Thomas R. Bloom interview

Monday, November 29th, 1999 - 20:00
Thomas R. Bloom
Radio show date: 
Thu, 04/20/2000
Intro text: 
Thomas R. Bloom
Complete transcript: 

Arlington, Virginia

Thursday, April 20, 2000

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

The Business of Government Hour focuses on outstanding government executives who are changing the way government does business. Our guest tonight is Tom Bloom, director of Defense Finance and Accounting Service. Welcome, Tom.

Mr. Bloom: Great to be here.

Mr. Lawrence: Joining me in our conversation is Wood Parker, also a partner at PricewaterhouseCoopers. Welcome, Wood.

Mr. Parker: Thanks very much, Paul. I'm pleased to be here as well. And Tom, thanks so much for joining us.

Mr. Lawrence: Well Tom, in this first segment, tell us more about D-FAS. What is it and what are its responsibilities?

Mr. Bloom: First of all, let me say that I tell anybody who will listen that I think I have the best job in Washington, D.C. There are a couple of reasons for that. One is that we have a very clear mission at the Defense Finance and Accounting Service, and we've got some really great people. Our mission is to provide responsive, professional finance and accounting service to the Department of Defense. And our success is actually very easily measured. It's ultimately defined by how well we service the commanders and managers in the field, with a particular emphasis on the war fighter.

Some people ask about my job and it is somewhat schizophrenic, if I might say. I ask the question sometimes, am I the chief finance and accounting officer of the largest entity in the world, which is what the Department of Defense is, or in my position as the head of the agency, am I really the CEO of a $2 billion corporation with 20,000 employees?

Defense is really big business. As the Finance and Accounting Service for the Department of Defense, we pay out to folks over $1 billion each and every day. Each month we pay over 5.5 million soldiers, sailors, airmen, Marines and civilian employees, as well as retired and annuitants. And we pay over 144 million invoices each year.

Mr. Parker: Tom, you mentioned that one of the descriptions or potential descriptions of your job is a CFO. And I noted in your experience you've been a CFO before. You've also been an Inspector General before. Could you talk about those two different positions and two different sets of responsibilities and what you're bringing from those experiences to the Defense Finance and Accounting Service?

Mr. Bloom: Well, certainly the positions are very different. I've been lucky enough to be a CFO at the Department of Commerce, as well as GSA, the General Services Administration. And at the Department of Commerce, I was not only CFO, but I was also the Assistant Secretary for Administration. The job at GSA was really much more of a pure accounting and finance position, although having developed a close relationship with the CEO there; I was brought into many of the discussions of general business areas.

The two CFO jobs were very fulfilling jobs. Again, we had a very clear mission. We had teams that worked together very well to get the mission accomplished, which is to give financial managers the kind of information they need to manage better.

The job of an Inspector General is very, very different. I like to tell folks that the two years I spent as Inspector General were very much character-building years. It is a very difficult position to be an Inspector General. There is a feeling, really on both sides of the fence, both in the Inspector General community as well as the folks who are being looked at by the Inspector General Community, that it needs to be a contentious relationship. That makes that job very difficult sometimes.

Mr. Parker: How do you think those jobs prepared you for your current position?

Mr. Bloom: Well, certainly the two CFO jobs very much helped me prepare for this position. They both involved a lot of finance and accounting. In fact, the GSA job was almost exactly the same, it's just that the magnitude at DOD and the Defense Finance Accounting Services is really so much larger.

Another good thing about the Department of Commerce CFO job -- as I mentioned, I was also the Assistant Secretary for Administration – was that it was very much a management job. I was very much involved in procurement as well as human resources. I had the civil rights office. So it really was a broad spectrum of management, which of course comes in handy being the CEO of a large organization, as D-FAS is.

Mr. Parker: Why don't we take a step back and tell us more about your career. I understand you've also been in the private sector as well. So I'd be curious to know how that transition worked and the pluses or minuses, having people come from the private sector.

Mr. Bloom: Well, I've spent most of my career, actually, in the private sector, starting from junior staff to rising to senior partner in a large CPA firm. That actually was great preparation also. I am an accountant, with all the good and bad that comes with being an accountant.

The transition, actually, was easier than one might think, although it wasn't my first transition from the world of public accounting into the government. I had done that once before when I was a senior banking regulator at the Federal Home Loan Bank System. So I'd done the transition before, and I think that made it easy. But I do want everyone to know that there is a transition. There is a big difference between the private sector and the public sector.

The biggest area that I would note would be the area of risk and reward. In the public sector, too often folks are afraid to take risks. In the private sector, we had to take risks to continue to exist. To stay relevant we had to take risks. There had been a history of that in the private sector. Now that, to a certain extent, is changing in the public sector dramatically. And that is one of the big transitions that I think everyone in the public sector is going to have to work with.

One of the things that I like to always ask our folks now that I'm in the public sector, when we're going to do something or when we're going to spend money, I'll ask the question, "If it was your money, would you spend it that way?" That's sometimes a bit of a foreign concept to them, as strange as that may seem. But we are trying to change the way we think about things in the public sector and not just at D-FAS, but I think, throughout the government.

Mr. Parker: Well, having been in both sectors, what is it about the public sector that attracts you?

Mr. Bloom: Where else would someone give me a $2 billion business to run? So there is that factor, but I'm also a third generation public servant. My grandfather was a public servant. My father was a career police officer. And so it's in my blood, to a certain extent. And the work is just so interesting. You're always doing new and interesting things. And while I enjoyed my career in public accounting, as I am sure you two enjoy your career, there's really no reward like helping out in the public sector. And, again, running a business, which is what D-FAS is, is very rewarding and very challenging.

Mr. Parker: How about in terms of attracting new employees, in terms of attractiveness of the public sector? There are no stock options at D-FAS.

Mr. Bloom: None that are worth anything. You know, it makes it a challenge. We clearly have a challenge ahead of us in the public sector to recruit and retain the best and the brightest. Certainly in the '60s, there was a feeling with President Kennedy and some of the things that President Johnson did, there was a feeling, a really good feeling about the public sector, particularly the federal public sector. In recent years, we really haven't enjoyed that same feeling in the public sector. It does make a difference in our recruiting. We need to be able to capitalize on the great things about public service.

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

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And tonight's conversation is with Tom Bloom, director of Defense Finance and Accounting Service. Wood?

Mr. Parker: Tom, before the break you were talking about the importance of public service. And in our job we feel it is very important that we make a contribution, and so I share your commitment to public service. Let's talk a little bit more about D-FAS. I understand you have a new vision for the organization. Could you tell us about it?

Mr. Bloom: Sure. There are really four tenets of our vision. The first tenet is to be a world-class provider of finance and accounting services, with a strong corporate identity. There are two catch phrases there. The first one is "world-class provider." It is no longer good enough to be just the best in government or one of the best in government or as good as the average in the private sector. We are going to have to be world-class at D-FAS. We are going to have to be in the top ten percent of folks who provide the kind of service that we provide. If we are going to be competitive and relevant and best value to our customer, we are going to have to become world-class.

The second part of that is to have a strong corporate identity. The Defense Finance and Accounting Service is a consolidation of the accounting and finance offices that the four Services had prior to D-FAS being formed. So, therefore, we have four corporate identities. What we're trying to do is amalgamate that into one corporate identity where we're learning from one another, where we're picking up the best practices of each.

The second tenet of our vision is to become a trusted innovative financial advisor. We've been too much of a utility, where we have been supplying folks data but not much information. In fact, I've had a commander tell me that we are drowning them in data and they're thirsting for information. So we have to become the financial adviser, the trusted financial adviser, much like you all might be to the private sector.

Our third tenet, and probably the most important, is that we would like to become an employer of choice, providing a progressive and professional work environment for our folks. I like to use PwC as an example when I am talking to my folks. We want the best and the brightest to come to work at D-FAS. We want to attract them by having a progressive and professional work environment, where we are working with the latest in technology, we're training our people all the time to operate in this new economy. We want D-FAS to be a ticket that people have to have on their resume if they want to be relevant in this community. We want the private sector to be beating down our doors to hire our folks. And then I want our environment to be so good that they don't leave, that they stay at D-FAS. We've got some work to go on that.

The last tenet of our vision is we want to be competitive and the best value to our customers. We are going to have to compete with the private sector, probably, for most of our jobs over the next five to seven years. And we should encourage that. We should want that competition. We should want to be the best that we can be, and to be the best value.

Mr. Parker: I understand your motto is "Your financial partner at work," with the Internet "@" sign. And so I'm curious to know how you're refocusing customer relations efforts to support this motto.

Mr. Bloom: Well, you know, our customers are world-class customers. They're the best in the world. And we need to be as good as they are. And we're not quite there yet. We hope our new catch phrase or slogan, "Your financial partner @ work," will emphasize what we're trying to do.

The first word, "your"… we want to make it clear to our customers that we belong to them, that we're there to service them. "Financial," we do provide accounting and financial services, so that makes sense. Third, "partner," we really want our customers to know that we are their partner, that we are in it with them. And we want to do all the things that partners do for one another. We want to communicate and we want to make sure we're servicing them as well as we can.

The internet "@" sign, that's to signify that we are modern and we are jumping full force into the e-commerce world, and we're ready to go with that. The fourth, "work," there's a double meaning there. We're working for them and we're working hard. We've got the same kind of work ethic that our customers have, the hard-working war fighters.

Mr. Parker: In terms of your efforts with respect to your customers and becoming the trusted financial advisor, I understand you're also considering, and you referred, by the way, to the issue of competing with the private sector. I understand you're considering some competitive out-sourcing opportunities within your operation. Could you tell us a little bit about that -- and particularly within the context of trying to become the employer of choice?

Mr. Bloom: Sometimes a tough balance, Wood. We believe very strongly that we can compete well with the private sector. And over the next five to seven years, we will compete out probably 90 percent of the work that we do. We have two initiatives, retired and annuitant pay and civilian pay, two very large parts of our business that we will be competing out in the next year. Our philosophy on this is we want to be doing the stuff that we do best. We think on a lot of stuff that we match up pretty well with the private sector. But the stuff we don't do so well, you know, so be it. That should probably be done by someone else and we stick to what we do best, our core competencies.

Mr. Parker: What do you think you'll gain from that process?

Mr. Bloom: Well, one of the great things about the process is first we learn an awful lot about ourselves. We take a really hard look at the way we're doing business. We've done five of these competitive sourcings in the past. In each case, we have been able to squeeze out a lot of inefficiencies in our process… nothing like competition to make you learn what you need to learn about your operation.

Mr. Parker: But does the competitive out-sourcing produce a challenge in terms of your efforts to be the employer of choice? Sometimes folks are concerned when the boss talks about competitive out-sourcing. How are you handling that?

Mr. Lawrence: Hold your answer. It's time for a break. We'll be right back for more of The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. Wood Parker is also a partner. And we're talking to Tom Bloom, director of the Defense Finance and Accounting Service.

Tom, before we went to the commercial, Wood was just asking how difficult it was to be the employer of choice in a possible out-sourcing environment.

Mr. Bloom: It does make it tough sometimes, Wood, trying to keep your folks motivated when they know that there is a possibility that they may lose the competition. But as you all know, in a competitive environment, that does sometimes stimulate the work force. Watching the guy over your shoulder sometimes does make you run faster. Sometimes that can be a positive thing, even with morale.

Mr. Parker: And it is just possible out-sourcing? Those jobs aren't necessarily going to be out-sourced?

Mr. Bloom: Let me make this absolutely clear. These are going to be competitions. And our folks at the Defense Finance and Accounting Service will have the opportunity to compete against the private sector. And again, I'm pretty confident that in most of our areas, particularly our core competencies, that we are going to match up very well with the private sector.

Mr. Parker: You were talking about your vision of becoming the employer of choice, and you alluded to a couple of things you were doing. Tell us a little bit more about some of the things that you are doing to achieve your goal of becoming the employer of choice.

Mr. Bloom: Well, one of the things that we believe very strongly at D-FAS is in keeping our folks trained. We spend a large portion of our budget, actually an amount that's equal to five percent of our salary expense, in training and educating our folks. We want our folks to work with the latest technology, to understand the latest technology, to learn the latest management techniques. One of the things that I tell our folks is that I cannot always promise them employment, but we want to work hard at making them employable. We believe that will help them do a better job in our business, for us. And it will certainly make them marketable in the public sector.

Mr. Parker: There are 20,000 employees at D-FAS. How do you manage such a large work force, at the same time striving for efficiency and effectiveness?

Mr. Bloom: Some days I ask myself that question. One of the big things that you have to work on when you're running an organization this size is communication. It's easy to say and it becomes almost a cliche or trite, but it's very difficult to communicate with 20,000 employees on a regular basis. One of the things that we're working with, and we're hoping to launch this in the next month or so, is going to be little snippets, video snippets that may be five to ten minutes in duration we'll e-mail to our folks. They'll be able to pull it up on the server and hear me, my deputy or another executive talk about some of our visions, about some of the changes that we are going to be going through. So, communication, really, you can't over-emphasize communication, and it's something we need to work really hard on.

Another thing is you do have to set the vision. You have to make sure that people know what the vision is, what the bottom line is and what the finish line might be. You also have to eliminate all the obstacles that you can. I look at my job, really, as chief obstacle eliminator. If I can eliminate the obstacles so that my folks can get their job done, it will make it a lot easier for them to get their job done.

And you have to empower your work force. There's so much more knowledge down there in the trenches where the work gets done than I would ever know. So you have to empower folks, you have to make folks feel as though they are contributing to the organization.

And you have to have an organization where you encourage some risk taking. This is the public sector, and so you have to be careful that you are controlling your assets, but in order to move ahead you have to have a certain amount of risk. We have to change that in the government culture overall so that people feel more comfortable in taking risks. Then as the CEO, I need to get out of the way and let my folks do their jobs.

Mr. Parker: What does the typical day look like, in broad strokes?

Mr. Bloom: Usually I'll start the day, my deputy and I will spend 20 to 40 minutes talking about what happened the previous day. At least once a week we'll have a staff meeting with all the headquarters folks, and we'll talk about the issues there. Then the meetings start.

One of the downsides of government, and we probably need to work on this, is that we spend way too much time in meetings talking about what we are going to do and maybe not enough time actually doing it. Although meetings are a good way to communicate, if you are doing them effectively. One of the things that I like to do is -- and I haven't done it as much as I would like to -- is to have meetings where everyone stands up, giving new meaning to standing committees. But I try to make the meetings go along as fast as possible, having agendas.

We spend a lot of time at the Pentagon, talking to folks at the Pentagon. But what I really like to do are the customer visits, to get out and talk to our customers. In fact, just last Thursday and Friday we were in San Antonio talking to two of our biggest customers, talking to a one-star general and a three-star general, as well the colonels and some of the middle-level officers that actually get the work done. That's what I really enjoy, being where the rubber meets the road and hearing what we're doing well and what we're not doing so well.

Mr. Parker: We're talking about people, Tom, and you referred to part of your job being the obstacle eliminator. I would think one of your biggest challenges is recruiting. We alluded to this earlier when we talked about the vision. But in the public sector there is a real challenge when it comes to recruiting IT and financially skilled folks and others. Could you talk to us about how you're addressing that challenge?

Mr. Bloom: Well, it's a challenge, particularly at the Defense Finance and Accounting Service and probably the rest of DOD. We missed what I would call a generation of workers. We have not hired many people from 1991 to the present, and so there's a big gap in our work force. And, to add to that, at least at the Defense Finance and Accounting Service, 40 percent of my work force is going to be eligible for retirement in the next five years. That's a big part of my work force. That is a challenge, but it's also an opportunity. And we need to work with that opportunity.

Recruiting is something that I believe is very personal. I've encouraged all my managers, all my executives to get involved in the recruiting process. I would like to see all my top-level people visiting colleges for entry-level folks, as well as getting involved in the recruiting of mid-career folks.

We have a good story to tell at D-FAS. We have the vision. We have the technology, and we have great managers. And you can't recruit the kind of people we need in this environment without making it personal, just as I'm sure you all at PwC are personally involved in the recruiting process. We need to do more of that. It's not just the human resource people involved.

We are at a disadvantage in some cases with our salary schedule. And we don't necessarily have the flexibility that we would like on the salary side. That is particularly true, I think, on the IT side. But you know, one of the interesting things I found about IT professionals is that the challenge is more important to them, many times, than the money. And the idea of working with the latest technology can be a real enhancer.

So, that's a challenge, but it's one that I think in the long run we can do pretty well. And I think particularly we can do well at recruiting folks, you know, in the middle of their career. Maybe the young kids out of college should spend two or three years with PricewaterhouseCoopers, but after that, we're very competitive and can offer a good work environment.

Mr. Parker: And you have a unique workforce that includes a lot of civilians and some military. I'm wondering what challenge that presents.

Mr. Bloom: Interestingly enough, really no more challenge than if you had an all-civilian work force. I've found having the military really help us in meeting our mission. First of all, there's this great tradition that the military folks have. And they're all former and potential customers. And so they have an interesting view of our work.

The other thing that it does, for the civilians, is it keeps in mind what we're here for. We're here to support the uniform folks, to support the war fighter. And having that guy or gal across your work environment reminds you that you're here really serving your country.

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

Mr. Lawrence: Welcomee back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. And tonight's conversation is with Tom Bloom, director of the Defense Finance and Accounting Service. And joining me is Wood Parker, one of my partners at PricewaterhouseCoopers.

Mr. Parker: Tom, technology is becoming increasingly important in all facets of society, including, of course, government agencies. Can you tell us what role technology has been playing at D-FAS, especially related to your goal to becoming paperless in the future?

Mr. Bloom: Well, technology really is our future. In order to stay relevant, in order to stay competitive, actually, if you remember our vision, every tenet of the vision really involves technology. To become world-class we have to work with technology. In order to be the trusted innovative financial advisor, you have to do that through technology. The employer of choice, people want to work at companies that are state of the art. The last tenet is to be a competitive organization. In order to be competitive, we really have to embrace technology. And we're doing that pretty well.

Right now, for instance, we have 32 new systems that we're in the process of installing, and that in itself is a daunting task. I don't know of any organization, whether it's General Motors or Mobile-Exxon, that has that kind initiative, to put in 32 new systems. So, we're certainly on the cutting edge there.

Mr. Parker: I notice in an effort to remain paperless D-FAS has engaged in e-commerce activities, to include things like document management, electronic funds transfer and EDI, electronic data interchange. I'm wondering how electronic commerce is affecting D-FAS in terms of being more efficient. What happens when a business rolls this out?

Mr. Bloom: Well, paper is our enemy. We're probably going to have banners all over the Defense Finance and Accounting Service that say just that, that paper is our enemy. We are developing as many electronic means and as many electronic interfaces as possible, so that we end up with as little paper as possible.

We have just recently rolled out employee member self-service, where you can change most of your human resource allotment changes, change you address, you can change your exemptions on your tax form. We would like to someday our leave and earning statements, essentially your pay stub, we would like to make that electronic.

And in dealing with the vendors, there is a big push to have them transfer their invoices to us electronically. Not to forget about the small mom and pop vendors, and that really is the lion's share of our vendors are the smaller businesses out there, we're making it easier for them. We're coming up with an electronic interface. We call it WINS, where a business, all they really need is a computer and internet access, which by the way, you can get at your local library, if you don't happen to have that, although most businesses do have that. But they can pull up a screen and essentially put their invoice information on this predetermined screen and send that to us electronically, so that we don't have to deal with paper. There's not the opportunity to lose the paper or to make the mistakes. So we're embracing this e-commerce as much as we possibly can to eliminate that enemy, the paper.

Mr. Parker: How are the employees dealing with all this e-commerce stuff? Normally, it brings about tremendous change. So if you can adapt to the change, that's the first step. But also, one can then figure out that it might involve fewer employees. So it's difficult to imagine a win-win with those two things to think about.

Mr. Bloom: Well, it is a challenge. It's a little bit of the challenge we talked about earlier. Although D-FAS employees, D-FAS has been in existence since, as I mentioned, 1991, and it's just been a flurry of change since we first came about. We had over 300 locations and we've consolidated down to 26. So our people are pretty used to the change. Also, we've gone from 27,000 employees to the 19,000 to 20,000 range. So our people have seen the diminishing of jobs.

We have what we call the Responsible Employer Program, because we believe we do owe folks some consideration, and we work hard to get our folks ready in case their jobs do disappear. So there is a fair amount of trust there. But sure, they're seeing that the technology in many cases, particularly if you're dealing with just paper today, you know, you're at risk. And that can be a morale problem.

Mr. Parker: We were talking earlier, Tom, about training and the importance of training to D-FAS and your people and your commitment to training. Within the context of technology, talk about that training. How is that going to be a change, whether in terms of delivery systems or other means?

Mr. Bloom: Well, first of all, we have on the IT side about 1300 IT professionals at D-FAS. Many of those folks are working with old languages, old computer technology. We are giving them the formal training to deal with kind of the fourth generation relational data base kinds of things. With our accounting and finance technicians, since we are introducing a lot of new systems, they are working with state-of-the-art, you know, dual screens and multi-tasking kind of things. And we think that that's building competencies that they haven't had inthe past. That is a big challenge.

Mr. Parker: How about some of the key issues looking out to the future for D-FAS? Will there be a D-FAS in ten years?

Mr. Bloom: Well, I believe that there'll be a D-FAS. I think that we may look very different than we look today. There may be much more of an emphasis on the accounting side of what we do. Half of our business right now is accounting and the other half is finance, the actual paying of folks. I think on the finance side you will see technology making that easier and maybe turning that more and more into a utility. But on an accounting side, getting the information that we need to get to managers, to commanders out in the field to manage troops better, to manage their individual businesses better, that's really where the future of D-FAS lies, I believe. And we've got a long way to go in that area.

I'm a user of D-FAS. I eat my own dog food, so to speak. We need to get me better information for me to manage my business, so I know that it's true probably for most of the commanders out there. I see a big future at D-FAS in helping turn data into information, so that my commanders aren't drowning in data, but their thirst is being quenched by the information that we're providing.

Mr. Parker: As you look to the future, Tom, and the various challenges we've alluded to, what keeps you up at night? What are the ones that concern you the most, let's say, in the short term?

Mr. Bloom: Well, certainly the thing that does keep me up and it has kept me up is paying our military folks, our soldiers, sailors, airmen and Marines. We don't ever want to miss a payroll. Their families depend on that. They're assuming that D-FAS is taking care of their families. And that's probably a security item. For the nation's security, we have to make sure that we're taking care of our number one customer, which is the war fighter.

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

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

Steven I. Cooper interview

Monday, November 29th, 1999 - 20:00
Radio show date: 
Mon, 01/01/2018

John P. Mitchell interview

Monday, November 29th, 1999 - 20:00
John P. Mitchell
Radio show date: 
Fri, 04/14/2000
Intro text: 
Missions and Programs; Strategic Thinking; Leadership; ...
Missions and Programs; Strategic Thinking; Leadership;
Magazine profile: 
Complete transcript: 

Arlington, Virginia
Friday, April 14, 2000

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

The Business of Government Hour focuses on outstanding government executives who are changing the way government does business. Our guests tonight, John Mitchell, acting director of the U.S. Mint. Welcome, John.

Mr. Mitchell: Hi, Paul.

Mr. Lawrence: And Colleen Vogel, staff director of Mint operations. Welcome, Colleen.

Ms. Vogel: Hi, Paul.

Mr. Lawrence: Well, why don't we begin by talking about the mint, because most of us at a certain age remember the Mint from the James Bond movie Goldfinger and Fort Knox, but I know there's much more. So perhaps you could tell us about other parts of the mint.

Mr. Mitchell: I'd be happy to. I have the same memories of Fort Knox and Odd Job. As a matter of fact, Fort Knox as a Mint holds over $100 billion of the nation's assets that we protect as part of our protection business unit. In addition, we have circulating coin production that everyone is familiar with as pocket change. We're going to be minting a record 29 or 30 billion coins this year, including the new 50-state quarters program, and the Golden Dollar which everyone is very excited about.

We have a very active IT side and collectibles side as well. We had over a billion dollars in revenues last year in various collectibles as well as the only investment product that we sell, the bullion coin, the American Eagle platinum, gold, and silver, and lots of other things as well. So we're a very active business.

Mr. Lawrence: Well, maybe we can begin by talking about your careers and the various positions you'd had. Colleen, do you want to start?

Ms. Vogel: Sure. I started my career as a GS-2 at Wright Patterson Air Force Base, and as I've grown in my career, I have seen the government grow as well in the way that it does business. In my various positions in accounting, procurement and human resources, I've watched our focus go from the business that we designed to one of customer service and benchmarking and utilizing best practices -- really trying to identify what it is that the customers need and delivering that rather than what we think they need.

Mr. Mitchell: Similarly, as a grade 2 at the Export-Import Bank during college, that was my start of my federal career. I've worked at the Federal Reserve Board, other Treasury offices, a few years in the private sector. That has provided a great balance of the type of skills that you need to work not only in a public-sector agency, but one that has a private-sector focus and business attitude about it.

Even some of the courses that I took for my undergraduate degree at Maryland many years ago, like cost accounting and others, that information was dormant for about 20 years, and then all of a sudden I come into a major manufacturing operation like the Mint and I'm now able to use a lot of the skills that went unused in other organizations.

Mr. Lawrence: What drew you both to a career in public service?

Mr. Mitchell: I think from my perspective it's twofold. The public service is very important to me. It's a passion of mine. It's important to me that whatever organization I'm part of delivers excellent products and services to the public. The Mint specifically has such a wonderful combination of public and private-sector characteristics it's an opportunity to really soar, to flex your wings and to take on a number of different opportunities and challenges that the Mint is pretty unique in being able to provide.

Ms. Vogel: For me, too, a sense of serving the greater good, and putting all that coinage in the public's hand is important. Early on, job security and interesting work is what brought me into the government. Especially for me in procurement… there is a lot of interesting things to do in that field, and it continues to grow and become more important in the business cycle. It's also helped that the public service in general has changed and grown. And working at the mint, you operate using private-sector practices in a public forum.

Mr. Lawrence: You've mentioned that a couple times, Colleen, that you operate in a private-sector setting, and I think most people think of the Mint as just another federal government agency, but it's really not. Perhaps you could talkabout that and some of the flexibility it allows you.

Mr. Mitchell: That's exactly right. One of the things I want to say early on to turn your question a little bit initially, is that one of our opportunities but also one of our frustrations is that we've had the support of the administration and Congress to gain the flexibility to allow ourselves to operate more like a business. So we've been a good opportunity to model various business practices on behalf of the administration and Congress. We have taken to heart all of the President and Vice President's reinvention initiatives and have completed them all at the mint, and they're ongoing and thriving.

One of our frustrations is that other people say, well, you're different and we can't do the same thing at our agency, and that most of what we do is very service and customer oriented and is easily translatable to other federal agencies. In terms of other aspects of the mint, we think that what we do, and the flexibility that we've gained through legislation as well as by taking on other initiatives, allows us to maintain a very high level of the integrity that goes along with being a federal agency and fulfilling our mission as mandated by Congress, but also operating very much in a private-sector manner in terms of being profit and loss driven, very cost conscious, very customer focused. Something we'll be talking about a little bit later, basically reorganizing to be better aligned with our customers in our various business units.

Mr. Lawrence: Colleen, how about some of the procurement changes that exist because you have more flexibility?

Ms. Vogel: Again, a lot of the things that we've done. For instance the procurement executive over at Treasury, when we were describing some of the things that we had done, realized right away that a lot of them were things that other people in the department could do even with the regulations.

Initially, we had done all of our streamlining and things from our own experience and knowledge when we first got the procurement waiver, but once we got through those initial shifts, we found that to change even further we really needed to get some help. So one of the key things that we did is we hired PricewaterhouseCoopers to come in and do a review and a benchmarking of our practices. Jay Tansing led that effort, and they found that a lot of the things we do are best practices in both public and private sector, and we didn't just benchmark private sector. There are a lot of practices out there in the public sector as well. They also come up with some new opportunities for us to make the procurement cycle go better.

One of the main things we did was develop a procurement council of the key managers in procurement to identify the needs across the business. There were a lot of people just looking at their piece of the pie and we found that that wasn't particularly fruitful and we'd get a lot more accomplished. Along those same lines, we conducted a spend analysis that Dun & Bradstreet did for us.

Personally I think that's the most significant thing that we've done recently, because it gives you a lot of information and it tells you where you're spending your money, how you're spending your money, with whom, and it gives you a lot of opportunities to continue to buy wiser. Of course, spend analysis is something anyone could do. You don't have to be waived from the federal regulations to do that. Again, with the procurement council, anyone could do that. We also established cross-functional teams like a lot of folks are doing, and we have a really significant push right now on performance-based service contracts… from small incentives for getting a job done early, to larger more complex measurements.

Mr. Mitchell: One of the things that you hear Colleen addressing is that procurement is very much seen as a partner within the organization with the various business units and corporate CFO and CIO functions. Initially, when we got the waiver from the federal acquisition regulations most saw it as a business opportunity. Some saw it as an opportunity to avoid any sort of oversight. We quickly, with some very good support from senior leadership, dispelled that notion and that, in fact, we would have lean procedures, but ones that would, again, protect the government's interests and have a high level of credibility and integrity.

After that, procurement has marketed themselves very successfully within the organization. They are now seen as a partner from the very beginning, not somebody that you bring in later or even late in the process, and an organization that will get the best products, the best services, the best suppliers, companies, et cetera, into our business units that will help our business units accomplish their work and realize opportunities.

Mr. Lawrence: During this process was procurement elevated in its position in the organization?

Mr. Mitchell: No. It stayed exactly where it was originally which was within the office of the chief financial officer. Thanks to folks like Colleen Vogel, Joan Ting and others in procurement, they took on the leadership themselves and have not only provided great service, but also marketed their service well.

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


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with John Mitchell, acting director of the U.S. Mint, and Colleen Vogel, staff director of Mint operations. In the second segment, why don't we spend some time talking about your experiences at the Mint, what it was like when you arrived, and what were some of the changes you made?

Mr. Mitchell: When we arrived at the mint, and this roughly goes back 6 or 7 years for myself and the former director, and for Colleen it goes back a few years prior to that. What we found was a very traditional stovepipe-oriented organization and one that did its job well in the old way of doing business, but hadn't been as responsive to the market and hadn’t realized opportunities that were there.

For example, from its perspective, the Mint was customer-focused in that it provided the products to its customer within roughly 8 weeks or beyond for half of its products, and the other half of its products there was no tracking for it because it could take up to months. Now we've completely turned that around in terms of providing standard delivery in 3 weeks, 4 weeks, and many cases within a week, and next-day delivery as well.

Number one, in terms of the circulating coin field and the numismatic or collectable side of our business, the Mint had succeeded in running things the way it had for decades, but really had not taken advantage of the opportunities that the market presented. Number two, the Mint had a customer focus that internally determined what the customer wanted versus talking to the customers to determine what products and services they would want.

Ms. Vogel: I agree. When I first came 10 years ago, the Mint was the government that also happened to be in business, and I think we've shifted to a business that also happens to be the government. Specifically to procurement, small portions of our procurements when I first came to the Mint were exempt, but otherwise we were regulated. Then we received the procurement waiver in 1995 and we began the process of shifting all of our practices to be more streamlined.

Mr. Lawrence: What do you think started all this change?

Mr. Mitchell: Well, I think that going back 5 to 6 years, believe it not, the Mint never had a strategic plan. We're only 208 years old, so I guess it's understandable it took us a little long to get out of the chute. But we'd never had a strategic plan, and we crafted our very first one which, all things considered, was a very modest document, but it is what that document represented to the Mint.

Number one, we designed that document in partnership with our union. We had union leadership sitting around the table with management from the Mint and we created a strategic plan from scratch. And we really focused on our vision, our mission, and our guiding principles as to what values we as an institution held, and then set on a course of accomplishing 12 to 14 projects.

If you look at that plan now, it's not in a good format. It has no measurements. It very much is not aligned in terms of goals, objectives, strategies, performance measurements, et cetera. But it was a great beginning, and two other things to note about it. One is that it projected out a vision as to what we could become and the things we needed to do to get there, including legislation. It also established, as part of our culture, stretch goals, that it's okay to set the bar high, and if you fall short of that, then you still have made much more progress than you otherwise would have made with more modest goals. I think that document and how it was designed in partnership was a very significant turn for the Mint.

Mr. Lawrence: Was it difficult to create, getting people and establishing the vision? I think one of the stories that we hear is that people don't have strategic plans because it's just too hard.

Mr. Mitchell: Yes, it was. It was also an exciting time. I remember one of our union stewards at the time, a gentleman named Dale Nuanis from our Denver Mint, as we sat around the table in those initial years of our strategic plan creation and then modification, there were only maybe 30 or 40 of us off-site for 3 days putting together this plan.

From a relationship perspective, one of the things that Dale mentioned was that as a union individual it was rewarding to him to look across the table and not see three and four-headed management dragons staring back at him; that we're all people, that we all have the same challenges. As the union listened to us as managers talking about all of our different perspectives on how to realize opportunities and how to vanquish a lot of challenges that we had. They also understood that we didn't speak in one voice, we weren't monolithic, that it was a very active discussion which began to build the trust within the organization to deal with issues and not be hung up with personalities.

Mr. Lawrence: How about the adoption of the kinds of goals you talked about? It sounded like the bar was being raised on the staff.

Mr. Mitchell: Well, that's right. What we basically said is, and it takes a while for everyone, ourselves included, to learn how to do this. What we said is, don't assume any of the restrictions that we currently operate under. If we could both resolve longstanding problems that we've had as well as realize a number of opportunities, what do we need to accomplish that. So when I mentioned earlier about how any agency can do what we've done, it's easier for someone to look at us now. We're self-funded. We have a procurement waiver. Nine of ten political positions were eliminated with the full support of the President and the Congress.

We've created new programs. The 50-state quarter program and the Golden Dollar program are all new programs that we worked with the administration and Congress to create. All of those things are in place now that give us the foundation to work from, but we didn't have any of those in 93' and '94. And we basically made our business case to the Hill and to our administration to say, this is what we need to accomplish our objectives. So it's really taking the blinders off, thinking outside of the box, and using any creative techniques you can use to say what could we become, and what do our customers want from us that helps guide that vision as to where we think we should take the Mint.

Ms. Vogel: I think a key to the success, too, is just the partnering with the union and bringing the employees in and not having management go off-site, create a plan and then bring it back. Each year we've gotten better and better at including more of the non-managerial people in the strategic planning process so that it kind of institutionalizes the culture that management has identified for us.

Mr. Lawrence: Earlier you talked about minting a huge number of coins, and I understand you have a half-a-billion dollar capital investment program underway at the Mint to improve the manufacturing plants. Could you tell us about that?

Mr. Mitchell: I'd be happy to. One of the key business drivers we were able to identify to Congress, and in fact the chairmen of our appropriations committees, House and Senate, were fully supportive of this idea. Prior to our public enterprise fund which is how we generate the revenues to recover our expenses and otherwise turn the profits over to the Treasury general fund. Prior to that we were under an appropriation in four other funding sources. What we identified to those chairmen is that we had a business need to become self-funded. One of the key reasons for that was our capital budget and the need for it.

Mr. Lawrence: Let's stop, and we'll come back after the break.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with John Mitchell, acting director of the U.S. Mint, and Colleen Vogel, staff director for Mint operations. John, before we went to commercial, you were talking about the capital investment program. Let me let you finish.

Mr. Mitchell: Briefly, Paul, what we did prior to our public enterprise fund is; we could only spend something like $5 million a year because, in the appropriations process as we're all well aware, there are a lot of competing priorities. We had equipment that was 25 to 30 years old. We have a very aggressive capital budget that we're 3 years into our 5–year half-billion-dollar capital campaign that is bringing in new high-speed coining presses and annealing furnaces. We're making some building improvements, but the vast majority of that is equipment oriented. We've got state-of-the-art robotics in our San Francisco Mint in terms of packaging our products, and so it's been a good opportunity to catch up.

That half-billion-dollar program represents about 4 percent or so of our revenues, and that's very much in line with industry averages of about 3 or 3 1/2 percent. After this 5 years, it'll settle back into an average of maybe $40 million or so per year. But it's been a very necessary investment as well as recovery from years of neglected capital.

Mr. Lawrence: Let me shift to talking about the employees of the Mint, because you mentioned in terms of your work with the unions as well. I understand the Mint has earned three national labor/management awards, and every manager and union steward has received some front-line leadership training. How did it come about? How did it begin, and what changes has it brought about?

Mr. Mitchell: You're exactly right. We're very proud of the recognition that we've gotten from the Vice President from the President's labor partnership council. It started with the fact that we were the first Treasury Bureau, and perhaps one of the first few in government to sign an agency-wide partnership agreement with our union back in 1994 and we took a very open approach. We included the union in a lot of discussions early on, and so it was partly that change, but also the building of relationships and trust. That greases so much of the operations of a business, for a group of people to trust each other and to deal with only the issues and not get hung up on personalities. So that was very important.

We also had an environment prior to '94, where to say we had strained labor-management relations would not be an exaggeration; our Denver Mint was picketed by its employees… informational pickets since these are government employees. The Denver facility, at the time, had a little over 400 employees, and we had over 200 grievances and other labor complaints. We were not going from a quiet operation into an even stronger one. We were going into a labor relationship in turmoil to what is a recognized and very strong partnership.

Mr. Lawrence: What do you think the lessons learned are from turning about that kind of relationship?

Mr. Mitchell: I think inclusion is very important. Building relationships so that people understand who sits across the table and alongside them. Also, I keep getting back to the business and the customer, we exist to serve the public, and focusing on what it is that we do at the Mint and what our customer wants from us, doesn't just need from us, but what also wants from us, how and how often and time frames and all sorts of other measurements of customer satisfaction; what we as a business need to do and be held accountable for in running a successful business.

The combination of building relationships and trust, getting to know each other so that we work better together as a team and having a team focus, and then having the organization focus on itself as a business that is in existence to serve the public and our customers. I think all of those things woven together is the reason that we've been able to be so successful.

Mr. Lawrence: What else are you doing differently with the employees at the Mint? Let's go through the life cycle. I notice you're actively recruiting, and I understand you have some very interesting training and development programs going on. Perhaps you could tell us about those as well.

Ms. Vogel: We do. We have an individual development plan program for our employees that's very robust and it offers on-the-job training, tuition reimbursement, various job assignments. I'm like the poster child for various job assignments being the procurement director and then doing a rotation through human resources, and now as the staff director.

We've also instituted many flexibility that are just friendly towards our employees like our flexible work schedules, public transportation incentives, telecommuting, things like that that make it just a little easier on the employee and also are good recruiting tools.

Mr. Mitchell: I think, Paul, a couple of things. One is Colleen was responsible for creating an employee advocate position down in our human resources office; somebody that's responsible for coordinating with new employees as they come on board and then working with them for their first months to make sure everything is going well.

While that isn't a revolutionary concept by any stretch, it's something we hadn't been doing, and our employees appreciate. Even our new headquarters location on 801 9th Street in Northwest, our building is a beautiful building that is very much designed around the openness and the environment. Our employees can see an icon as to what the Mint is all about and how valued the employees and their contribution are, and therefore a building that has been designed around those principles with a number of amenities. I hasten to add at a price that's at least $5 below market value. So we did a great job, Colleen and her staff, in negotiating a great deal.

Mr. Lawrence: Well, Colleen, let me ask you something you mentioned about changing jobs. Our surveys of federal employees is by and large they almost hate changing jobs and yet you've been able to do that. How did you do that?

Ms. Vogel: Well, the need was there. The thing about the Mint that I think is unique is that typically in government, it's been my experience, that you get into a series and then that is where you are and there's no moving around. The Mint is different in that when the need is there and if they can match up the right skills with the need… for instance, it didn't seem reasonable to some people that I would move from procurement to human resources, but I did have a degree in human resources and I had some experience. And so it just flowed like that. It was short-term. It was really a matter of hiring someone else to fill the job permanently, but at the same time being able to take an opportunity to let someone else come in who really wasn't too familiar with the day-to-day operations and then find opportunities to help them make change in their organization.

Mr. Mitchell: If I could, we have two points then at this point, the strategic plan and IDPs. We, in our strategic plan in '94 and '95 wrote in deliberately that every employee at the Mint that was entitled to have an individual development plan and that we would support that plan. We also added that they had to take the initiative to create it because initially we were talking about doing them for each employee and then we decided, no, they need to take the initiative to seize that opportunity.

What we also said is that we're going to create an environment where these opportunities can be realized and people can go outside of their current job field and that the key to that success is tying it into the strategic plan and the business interests of the agency. Because we have so many varied operations within the mint, there really is quite an open field for people to provide or identify those sorts of opportunities for them. They work with their supervisor and they work with others to both have on-the-job training, off-site classes, on-site training, as well, and gravitate into other fields.

What we want is for employees to feel that they're contributing, know that they're the reason for our success, and we want to keep them as long as we can. But if they also want to go outside of the Mint down the road and they can gain a lot of marketable skills at the mint, and we have very marketable skills at the mint, then that's great. Then that's a success for us. They helped us for a period of time. We had folks that helped create our Web for example that after 3 or 4 years of developing themselves in that arena have taken jobs with million-dollar stock options and other things that we can't quite compete with in the public sector, but that's great. It's a success for them and for us.

Mr. Lawrence: You raise two questions I'm interested in asking about. First, one of the things, the stories created about the federal work force, is that it tends to be older. A lot of employees are near retirement, and are very resistant to the kind of changes you're describing. So, I wonder is the Mint not typical in that sense?

Mr. Mitchell: I think we were very typical. What we tried to do early on is, a number of folks in leadership positions both formal and informal decided that there was this great opportunity, that the Mint was an incredible sleeping giant. Then what we did was, we found folks throughout the organization, including individuals like Colleen and people from all the different functional areas at every level of the organization. By including the union leadership and union stewards, that bought into it our values, our principles… realizing opportunities, having a fun place to work, allowing people to develop and really blossom, I think that's what's really driven us.

As part of our business, all the things we do with a profit-and-loss focus in terms of our financial management, having an enterprise resource planning system, a Web site that's very profitable and puts us in the top 20 national E-retailers. A lot of stuff we do is cutting edge and therefore our existing work force has changed, but we've also recruited a lot of folks into our organization that are part of a new level of enthusiasm for what we do.

Ms. Vogel: I've also seen, though, that a lot of our employees that have been around for a while, I watched them become rejuvenated also because there was an influx of change and excitement. So those people were driving things. But then also the people that have been there for a while jumped on the wagon and took over as well.

Mr. Mitchell: A very quick note. By and large we have done this with most of the folks that were there when we came on board. There have been some including in leadership positions that just did not want to go that route. So the influx of new talent, but also the re-energizing of existing talent is what's accounted for our success.

Mr. Lawrence: We'll be right back with more of The Business of Government Hour.


Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with John Mitchell, acting director of the U.S. Mint, and Colleen Vogel, staff director of Mint operations.

Let me just continue on the last theme because we talked about the change of the present employees, but how about recruiting new employees? It's very difficult for government to do, I understand. You even mentioned it, John, there are no stock options. You have to really want to come to work for the government. So how is the Mint getting new people?

Mr. Mitchell: That's exactly right. What we have is a situation that we can talk about the fact that we are a very fun place to work, people coming to work with us either with existing skills or wanting to develop new ones, that we have an incredibly supportive training program and culture that developing new talents is a good thing and something that we welcome and encourage. Also, the environment that we have is very innovative and risk oriented, obviously measured risks, but nonetheless we encourage risk-taking in our organization. A lot of features that anyone could employ, we do at the mint, and we've also got products that are in everyone's pockets right now.

Everyone is very conscious of the quarters, of the Golden Dollar. They've seen our various promotions. They know that for example Kermit is our spokes-frog for our 50 State Quarters program, and they've seen the new ads with a hipper George Washington out there that's promoting our dollar coin. So, there is a buzz about the Mint that we've been able to create. And beyond that, we want them to know that the reason this buzz has been created is because of our employees. By coming and joining us they can both use and develop skills that are very marketable, that they can either stay at the Mint, which would be great for us, or then move on to something else. That's also great because while they're with us they'll have fun with their work, they'll know they're contributing, and they'll leave with very marketable skills.

Ms. Vogel: Like we were talking about earlier, the flexibility between going from job to job. If you've identified as John said through your IDP that you have interests in other areas, we really are very open to letting you take temporary assignments in those other areas. There's a lot of trust in our organization, so with a sense of trust that your job will still be there for you when you're ready to go back.

I've heard from our presidential management interns, and when they are helping us recruit new PMIs, they frequently talk about the Mint as a breeding ground for knowledge and expanding yourself and for entering various areas that are of interest to you. If you can identify, for the Mint, something that will help them and help you, the Mint generally approves those plans. So the new people coming into the organization find that they're not put in a job and then just left there to do just that one thing, that if they can think of it, they can probably do it.

Mr. Lawrence: Speaking of marketable skills, technology is becoming an increasingly important part of all government agencies, and I understand the Mint was one of the first to install enterprise resource planning, or ERP computer systems, and this has been a big step. I wonder if you could tell us, what is ERP and why has it been so important to the mint.

Mr. Mitchell: I think to say that we had a nonintegrated, Byzantine type of automated systems before our ERP would not be an exaggeration. It was pretty horrible. In fact, it was part of the reason that we could not get a clean opinion back in '94 on our financial statements. We went to an ERP because of the power of the information systems, basically going from the Dark Ages to the 21st century, if you will, because it tightly integrated manufacturing, financial, sales and distribution, and database mining and warehousing capabilities, and we need all of those.

We are a manufacturer, we distribute products. We need to have strong financials. We need to work with our customers and serve them best at the lowest cost. So all of those things together were important to us, or are important to us, and we basically implemented the entire suite of systems, a Peoplesoft ERP solution, plus three other systems in 12 months and went live in October of '98.

Mr. Lawrence: When we talk about bringing ERP to government, we often hear it won't work. This has been widely used in the private sector, but yet it won't work in government, and yet it seems to have worked.

Mr. Mitchell: It works very well. As we usually do at the mint, we saw it not only as a challenge, because it was a very significant challenge especially because it was our 100 percent Y2K solution, so the risks were large with the implementation. In addition, what we saw with it was a tremendous opportunity for both people in functional areas as well as our information technology area to get into state-of-the-art systems that all of us could then benefit from. The very robust data and reporting that it captures, helps us to run our business and to look down the road and see the future instead of looking at reports that are months old. That’s basically managing by rear-view mirror.

Everyone, any federal agency, can implement the ERP. Certainly the financial side of it, but tying it into certain service measurements matches up to what any federal agency does. If you happen to have a particularly unique product or service like we do at the Mint with coins and coin-related products, then for us the manufacturing piece, and we realize we're one of the few manufacturers in federal government, then for us there was an added benefit as well.

It was taking a very bad situation, going out into the market and seeing what the best solutions were and then getting a commitment to implement it within the mint, and also seeing it as a great opportunity.

Mr. Lawrence: You call your call ERP coins consolidated information systems. I read in an earlier interview you said without coins we would not have been able to have been the successful E-commerce site that we now are. What does that mean?

Mr. Mitchell: That’s exactly right as well. What that means is that coins have all of the data out there… from the point that a huge roll of strip that manufacture coins from comes in the front door to where that goes out the door, whether it's bagged coin to the Federal Reserve or packaged coin to a collector. We know where that is and can track that through the entire system as well as what the costs and the revenues related to it are. So on top of that, we have overlaid a Web system that takes advantage of that rich database and now gives us the opportunity and our customers an opportunity, to interact directly with us and place an order for example that goes immediately into the system without any human interaction. Without our very robust ERP, we could not have the kind of Web that we have currently.

Mr. Lawrence: You seem very comfortable with E-commerce, and I'm wondering what challenges does E-commerce present to the public sector.

Mr. Mitchell: I think E-commerce is just an incredible field of opportunities from E-procurement, and Colleen has got that lead on that for the Mint, and the supplier relationships, the opportunity to purchase goods and services that everyone in the federal government needs at the best quality and the lowest prices. I think it's a tremendous opportunity. For us with the additional customer component and the collector of our coins and coin products, it's a great opportunity to very much realize our customer's relationship management, permission marketing and all of the other things that from an E-retail side we traditionally can realize an opportunity from.

Mr. Lawrence: Colleen, how about the challenges of E-procurement?

Ms. Vogel: The challenges are pretty great, actually, because it's so new. It's new really in the private sector also. The good thing is that someone coming to the mint, they're not going to be behind the power curve. Coming to the Mint in procurement you will get on the ground floor of something that is important throughout the purchasing community. We are looking at reverse auctioning, we're looking at buying our products directly from the manufacturers without even going through procurement at all just based on the need as identified through coins.

We're very excited about it, though. We're going to do it, it's very interesting, but it is all very new. So we're excited, but we've got a lot ahead of us.

Mr. Mitchell: I also think, Paul, very briefly, that there's a culture that also goes along with the Web that is very closely matched to the Mint culture. That is, we move very fast and we're very customer-focused. There's an immediacy within our operations, and that very much typifies the Web. So both within the Mint in terms of how we work it as well as how our customers view us as well as recruiting individuals, the Web is emblematic, basically, of the new Mint.

Mr. Lawrence: We're almost out of time, but how about a couple of the key challenges in the future for the mint?

Mr. Mitchell: It's hard to summarize, but number one will be growing this entrepreneurship that we've been for the last 5 or 6 years and maturing it into an organization that's thriving and risk oriented, but also more stable. Then we've also got some other opportunities with our customers and with manufacturing and the Web and the whole E-field that I think we're very excited about seeing what those opportunities bring to us.

Mr. Lawrence: I'm afraid we're out of time. I want to thank you very much, John and Colleen, for spending time with us today. We've really enjoyed the conversation.

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

Robert E. Wenzel interview

Monday, November 29th, 1999 - 20:00
Robert E. Wenzel
Radio show date: 
Wed, 04/26/2000
Intro text: 
Missions and Programs...
Missions and Programs
Magazine profile: 
Complete transcript: 

Arlington, Virginia

Friday, April 26, 2000

Mr. Lawrence: Welcome to The Business of Government Hour, conversations with government leaders. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and co-chair of the PricewaterhouseCoopers' Endowment for the Business of Government. The Endowment was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness. To find out more about the Endowment visit us on the Web at

The Business of Government Hour focuses on outstanding government executives who are changing the way government does business. Our special guest tonight is Bob Wenzel, deputy commissioner of operations for the IRS. Welcome, Bob.

Mr. Wenzel: Good evening, Paul.

Mr. Lawrence: Joining us in our conversation is Jim Cook, a consultant at PricewaterhouseCoopers. Hi, Jim.

Mr. Cook: Good evening, Paul.

Mr. Lawrence: Well, Bob, in this first segment let's talk about your career, but first I want to talk about the IRS. Around tax time everybody thinks about the IRS and they're aware of tax collections, but that's not all they do. Perhaps you could tell us more about the IRS and some of its major functions.

Mr. Wenzel: Well, Paul, you're certainly right about our being on everyone's mind about this time of year. Many people think that the IRS is all about April 15th. This year it was April 17th. But you're right on point when you talk about and note that the IRS responsibilities extend far beyond its tax-collection role.

We are responsible for implementing a great number of new tax laws and provisions each and every year. We're responsible for educating taxpayers about their responsibilities, and for helping individuals and corporate taxpayers in many, many different ways.

We have education, assistance, and outreach programs to individual taxpayers, to small businesses, business liaison groups, and corporate taxpayers. We also interact with and assist, as you might expect, other government agencies such as the Social Security Administration and the Small Business Administration, just to name two.

We have a very active international tax organization and assist other countries, both in emerging and established countries, in administrating their programs and setting up or enhancing their tax-administration programs.

Our criminal investigation function, another example of a part of the IRS that a lot of folks might now know about, is in the forefront of battling crimes involving illegal drugs, financial crimes, tax evasion, and money laundering.

I could really tell you that the IRS is recognized as the worldwide leader in tax administration. I can also admit that we really needed to change, upgrade, and move with the times to provide even better service to taxpayers here in our country and to American citizens working overseas.

The IRS Restructuring and Reform Act of 1998, that many individuals are familiar with, gave us the mandate and provided the tools to accomplish this, while the leadership of Commissioner Charles Rossotti has established the direction and shape of the future of the Internal Revenue Service.

Mr. Cook: Bob, you've been with the IRS for over 30 years, and as such you're now the highest-ranking career official at the IRS. Over that time you've held a number of positions and you've had a number of accomplishments. You've been instrumental in some of the changes that have taken place. Can you describe for us a little bit about your history?

Mr. Wenzel: Jim, it's actually soon to be 37 years. Two years of that is with service in the United States Army, but the other 35 years has all been with the Internal Revenue Service. I mean this when I say it seems like a short period of time because it's gone by so quickly.

During this time, I have been fortunate I have worked for an organization like the Internal Revenue Service, working with employees who work for the Service because there is real pride in doing a good job and a really sincere commitment in helping taxpayers.

We've seen many, many changes over that period of time occurring throughout the world. That is, in the private sector and in government. And although I think the IRS has always been concerned with doing the job well, I think the focus of our job has changed. Offering quality service to our customer is not so much a "nice to have," but an integral part of doing our job correctly and well.

I started with the IRS as a revenue officer, a GS-5, right out of college in Chicago, and worked in both our Chicago and Detroit offices before being selected for our executive selection and development program. While I was working in Detroit for seven years in the '70s, I was observing what was happening to the U.S. auto industry. That taught me an extremely important lesson about how important it is, not just in the private sector, but also in public service, to offer good customer service and high quality. That is, providing the best products in public service and providing the best customer service that we possibly can offer. That experience also taught me what happens to business or government when these elements are lacking or considered not the most important way of delivering products or services.

After Detroit, and having a number of management positions both in Chicago and Detroit, I spent a significant portion of my time as an executive. Other than at Washington at our national headquarters, I also served at our National Computing Center in Martinsburg, West Virginia, as the director there, and also as director in our two service enters, one in Ogden, Utah, and the other in Fresno, California, and I thoroughly enjoyed and appreciated my time as director in those three offices and locations.

It gave me a real good understanding and a hearty appreciation for the challenges facing the processing activity within the Internal Revenue Service.

I've been the deputy commissioner for the Internal Revenue Service since 1998, and I have to say this is the greatest challenge and most important assignment, obviously, of my entire government career. It comes at a time when the IRS is changing and modernizing itself during the most critical rebuilding phase the Service has really faced since 1952, the last time when we significantly reorganized ourselves.

By the way, I wasn't there at the time. I can only share with you what I've read and learned about it. But I will say that we're in a period of time right now when we are changing the way we do business with a renewed focus upon meeting our taxpayer needs and delivering quality customer service. I'm just really appreciative of the fact that I have the opportunity to be a part of this major change that's underway within our organization.

Mr. Lawrence: Well, 37 years certainly is a long time. What is it about public service that drew you to it?

Mr. Wenzel: When I think back to 1963, Paul, when I graduated college, I had several career choices. There were a number of corporations that came to the college campus and interviewed for positions there and I was offered several opportunities to go into the private sector � by the way, at a starting salary that was about twice of what I finally accepted with the Internal Revenue Service.

But in 1963 a lot of the young people like myself back in those days thought of government service as the right thing to do for their country. Personally speaking, I am a first-generation American. My parents immigrated to the United States, and their formal education stopped at the age of 14 in the country that they came from.

But they learned about the constitution of the United States early on and set as their goal when they were young to come to the United States for a better way of life. So, being raised in that environment, my father and mother encouraged me to always remember what a great country this is given the opportunity, and that we all have a responsibility to give back to our country.

The Internal Revenue Service was on the college campus along with other corporations, and I interviewed for the Internal Revenue Service. I was an accounting major, and I said if I really had a sincere interest to go into public service then the Internal Revenue Service was the right fit for me � and I made that my career choice.

As I mentioned earlier, I started as a GS-5 and really enjoyed the training that I received initially and stayed with the Internal Revenue Service all these years.

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

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Bob Wenzel, deputy commissioner of operations for the IRS. Joining me is Jim Cook, a consultant with PricewaterhouseCoopers.

Well, Bob, in the first segment you touched on a very interesting point, which is even as far back as 1963 the private sector was offering higher salaries than the public sector was, and that's something that comes up a lot today. So, I'd like to follow-up and ask about the IRS's ability to attract young or junior people into the service.

Mr. Wenzel: Paul that�s really an excellent question. Let me respond by answering it this way, that, first of all, I really believe that the Internal Revenue Service is the only game in town when it comes to learning about tax administration. Whether an individual wants to acquire a strong background within the public sector and move on to something else, or whether an individual wants a career in public service from the beginning, we've always been recognized for the excellent training we offer.

So, there's somebody coming in and working with us for a number of years, and hopefully they'll stay with us. But if there's another option, there is another option for those individuals to go into the private sector.

Second, there are still many, many individuals who feel, I believe, a sense of commitment and a need to give back to their nation in some very, very meaningful way, and I can't think of a better way than going into public service. If you visit our headquarters office right on 12th and Constitution Avenue, right above our main entrance there's an inscription there by Oliver Wendell Holmes. I think it really describes our purpose very, very well, saying simply that taxes are the price we pay for a civilized society.

It is the belief of so many IRS employees, the 100,000 folks that work for us past and present that the ultimate function of the IRS is to support and to finance our democracy, and Oliver Wendell Holmes' statement is so very, very appropriate. Our current commissioner, Commissioner Rossotti, and all of our past commissioners are prime examples of this maxim, as are our recently recruited new executives and many, many of our rank and file employees.

Mr. Cook: Bob, as a follow-on to that, you've talked about the challenge and your thoughts on recruiting junior folks to the IRS. Let's talk a little bit about leadership. The IRS is traditionally a career agency, and with the exception of the commissioner, the senior leaders really came from within the IRS. But, in recent years, Commissioner Rossotti has started to recruit some outstanding individuals from other areas of the public sector and private sector. I guess I'm interested in finding out a little bit more about your thoughts on the appropriate mix between senior career executives and recruiting senior leaders directly into the IRS.

Mr. Wenzel: Right, Jim. You're absolutely right. Up until the Restructuring and Reform Act of 1998 there were two political appointments with IRS and the rest of us were all career civil servants. That is, the commissioner, as you pointed out, and our chief counsel.

But the Restructuring and Reform Act of 1998 allowed the commissioner to bring in up to 40 additional individuals from the private sector, and although we haven't reached that number yet, 17 new executives have joined our organization from the private sector.

What we've discovered from that very positive experience is that there's real value in both sources for recruitment of IRS leadership inside and outside. During the past year or two we've put in place teams of experienced and highly qualified executives from, as I said, both inside and outside the IRS. All of them have became leaders because they saw an opportunity to improve the Internal Revenue Service, and all of them were chosen as leaders because they bring a unique ability to implement change at this critical point in time in our history.

We all work together and value one another in terms of what we each bring to the table. The key we found is to continue to do what we do well in the traditional ways and to keep an open mind, embrace change and progress, and readily accept new ideas of achieving our new mission and goals. We know we must be prepared to make changes and implement innovations, and I really believe that our new mix of people, their backgrounds, their experiences and ideas, allows us to even do better than what we've ever, ever done before.

Mr. Lawrence: We know as you've been talking about that the IRS has been moving towards becoming a more customer-centric organization, performance based, and focusing on world-class service to the taxpayers. Sounds like a tremendous transition. I was wondering if you could tell us about the steps that the IRS is taking as it moves towards these goals.

Mr. Wenzel: I think the principal changes that we've implemented in this new approach is that we've included as many of our people as possible in the changes within our organization. In the past we did that to a limited extent, but not to the point that we've done it since the last almost 3 years. As we started to implement the changes the Restructuring and Reform Act in itself required � a new mission statement, new goals, a new organizational structure, new performance measures, and it's a whole list of requirements � we engaged our entire work force as much as we possibly could. Now we have 100,000 employees as I mentioned.

Mr. Lawrence: I was going to ask how you do that with 100,000 employees?

Mr. Wenzel: They're scattered all over the United States, and even in some of our embassies around the world. So, how do you do that? Well, first of all, we've opened up the internal communications as much as you can possibly imagine in terms of trying to get input. For example, Commissioner Rossotti has welcomed e-mail messages, voice mail messages, and he receives scores and scores of direct contact in the form of ideas, thoughts, and recommendations from employees from all over the United States.

But one of the principal things that we've done is we've started to implement the changes. We have brought numbers of employees from around the country. As we sit here this evening for example, there are 600 employees in Washington, D.C. that are modernizing the IRS task groups and being an integral part of developing the changes and improvements.

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

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Bob Wenzel, deputy commissioner of operations for the IRS. Joining me is Jim Cook, also with PricewaterhouseCoopers. Jim?

Mr. Cook: Thank you, Paul. Bob, in the last segment you talked a little bit about some of the things that you're doing, in particular with the employees and involving the employees in the modernization effort. I'd like to talk a little bit about managing that effort itself.

Some have characterized the IRS's modernization effort as changing the IRS's focus to assistance of taxpayers, rather than managing compliance. We've all heard in particular over the last 6 to 8 months about managing the balance between those two. I'd like you to get you to talk a little bit about how you manage and maintain this balance, and how you manage in particular the expectations of your employees, the taxpayers, and Congress on this critical issue.

Mr. Wenzel: Jim, that's certainly a fair question, and let me respond to it this way, although it's been identified as a concern right now, we're really addressing this day in and day out. Certainly we've changed our focus. To be sure, we have revamped our mission statement, and we've developed newly defined goals.

But just because we've moved to do a better job to meet the needs of taxpayers, it does not follow that we no longer require taxpayers to meet their legal obligations. That's never been the intent here. It is the role of taxpayers to understand and meet their tax obligations, and most do so. A very high percentage of folks do so without even a single intervention on the part of anyone with the Internal Revenue Service.

We want to do a better job at helping that overwhelming majority of taxpayers to comply, but we have not in any way lessened our commitment to taxpayers to comply. Let me underscore that. We haven't lessened our commitment to taxpayers to comply, and it's important that small minority who are not willing to comply are not permitted to get away with not complying. That's one of our principal roles, to make sure that we don't put additional burden on compliant taxpayers. People expect this of us, and we remain committed to doing just that.

Certainly, over the past year there was some confusion and misinterpretation by employees and managers about the meaning of some of the aspects of the Restructuring and Reform Act of 1998. You may have heard, for example, about Section 1203, which our employees have referred to as the "ten deadly sins." What that basically sys is that if somebody violated this one section of the act itself, it could result in removal. Then we also had a Section 1204, which addresses the use of statistics inside IRS.

But we've really worked hard on trying to alleviate the concerns of our employees, and we've done this right from the commissioner all the way down. The top leaders in our organization, by educating our employees, clearly elucidate our position in every way that you can possibly think of.

We've reinforced our position to employees that enforcement activity is a very vital component of our strategy for achieving overall compliance. But it's not the only component, and enforcement revenue is not a good measure of success in achieving our goal of service to all taxpayers.

Mr. Lawrence: The IRS modernization is a tremendous undertaking and you have to align the organization, the processes and the technology, and I think that would be difficult under any circumstances, but yet you have to continue the current operations. Can you talk to us about this change in general, and how it takes place when the IRS can't disrupt the filing season?

Mr. Wenzel: Well, we've talked already about how important it is to communicate effectively with our employees. But what we've also tried to do is to make sure that we communicate information on an ongoing basis with all our stakeholders, including various practitioners and liaison groups, other government agencies, such as the Small Business Administration and Social Security Administration, and many large and small taxpayer groups.

A good example is what we did in January when all of these external stakeholder groups came together here in Washington, D.C., and we held a press conference that was broadcast throughout the whole country. We called it our modernization conference, and it was entitled The New IRS Stands Up. This provided an opportunity for many taxpayer and tax practitioner groups to get a glimpse of our new organization and hear firsthand what was happening within the Internal Revenue Service.

It's so important for us as an agency and our mission to have open and frequent communication. Our ability to achieve employee and customer buy-in to our many changes that are underway in our organization, has been a key to much of our success thus far.

We really recognized in the earliest planning stages of the modernization that internal communication was important, but that it was also necessary to manage communication and decision-making operations in order to keep our top management out of endless and repetitive meetings.

When you talk about managing change, we've established a management process within our organization for each area of change with an executive steering committee is how we're organized consisting of the commissioner as the chairperson and identified senior executives to perform as the top-level governing body.

Additionally, included in those executive steering committees is the assistant secretary of the Treasury Department, the assistant secretary for administration of the department, our president of the National Treasury Employee's Union, NTEU, and many, many other key leaders. We work within this executive steering committee to provide consistent direction and prompt decision-making on major issues that affect progress in any or all of the change areas.

Mr. Cook: Bob, let's talk a little bit more about the employees. You've touched on that several times throughout this discussion this evening, and you've talked a little bit about some of the things that you're doing differently with the employees to include them in this effort. But how do you feel the employees are dealing with this culture shift within the IRS, and what if any resistance have you seen?

Mr. Wenzel: Jim, we've really tried to issue timely communications within the organization and to be receptive to any and all incoming correspondence. The example I gave with our commissioner having an e-mail address -- believe me, employees utilize that. At least that's been our experience. We've gotten tremendous ideas and suggestions directly from our employees that way.

We do have a very effective communications and liaison organization within our agency. We value that and make sure that we provide the right staffing and budget for communications and liaison which really helps us provide consistent and timely outward-bound communications to our employees.

Going a little bit further on that, we've been thoroughly committed from the top down, and it's gone back several years now, to listening to our employees. And one of the ways we do that is to conduct an annual employee survey using survey feedback action processes.

We just started our year 2000 survey. We expect somewhere close to 80,000 of our 100,000 employees to voluntarily take time out to do this survey. Since we've done this kind of survey for four years, we have a base line experience. We can compare from one year to the next in terms of how we're doing.

But let me just go back and say perhaps most importantly for our employees and our participants, that over 600 of our employees right now representing all functions, all areas of the country geographically in all positions within the service are participating in our whole design efforts. This is our phase 3 of our design effort. In phase 1 we've had about 400 employees, phase 2 about 500 employees, and now we're in our final phase. They are linked to their peers around the country, so there's a lot of active engagement, a lot of communication has taken place.

What's so important here is that so many employees have spent months away from their families and their regular work in order to contribute to the original design efforts, but we had more volunteers than what we actually could accommodate in our effort.

So, I think that with what's happened within the Internal Revenue Service. Our employees feel good that they have this opportunity to have the input. I also believe it's helped through this difficult transition as it relates to their attitude and their feeling about their job and their role within the IRS.

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

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Bob Wenzel, deputy commissioner of operations for the IRS. I'm joined by Jim Cook, a consultant with PricewaterhouseCoopers.

Well, Bob, I'd like to follow-up on something you mentioned in the last segment about working with the union. I'm curious to know how it is to work with the union as a key stakeholder in this effort.

Mr. Wenzel: I really can best answer that by saying that my personal experience has only been extremely positive. We started to build and strengthen our partnership with the NTEU going all the way back to 1987 when the commissioner and president of the NTEU signed an agreement to become partners in the way the IRS goes about our business.

As I said, it goes back a number of years and has become stronger and more professional as I see it with each year that passes. It's now reached the point, for example, that the Restructuring and Reform Act of 1998 calls for an oversight board that still has not been officially finalized with Congress and by the administration, but hopefully it will be in the near future.

One of the individuals nominated to be a part of the oversight board of the IRS is the former NTEU president. He has been nominated and I expect he will be appointed as a member of the oversight board. Our current president of the NTEU, Colleen Kelly is also a very active member of these executive steering committees and is actively engaged in policy and key decision-making at the executive steering committee level.

Of course, we have at the headquarters, at the highest level of the Internal Revenue Service, what we call the national partnership council. The council consists of the president of the National Treasury Employee's Union, myself, and the top leadership, and it's a representation where it's literally almost equal numbers of individuals appointed by the president of the National Treasury Employee's Union and those executives that I appoint.

We meet every other month, normally for about 3 days on key issues of concern to both of us, and all the recommendations in terms of what comes out of that effort is forwarded on. You can see a very high percentage of those recommendations being implemented throughout the Service.

So, while we go back a ways, and it's important now that we we're going through this change that we've engaged NTEU once again. They're the people that I've talked about being on the design teams. The national president of the NTEU also has the opportunity to appoint a number of members from the union to be a part of those design teams.

Those appointments are not all just management type appointments. It's that partnering effort that really we've committed ourselves to continue to have a strong and effective relationship with mutual goals, obviously, improving the quality of service, the quality of work life for all of our employees, and increasing our employee and customer satisfaction.

We have three basic goals in terms of measures, and that is customer satisfaction, employee satisfaction, and business results, and NTEU is a critical part of making that happen.

Mr. Cook: Bob, you've talked a lot about the reinvention efforts, and I always find it interesting that the general tone in the media about the IRS tends to be somewhat negative. But despite that, I'm always amazed about the fact that the IRS is in fact the model around the world for how to run a tax-administration organization. As the deputy commissioner of operations, you have primary responsibility for all of those programs that address customer service, collect the revenue, process the payments, issue the refunds. I'm interested to find a little bit more about how you and your people ensure that these programs operate in an effective and efficient manner.

Mr. Wenzel: That's a good question, and you just reminded me again of one of my experiences in my career when I was in Detroit for 7 years, and part of that time I was responsible for the state of Michigan and the customer-service program for the entire state.

One day I had a group of reporters in my office. It was near the end of the filing season in that particular year, and I asked a question. I said, when are you going to write an article that says something positive about the Internal Revenue Service, and one of them looked at me straight in the eye and said, "Bob, that doesn't sell newspapers."

It's when you make mistakes. Of course, we realize that because we have a very delicate mission in terms of our responsibility. We're very conscious of the fact that we really need to make sure we don't make mistakes, to keep them to a minimum and if we do make them, and to learn from the mistakes so that we can improve our operation.

Jim, the other side of that if I may comment, is that I'm really proud to say, and without any bragging, is that the Internal Revenue Service remains the leader throughout the world in tax administration. I say that, and I can bring in leaders from other countries that will vouch for that. We have regular visitors come into the Internal Revenue Service from around the world, including their commissioners, if you will, and their top staffs, to learn about our operations and how we go about our business.

We're doing that in spite of lagging technology and resource needs. That we've been able to maintain this leadership role is testimony to the commitment and dedication of our employees, many of whom literally have forced our 40-year-old computers to continue to work. And it's just amazing how they are able to do this. We�ve also been consistently fortunate, I believe, because of Commissioner Rossotti's highly effective and efficient leadership. He's now been with us over 2 years. Along with other top leaders, and a very, very dedicated work force from the top down and the bottom up, we are convinced that we not only will ensure continued tax-administration leadership, but we will provide better, more effective operations serving as a model throughout the world.

Mr. Lawrence: Internet speed is changing how everybody thinks about federal agencies, including the IRS, and I'm wondering how has technology impacted customer service at the IRS.

Mr. Wenzel: This really is a great opportunity for the IRS to serve our customers even better through technology. There is also a great incentive for us to be able to provide better, quicker service to taxpayers. Our ability to serve taxpayers is key to our ability to achieve our mission, and electronic tax administration is a vital piece of our future plans. We've moved into the Internet in a very, very big way, and we'll continue to look for more ways to serve taxpayers through technology.

I guess it may be fair to say that the future of electronic tax administration is really the real future of tax administration, and I mean that.

Our electronic-filing strategy is both ambitious and totally within reach, and it includes use of the Web for a wide range of tax administration purposes. As I'm sure you're probably aware, we also have underway a multiyear plan to modernize our core computer systems. This is critical to our success. Our goal is to be able to provide the public with the same level of service and responsiveness the private sector is able to deliver.

With the continued support of the Congress, and once again, the leadership of our commissioner, Charles Rossotti, and our chief information officer, Paul Cosgrave, we really expect significant results and enormous technological improvements over the next several years.

Mr. Lawrence: I'm afraid we're out of time. Thank you very much, Bob, for spending some time with us today. Jim and I have enjoyed our conversation very much. This has been The Business of Government Hour, conversations with government leaders.

I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and the co-chair of the PricewaterhouseCoopers Endowment for the Business of Government. To learn more about the Endowment's programs and research into new approaches to improving government effectiveness, visit us on the Web at See you next week.