarly, you know, if you look at homeland security and if you look at a lot of the government-to-government initiatives, we don't have weeks or months to make a decision. That has to be down to hours. Maybe, minutes, if possible. So cycle time is an often important criterion. The other is the measure of performance, and exactly as you said, these initiatives, whether they're cross-agency or within each agency, link back to actual program performance. So we're looking for the productivity improvement down to the level of that program. We have some other types of measures, and we're tracking this all via the scorecard. So my objective in how I measure the performance of my direct reports is in getting the federal agencies to green for that e-government score on their scorecard.

MR. LAWRENCE: We've got time for one last quick question. I'm curious, Mark. What advice would you give to a young person interested in a career in public service?

MR. FORMAN: Well, there's no doubt about it, this is an exciting time to come into government. I would say at this point, this year, be a little patient. We're in transition. We are rebuilding the recruitment processes for the federal government. All the departments are working on strategic human capital plans. They're understanding that the workforce is changing. It is a tremendously rewarding experience. But I have to say right now, you have to be persistent. You have to be willing to work via the USA Jobs Website, via other aspects of getting into government to get in. I think getting a master's and entering through the Presidential Management Intern Program is a tremendous way to come into government.

MR. LAWRENCE: Well, we're out of time. David and I want to thank you very much for being with us this morning.

MR. FORMAN: Thank you. And, it's a pleasure to be here. If you want to see more information about the e-government initiatives, I'd encourage people to go to the website. Look at the budget, look at Chapter 22 of the analytical perspectives. It goes out into excruciating detail on how we did the first-ever IT strategy look at the federal government. As we go into the summer, you'll see a new-looking field for the web site. You'll see the scores of the various agencies on e-gov as well as the other management agenda criteria.

MR. LAWRENCE: Great. Thanks so much.

MR. CARR: Thank you, Mark.

MR. LAWRENCE: This has been The Business of Government Hour, featuring a conversation with Mark Forman, Associate Director for Information Technology and

e-Government in the Office of Management and Budget.

Be sure and visit us on the web at There, you can learn more about our programs and get a transcript of today's very interesting conversation. Again, that's

This is Paul Lawrence. See you next week.

Stephen Perry interview

Friday, August 30th, 2002 - 20:00
Stephen Perry
Radio show date: 
Sat, 08/31/2002
Intro text: 
Stephen Perry
Magazine profile: 
Complete transcript: 

Arlington, Virginia

Friday, April 26, 2002

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

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business.

Our special guest this morning is Steven Perry, administrator of the General Services Administration.

Good morning, Steve.

Mr. Perry: Good morning. Thanks for having me.

Mr. Lawrence: Joining us in our conversation is another PwC partner, Steve Watson.

Mr. Watson: Good morning.

Mr. Lawrence: Good morning, Steve.

Steve Perry, let's start by learning more about the General Services Administration. Perhaps you could describe its mission and its roles >.

Mr. Perry: Sure. Let me begin by saying the General Services Administration was formed by Congress back in 1949. At that time, the purpose was to improve the efficiency of government by taking the procurement and property management activities which were then occurring in several different agencies and consolidating that all into one agency, thereby making it more efficient, eliminating the duplication that otherwise would have existed in the various agencies, and enabling GSA then to be the organization that developed expertise with respect to procurement, property management, understanding the supply base, and being able to do a better job and delivering best value for its customer agencies.

We still operate that way today. I think it's a great organizational design concept. Many organizations are organized in a similar way. Many private-sector organizations pool together their procurement and property management into one central part of the organization as opposed to have it overly dispersed throughout the organization.

Our major units are: one, the property management unit is our Public Building Service unit under the leadership of Jill Morvek (?), our commissioner for Public Building Service. Then we have a Federal Technology Service unit which provides telecommunications and IT technology for customer agencies, under the leadership of Sandy Bates.

Thirdly, we have a Federal Supply unit which provides virtually everything else that agencies need, a wide variety of supplies for their offices, equipment, vehicles. Virtually everything, again, that an office would need to operate are provided by our three services.

Then we have a fourth major part of GSA which is called the Office of Government-Wide Policy. This groups works with other agencies within the federal government to develop policies, particularly as they relate to procurement matters and to management issues. As an example, this is the group that works with other agencies in developing the procurement regulations under the federal acquisition regulation rules. So that's what we are.

We provide office space. We are one of the nation's � in fact, I suppose we are the nation's largest commercial real estate-type entity because we provide in total over 350 million rentable square feet of space, which houses 1.1 million federal workers around the nation. Of that space, of the roughly 8,300 buildings in which federal workers are housed, 1,800 are federally owned by the government, and the other 6,500 are owned by private-sector real estate forms, and we lease space. So providing space is one of the big things we do, and then technology, supplies, and policies are the remaining three.

Mr. Lawrence: That's a broad mission. How many people work with you at GSA, and what are their skills? I heard such different areas.

Mr. Perry: It is a very broad mission. Today we have about 14,300 people nationwide that make up the GSA team. It a few years ago was much larger; as a matter of fact, as high as 35,000 in the early 1980s, and that number has been reduced as we have been able to do more work through the use of technology, improved productivity, and some out-sourcing. We have a somewhat smaller organization, but still, at 14,300, that's among the largest of the federal government agencies.

Within our group, our areas of specialty would include clearly people with acquisition skills. As you know, the acquisition procedures and policies within the federal government are a little bit specialized, and those specialized procedures are there for a good reason, so that we make sure that all of the companies in the private sector who would like to interact or do business with the government have an equal opportunity to do so. But they're also there to make sure that our procurement policies enable us to procure best value for agencies in a way that's ethnical, with integrity, and so forth.

So my point being, acquisition is one of our key skills within our agency. Another one is real estate management. Obviously, again, in order to be able to negotiate real estate deals or to manage properties in which we house federal workers, we need people with those skills.

And like many other organizations these days, information technology is a big skill area for GSA. We use information technology in a wide variety of carrying out our operations, and we are working to continually bring in the new technology people that we need to carry out our operations. Those are three.

There are two others that are particularly critical to our mission. One is financial management skills, because we are endeavoring to enhance our ability in that area; not that we're not doing well. In fact, we are very proud of the fact that we've had 14 consecutive years in which we've gotten a clean audit opinion, which is pretty stellar among federal agencies. Nevertheless, we are moving to have a financial management system that provides timely and accurate financial information to our managers for decision-making purposes, and we are endeavoring to enhance our skills in that area.

Then lastly, the fifth of the skills that we're really focused on these days is security. Even prior to September 11th, certainly following the disaster in Oklahoma in 1995, we've been working to enhance our security process and the people that carry out our security process to do two things, generally. One is to have them be people who can work with the other criminal intelligence-gathering informations of the government to understand what the threats are regionally and location by location, and then to apply their expertise in putting in place countermeasures to reduce those threats.

Countermeasures could include security guards. They also could include cameras, the magnetometers and other sorts of screening devices that we use as people enter public buildings. So enhancing our skills in the security area is a fifth major category of skill development for us today.

Mr. Watson: Steve, as the administrator of GSA, what are your responsibilities?

Mr. Perry: Well, they are varied and broad. Like in any major organization, and we are a major organization, a large, complex organization, I have a number of people who are part of the GSA team who have certain responsibilities, and I'll talk about that. But as it would relate to my particular responsibility, I think it is to assure that we have a really effective performance management process. What I mean by performance management process, it begins with understanding and having a broad understanding in the organization of what our agency's mission, values, and goals are. The head of the organization has a very responsible role to make sure that that is occurring, that there are in fact rich dialogues going on inside the organization as to why do we exist, what is our mission, what are we here for, why do we get up in the morning and come to this organization, what are we responsible to do.

Then once we're clear about our mission, we have talked a lot about what are our values: how will we work together; how will we incorporate ethics and integrity into everything we do; how will we foster teamwork inside this organization; how will we work in a way that illustrates our respect for our fellow associates; how will we act in a way that's professional; and most importantly, or equally importantly, at least, how will we be focused on achieving results; how are we result-oriented.

So we've defined our mission, which is to help other agencies better serve the public, and we've defined our values. I see it as the administrator's role to see that that process is occurring and occurring effectively.

After having established mission and values, our role then as the head of the agency was to help craft the goals for the organization. That is, what is it that we will achieve together. We've set for ourselves I believe some challenging goals, following the directives in the President's management agenda, and that's what we do. As the head of the organization, I spend most of my time making sure that this performance management process is in place and that it's working well.

There are a couple of other elements to it. After you get past having goals, then one of the things that you have to do is to make sure that you have the organizational capability that's necessary for success in achieving those goals. That means that you have people with the skills and competencies and personal characteristics and dedication that are necessary to achieve at that level, and we're working to make sure that's the case. Then, clearly, you execute the action plan, you work on measuring your performance so that you can know where you're achieving your goals and where you're falling short. You take corrective action as necessary to keep yourself on track. Then at the end of the day, you assess your performance and reward and recognize people accordingly.

So that whole performance management process, to my mind, helps to explain or define what I believe my role and responsibility is as the administrator at GSA.

Mr. Lawrence: That's a good point to stop on.

Come back with us after the break as we continue our discussion with Steve Perry of GSA. Do you know what e-government is? You'll find out in our next segment when we ask Steve about GSA's award-winning FirstGov website.

This is The Business of Government Hour.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and this morning's conversation is with Steve Perry, the administrator of the General Services Administration.

Joining us in our conversation is another PwC partner, Steve Watson.

Steve, you were appointed to this position about a year ago. Can you tell us a little bit about your career prior to joining GSA?

Mr. Perry: Sure. I'm from Canton, Ohio, a wonderful little town in the middle of the state of Ohio. I was born and raised in Canton. My parents had moved there, they had 12 children, and I lived there. I had worked for what was one of the larger employers in Canton called the Timkin Company. Timkin is a worldwide organization with headquarters in Canton and manufactures tapered roller bearings and specialty alloy steel. I had worked at Timkin for 37 years in a variety of positions. The other thing Canton is well-known for that I'll mention is being the home of the Pro Football Hall of Fame. I also had the privilege of being involved with that organization as well.

My career at Timkin started in 1964 and ended in 2001 after 37 years when I joined the Bush administration in this present position. However, there was a period of 2 years, 1991 and 1992, when I was asked by then-governor George Voinovich of the state of Ohio to get involved in his administration running a GSA-type organization, actually at the state level, which was called the Department of Administrative Services for the state of Ohio, and I did that during 1991 and 1992. Then I went back to Timkin. At that point, I had taken the position of senior vice president for human resources, purchasing, and corporate communications. As I say, I'd remained there until 2001.

Mr. Watson: Steve, GSA oversees the FirstGov, website which is a one-stop Internet portal for the government. The site has received praise and a number of awards, and I understand it's been recently updated. Can you tell us a little bit about FirstGov and the recent updates?

Mr. Perry: Yes. FirstGov is a use of Internet technology that was sort of the government's first big step I think into expanding to what ultimately will become a ubiquitous use of Internet technology for government operations. It is a portal into the government.

When it was established, it was put in place as a search engine that enabled people to get information about government activities or government agencies at a very, very rapid pace. There were some 50 million pages of web pages from various government agencies. Then additional state pages were added subsequent to that. Despite the large volume of data that's in this file, the search engine technology that's used would enable you to make an inquiry and get a very, very split-second rapid response so that you could find out information about government activities and government agencies.

What we want to now in keeping with one of President Bush's management agenda items is to expand the use of electronic government, and this is one part of that. What we want to do is enable people in the private sector, either individuals or businesses, not only to be able to obtain information, but to be able actually to complete transactions with the government and with government agencies. So the website will be the portal through which people will come, and then that will link to other agency database files or web files so that information could be pulled through that portal or transactions could be completed through that portal. We're in the process of putting that in place as we speak.

Mr. Watson: As you mentioned, e-government is one of the President's key management agenda items. What role is GSA serving in helping to roll that agenda item out across government?

Mr. Perry: Actually, we have a pretty substantial role. We're working very closely with the Office of Management and Budget, who has a leadership role with respect to

e-government and impacting all agencies. We, in working with OMB, have been asked to be the lead agency on 5 of the 24 initial initiatives; e-government or being one of the 5. But others that we have been asked to take a leadership role in, one is called e-authentication, and what that means is that it's the development of the process by which individuals or businesses who interact with the government over the web will be able to have a confidential interaction, to protect privacy and confidentiality on both sides of that transaction. This e-authentication is an electronic signature technology that will enable that confidentiality and privacy to be properly protected. So we're working with that one.

A second one that we are involved is called integrated acquisitions. As we are a procurement organization, it makes good sense that we would have a major responsibility there. There are other agencies of the government that also are involved in procurement, and this is going to be a process to integrate together all of the acquisition or procurement processes that are used by various federal agencies into one system as opposed to having multiple systems. That will be beneficial in terms of efficiency from the government side. It will also be beneficial from the private-sector side in that vendors who want to do business with the government will have one basic approach to use in getting that interaction, transaction, or business opportunity completed.

A third e-government initiative that we've been asked to serve as the lead agency for is called e-travel. As you know, government officials do a fair amount of traveling on government business, and this will be a process of taking that travel as it relates to all agencies and again coming up with a consistent and uniform approach for authorizing travel, for handling travel reimbursements and all the record keeping that's associated with travel.

Mr. Lawrence: Let me ask you a question now. You said something interesting about taking the lead on an initiative. What does that mean?

Mr. Perry: In each of these cases, it will be necessary for a number of agencies, and indeed, in some cases all of the agencies, to participate. That is, e-travel is a good example; every agency will be impacted by that. Now, the way that we're structuring this is you have one agency that is designated to be the project manager or the managing partner for that initiative. Then you will have several other agencies that form the core team for development and implementation.

Now, not every agency that's impacted will actually be a part of that team, but many agencies would be a part of that team. Teams are typically made up of 6 to 10 agencies, and the lead partner is responsible for convening the meetings, developing the work plans, and keeping the project on schedule; serving, in effect, as the project manager for that project. So it's a very collaborative effort.

In fact, it in some ways is a new experience for many agencies to work collaboratively on projects, because historically, many of the agencies have worked independently. But the web technology and the use of the Internet really affords us the opportunity to have much, much greater intraagency or interagency collaboration so that we have multiple processes and multiple systems duplicated at every agency.

Ten years ago, the technology would have been such that we might not have been able to exploit those synergies that exist among agencies, but today we clearly have that technology. And this use of web technology or e-government as a way to exploit that synergy and efficiency is something whose time has come.

Mr. Watson: What benefits will the citizens see from e-government?

Mr. Perry: One of the benefits will be that they will have an easier and more efficient means of interacting with their government, either, as I mentioned, for purposes of obtaining information, or ultimately for purposes of completing transactions with the government. All of us have probably had the experience at one time or another of unanswered phone calls or mail that took a long time to be returned or waiting in a line for government information or government transaction completion. I think a benefit that will derive here is that that will be become easier and more efficient. Then, of course, another indirect benefit that taxpayers will receive is a less costly way for the government to operate.

Mr. Lawrence: GSA has expressed a commitment to becoming more citizen-centric and customer-centric. I guess I'm curious, who are your customers?

Mr. Perry: Our most direct customers are the other federal agencies.  That's who we work with directly to provide space, technology solutions, supplies, vehicles, furniture, and things of that nature.

In a sense, our indirect customer is the American taxpayer, because again, two things happen: one, as we deliver those goods and services to other federal agencies in an efficient and effective way, we help them to improve the quality of their programs and their ability to meet the needs of the American people. So that's one benefit. The second benefit is that as we do those things well, we reduce the cost of doing it. So another benefit is the lower cost of government.

Mr. Lawrence: How will you become more customer-centric with so many people to serve?

Mr. Perry: Well, one customer at a time I suppose is part of the answer, and we're literally working on that approach. We have a strong commitment to customer service, and in order to be really good at customer service, it has to begin with understanding what the customer's needs are. So we've been working agency by agency to interact with them at the senior management level, at the mid-management level, at the regional level, and at the data-collection level, if you will, to understand what customer needs are; where are they moving programmatically; how can we support that move; what could we do in terms of providing facilities and/or supplies and so forth to support their missions. So we are doing that, as I say, one customer at a time.

Mr. Lawrence: Stick with us through the break as we continue our conversation with Steve Perry of GSA.

Managing one organization is often challenging, but managing across multiple organizations surely increases those challenges. In the next segment, we'll ask how GSA works across multiple government agencies and deals with these challenges. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. Today's conversation is with Steve Perry, administrator of the General Services Administration.

Joining us in our conversation is Steve Watson, another PwC partner.

Mr. Watson: Steve, in the last segment, we were talking about the various

e-government initiatives that GSA is leading. You touched on three of them. Are there others?

Mr. Perry: Yes, Steve. I think I mentioned e-authentication, e-travel, and we talked a little bit about integrated acquisitions. In a general sense, we talked about a fourth one which is called USA Services, which we call our Office of Citizen Services, which has to do with the use of our website to become the portal for providing information, and then ultimately, the ability to conduct transactions with the federal government. That's the fourth one.

Then the fifth and final one that we've been asked to serve as the managing partner for is called Fed Asset Sales, and this is to make available to the public assets that the government no longer needs or can use and has available for sale. Some of those assets are personal property, vehicles, boats and things of that nature. Other assets are real property, land and buildings that may not be required for agency missions anymore. Then another category is security assets that the Department of the Treasury makes available for purchase by the public.

We are attempting to put into place a website which would be a one-stop shop for any individual or business that would want to purchase a government, that would be the way that that would happen, and those make up the five projects that we're working on.

Mr. Lawrence: GSA has expressed the desire not to let the human capital need become a crisis. What are your top HR concerns, and how are you addressing them?

Mr. Perry: Well, the issue of managing human capital has to do with building the organizational capability necessary to achieve the goals that an organization has set for itself. As we have set out goals, we are now in the process of assessing whether or not we have people with all the right skills and competencies to be successful in achieving those goals.

We have identified five areas where we know that we have to do some more work in terms of, first of all, additional training and development so that we can enhance the skills of existing people. Second, we will do some more work in understanding what our attrition will be, being prepared in the event of retirements and what-have-you. So we're working to make sure that we're prepared for smooth transitions in those cases.

Then thirdly, doing targeted recruitment to bring into the organization people who have skills that particularly needed. Some of those skills, obviously, will exist in the five mission-critical areas that I may have mentioned: IT, real estate management, security, which is a big one.

Mr. Lawrence: You're also taking a lead role in embracing teleworking for employees. What's teleworking?

Mr. Perry: Teleworking, or telecommuting, as some people call it, has to do with carrying out your normal work, but doing it outside of your normal office place. Sometimes that can happen at home if you have the computer equipment on the home end in order to interact with the network at your office, or other times, it can happen in a teleworking center where you would drive from your home to some other location closer to your home than your office and do the teleworking from there. We've built 15 such centers in the Washington, D.C. metropolitan area, including Virginia and Maryland, so that in some cases, people drive from their home to the teleworking center and then carry out their work from that location.

It has a number of benefits. One of the benefits is that it helps to improve the quality of life in some sense, quality of work life, in that people can use that as an approach to accomplish their work and be productive without necessarily having to drive to work. A second benefit area is that it reduces the transportation problems, snarls and traffic congestion that we have to some extent. And it may have a favorable -- or would have a favorable impact as well on pollution resulting from driving our cars in these congested areas.

Another area of benefit is that in the case of some individuals, they actually wouldn't be able to work if they didn't have the telecommuting as an option, at least for portions of their time. So you might take somebody whose personal life schedule is such that they really couldn't take on a 40-hour-a-week kind of a job, but if they could work some of that time from a telecommuting center, some of that time from their home, and then some of that time in the office, in some instances, it makes it possible to actually recruit that person.

Mr. Lawrence: What are the challenges of telecommuting?

Mr. Perry: One of the challenges initially was to be able to afford the cost of the equipment that would be necessary to carry it out, but that cost has come down dramatically in recent years, so that's not so much of an issue anymore.

Now the challenge becomes is the nature of the work such that telecommuting fits. For example, a receptionist can't telecommute from home because he or she has to be at a location to carry out the job. The same would be true of a maintenance person. They have to be physically where the assets are that they're going to be working on.

But there would be others who are, for example, involved in report writing or in report review or some other kind of activity where their interaction with other associates can be done electronically or over the phone. In those cases where the nature of the work is right, then telecommuting fits. So that's one issue.

The other issue is a little bit of a cultural issue. Telecommuting is relatively new for us in our culture, and so we are finding that managers and subordinates in the manager's office have to get used to this idea of not being in the same work space and nevertheless being confident that work is being achieved. They can get that confidence if they have developed together the performance expectations; you know what is to be done, you know what the time frames are, and as long as all those things are being achieved, whether the person is in the office or working from a telecommuting center, it becomes less and less of an issue.

Mr. Watson: GSA's mission requires it to work closely and cooperate with other agencies to get its work done. How hard is it working across an organization as large as the federal government?

Mr. Perry: Well, it does present its challenges, but you're absolutely right; in order for us to be successful in carrying out our work, we have to work with individual agencies and many times with multiple agencies together. That just requires us and the other agencies to adopt a spirit of teamwork.

In the aftermath of September 11th, I think we learned that we could do that, because although the terrorist attacks of September 11th are a memory that we don't like to keep reflecting on, one of the lessons learned from that was how our government agencies did in fact act very, very closely together. There are numerous examples of that.

I know in our case, GSA and FEMA, the Federal Emergency Management Agency, worked very closely, and we helped them locate space where they could operate in New York, and we provided them with materiel and so forth that they needed to conduct the search-and-rescue efforts and provide other assistance. The same was the case with the Department of Defense here in Washington, D.C. As you know, the airplane attack on the Pentagon caused them to be completely disrupted and they needed to be placed back into space and re-equipped with telephones and telecommunications equipment and so forth. So our two agencies worked night and day, literally, and very closely together to accomplish those things. It's just an example that it in fact can happen and we know that we can do it.

Within our agency, our three major services of technology, supply, and buildings, also found that we could work very, very closely together in providing total solutions to our customer agencies in a way that was closer than we had worked previously. So, yes, it has to happen, it can happen, it does happen. There are always challenges; the challenge of independence as opposed to collaboration. But we're learning in these days that collaboration is the route to high performance. We're doing it in GSA, and I think we're doing it more and more within the total federal government.

Mr. Lawrence: You've described a lot of successes. What were your lessons learned in terms of going forward about how to make this happen absent a crisis?

Mr. Perry: The issue of being clear in our mission and our understanding of our capabilities, that from a customer perspective, they expect GSA, as I say, to deliver a total solution. They don't necessarily look at us only as an entity that provides physical space or only as an entity that provides telephone service or telecommunications. They look at us as an agency that provides everything that they need for the successful operation of their agency other than the people themselves, and they bring that.

But as we look at ourselves in the way our customers look at us, it causes us to understand that we can better meet their needs by working collaboratively across all organizations or aspects of our GSA.

Mr. Lawrence: That's a good stopping point. Come back with us as we continue our discussion about management with Steve Perry of GSA.

What will the future hold for government in GSA? We'll ask Steve for his thoughts when The Business of Government Hour continues. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and today's conversation is with Steve Perry, administrator of the General Services Administration.

Joining us in our conversation is another PwC partner, Steve Watson.

Mr. Watson: In your fiscal 2001 annual report, it's reported that GSA met or exceeded 78 percent of the performance goals it had set forth. Were you satisfied with this outcome?

Mr. Perry: We know that we can improve upon that, and we know we need to improve upon that, and we know we need to improve upon that because our customer needs are increasing. We are setting for ourselves, or have set for ourselves for 2002 and beyond even more challenging goals than were set in 2001. So we will have to work harder and smarter to make sure that our performance continues to improve. Even though 2001 was a good year and it indicates that we have a strong foundation on which to build, we know that the future will require us to do more than that.

Mr. Watson: What are some of your top priorities for fiscal year 2002 and beyond that, looking forward to 2003?

Mr. Perry: Well, let's take our property management area first. As you know, we have 1,800 or so federally owned buildings. Unfortunately, the state of repair of some of those buildings is not what it should be. The General Accounting Office did a study that indicated that something over $4 billion of deferred maintenance needed to be addressed. We know that that is going to be a tough challenge, and at the same time, we know that we want our legacy to be that we addressed those issues as best we possibly could.

We're doing that by first of all in our portfolio management of our real estate assets, developing the priorities of which of those buildings will be addressed first, and we're looking at those priorities on a national basis. The second thing we're doing is that we're taking the resources that we have available in the appropriations from Congress in what's called the Federal Buildings Fund and giving a high priority to addressing the backlog of repair and alterations work or deferred maintenance.

Then thirdly, we are sponsoring proposed legislation that would reform the property management rules and regulations under which we operate to enable us to use more modern real estate management practices so that we could better address some of these issues. As an example, one of the more modern real estate management practices would be that each agency would be more involved, if you will, in developing an annual facilities management plan and making sure that that facilities management plan was consistent with that agency's mission. That would help to identify whether there are buildings that are excess to that agency's mission so that we could deal with that. It would also help to identify buildings that continue to be needed for the agency's mission, and so they would move up on the priority list in terms of attention for purposes of repair and alterations.

Another part of that reform would be to enable GSA to enter into public-private partnerships; in effect, find a way to be able to have private-sector investors invest in repairing existing federally owned buildings and then recovering their investment over a period of years by receiving a pro rata share of the rent. Today, we often find ourselves with inadequate resources. If we could tap private-sector developers who would be willing to make these investments for a return, it would be a way to help solve these deferred maintenance problem that we have. So that's a big priority for us in the property management arena.

In the procurement arena, what we've been endeavoring to do is find more and more efficient ways to enable agencies to be able to carry out their purchase of products and services needs. As you know, we have something called GSA schedules, a very efficient marketplace type of arrangement that we at GSA have put in place that enables agencies who need to buy certain things just go to that schedule and make the purchase. The terms and conditions have already been negotiated, the price and delivery items are already in place, and it makes it a very efficient process for agencies to use.

In addition to those sorts of unassisted schedules, we have some agencies who need additional assistance, particularly in the purchase of information technology types of items. In that instance, our Federal Technology Service provides additional assistance where it's needed to help agencies develop the scope of their process change, to help them review alternatives in terms of their purchasing options, help them make the selection, and provide for the delivery and implementation of the improvement. So that is an area as well where we are endeavoring to make that process work better so that agencies get even higher value when they use GSA for their procurement purposes.

Mr. Watson: We've talked about other aspects of the President's management agenda. Another agenda item is a better link to performance with the budget process. How effective has GSA been in being able to make that linkage?

Mr. Perry: That's an area that we will need to make further improvement. As a matter of fact, we have had some success in being able to identify parts of our performance agenda that are working well and identify parts that are not working well and then make the appropriate resource allocation changes as needed. What's meant by linking budget to performance is that you should not continue to devote resources to an activity that's not generating a highly desirable result. So that means that there may be low-value activities that agencies are involved in and we need to reduce the amount of time, money, and people that devoted to low-value activities and have a greater proportion of our resource budget allocated to the higher-value activities. So that's what we're attempting to do to a greater extent than may have been the case in the past.

Mr. Lawrence: You've worked in both the private sector and the public sector. I'm curious about your observations on the differences perhaps just in terms of culture.

Mr. Perry: Actually, there are a lot of similarities to me, as a person coming in, I find most people in the private sector would not have assumed. One of the things that is very prevalent I think in the public sector is it is populated by a number of people who are here largely as a result of their commitment to public service. It isn't that they couldn't be successful in the private sector, but they just made a choice to be involved in a public-service type of activity because of the satisfaction that that brings. So we happen to have, certainly at GSA, a number of people who are very capable, competent individuals who are doing what they do partially driven by this desire to be involved in public service.

Again, I see lots of similarities between the private sector and the public sector, but one area of difference perhaps is this area that the President has hit upon as he has announced his performance management agenda, saying that we can deliver good government to the people; good government being defined as citizen-centered and results-oriented. That's a very simple statement, but really a profound statement as well: citizen-centered,

results-oriented government. That's the definition of good government. But President Bush's agenda says that we can deliver that in part by improving on our use of good management practices. So that is an area where the private sector I think generally speaking is more diligent about using good management practices than is the case today in some public-sector agencies.

What I mean by good management practices, to make sure that you have a process of setting challenging goals; goals that are important from a customer perspective, goals that are challenging, goals that are measurable, and goals that are broadly communicated among the people who have to carry them out. That's a management practice. Some organizations don't do that as well as they might. I think as we at GSA and other federal agencies do our goal setting steps better, it begins to improve or offer the opportunity for improvement of the organization.

Similarly, other aspects of the performance management process beyond goal setting, developing action plans which are documented so that it's clear among everybody in the organization who is responsible to do what by when. Then moving on with execution of those action plans, and then measuring performance after the fact; measuring performance as a part of the effort to achieve accountability, but also measuring performance as a part of the effort of understanding where it is that we're on the right track and where it is that we're not on the right track so that we could take appropriate corrective action in terms of our processes.

So these are management practices which, as I say, most private sector organizations that I've been familiar with rely upon and execute in a very diligent and rigorous way. In the public sector, we are moving toward executing those kinds of management practices more diligently and more rigorously, and I think the result will be improved performance.

Mr. Lawrence: What advice would you give to a young person interested in a career in public service?

Mr. Perry: Well, I would certainly encourage it. Being involved in public service is necessary. When you think of what our country's infrastructure and activities would be like if we didn't have the services that are brought to us by federal agencies, it's necessary. It's a very worthwhile career, because you do have the opportunity to use your academic skills and your God-given talents to do very interesting work.

Mr. Lawrence: Well, we've run out of time, Steve.

Steve and I want to thank you for being with us this morning.

Mr. Perry: Thank you. It's been a pleasure. I really have enjoyed our conversation. I'll mention, if I may, if people want to get in touch with GSA, there's at least two ways to do it in terms of using the web. One is through, and the other is That gets you in touch not only with GSA, but with all federal agencies.

Mr. Lawrence: This has been The Business of Government Hour, featuring a conversation with Steve Perry, administrator of the General Services Administration.

Be sure to visit us on the web at There, you can learn more about our programs and research, and you can also get a transcript of today's very interesting conversation. Again, that's

This is Paul Lawrence. See you next week.

Ken Nibali interview

Friday, July 5th, 2002 - 20:00
Ken Nibali
Radio show date: 
Sat, 07/06/2002
Intro text: 
Ken Nibali
Complete transcript: 

Arlington, Virginia

Wednesday May 29, 2002

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

The Business of Government Hour features a conversation about management with a government executive who's changing the way government does business. Our conversation this morning is with Ken Nibali, Associate Commissioner for Disability in the

Social Security Administration.

Good morning, Ken.

MR. NIBALI: Good morning.

MR. LAWRENCE: And joining us in our conversation is another PwC partner, John Lainhart.

Good morning, John.

MR. LAINHART: Good morning, Paul.

MR. LAWRENCE: Well, Ken, let's start with let's SSA and the Office of Disability. Could you describe its functions for us, please?    

MR. NIBALI: Certainly. I'd be happy to. First of all, I'm very glad for the opportunity to come and talk with you all and appreciate you putting on this kind of information sharing. The Social Security Administration, Social Security programs to, probably, most people tend to be about retirement or survivor's benefits. But what I'm particularly involved in is the disability program.

And many folks don't realize that those FICA taxes that everyone gets taken out of their paycheck each month actually covers the disability program as well. And while most of our benefits go toward retirement and survivors, we really do have a fair portion go to people on disability, overseeing that process in terms of writing all the policies and working with Congress on law and regulation changes.

I also specifically oversee about a $1.6 billion budget. For a major part of the program, interestingly enough, is actually run by the states. We fully fund a portion of state government employees to make a lot of disability decisions when people first file for it. And, then, of course, from there, we're also just involved in maintaining data and information to help run the program in

many different ways.

MR. LAWRENCE: How many people are served by the Office of Disability?

MR. NIBALI: Well, it's not an easy, direct question to answer. The Disability Program really serves everybody in the country. So we're talking several hundred million people. We have a little over 2 million people every year who come in to file for disability claims in this country. And probably about half of them end up on the rolls. Right now, the Disability Program pays out about $80 billion in benefits every year. That's an amount of money that generally catches people's attention. And it probably is doubled when you count the medical coverage that entitlement to disability benefits also covers people for. So you add Medicare and Medicaid kind of coverage

in there, and we're spending well over $100 billion on individuals. There's about 12 million people that are on the disability rolls in the country right now. Just for context, there's probably about 1 of every 20 or 5 percent of the population in this country that would be eligible is on the disability rolls.

MR. LAWRENCE: How many people are employed by the Office of Disability to administer this. I imagine there's hundreds and thousands of people doing all this work.

MR. NIBALI: I wish you would tell Congress so we can budget it like that. The Office of Disability specifically, I only have about 250 employees to write policies, to oversee the operation, to maintain data. A fair number of those employees, we actually run our own claims operations right in Social Security headquarters, which many folks might not realize is in Baltimore, Maryland, versus Washington, D.C., where most agencies are headquartered. So, we have an operation here to actually do some claims to help out.

But, the program, broadly, is really run by, actually, many of the thousands of employees in Social Security that -- most people know the Social Security by the field office, or their local district office, is what we call them. They're in almost every community around this country. And that's where people can either walk in or they can call our 800 number service. And then, the initial part of the process, when you file a claim, as I said, is actually carried out by about 14,000 state employees that we fully fund. And they, you know, follow our directions and our instructions and our regulations. But they're actually state employees that are making those decisions.

And, then, actually, many hundreds, if not thousands of employees, are involved beyond that as individuals can appeal, because some people are denied when they first apply. And, then, there's an appeals process, et cetera. So to put it in context, SSA is about 60- or 70,000 people nationwide. You put another 14,000 state employees on top of that, two-thirds of those resources actually go for running the disability program. Even though the retirement and survivor's programs are much larger, the Disability Program is a tough program to run. It's got a lot of decision-making

data-gathering that has to go on. So it's interesting that people don't realize that actually

two-thirds of the resources, and, probably, management attention and problems, are in the Disability Program.

MR. LAINHART: Ken, as the Associate Commissioner for Disability, what are your specific responsibilities?

MR. NIBALI: Well, pretty much, it's to oversee all the things I was just speaking of in terms of staying on top of policy and making sure that that's up to date, managing that rather large budget over the state agencies. When you think about how the program is run and all the different people that are involved in it, the management challenge is really one of coordination and communication. When two-thirds of the agency's resources are involved in running the program, you can't just hold one person accountable over here and lots of other high-level people, you know, say that they don't have anything to do with the program.

The fact is that almost every high-level executive in SSA has something to do with disability. And, so, communications within the organization is a major, major challenge. You have to try to help everybody keep going in the same direction. And, then, you throw that federal/state relationship in, which is a pretty unique kind of thing to run a program. I do a lot of traveling, put it that way, to states and regions.

MR. LAINHART: Well, tell us something about your career at SSA; where and when you started, and then how you got to join the Office of Disability.

MR. NIBALI: Well, probably many of us at points in our career sit back and wonder just how we got to where we are now.  But I started with the Social Security Administration back in

the early �70s. I was actually in private industry for several years, right out of college. My father actually worked with the Social Security Administration. The organization sort of has a family culture in many ways.

And I will tell you, being a child of the '60s, the last place I wanted to work was a place my father worked. And so I went in private industry a couple of years. But then, interestingly enough, I got an offer from the Social Security Administration to come in, in those days, what was called a Management Intern Program, where you literally could come into an organization and you had 2 years to move around from job to job, try things out, see if you liked the organization, where you liked it. And, then, you would settle down into a job. So, I figured I'd try it. And if I didn't like it, I'd be gone. And if I liked it, then that's a good way to get introduced. So, here 31 years later, I sit.

But I actually started in the field of, more or less, human resources, personnel. It was actually the Equal Employment Opportunity Staff. That was just something that was very interesting to me at the time, and I spent probably a good close to a third of my first part of my career really learning all about that, and hopefully contributing. SSA has a strong emphasis on diversity. We serve everybody in the country. We need to be, as an organization, capable of serving them that way. So equal opportunity was a very big factor. I guess the second third of my career, I moved into workforce analysis. It was an analytic kind of work about how SSA gets its jobs done and where we put our resources and, you know, what's the most effective use of things. And that got me very

interested in what SSA is really all about.

And, then, roughly, the last third, since about '94 or so, is when I moved into the disability arena. And it's a challenge. It's one of the most difficult programs I've seen. It's generally acknowledged that retirement or survivors questions are pretty straightforward. You work a certain number of years, you're of certain age. As long as you can tell us that, we calculate your benefits.

But disability is a little tougher. It's, you know, are you able to work anymore? I mean, not just what job you have right now, but really, any other job that exists in the economy. And the challenges of that just attracted me for some reason. So I've spent the last 8 or 9 years there. And along the way, I went to law school and became a lawyer, which was very, very helpful, particularly in the disability field, because we deal with an awful lot of lawyers. And that

was very helpful to me as well. So, that's more or less a thumbnail sketch of how I got here.

MR. LAWRENCE: You describe the program as large and complex. I'm curious, what of your jobs or experience best prepared you for your present position?

MR. NIBALI: Certainly, going to law school helped a great deal. But also, I think the analysis that I was involved in was very, very helpful. When you get to the level of running a program like the Disability Program and trying to understand what works and what doesn't work and convince other people in the organization about what needs to be done and how to go about certain things, a good analytical approach absolutely is essential. And, SSA, as an organization, is a very caring organization and people really want to do their very best for the folks that we serve.

So, I also have to say my early days in the more personnel-related kinds of areas was very important to me. I have to say I specifically sought that out. That was probably

one of the bigger challenges to me. I was a math and economics major in high school and went to law school. And the analysis stuff came a little easier than really learning how to work with people and understand them as individuals, and all the things that a manager has to do when they eventually really are dealing with a number of very good and talented people. But also, as you know, they're also every one of them is unique. They each bring something different to a job. And the more skills you can bring in that area really make a difference.

MR. LAWRENCE: That's a good stopping point. Rejoin us after the break, as we continue our conversation about management with Ken Nibali of the Social Security


How is technology changing SSA? We'll ask Ken when The Business of Government Hour returns.


MR. LAWRENCE: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner of PricewaterhouseCoopers. And today's conversation is with Ken Nibali,

Associate Commissioner for Disability in the Social SecurityAdministration.

And joining us in our conversation is another PwC partner, John Lainhart.  

Well, Ken, you said something very interesting in the first segment when you described that

approximately 5 percent of our population is on disability. And, I'm curious, is that a large number or a small number? And how do we fare with, say, the rest of the world?

MR. NIBALI: Sure. Whether you consider it small or large obviously depends on where you're coming from. One of the interesting aspects of the job is to deal with lots of advocate organizations, people who really look for people with disabilities, et cetera. And as you can imagine, their pressures are generally are there that there are a lot more people who should be on the rolls in disability. The truth is the standard in this country is really a very tough one. It's, as I said earlier, not that you just can't do your past job, but really you are unable to do any job that exists in the our economy. That is not a standard that many other countries use.

And, therefore, you find, when you look around, that this country's program compares pretty favorably if you're doing it in terms of the percentage of people on the rolls. There are a number of European countries that are closer to 10 or even 15 percent of eligible population on disability benefits, because their definition is a little easier. Maybe it's just that you can't do your past job or whatever.

And, of course, they have different programs anyway, with sort of national health insurance and they all roll together. But I suspect many of you also know that there's higher taxes in many of those countries to support those kinds of programs. So this country, from the word go, when Social Security started, it did not include disability. When it started in the mid-�30s, it wasn't until 1954 that really started a disability program. And it was for the very reason of being concerned about what percentage is it. Is it 5 percent? You know, maybe, you live with that. But people were very concerned about it getting much higher.

Every once in a while, Congress will come along and, you know, do something with the regulations and laws to maybe tighten up here or add benefits there. But it's been pretty much in that range for a couple of years now. The concern, of course, is we're now facing the major part of this country's population, the baby boomers, hitting the what we know are the disability prone years, which is around age 50. That's when people really start applying for disability. So keep an eye on that, and you'll see Congress starting to probably deal with issues in relation to disability.

MR. LAINHART: Ken, the SSA has expressed a commitment to continually improving service to our nation's citizens. How are you using innovative solutions in the Office of Disability to achieve this goal?

MR. NIBALI: Well, we take advantage of absolutely anything we can find along the way. Running the program is a challenge. We deal with 50 states running much of it. It's kind of a constant challenge to do it. One of the things I'd like the audience and the American public to know is we are jealous about the fact that when we put people on the disability rolls, we like to make sure that they still belong there and that we periodically review them. They are called continuing disability reviews. And depending of the nature of your impairment, and some other factors, we may review you every year, every 3 years or every 7 years; something like that.

So, the issue is, that's a pretty expensive process. We have to go out and write to people, call them back into the office, get updated medical information and make sure that their medical condition still exists and that they are still unable to work. In fact, it's so time-consuming and expensive that back in the early '90s, we got totally away from doing it, and we built up a tremendous backlog., because we felt the right thing to do was to put what were some stretches of our resources at the time on deciding new people. There were still several million people a year coming through the door. And it was important to find out if they belonged on the rolls or not. And we simply didn't have the resources to keep up with looking at the folks on the rolls.

Several things happened. Congress got very helpful for us with the Office of Management and Budget with Congress, actually gave us exceptions to some of the caps on federal spending. And what they said is, we will give you dollars to do these reviews, because we believe that when you do them, some people will come off the rolls. And the amounts that we save in those benefits will at least offset what's spent. Has absolutely happened. Something like a 10 to 1 ratio. Okay? And for the American taxpayer, I think that's very important in the stewardship of the program.

The second thing we did is say, you know, we've doing a lot of reviews on people over the years and we've learned something. And we can learn something from experience to say if we look at the types of people who are on the rolls, how long they've been there, whether they've had a prior review or not, we ought to be able to predict whether or not they are going to come off the rolls if we reviewed them again. And so we did that. And we called it profiling. And we looked at the characteristics, as I said, of a number of people, and we came up with a pretty good predictive model about a number a years, go back in the mid-90s or so, that would tell us that this group of people, really, we should call them in and do a full medical review of them, et cetera.

But, another group of people, the likelihood of them coming off the rolls is so low that all we're going to do is send them what we call a mailer. We send them about a six- or eight-page -- six or eight questions, really, one page, form. And they answer questions like, are you back to work, has your doctor told you you can go back to work? You know, have you medically improved? And as long as they answer no to those questions, you know, under penalty of signature, and our data tells us that with their impairment and history they don't really have much of a likelihood of coming back on the rolls, that counts as doing one of our reviews. And we're now up to doing about half of the reviews that we have to do every year that way.

Now, where Pricewaterhouse has really come in to help us is, we knew that we had to update and improve that profiling. And they came in and were extremely helpful in taking more current data than we had taken many years ago and not only updated what we had done, but also greatly improved by the way you compare things and the kind of characteristics that are included. And, now, we're reaching out to some other agencies, like, CMS. For some of you, that will be HCFA, the Health Care Finance Administration. And we're sharing some data with them. We're really finding that we're really improving that process. So, not only is it more efficient and enables us to keep up and to keep just the people on the rolls who belong there, but it's also a lot more humane for the people involved.

You know, if you're somebody who is obviously disabled and aren't going to improve -- let me use the example of the quadriplegic. They almost always, obviously, meet our definition of disability, and that's not likely something that you will improve from. So, therefore, why would we have you come in every 3 or 7 years to prove you're in the same position. If we know that, we'll let you just certify to that's the way you are. And you don't have to come in and be exposed to another doctor's review, et cetera. We're very pleased with that, and really very pleased with the sort of government/private sector partnership that we've had; not just with PricewaterhouseCoopers, although you're one of our shining examples, I will say that, but with a number of others who have come and helped work on issues like this.

MR. LAWRENCE: The Office of Disability has been working on a number of initiatives to streamline the process of applying for and getting disability benefits. Could you describe some of these efforts for us?

MR. NIBALI: Yes, I can. And this will be a lesson learned kind of description here. Back in the early '90s, the agency engaged in what probably a number of organizations were doing. And that was re-engineering. And, you know, automation was really hitting its stride. And people were saying, gee, where are we going to be able to improve our processes and change them? And we came up with some pretty, for us in the program, bold and innovative kinds of changes. In some ways, they were perhaps a bit more dreams and hopes than reality, but we wanted to really try to improve the process for the public as well as the taxpayers.

The truth is that over really many more years than we would like, we've kind of piloted and tested and prototyped many different angles of these things. The Commissioner who came in, JoAnne Barnhardt, our current Commissioner, made some very good decisions about let's stop, you know, testing and piloting and let's move on with what we've learned here. So, we are doing some things.

For example, one of the things we tried to do, which quite honestly, we are not going to end up doing, is we tried to drop a step in the process. I've mentioned several times that when you first file, you get an initial decision by individuals from the state agency. Well, the second step is if you don't like that decision, which generally means you weren't allowed, you can appeal. And that state agency makes a second decision, called a reconsideration. Then if you're still denied, you can appeal to an administrative law judge. If you're still denied, you can appeal to our Appeals Counsel. And if you're still denied, you can go into district court and on up the line. A lot of steps. We talked about streamlining that. So we tried it in 10 states in this country, with about 25 percent of the people covered by those 10 states. We dropped that second step. If you got denied by that state agency initially, you didn't go to a reconsideration if you appealed. You went right into the administrative law judge step.

What our test showed us is that moved people along faster. It gave pretty good service. What we did is we told the state agencies instead of taking your resources and making two decisions, an initial and a reconsideration, put them into one really good initial decision. And that turned out pretty well. They did a better job of developing information, and more people were properly allowed early in the process great service. What we couldn't live with is by not having that second step in there, it meant a significantly greater number of people had to appeal on to the administrative law judge step, which is a much more time-consuming, much more expensive step and simply wasn't good service to people. So, the commissioners kind of called a stop to that. But, we're going to continue the pilots in a few states until we came up with an alternative. But, now, we're looking for an alternative to that process.

My point is, we are kind of constantly testing things. But the Disability Program has grown, very large, number 1. But, also, very much through a lot of tensions between, you know, the administration, the Congresses, the courts, the advocates. And there's a lot of reasons why the process is as it is. And making changes to any of it is kind of one of those things where you push in here and it pops out over here. So, we're making some changes and improvements, but it's probably slower than any of us would like.

MR. LAWRENCE: Well, it's a good stopping point because it's time for a break. Come back with us after the break as we continue our conversation with Ken Nibali of the Social Security Administration.

SSA consistently receives high marks for customer service. How have they done this? We'll ask Ken when The Business of Government Hour returns. (Intermission)

MR. LAWRENCE: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And today's conversation is with Ken Nibali, Associate Commissioner for Disability with the Social Security Administration.

And joining us in our conversation is another PwC partner, John Lainhart.

MR. LAINHART: Ken, SSA consistently ranks very high among federal agencies for its customer service. What do you think has been SSA's major success factor for this?

MR. NIBALI: I think the reasons are fairly straightforward. First and foremost, we're simply a service-oriented organization. We're there to help people, pay benefits and help them in what are pretty vulnerable times in their lives. And that obviously engenders, rightfully so, I think, a good reaction to what we're about.

Secondly, we're located in every community in this country. I think to many, many people, we are the federal government. And the Post Office is probably out there a little more than we are, in terms of actually dealings and services being provided, where people would look to the government. I think, generally, SSA is very much or organization that comes first and foremost to people's minds.

And another reason is, very simply, it's our culture. And, you know, that's a word that's often used and probably misused in many ways, but I think it's extremely true for our organization. We just have the type of people, we attract the type of people that want to give service and want to get the kind of reactions that the public gives us. We have kind of a mantra, or you could even call it a vision nowadays, of what we're all about. And that's pay the right person the right check at the right time. It's pretty simple, pretty straightforward. But when we keep on that track, you know, we find we do very, very well.

And, finally, I will tell you we measure an awful lot in our agency. We do an awful lot of measuring about what people understand, how we're servicing, how long they wait, whether they're satisfied with our service. We have a fairly significant number of people who do go out and do follow-up interviews with people and really find out what they thought of our service. And when you measure things, as you know, people tend to pay much more attention to that, and it also helps management deal with individuals if there's any questions about what kind of service is being provided. So it's just all through our culture and, like I say, we take a lot of pride and we always enjoy hearing favorable comments back.

MR. LAWRENCE: As you indicated, SSA, and the Office of Disability, its mission is service. I'm curious. You have to give service to everybody. How do you deal with so many languages and disability barriers when you interact with customers?

MR. NIBALI: It is a challenge, as I'm sure it is for any organization, but again, our strength is that we are throughout the entire community, and therefore, we do much of our hiring throughout the entire country. And our field offices, our servicing offices out there in every community, we make explicit efforts to make sure that we hire individuals with language abilities. Obviously, Spanish is the next major language in this country, and in many parts of the South, Southwest, West, major portions of the individuals we hire will have Spanish-speaking capability. The challenges now are the many, many Asian languages that are coming to the front that we really need to make sure are in our offices and available.

One of the challenges there is that to hire individuals in the federal government, you need to be a citizen. And citizenship takes a certain number of years, and as a certain population starts coming in, you don't have a sufficient number right away to be able to actually hire, but as time goes on, we've caught up with many of those as well. And, we're also, I think, justifiably proud of our 800 number service. It is an 800 number. It's 800-SSA-1213, for anyone who's interested. And you call that number, and you can get any information about SSA you need. And we in fact recently won awards for our multi-language facilities there, Gateways, that when you call in, you actually get a selection of choices to hit on the menus, if you will, of what language you would like to be serviced in. And then we can route those calls to different segments of the country where we have those kinds of skills.

MR. LAINHART: SSA has expressed a deep concern about the double impact of workforce retirements and the increasing workloads from the aging population with the baby boom. What are the agency's top human resources concerns, and what steps are being taken to address them?

MR. NIBALI: Well, our biggest one, I suspect, is shared by many agencies. And that is we absolutely have a retirement wave that not only is coming, we're in the middle of it now. And we did much of our hiring back in the early �70s. For anyone who follows the Social Security program, you know, there is the sort of Social Security program proper that everyone thinks of. But then there's also the supplemental security income program that came from the states and to be run by the federal government back in the early to mid �70s.

And, at that time, when Social Security took that program on, we hired an awful lot of people. Well, guess what? Those people are now approaching the retirement age. And you know, our projections are very high for what's going to be happening. So, obviously, the challenges in front of us are projecting who's leaving and what the needs are; to continue to hire the kind of individuals with the diversity that I spoke of before, make sure the training and tools are there, the work environment. You know, all the kinds of things that companies are doing, SSA is in the middle of that.

I would just observe that given our culture and our very much family atmosphere of what's going on, I don't think it's a bad thing that we're going to have a fair amount of turnover as well. You never like that. You know, you always have a new group of people coming in that have to be sort of trained and gotten used to how things go on. But, I think as an organization, SSA will benefit for that as any new organization does with some new blood as we go along. So, I hope we also view that as a positive as we move forward, as well as the issues that we'll have to deal with.

MR. LAWRENCE: Just to set context, you talk about the number of employees that SSA may need to be, perhaps, hiring in the near term. What type skills does SSA employ? You describe yourself as an economist, kind of an amateur statistician, you know, a lawyer. And, I'm trying to understand. That's not what I would have thought. I would have thought there would have been a lot of actuaries and accountant-type things.

MR. NIBALI: First and foremost, the kinds of folks we have in Social Security are claims representatives. The people on the front line who deal with individuals when they come in, as I said, often, at very vulnerable times of their lives, to file claims. And they need, you know, they need help. They need some handholding. They need information, and basically they need the job done to make sure that if they have benefits coming, that they will get those.

So that's kind of first and foremost the type of people that we have, the front line individuals. Perhaps, what you're thinking is more when you go into our central office of our headquarters in Baltimore, we have an incredible array of occupations. Probably the largest single most there are systems. You know, we run one of the biggest systems, certainly, outside the Department of Defense, anywhere in the world. And we're very heavily automated. And all of our information is run through mainframe computers and is on direct access storage devices, because as we deal on the front line with individuals, we literally have a claim rep get online and call up people's records about what earnings they've reported over 30, 40 years of working and what our records say about their age, et cetera, et cetera. So the system we use is very, very large.

Then, of course, you need people, I'll say, like me, who have to kind of know what the programs are, write the policies. And those individuals can be from a variety of backgrounds. Yes, we have many lawyers, because we have lots of people who appeal, some who even sue us, as any government agency knows. So we have a number of lawyers. We have actuaries, you know, who report right to the Commissioner, because they make the projections and set the actuarial tables,

et cetera, for just how much money we plan on spending, and therefore, how much taxes we have to collect and those types of things. So, it's a pretty endless supply. And it's one of things I hope people would keep in mind about SSA in particular and even the government in general. There's going to be a lot of opportunities for a lot of young people, I think, in the coming years throughout the government, because so many agencies are in a similar position to ours.

MR. LAWRENCE: You talked about SSA working with state level organizations and even other federal level organizations. What are the challenges and managing efforts that involve multiple organizations?

MR. NIBALI: Well, the disability program is, again, a bit unique, certainly for SSA, in terms of the federal/state relationships that I spoke about. We, of course, deal with many other federal agencies, including what used to be the Health Care Financing Administration, Department of Labor, and, of course, Health and Human Services. And, I know, my boss, Mark Gary, who's come in very recently, is very interested in a lot more government interaction and coordination about serving, many times, the same people.

You know, Department of Labor is out there with their offices about coming in for help on various issues. So he is being very aggressive about trying to bring more of that kind of activity together.

But I would like to mention, just for a few minutes, the particular challenges of running a federal program through a state structure. And, first and foremost, the state employees and agencies that we deal with are a good group of people. In fact, they're a great group of people. They perform very well. I think we get very efficient operations out of them. And, quite frankly, they're very, very willing to work closely with us. And we've worked hard at establishing a partnership there.

The reality is, though, that they are still state employees. They do not work for our commissioner or the President. They work for their governor. And even though I'm sitting there with my budget saying I'm willing to support, you know, 2- or 300 state employees in state X, Y and Z, and that's what you need to run the program, if their governor believes for his or her particular timing and political reasons that he or she wants to downsize the state workforce, by gosh, they'll do that. And that makes it awfully hard for us to run a situation. So, there's a lot of negotiation and a lot of discussion back and forth that go on there.

MR. LAWRENCE: That's a good stopping point. Come back with us in a few minutes as we continue our conversation about management with Ken Nibali of SSA.

What might the future hold for SSA? We'll ask Ken for his thoughts when the Business of Government Hour returns. (Intermission)

MR. LAWRENCE: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and today's conversation is with Ken Nibali, Associate Commissioner for Disability in the Social Security Administration.

Joining us in our conversation is another PwC partner, John Lainhart.

MR. LAINHART: Ken, how do you measure success in the Office of Disability?

MR. NIBALI: Well, as I hope our discussion so far has shown, this is a pretty far-reaching and complicated program. And, as I mentioned, many other countries struggle with it. But, I've given you some ideas of the kinds of things that we think why we're running a pretty good program.

I will tell you, we get much feedback. The Commissioner gets more feedback on the Disability Program, and unfortunately, more negative feedback, simply because it's a very difficult thing to run. And, pretty much, when you file for retirement or survivor's benefits, most people get them. They know they've worked, they know they had their earnings and they get them. Something roughly like 50 percent of the people who come in for disability benefits end up getting them, and 50 percent don't end up getting them. So right there, you have a pretty good chunk of people who have some reason to raise questions.

But, given all of that, and given all the different interests that we're trying to balance with advocates and lawyers and taxpayers and the public themselves filing for claims, I sometimes jokingly say that if everyone is yelling at us equally, then we must be doing it right. And that probably isn't as true with the Disability Program as just about any that I can think of.

But, beyond that observation, you know, I think there's some fairly obvious things that we look at. We certainly try to keep current with policy. That's something we'd slipped on. A lot of decisions are very medically based, and medicine changes as far as, you know, what incapacitates people, or what kind of improvements are out there to help people. So, we have to keep our policies current with that. We got to keep cases moving in a reasonable time frame. And that is always a number one thing.

Probably, more complaints go to local Congressmen's offices about disability claims than anything else. That's probably their number one complaint that Congressmen receive. So we obviously hear back a lot from that if that time frame gets too big. We're very interested in measuring that the right people are on the rolls. And we talked about reviewing and making sure folks come off if they no longer belong there. But, we do want the right people on the rolls. And one area that we just haven't mentioned much is we're also increasingly interested because of the people with disabilities community is increasingly interested in opportunities for returning to work.

While it's very important for most people who file for disability to have a benefit to help them through rough times, or even until they retire, we are getting an increasing number of younger individuals on the rolls with very serious problems. But, even with those problems, with the right support services, et cetera, they could return to a job. And many of them, for self worth, dignity reasons, are very interested in doing that. And we would like our programs to be a help to that as opposed to a disincentive, if you will.

Unfortunately, right now, less than 1 percent of the individuals on our rolls ever return to work. Okay? It's like one half of 1 percent. So, you know, even if we could double or triple that, it would be a big improvement. But, still, you know, recognize that most people do need and want the benefits. But that is an area that we'd like to see a lot more progress in.

MR. LAWRENCE: How is technology changing the way the employees of the Office of Disability perform their jobs?

MR. NIBALI: Well, within the agency, obviously, we're facing a lot of the same things any organization is: e-mail and access to information is very, very different as time has gone on. Within the broader range of doing all the claims that I've talked about, a major effort in the agency, and one the Commissioner's putting the highest priority on is something we call electronic disability, or e-dib. But, electronic disability is the whole idea of, we need to move from what is right now a very paper-bound process. That's no surprise in government to anyone.

But, we need to move to a process where, essentially, you can file over the telephone, you can file over the Internet, you can come into our office, and we will input the information directly into a system, and then we don't have paper after that. One of our biggest challenges in running the disability program is getting information about you from your doctor or from employers or from whoever else would help us understand what your condition is. And the faster that those parts of the population move towards being able to give us information electronically, if doctors and hospitals can send us records electronically, we want to get, literally, in the next couple of years, as close to electronic processing, an electronic folder on you. And that will mean that we can move that case along from one step of the process to another much easier. And, it can be worked on by multiple people. Some of the benefits are incredible. It's much faster; it means we get better information because it's easier to give it to us.

It will also mean savings in -- when I talked about continuing disability reviews, one of our problems 3, 4, 5 years down the road, when we want to go back and review someone is, we might not be able to find that folder. Hopefully, that doesn't happen an awful lot. But even if it happens in a couple of percentage points of cases, that's a lot of cases in our world, since we deal with millions. And the ability to find that information very easily electronically means we can in fact do a good review on that person, and if some people don't belong on the rolls any more. So, there could be a lot of good benefits out of that.

The other thing I mentioned, just for my people in particular, is just writing policies. One of our biggest challenges in updating policies about how to run the program is you need input from a lot of people. You're not just writing it because you're a doctor and something in medicine's changed. But, you have adjudicators. You know, the people out on the front line who have to decide if someone is disabled or not. You need their input as to whether this is going to work or not, and what difference it makes to them.

And with the kind of online creation of documents and sharing of documents that you can do with real-time, you can get people all over the country involved in putting something together and get a major, major help. And the last thing I'd mention, which, again, John, I'm sure is familiar with because of the work he's been doing, is, we're also moving very much towards much more of a data warehousing kind of information gathering storage; instead of having management information shops that decide what reports to run and give the people, they put a lot of data into an automated format and then the users can go in and pick out what they need. Undoubtedly, you took advantage of that as you did some of the things that you did for us on those continuing disability review profiling.

MR. LAINHART: Well, you've seen a lot of changes at SSA during your career. What do you think lies ahead in the next 5 years for your office and, then, also for SSA as a whole?

MR. NIBALI: As I said, the personnel changeover is going to be a big, big driver. We again pride ourselves on knowing our programs and making good decisions about what to improve and change. And, it's going to be very interesting to see how that works as a lot of new people come into the organization. Undoubtedly, there will probably be some mistakes made. But, also, undoubtedly, we're going to make some real advances in terms of new ideas and fresh approaches and all of that.

I will say, in relation to some of the things you've been hearing on homeland security and the aftermath of 9/11, enumeration has become absolutely a hot topic in our agency, and rightfully so countrywide. Because, you know, stories were about how do people get into flight schools and how do they get social security numbers and establish identities in this country.

And the whole areas of fraud and the security risk of individuals creating records that can be used for wrongful purposes has become a very, very hot topic. And we're working very closely with out inspector generals and law enforcement agencies to help make the proper use of social security numbers as much as of a help for those kinds of things that it can be.

And, lastly, I'd say, without a doubt, the whole automation area is going to change. Our agency, dramatically -- what I talked about with the electronic disability and paperless processes that we're moving to, are going to make a big difference. And I hope the American public will see, in a very favorable way, you know, faster and better service as a result of it.

MR. LAWRENCE: What advice would you give to a young person considering a career in public service, and perhaps even at SSA?

MR. NIBALI: Well, thank you for mentioning SSA. I will say this. Please take a look at federal service, and particularly at SSA. Please consider it seriously. I would say give it a try, at least for a year or 2. For one thing, we don't have the same retirement program we used to have that when you got into the federal service, you felt like if you ever left, you were doing the wrong thing until you retired. We now have much of a portable retirement system where if you get in and find out you simply don't like it, and some of you will, then move on. And I think that's an understood part of the process nowadays.

But, I will say this, if you find a job that matches your skills, if you hit upon that, I do sincerely believe you will love it. And I think you could have a very, very interesting career with the government. But the opportunities are unlimited, and with the turnover that we talked about, there are just going to be many, many opportunities in government.

MR. LAWRENCE: Well, that's a good stopping point. Ken, I'm afraid we're out of time. John and I want to thank you very much for being with us today.

MR. NIBALI: Well, again, thank you very much for doing this program and this kind of service for helping people understand the government. And, I will say, if anyone is interested in further information about the Social Security Administration or disability, we do have a web site very easy to remember. It's And you can get on that, and it will have send you to portals to many interesting aspects about both working for our agency and the programs that we run.

MR. LAWRENCE: Thanks again. This has been The Business of Government Hour, featuring a conversation with Ken Nibali, Associate Commissioner for Disability in the Social Security Administration.

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

This is Paul Lawrence. See you next week.

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