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BUSINESSOFGOVERNMENT.ORG SPRING 2014 

The Business of Government 

3 From the Executive Director 

5 From the Managing Editor’s Desk 

8 Conversations with Leaders 

Anthony Fauci, M.D. 

J. Christopher Mihm 

Vice Admiral Mark Harnitchek 

Curtis L. Coy 

32 Insights 

Dave Bowen 

David Bowen 

Defense Health Agency 

Nani Coloretti 

U.S. Department of the Treasury 

Curtis L. Coy 

U.S. Department of Veterans Affairs 

Nani Coloretti 

Mary Davie 

Dave Lebryk 

Kathy Stack 

Dr. Simon Szykman 

56 Forum 

Six Trends Driving Change in Government 

68 Viewpoints 

Is Moneyball Government the Next 

Big Thing? 

Mary Davie 

U.S General Services Administration 


National Institute of Allergy and Infectious Diseases 

VADM Mark Harnitchek 

Defense Logistics Agency 

Modernizing the Budget Process to 

Reflect Modern Technology Realities 

Learning to Trust Open Data 

79 Perspectives 

Perspectives on Federal Acquisition and 

Complex Contracting with Professors 

Trevor Brown and David Van Slyke 

86 Management 

Predictive Policing: Preventing Crime 

with Data and Analytics 

David Lebryk 

Bureau of the Fiscal Service 


U.S. Government Accountability Office 

Kathy Stack 

Office of Management and Budget 

Using Crowdsourcing In Government 

Coordinating for Results: Lessons from 

a Case Study of Interagency Coordination 

in Afghanistan 

98 Research Abstracts 

Dr. Simon Szykman 

U.S. Department of Commerce

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Table of Contents 

From the Executive Director 

By Daniel Chenok.....................................................................................3 

From the Managing Editor’s Desk 

By Michael J. Keegan.................................................................................5 

Conversations with Leaders 


Director, National Institute of Allergy and Infectious Diseases ................. 8 


Managing Director, Strategic Issues 

Government Accountability Office ........................................................ 14 

Vice Admiral Mark Harnitchek 

Director, Defense Logistics Agency ........................................................ 20 

Curtis L. Coy 

Deputy Under Secretary for Economic Opportunity, Veterans 

Benefits Administration, U.S. Department of Veterans Affairs .................. 26 

Insights 

Pursuing IT Standardization and Consolidation: 

Insights from Dave Bowen, Director of Health Information 

Technology and Chief Information Officer, Defense Health Agency 

U.S. Department of Defense.......................................................................... 32 

Managing Resources in an Era of Fiscal Constraint and Reform: 

Insights from Nani Coloretti, Assistant Secretary of the Treasury for 

Management, U.S. Department of the Treasury ............................................ 36 

Maximizing the Value of Government IT: Insights from Mary Davie 

Assistant Commissioner, Office of Integrated Technology Services 

Federal Acquisition Service, U.S General Services Administration...............40 

Promoting the Financial Integrity of the U.S. Government: Insights 

from Dave Lebryk, Commissioner, Bureau of the Fiscal Service 

U.S. Department of the Treasury ................................................................... 44 

Harnessing Evidence and Evaluation: Insights from Kathy Stack 

Advisor, Evidence-Based Innovation, Office of Management and Budget .......48 

Data and Information as Strategic Assets: 

Insights from Dr. Simon Szykman, Chief Information Officer 

U.S. Department of Commerce .................................................................... 52 

Forum 

Six Trends Driving Change in Government.............................................. 56 

SPRING 2014 IBM Center for The Business of Government 1

Table of Contents (continued) 

Viewpoints 

Is Moneyball Government the Next Big Thing? 

By John M. Kamensky.............................................................................68 

Modernizing the Budget Process to Reflect Modern Technology 

Realities 

By Daniel Chenok...................................................................................73 


By Gadi Ben-Yehuda...............................................................................76 

Perspectives 

Introduction: Perspectives on Federal Acquisition and Complex 

Contracting 

By Michael J. Keegan...............................................................................79 

Perspectives on Federal Acquisition and Complex Contracting 

with Professors Trevor Brown and David Van Slyke 

By Michael J. Keegan...............................................................................80 

Management 

Predictive Policing: Preventing Crime with Data and Analytics 

By Jennifer Bachner.................................................................................86 


By Daren C. Brabham.............................................................................91 

Coordinating for Results: Lessons from a Case Study of Interagency 

Coordination in Afghanistan 

By Andrea Strimling Yodsampa................................................................95 

Research Abstracts 

Realizing the Promise of Big Data.......................................................... 98 

Engaging Citizens in Co-Creation in Public Services................................. 98 

Eight Actions to Improve Defense Acquisition........................................ 98 

Incident Reporting Systems: Lessons from the Federal Aviation 

Administration’s Air Traffic Organization................................................ 99 

Cloudy with a Chance of Success: Contracting for the Cloud in 

Government........................................................................................... 99 

Using Crowdsourcing In Government.................................................... 99 

Federal Ideation Programs: Challenges and Best Practices.................... 100 

Six Trends Driving Change in Government........................................... 100 

Coordinating for Results: Lessons from a Case Study of 

Interagency Coordination in Afghanistan.............................................. 100 

Predictive Policing: Preventing Crime with Data and Analytics............ 101 

Collaboration Between Government and Outreach Organizations: 

A Case Study of the Department of Veterans Affairs.............................. 101 

A Guide for Agency Leaders on Federal Acquisition............................... 101 

The Business of Government 

A Publication of the IBM Center for The Business of Government 

Daniel Chenok 

Executive Director 

John M. Kamensky 

Senior Fellow 

Michael J. Keegan 

Managing Editor 

The Business of Government magazine and 

Host/Producer, The Business of Government Hour 

Ruth Gordon 

Business and Web Manager 

Gadi Ben-Yehuda 

Innovation and Social Media Director 

IBM Center for The Business of Government 

600 14th Street, NW, Second Floor 

Washington, DC 20005 

For subscription information, call (202) 551-9342. Web page: 

www.businessofgovernment.org. Copyright 2014 IBM Global 

Business Services. All rights reserved. No part of this 

publication may be reproduced in any form, by microfilm, 

xerography, or otherwise, without the written permission 

of the copyright owner. This publication is designed to 

provide accurate information about its subject matter, but 

is distributed with the understanding that the articles do not 

constitute legal, accounting, or other professional advice. 

How to Order Recent Publications.......................................................102 

2 

www.businessofgovernment.org 

The Business of Government


Six Trends Driving Change in Government: Examples of 

Agencies Leveraging Change 

Since the creation of the IBM Center for The Business of Government over 15 years ago, 

it has been our goal to help public sector leaders and managers address real-world problems 

by sponsoring independent, third-party research from top minds in academe and the 

nonprofit sector. 

Daniel Chenok is Executive 

Director of the IBM Center for 

The Business of Government. 

His e-mail: chenokd@us.ibm.com. 

We aim to produce research and analysis that help government leaders respond more 

effectively to their mission and management challenges. The IBM Center is named “The 

Business of Government” because we focus on the management and operation of government, 

not the policies of government. Public sector leaders and managers need the best, 

most practical advice available when it comes to delivering the business of government. 

We seek to bridge the gap between research and practice by helping to stimulate and 

accelerate the production of research that points to actionable recommendations. 

Over the past several months, the Center for the Business of Government has been examining 

trends in six different areas that are driving government to approach mission and 

business challenges differently, pointing to the need for further analysis and recommendations 

on how to effect change across these six areas. The Center reviewed these trends 

and released a special report, Six Trends Driving Change in Government. The Forum in this 

edition offers a primer on each of the six trends and the insights that can help gov ernment 

executives respond more effectively to their mission and management chal lenges. The 

Center’s research agenda is informed by these trends, but some federal agencies have 

already started down a positive path of change in each trend area, and their ideas can 

serve as models for others to adapt as appropriate. 

Such examples include: 

Performance. The Department of Education has created a What Works Clearinghouse of 

successful policies, programs, and practices that provide educators in the field with the 

best information available so they can make evidence-based decisions regarding curriculum 

and other education-based initiatives. 

Risk. The Internal Revenue Service established a new Chief Risk Officer to help agency 

leaders understand risks in advance, and develop strategies that support the delivery of 

taxpayer services that account for, communicate, and mitigate risks. 

Innovation. The Consumer Financial Protection Bureau (CFPB) has introduced a portal 

called the Project Catalyst, through which they achieve three of the goals laid out in this 

section. The CFPB allows visitors to the site to (1) “Pitch a Pilot,” (2) “Run a Disclosure 

Trial,” and (3) “Use Our Data.” They are doing so in order to “engage with the innovator 

community; participate in initiatives that inform our policy work; and stay on top of 

emerging trends to remain a forward-looking organization.” 



Efficiency. The General Services Administration has saved over $1 billion through actions 

taken by its Information Technology Service to create a marketplace that will provide 

agencies with buying options, access to data and information, access to expertise, and 

an improved buying experience. 

Mission and Leadership. Mission support chiefs within the Departments of Veterans Affairs 

and Agriculture convene on a regular basis to share their progress on various initiatives 

and to identify ways to work together, for example on telework strategies and reducing 

their real estate footprints. Success in any of these initiatives often involves leaders collaborating 

with multiple mission-support organizations in order to be successful. 

This issue highlights successful actions being taken throughout government to meet challenges 

of ever-increasing complexity, and sparks thinking among government leaders and 

stakeholders about how best to forge new paths forward. ¥ 

4 




By Michael J. Keegan 

In meeting varied missions, government executives confront significant challenges. 

Responding properly to them must be guided and informed by the harsh fiscal and 

budgetary realities of the day. It can no longer be simply a wishful platitude that government 

do more with less. Leaders need to change the way government does business to 

make smarter use of increasingly limited resources—leveraging technology and innovation 

to be more efficient, effective, anticipatory, adaptive, and evidence-based in delivering 

missions and securing the public trust. 

Michael J. Keegan is Managing 

Editor of The Business of 

Government magazine and 

Host/Producer of The Business 

of Government Hour. His 

e-mail: michael.j.keegan@ 

us.ibm.com. 

Government executives, however, must also avoid the tyranny of the present or the next 

budget cycle, and recognize that the challenges of today often morph into the hazards of 

tomorrow. So anticipating the future—getting ahead of events rather than being subsumed 

by them—becomes integral to positioning, resourcing, and preparing an agency for what 

may come, while always keeping focused on primary responsibilities. 

This edition of The Business of Government magazine underscores the importance of 

correlating short-term decision-making with long-range consequences. We highlight the 

latest trends and best practices for improving government effectiveness by introducing you 

to key government executives, detailing the work of public management practitioners, and 

offering insights from leading academics. 

Forum on Six Trends Driving Change in Government 

Fiscal austerity, citizen expectations, the pace of technology and innovation, and a new 

role for governance make for trying times. These challenges influence how government 

executives lead today, and more important, how they can prepare for the future. It is anticipating 

the future—using foresight in government—that can deepen our understanding of 

the forces driving change. 

In a special report, Six Trends Driving Change in Government, the IBM Center for The 

Business of Government has identified trends that correspond to these challenges and 

drive government change. Separately and in combination, they paint a path forward in 

responding to the ever-increasing complexity government faces. 

The areas covered by Six Trends are performance, risk, innovation, mission, efficiency, 

and leadership. Focusing on these has the potential to change the way government does 

business. This forum reflects our sense of what lies ahead, providing an excerpt of the 

Six Trends special report. We hope these insights are instructive and ultimately helpful to 

today’s government leaders and managers. For a more in-depth exploration of each trend, 

download or order a free copy of the full report at businessofgovernment.org. 


Throughout the year, I have the pleasure of speaking with key government executives and 

public sector leaders about their agencies, accomplishments, and vision of government in 

the 21st Century. The four profiled manifest the leadership and strategic foresight needed 

to meet their varied missions. 



• Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, 

leads an agency that has for 60 years been at the forefront of research in infectious 

and immune mediated diseases, microbiology, and immunology. Dr. Fauci outlines 

his agency’s strategic priorities, how NIAID accelerates basic research into health care 

practice, and the lessons learned from studying emerging and reemerging infectious 

diseases. 

• Chris Mihm, managing director for strategic issues at the U.S. Government 

Accountability Office, describes his group’s work in three broad areas—oversight, 

insight, and foresight. His oversight mission focuses on making sure that funds are 

expended for their intended purposes. Mihm also offers insights into what works, identifying 

best practices that can be leveraged and adopted, where appropriate, across 

government. Finally, what he calls foresight involves pinpointing emerging trends, 

making Congress aware of them, and informing them of the trends’ possible implications 

for public policy and governance. 

• Vice Admiral Mark Harnitchek, director of the Defense Logistics Agency, is charged 

with providing full-spectrum logistical support to the armed services and civilians 

around the world every day and for every major conflict over the past five decades. 

Logistics is a cost driver that must be managed with deliberate precision. Admiral 

Harnitchek recognizes that the very nature of envisioned threats and conflicts over the 

next decade, combined with increased fiscal challenges, demand an agile, joint logistics 

response marked by innovation and best practices. 

• Curtis Coy, deputy under secretary for economic opportunity within the U.S. 

Department of Veterans Affairs, manages a portfolio of educational and job training 

services for eligible veterans to enhance their economic opportunity and successful 

transition. With some one million veterans likely to separate or retire in the next 

five years and many young veterans unemployed, Coy discusses how VA promotes 

employment and educational opportunities for veterans and what VA is doing to 

enhance opportunities for veterans to obtain knowledge and skills to properly transition 

to civilian life. 

Insights from Leaders 

Over the past six months, I also had an opportunity to speak with public servants pursuing 

innovative approaches to mission achievement and citizen services. Six government executives 

provide insights into how they are changing the ways government does business. 

• Dave Bowen, chief information officer at the Defense Health Agency, shares his 

insights into the information technology strategy for DOD’s Defense Health Agency, 

how the DHA will enhance IT efforts to deliver care anytime, anywhere, and how 

DHA is modernizing its technology infrastructure and working toward a robust, integrated 

electronic health record. 

• Nani Coloretti, assistant secretary of the Treasury for management, offers her insights 

on Treasury’s management performance agenda, what her department is doing to 

consolidate its office space and right-size its operational footprint, and how it is 

working to transform the way it does business. 

• Mary Davie, assistant commissioner, U.S. General Services Administration’s Office of 

Integrated Technology Services, describes how ITS is increasing government IT’s value 

while lowering its cost. She identifies her office’s strategic priorities and how she is 

improving its operations, becoming more efficient and agile. 

6 




• Dave Lebryk, commissioner, Bureau of the Fiscal Service, U.S. Department of the 

Treasury, outlines his insights on how the Fiscal Service transforms the way the federal 

government manages its financial services, what Fiscal Service does to promote 

the financial integrity and operational efficiency of the federal government, and 

how Lebryk is seeking to realize efficiency, better transparency, and dependable 

accountability. 

• Kathy Stack, advisor for evidence-based innovation at the Office of Management and 

Budget (OMB), describes program evaluation and how evidence and rigorous evaluation 

can be integrated into decision-making. She details her insights on the importance 

of using evidence to inform program delivery and how agencies conduct rigorous 

program evaluations on a tight budget. 

• Dr. Simon Szykman, chief information officer at the U.S. Department of Commerce, 

highlights the department’s information technology strategy, how it has changed the 

way it does IT, the challenge of cybersecurity, and much more. 

Perspectives on Federal Acquisition and Complex Contracting 

In fiscal year 2012, the federal government contracted for $517 billion in products. 

Complex products require more sophisticated contracting approaches. Why do federal 

agencies need to acquire and procure goods and services? What are the basic phases of the 

federal acquisition lifecycle? What are the challenges of acquiring complex products? What 

lessons can be learned from the Coast Guard’s Deepwater program? How can government 

executives most effectively manage complex acquisitions? We explore these questions and 

more with Professor Trevor Brown of the John Glenn School of Public Affairs at The Ohio 

State University, and Professor David Van Slyke of the Maxwell School of Citizenship and 

Public Affairs at Syracuse University. 

Viewpoints 

John Kamensky ponders whether “moneyball government” is the next big thing. Dan 

Chenok explores the need to modernize the budget process to reflect modern technology, 

and Gadi Ben-Yehuda provides his viewpoint on learning to trust open data. 

I close this edition with overviews of several recent Center reports. If you have not read 

these reports, we encourage you to do so by going to businessofgovernment.org. We hope 

you enjoy this edition of The Business of Government magazine. Please let us know what 

you think by contacting me at michael.j.keegan@us.ibm.com. I look forward to hearing 

from you. ¥ 



A Conversation with Anthony Fauci, M.D. 

Director, National Institute of Allergy and 

Infectious Diseases 

For more than six decades, the National Institute of Allergy 

and Infectious Diseases (NIAID) has been at the forefront of 

research in infectious and immune mediated diseases, microbiology, 

immunology, and related disciplines. It conducts and 

supports basic and applied research to better understand, 

diagnose, prevent, and treat infectious diseases including 

HIV/AIDS, tuberculosis, and malaria, as well as immune 

mediated disorders such as lupus and asthma. This work has 

led to new vaccines, therapeutics, diagnostics, and other 

technologies that have improved health and saved millions 

of lives in the United States and around the world. 

What are the strategic priorities of NIAID? How is NIAID 

accelerating findings from basic research into health care 

practice? What have we learned from the study of emerging 

and reemerging infectious diseases? What’s on the horizon 

for NIAID? Dr. Anthony Fauci, Director of the National 

Institute of Allergy and Infectious Diseases, joined me on 

The Business of Government Hour to explore these questions 

and more. The following provides an edited excerpt 

from our interview. – Michael J. Keegan 

On the Strategic Priorities for NIAID 

The four major areas of emphasis are: 

• HIV/AIDS 

• Infectious diseases other than HIV/AIDS, which include 

the standard established infections, emerging and reemerging 

infections, and even bio-defense such as having 

defense against anthrax or other attacks 

• Basic and clinical research into the immune system— 

understanding how it works, diseases of aberrant function 

of the immune system, or deficiency of the immune system 

• Global health, focusing on a vision of where we want to go 

Regarding HIV/AIDS, three-plus decades since the [recorded 

manifestation] of this devastating pandemic, we have the 

scientific basis for development of prevention modalities and 

treatment that’s highly effective. We are also on a quest for 

a vaccine. We feel we can turn around the trajectory of the 

pandemic, and within a reasonable period of time, we’ll see 

an AIDS-free generation, where the number of new infections 

is less than the number of people who are put on therapy. 

The strategic vision for tackling emerging and reemerging 

infectious diseases involves developing platforms of vaccines 

and drugs that would have universal applicability, rather than 

trying to chase everything that might emerge. With regard 

to immunology, it’s just fundamentally good, sound basic 

research to understand the mechanisms of immune function 

to properly understand how we might suppress aberrant 

mechanisms and enhance deficient mechanisms. 

8 




It’s becoming quite evident that we live in a “global community” 

[with] certain consequences. The idea that we worry 

about certain diseases and there are diseases other people 

worry about is antiquated. 

On Challenges Facing NIAID 

We live in an era of constrained resources [and unprecedented] 

scientific opportunities. This is a real challenge: 

how do you get the best bang for the buck? How do we 

pursue groundbreaking research that will ultimately benefit 

public health under tight budgets? We meet this challenge 

by prioritization, which is essential because there are a lot 

of good ideas, but in an era of fiscal constraint you can’t 

pursue them all. 

The next significant challenge we face is particular to 

NIAID’s unique mission—anticipating the unexpected! Most 

institutes at NIH, including NIAID, are responsible for the 

basic and clinical research in a particular area, whether it’s 

focusing on heart, lung, blood, kidney, etc. For us, it’s infectious 

diseases and immunology. In addition to that predictable 

translation from a basic concept to an applied clinical 

concept, NIAID must also always be ready for the unexpected. 

At a moment’s notice we may need to respond to a 

completely new infection. 

This is exactly what we faced in the summer of 1981. At 

that time, the CDC’s Morbidity and Mortality Weekly Report 

reported the first five cases of pneumocystis pneumonia in 

gay men from Los Angeles. One month later, an additional 

26 young gay men from New York, San Francisco, and LA 

presented with this strange disease. Immediately, it was our 

task to figure what it was and what can be done. This need 

to deal with the unexpected and unpredictable presents a 

unique challenge for NIAID. It isn’t every week that a new 

cancer is discovered or a new form of heart disease, but at 

any given time we could face a brand new infectious disease. 

On the Characteristics of Infectious Diseases 

Infectious diseases have a number of unique characteristics. 

Microbes have the capability, through mutations, of changing 

characteristics in minutes to days because of their replication 

capability. Microbes like HIV replicate thousands of 

times per day. When you’re talking about infectious diseases, 

it’s a constant evolution. You have a disease. It spreads. You 

develop a drug. You treat a person, and then all of a sudden 

after a period of years, the virus or the bacteria develops 

resistance and you have to come in with another drug. It’s 

a constant, dynamic, emerging world of microbes that we’ll 

never completely wipe out; microbes constantly adapt for 

their own survival. We need to stay a step ahead of it all with 

our intervention, therapies, vaccines, or diagnostics. 

It’s a constant state of surprise given the extraordinary capability 

of microbes, viruses, bacteria, and parasites to evolve, 

emerge newly, or reemerge in a different setting and under 

different circumstances. I gave the example of HIV/AIDS 

emerging in 1981 as a truly new infection. In addition, we 

also face reemerging infections; these are infections that have 

historically existed that may be dominant, but reemerge either 

in a different form or a different location. For example, we 

have drug-resistant malaria. For years, we were able to treat 

malaria easily, and then drug-resistant forms emerged. We 

have diseases that have been around a long time, but not in 

our backyard. A classic example of that is West Nile Virus, 

which was in the Middle East and in Africa for centuries, but 

only within the last couple of decades has come to the U.S. 

It’s not so much a state of surprise, but [a] constant state of 

the unexpected. 

On the Pursuit of Progress: HIV/AIDS 

HIV 

In the mid-80s and early 90s, the median survival of my 

patients with HIV/AIDS was six to eight months, meaning 



that 50 percent of the patients would be dead in six to eight 

months, which is horrible. By applying fundamental basic 

research that involves understanding the replication cycle, 

targeting the vulnerable components of that replication 

cycle, and designing a drug therapy … fast-forward 30 years 

[to] today, we now have more than 30 FDA-approved antiretroviral 

drugs. When we use these drugs in combination, a 

recently infected person could [possibly] live an additional 

50 years. That’s a dramatic turnaround over a 30-year period. 

Along with these anti-retroviral drugs, we have effective lowtech 

forms of prevention. 

In addition, we’re actively pursuing the development of an 

HIV vaccine. The question is, can we cure people? Can we 

get to the point where you suppress the virus enough that 

you could stop the drug and the virus won’t rebound? I don’t 

know … but it’s certainly … worth trying …. Over the last 

three years, the advance … toward a vaccine is much more 

than what we had seen in the previous 15 to 20 years. 

On Bringing Tuberculosis (TB) Research into the 

21st Century 

Tuberculosis 

Tuberculosis is one of these enduring global health issues. 

It has been neglected because of a good dose of complacency—that 

it’s somebody else’s problem, not a problem for 

the developed world. One-third of the world’s population 

is infected with latent tuberculosis. That’s over two billion 

people. Though they’re not sick, they have latent TB, with 

about eight million new cases a year and about 1.3 million 

deaths per year. 

Our goal is to bring the science of tuberculosis into the 21st 

century. Until recently, we haven’t had a new drug for tuberculosis 

in over 40 years. Just this past year, we had the first 

drug that was specifically approved only for TB. 

We have a very ineffective tuberculosis vaccine. We have 

diagnostics that are antiquated. We don’t have enough drugs 

and the drugs we do have require six months to a year to 

suppress the disease. We need to play serious catch-up. 

We’re doing that by aggressively applying modern techniques 

such as the ability to rapidly sequence strains of TB, identify 

vulnerable parts of the microbacteria susceptible to drugs, 

and code for antigens that might be used for a vaccine. We 

have ways of not only diagnosing TB, but also determining 

at the point of care whether we’re dealing with a resistant 

tuberculosis. 

About 10 percent of the two billion-plus who are latently 

infected with TB will, during their lifetime, manifest active 

TB. We don’t understand this mechanism. We don’t understand 

the fundamental pathogenesis of tuberculosis or the 

systems biology of the immune system. Why doesn’t the 

immune system completely eradicate tuberculosis? Why 

do you always have a little bit that remains and is latent? 

What is the proper immune response to protect you? We 

are applying microbial genomic sequencing technologies, 

investing in the basic science underlying point-of-care 

diagnostics, supporting research to develop vaccine candidates, 

and engaging in public-private partnerships for drug 

development. 

On the Development of a Universal Influenza 

Vaccine 

We have made significant progress toward the production 

of vaccines, but for me and my colleagues in the field, the 

real goal is to develop what we call a universal influenza 

vaccine. This would obviate the need for annual influenza 

vaccination and enhance our ability to respond to … influenza 

pandemics. A universal flu vaccine induces a response 

against that component of the influenza virus that doesn’t 

change or changes very little from season to season. We are 

getting closer to this goal, so the exciting thing in influenza 

research is to develop a truly effective influenza vaccine that 

you may need to give once or two or three times throughout 

the lifetime to protect you against all strains. 

On Combating Drug Resistance 

Influenza 

MRSA 

It is a fact of life that microbes, given their replicative and 

mutational capability, adapt to whatever you throw at them. 

When you treat a patient with an antibiotic or an antiviral, 

10 



“It’s a constant state of surprise given the extraordinary capability of microbes, 

virus, bacteria, and parasites to evolve, emerge newly, or reemerge in a 

different setting and under different circumstances.” 

unless you completely eliminate that bacteria or that virus, 

it will naturally select for the mutation that is resistant to 

getting killed. When you are infected with a virus or bacteria 

it isn’t a single homogenous microbe. Mutations occur that 

can make a microbe resistant. If you inadequately treat 

the sensitive microbes, resistant ones might emerge and 

dominate. 

Therefore … if you use antibiotics when you don’t need them 

or use them at the incorrect dose, you will inadvertently 

select for resistant microbes. The overuse and inappropriate 

use of antibiotics is a surefire way to help the microbe select 

for resistance, leading to drug-resistant forms. 

In an outbreak of a disease, using sequencing and computational 

biology, we can very rapidly know whether we are 

dealing with a microbe, for example a virus. We can then 

identify the class of virus: checking databases, we assess 

whether there is a virus that absolutely matches it. If this 

virus doesn’t match anything we’ve seen before, then wow, 

we’re dealing with a brand-new virus. Once you identify 

it and sequence it, you can actually create it and then 

On Technological Advancement and the Use of 

Scientific Technology 

From the standpoint of infectious diseases, there are a 

number of technologies, but let me pick out one that is 

really transformative. It is the ability to rapidly sequence the 

genome of the microbes. To give you a sense of the transformation, 

when the first microbe was sequenced decades ago 

it took about a year and about $40 million. Today, we can 

do it in a few hours for a couple of dollars. It’s just breathtaking 

what you can do. We refer to it as next generation 

sequencing, NGS, or deep sequencing where you could take 

a quasi-species of viruses and sequence every single one 

of them and know the signatures of resistance, transmissibility, 

and pathogenesis. This is the application of genomics, 

proteomics, and informatics. These are technically the most 

transforming advances that we’ve been able to make. 

From a basic research perspective, we are able to better 

understand how the microbe works—all the genetic determinants 

of its functions. You arrive at a genotype and a phenotype. 

Genotype is what the genes are and the phenotype 

is how the microbe acts, what it does. To be able to make 

that correlation between genotype and phenotype instantaneously, 

as opposed to waiting, is phenomenal. From an 

applied research standpoint, the progress is breathtaking. 



“ The strategic vision for tackling 

emerging and reemerging 

infectious diseases involves 

developing platforms of vaccines 

and drugs that would have 

universal applicability, rather than 

trying to chase after everything 

that might emerge.” 

12 




manipulate it. This enables you to target drugs against it. 

These are activities that can be done today almost instantaneously, 

which years ago took months, if not a year or 

longer. 

On the Evolving Strategies in Biodefense 

Our biodefense strategy has evolved since the mid-2000s, 

[when] we were developing vaccines and drugs for threats 

we knew. It became clear that it was futile to try and make 

an intervention against each and every single potential 

microbe. We started to focus on what we call broad multiuse 

platforms for vaccines, antibiotics, and antivirals. We 

could have an antiviral that would be effective against 

multiple different classes of viruses. 

This shift in strategies has been transformative for the entire 

field of microbiology. It allows us to develop sustainable 

interventions against microbes that someone might deliberately 

release, namely bioterrorism. It also helps us prepare 

against the more likely scenario and that is nature itself. 

The evolutions of microbes that have devastated civilizations 

are naturally occurring events. In the quest to protect 

and develop interventions against deliberately released 

microbes, we’ve come a long way to enhance our capability 

of responding to naturally occurring events. 

On the Future 

We can expect extraordinary, breathtaking opportunities 

in science. From the standpoint of infectious diseases and 

immunology, it is being able to unlock the intricacies and 

the secrets of the immune system. How might we control 

it when it’s aberrant and supplement it when it’s deficient? 

With regard to microbes, we remain ever vigilant for any 

emerging infectious disease. We also seek, beyond just an 

aspiration, to send HIV/AIDS, malaria, and tuberculosis the 

way of smallpox. We pursue these goals, and our mission, 

in an era of constrained resources at a time when some 

view scientific research as a discretionary component of the 

federal budget. Personally, I don’t think science should be a 

discretionary component. It should be a mandatory component 

of what we do. ¥ 

To learn more about the National Institute of Allergy and 

Infectious Diseases, go to www.niaid.nih.gov/Pages/default.aspx. 

To hear The Business of Government Hour’s interview with Dr. Anthony 

Fauci, go to the Center’s website at www.businessofgovernment.org. 

To download the show as a podcast on your computer or MP3 player, 

from the Center’s website at www.businessofgovernment.org, right 

click on an audio segment, select Save Target As, and save the file. 

To read the full transcript of The Business of Government Hour’s 

interview with Dr. Anthony Fauci, visit the Center’s website at 

www.businessofgovernment.org. 



A Conversation with J. Christopher Mihm 

Managing Director, Strategic Issues 

Government Accountability Office 

Governments today face serious public management challenges 

that go to the core of effective governance and leadership, 

testing the very form, structure, and capacity required 

to meet these challenges head on. These challenges run the 

gamut—national security, the aging population, mounting 

fiscal pressures, and a host of others. Given these challenges, 

government leaders need to reassess and reprioritize 

how they do business. For these leaders it is ultimately about 

delivering meaningful results and being solid stewards of the 

public trust. 

In many ways the U.S. Government Accountability Office 

(GAO) provides the oversight, the insight and the foresight 

that can assist today’s government leaders to better manage 

resources, enhance program performance, and forge a path 

to a more sustainable future. What are the fiscal, management 

and performance challenges facing today’s government 

executive? What is the goal of GAO’s High Risk Series? How 

are performance data being used to drive decisions in the 

federal government? How can agencies change the way they 

do business to respond effectively to 21st century governance 

challenges? 

Chris Mihm, GAO’s Managing Director for Strategic Issues, 

joined me on The Business of Government Hour to explore 

these questions and more. The following provides an edited 

excerpt from our interview. – Michael J. Keegan 

On the History and Mission of GAO 

The General Accounting Office was formed in 1921. In 2004, 

it was renamed the Government Accountability Office to 

more accurately reflect the work we do today. Our mission 

is to support the U.S. Congress in meeting its constitutional 

responsibilities. We are a congressional agency that focuses 

on helping to improve the performance and ensure the 

accountability of the American government for the benefit of 

the American people. In recent years, we have done between 

800 and 900 products a year. Most of those are performance 

audits with probably 90% performed at the request of 

Congress or written into legislation. 

Our audit work falls into three broad areas—oversight, 

insight, and foresight. Our oversight mission focuses on 

compliance and making sure that funds are properly 

expended for their intended purposes. Our work also offers 

insights into what works, identifying best practices that can 

be leveraged and adopted, where appropriate, across government. 

Finally, what we call foresight involves pinpointing 

emerging trends, making Congress aware of them, and 

informing them of the possible implications of these trends 

for public policy and governance. 

We pursue our mission with an approximate budget of $546 

million a year. Like most other federal agencies, we have had 

a decline during the [recent] period of austerity. Our staffing 

is at about 2,900 today, which is among the lowest since the 

1930s. We’re organized here in Washington, D.C., with 11 

field offices across the country. About 70% of the GAO staff 

is located in D.C. 

14 




On Leading GAO’s Strategic Issues Portfolio 

There are 14 teams within GAO. For the most part, these 

teams are programmatically organized. For example, we 

have a team that focuses on defense issues, another on 

natural resources, and still another that concerns itself with 

the physical infrastructure of the U.S. However, some of 

the teams are crosscutting in nature. The team that I lead, 

Strategic Issues, is one of the crosscutting teams. Our focus 

is more functional and less programmatic. We look at functional 

issues that span across government and programs. 

GAO’s Strategic Issues team supports the agency’s third strategic 

goal, which is to help transform the federal government 

to address national challenges. We have responsibility 

for a broad set of crosscutting governance issues encompassing 

performance planning, strategic planning, regulatory 

policy, and strategic human capital management. We’re 

also concerned with how the government funds itself, which 

entails looking at the tax system in terms of tax policy, 

administration, as well as budgeting. We perform our own 

engagements—audits that typically culminate in reports. Just 

as importantly, we work with and support our colleagues 

from other teams within GAO. For example, if the GAO 

Defense Group perhaps identifies a human capital issue, 

then we are there to provide them the latest thinking and 

best practices to address this issue. 

On Challenges and Changes 

We work in a very challenging environment. We face what 

I refer to as a supply-demand imbalance. Congress’ need 

for independent, objective, and timely information, as well 

as assessments on how to improve government performance, 

has grown markedly and continues to grow. At the 

same time, our budget has been going down. This situation 

requires us to work very closely with our clients to understand 

their needs and set clear expectations. The only thing 

worse than bad news is bad news that comes late or bad 

news that is unexpected. 

I also want our auditing techniques to be top-tier, and that 

the questions we’re asking are suited to the problems we’re 

addressing. For example, when we do a performance audit 

of a government program, these audits have followed a traditional 

logic model approach. We would assess a program’s 

inputs (e.g., resources expended) and outputs (e.g., products 

produced) and determine its effectiveness. Increasingly, 

the focus is shifting away from program outputs and more 

towards outcomes. This approach changes the unit analysis, 

given we are now concerned with an outcome and working 

back, which is a distinctly different approach than the typical 

logical model that starts with a program and works through 

its specific inputs, activities, and outputs. 

Given that government is confronting increasingly complex, 

wicked challenges, this shift in focus toward outcomes and 

results may present a more suitable approach to effective 

governance. It also rests on the recognition that the outcomes 

being sought today are not going to be possible by one organization 

using one program strategy, operating on its own. 

They are going to be achieved by a variety of programs 

working together in a coordinated way to achieve results. This 

notion of complexity and network management is certainly a 

big change requiring a new way of doing business. 

The pace at which decision-makers need and must have 

information has changed significantly. Where we used to 

have time to pilot-test something or shake out the bugs, 

today the impetus has changed. Technology and social media 

have really pushed this change. 

On the Importance of GAO’s High Risk Series 

In 1990, GAO began a program to report on government 

operations that it identified as high risk. The High Risk Series 

was designed to highlight major program areas that are most 

vulnerable to waste, fraud, abuse, mismanagement or in 

need of broad-based transformation. Since then, GAO has 

reported on the progress to address high-risk areas. In our 

last report, two areas were removed from the high-risk designation: 

management of interagency contracting and IRS business 

systems modernization. Two areas were added: limiting 



LOGIC MODELS 

OUTCOMES 

OUTPUTS 

ACTIVITIES 

INPUTS 

Long term|Intermediate|Short 

Benefits or changes for 

participants during or 

after program activities 

The direct 

products of 

program 

activities 

What the 

program does 

with inputs 

to fulfill its 

mission 

Resources 

dedicated to 

or consumed 

by the 

program 

INPUTS 

OUTPUTS 

ACTIVITIES 

OUTCOMES 

Resources 

dedicated to 

or consumed 

by the 

program 

The direct 

products of 

program 

activities 

What the 

program does 

with inputs 

to fulfill its 

mission 

Short|Intermediate|Long term 

Benefits or changes for 

participants during or 

after program activities 

Logic models can strengthen the development of program outcomes, validate underlying program logic, and explain the purpose and operation of the program to 

others. Logic model is one among a number of planning and evaluation tools that provide a structured approach to clarifying activities and intended outcomes. 

When used as planning tool, the logic model “starts with the end” in mind by focusing on desired outcomes. It then requires the identification of outputs that contribute 

to those outcomes, activities that produce those outputs, and the inputs necessary to achieve these outcomes. 

When used as an evaluative tool, it starts with inputs working through desired outcomes; it identifies measures that will be used to determine whether desired outcomes 

have been achieved as well as the sources of data required to support the measurement of those outcomes. 

the federal government’s fiscal exposure by better managing 

climate change risks and mitigating gaps in weather satellite 

data. These changes bring GAO’s 2013 High Risk List 

to a total of 30 areas. Overall, GAO’s high risk program has 

served to identify and help resolve serious weaknesses in 

areas that involve substantial resources and provide critical 

services to the public. 

Our next report is scheduled for release in February 2015 

inclusive of updates, additional [high risk areas], and 

hopefully removals. We do that because it helps shape the 

congressional oversight agenda. As Justice Brandeis said, 

sunshine is the best disinfectant. Since the high-risk program 

began, the government has taken high-risk problems seriously 

and has made long-needed progress toward correcting them. 

On the Promises of the GPRA Modernization Act 

of 2010 

One of the greatest accomplishments of the original GPRA 

Act of 1993 was putting in place a performance infrastructure 

that required agencies to do strategic plans, annual 

performance plans, performance reporting with focus 

outcomes, and performance measures. It was lacking in two 

very important areas. The original GPRA was unsuccessful in 

getting agencies to work effectively on specific issues across 

organizational boundaries. It also generated volumes of 

performance information that was available but rarely being 

used to inform decision-making. 

The GPRA Modernization Act of 2010 was designed to 

address these two limitations and more. It sought to craft a 

16 



“Our audit work falls into three broad areas—oversight, insight, and foresight. Our 

oversight mission focuses on compliance and making sure that funds are properly 

expended for their intended purposes. Our work also offers insights into what works, 

identifying best practices that can be leveraged and adopted, where appropriate, 

across government. Finally, what we call foresight involves pinpointing emerging 

trends, making Congress aware of them, and informing them of the possible 

implications of those trends for public policy and governance.” 

more integrated and crosscutting approach to federal performance 

and push for the expanded use of performance 

information. This law established a variety of requirements 

and mechanisms to make this happen (i.e., the establishment 

of agency priority goals and cross-agency priority goals). 

Under the GPRA Modernization Act, we have a statutory 

responsibility to do periodic reviews of its implementation 

among federal agencies. GAO issued its latest report in June 

2013 and found that agencies had been pretty successful 

designating the number two in the agency or the deputies to 

be the chief operating officers. There are chief performance 

officers within agencies and goal leaders that have been 

designated as well. Putting this infrastructure in place is a 

positive and important development. 

The report did identify weaknesses: agencies need to ensure 

that performance information is useful and being used by 

federal managers to improve results, they need to pursue 

additional opportunities to address crosscutting issues, 

present performance information that could better meet 

users’ needs, and provide performance information that is 

useful to congressional decision-making. We’ve made progress, 

but we need to keep pushing this crosscutting issue with 

agencies and OMB. It’s key in realizing greater effectiveness 

and cost savings. 

GAO Featured Reports 

Duplication & Cost Savings: 

GAO’s yearly report on areas where 

the federal government could reduce 

duplication and achieve cost savings. 

High Risk Series: 

GAO’s list of programs that need 

continued attention due to high risk 

factors. 

Managing for Results in Government: 

Effective performance management 

helps the federal government to 

improve outcomes in areas that affect 

nearly every aspect of Americans’ lives, 

from education, health care, and housing 

to national and homeland security. 



“ GAO’s Strategic Issues team 

supports the agency’s third 

strategic goal, which is to help 

transform the federal government 

to address national challenges. 

We have responsibility for a broad 

set of crosscutting governance 

issues encompassing performance 

planning, strategic planning, 

regulatory policy, and strategic 

human capital management across 

the federal government.” 

18 




On Opportunities to Reduce Fragmentation, 

Overlap, and Duplication 

GAO issues an annual report on overlap, duplication, and 

fragmentation in government programs. We have identified 

over 380 actions that the administration and Congress 

can take to address fragmentation, overlap, and duplication. 

GAO’s 2013 annual report identifies 31 new areas where 

agencies may be able to achieve greater efficiency or effectiveness; 

17 involve fragmentation, overlap, or duplication. 

The number of program areas where there’s pure overlap— 

same programs, same tools, going to the same beneficiary or 

target population—is relatively infrequent. Far more frequent 

is overlap, which is the same population, but use of different 

tools or program strategies. Even more frequent is fragmentation, 

which is a variety of different programs using different 

strategies that are all trying to achieve a common outcome. 

On duplication and overlap, we’ll find success when we 

eliminate low-performing or ineffective programs and move 

money to better-performing programs that will net better 

outcomes. Regarding fragmentation, the solution is very often 

getting agencies to work better together; this is absolutely 

essential. 

We also found other cost savings or revenue enhancement 

opportunities. For example, we should do a better job 

reducing the net tax gap of $385 billion. The tax gap is the 

annual difference between what is legally owed and what 

is actually collected by IRS. Over the last few years, my 

group has focused on how the IRS can pursue the right mix 

of enforcement strategies and citizen service strategies to 

reduce that tax gap. 

Addressing fragmentation, overlap, and duplication will 

require continued attention by the executive branch agencies 

and targeted oversight by Congress. 

On the Future 

The country faces long-term fiscal issues requiring some 

fundamental decisions. We support the Congress as it 

ponders reprioritization and rethinking to address these fiscal 

issues. Since we’re fundamentally interested in improving 

performance of government, the way we’re going to do it 

is by improving the connections across organizations more 

than simply eking out another one or two percent of productivity 

out of any individual agency. 

I think the Center’s special report, Six Trends Driving Change 

in Government, contributes to a better understanding. I 

was very pleased to have participated in some of the initial 

brainstorming associated with its development. When we’re 

looking at drivers such as risk, innovation, mission, performance, 

efficiency, and leadership, there are certainly things 

individual organizations need to do in each of those areas. 

Fundamentally, at the end of the day, to improve the way 

organizations work across boundaries, we must recognize 

that risk management is more than how I manage my risk in 

my four walls. It also includes how my partners, whom I am 

absolutely dependent upon, manage their risk; how do we 

foster innovation across a network? What does leadership 

look like across a network? What does performance look like 

across a network? Individual agency improvement efforts are 

paying real dividends, but huge improvements are going to 

come in working better across organizations. 

We’re working on very difficult issues. Given budget realities, 

this may require GAO to perform fewer jobs, but the 

quality of our work will never be sacrificed; that is nonnegotiable. 

Given the speed of the decision-making, we need 

to make sure the work we’re doing is sufficient to answer 

the questions posed, so that we get the information to the 

decision-makers in the time and format they need. A beautiful, 

well-crafted report that comes in one day after the decision 

was made is essentially an historical document. With 

the speed of decision-making, social media, and all the rest, 

we need to find ways to radically streamline how we get our 

information out. We have an initiative underway in GAO 

that’s designed to do just this. ¥ 

To learn more about the Government Accountability Office, 

go to www.gao.gov. 

To hear The Business of Government Hour’s interview with J. Christopher 

Mihm, go to the Center’s website at www.businessofgovernment.org. 





interview with J. Christopher Mihm, visit the Center’s website at 




A Conversation with Vice Admiral Mark Harnitchek 

Director, Defense Logistics Agency 

The Defense Logistics Agency (DLA) provides full-spectrum 

logistical support to soldiers, sailors, airmen, Marines, and 

civilians around the world every day and for every major 

conflict over the past five decades. Logistics is a cost driver 

that must be managed with deliberate precision. DLA’s readiness 

to respond to warfighter needs is built on an integrated 

supply chain that must be efficient and effective. As stewards 

of the Department of Defense’s resources, the agency must 

go beyond simply responding to demands to more effectively 

anticipating them. 

Over the next decade, DLA will find its comprehensive logistics 

services needed more than ever in new and challenging 

ways. The very nature of envisioned threats and conflicts, 

combined with increased fiscal challenges, demands an agile, 

joint logistics response marked by innovation and best practices. 

What are DLA’s strategic priorities? How is DLA working 

to reduce cost while improving support of the warfighter? 

What about DLA’s role in providing humanitarian assistance 

and disaster relief support? Vice Admiral Mark Harnitchek, 

Director of the Defense Logistics Agency, joined me on The 

Business of Government Hour to explore these questions 

and more. The following provides an edited excerpt from 

our interview. — Michael J. Keegan 

On the Mission and Operations of the Defense 

Logistics Agency 

DLA was established on October 1, 1961, and was known 

as the Defense Supply Agency before officially changing 

to its present name in 1977. It was conceived in the 1960s 

as a more efficient way to provide armed services with 

supplies. The agency has evolved over time to provide a full 

spectrum of logistics, acquisition and technical services … 

sourcing and providing almost every consumable item used 

by our military forces worldwide—food, medicines, medical 

surgical equipment, fuel, construction equipment, construction 

supplies, uniforms, and all the things used in the field. 

DLA also supplies more than 84 percent of the military’s 

spare parts. In addition, we manage reutilization of military 

equipment, provide catalogs and other logistics information 

products, and offer document automation and production. 

DLA has 27,000 people working across 30 countries and 48 

states to meet its mission. We are indeed a global organization. 

The primary source of financing is our revolving fund, 

the Defense Working Capital Fund. We sell to our service 

customers the products and services they need. They reimburse 

us and those funds go into our working capital fund— 

basically, our activity is financed with the funded orders 

placed by our customers. 

We are required to keep a certain amount of cash on hand 

to pay our bills. We are right around $40 billion in sales and 

about $5 billion to $6 billion in cost of operations. Our two 

biggest financial lines of operation are the things that we buy 

and the cost of our operations, which includes staff, infrastructure, 

and transportation. 

20 




Fuel is our largest commodity purchase, equaling about 

half of that $40 billion. We’re in the same league as Delta 

and Northwest in the amount of fuel we buy. It’s about 130 

million barrels a year. Food is another big ticket item, at 

around $4 billion to $5 billion. Pharmaceuticals are in the 

$4 billion to $5 billion range as well, with uniforms, repair 

parts, construction equipment, etc., rounding out the last $10 

billion of our purchases. 

On the Importance of Understanding our 

Customers 

I am very focused on understanding my customers’ needs, 

requirements, and operational outcomes. We take that as 

understanding the array of required products and services 

while responding to the needs of our customers and assisting 

them to achieve mission outcomes. For example, our support 

in Afghanistan is to have the requisite amount of food and 

fuel on hand to meet the operational commanders’ needs, 

whatever those are, and then have all those other supply 

chains positioned to do that. 

From a 50,000-foot perspective, it’s not all that difficult. It’s 

understanding what it is your customers want, the outcome 

you’re trying to achieve, and then figuring out on the back 

end how to achieve it in the most efficient and cost-effective 

manner. Given our service customers pay us for these goods 

U.S. Navy photo by Mass Communication Specialist 3rd Class Lacordrick Wilson 

and services, we’re very focused on getting the best value 

for our money and passing that on to our customers. So if 

I can sell something for 10 percent less this year than I did 

the year before while getting the same operational outcome, 

then that’s exactly what we want to do. This is, in a nutshell, 

my responsibility and that of the 27,000 military and civilian 

folks who work for DLA. 

On DLA’s Strategic Vision: “13 in 6” 

Since I arrived at DLA, [I have] focused on significantly 

improving our performance while dramatically reducing 

cost. It is all about putting our customers first, and being a 

warfighter-focused, globally responsive, fiscally responsible 

supply chain leader. 

To make this strategic vision a reality, I introduced my 

10-in-5 strategy, which means saving $10 billion over the 

next five years by focusing on five core priorities: decrease 

direct material costs, decrease operating costs, right-size 

inventory, improve customer service, and achieve audit readiness. 

But the targets get more aggressive as we go forward. 

We’ve upped 10-in-5 to create even more savings; our new 

goal [is to] slash $13 billion in operating and material costs 

over the next six years. DLA will deliver improved performance 

for $13 billion less. 

On decreasing direct material costs, we are to be smart 

buyers of the right stuff through a combination of reverse 

auctions, commercial-type contract terms, substantial 

industry partnerships, performance-based logistics and prime 



vendor contracts, and significantly reduced lead times. We 

are reducing operating costs through a combination of eliminating, 

consolidating, and co-locating infrastructure, optimizing 

the global distribution network, enhancing retail 

industrial support, incorporating process improvements, and 

going green at DLA operating locations. 

An integral aspect of achieving the 13-in-6 strategy centers 

on cleaning out the attic. This involves right-sizing both 

war reserves and operational inventory by reviewing and 

adjusting strategic requirements, leveraging commercial 

supply chains without redundancy, and improving planning 

and forecasting accuracy. Our short-term goal is to reduce 

excess inventory by $6 billion by the end of 2014 without 

sacrificing military readiness. 

In the end, our customers must be front and center, so 

improving customer service is a key strategic objective. As 

with all DoD components, we need to make sure our organization 

achieves audit readiness, demonstrating our commitment 

to transparency and accountability through our culture 

of judiciousness. 

On improving performance, you have to give everybody 

a target and then you have to fully empower them to start 

improving performance and dramatically reducing cost. 

This is not something we define; it’s something our service 

customers define. Improving performance is not all that difficult 

if you stick to the basics. We are an acquisition machine. 

You have to buy enough. You have to buy it on time, and 

then you have to make sure it gets where it needs to go. 

On Reducing Costs Using Reverse Auctions 

DLA has substantially increased its reverse auction opportunities, 

which has led to savings of more than $1.6 billion. To 

put a fine point on it, our energy area achieved $400 million 

in savings in fiscal year 2013 by using reverse auctions 

to get better prices and increase competition in awarding 

fuel contracts. We had another contract that we ran as an 

auction for a medical prime vendor for medical supplies. It’s 

a 10-year contract worth about $10 billion. We saved five 

percent. Five percent of $10 billion is a big number leading 

to significant savings. So how do they work? 

Instead of a sealed bid or a best and final that we negotiate 

with each of the suppliers, reverse auctions run online 

and the reverse auction pricing tool should be used for all 

competitive purchases over $150,000. Reverse auctions 

involve contractors placing a bid lower than an earlier bid, 

which fosters intense competition and drives down prices. 

Typically, the bidding process lasts about an hour and 

auctions are held almost daily by DLA units. 

On Right-Sizing Infrastructure and Achieving 

Optimization 

We manage 26 distribution centers worldwide. To achieve 

our 13-in-6 vision, it is important to optimize warehouse 

operations and reduce distribution infrastructure. Since we 

need to decrease operating costs, we’re going to keep the 

inventory we need and store it in our most cost-effective, 

advantageously located distribution centers. 

Last year, 40 percent of DLA’s inventory was in more than 

one place. If you talk to FedEx, they’ll tell you they can 

have anything, big or small, moved anywhere in the United 

States in five days. How can we employ the same principle? 

It involves minimizing inventory and really leveraging our 

fabulous distribution and transportation system. We’re going 

to put most of our wholesale inventory at one of four places: 

Susquehanna, San Joaquin, Warner Robins, and to a lesser 

extent Red River. 

22 



“Since I arrived at DLA, my guidance has focused on significantly improving 

our performance while dramatically reducing cost. It is all about putting our 

customers first, and being a warfighter-focused, globally responsive, fiscally 

responsible supply chain leader.” 

When we eliminate a facility, we reduce operating costs. 

Reducing operating costs also reduces the rates charged to 

customers and ultimately [the price they will] pay for material 

storage. In FY12, by vacating 34 buildings, one partial 

facility, and four temporary structures, we reduced infrastructure 

by 2.6 million gross square feet. An even larger reduction 

was achieved in FY13 when 4.1 million gross square 

feet were vacated. The plan is constantly modified to account 

for changes in mission, workload, material in storage and 

DOD and DLA initiative. 

On Reducing Fuel Cost While Improving 

Distribution 

Fuel procurement, primarily jet fuel which accounts for 

approximately 75 to 80 percent of DLA Energy’s fuel 

purchases, represents the largest portion of expenditures. 

The U.S. Air Force is our biggest fuel customer, then the 

Navy, and then the Army. We sell largely JP8 fuel to them. 

JP8 is commercial jet fuel with a different flash point and 

a different freeze point. We have to store it separately from 

other types of fuel, resulting in about 600 sites where we 

store military-specification fuel. 

most susceptible to counterfeiting is microcircuits. We are 

attacking this situation on multiple fronts. 

We are only buying from certified suppliers. We’re instituting 

software that can identify anomalies in vendor addresses and 

buying patterns. If we have a supplier who only has a post 

office box or is fairly new to the system, then a flag should 

be raised, much like a credit card vendor recognizes anomalous 

buying patterns and warns the buyer. 

We also made it a requirement that all electronic microcircuits 

we buy must be marked with botanical DNA. This 

means that manufacturers and distributors that want to 

sell microcircuits to DLA have to mark those items with 

SigNature DNA, a product invented by the civilian hightechnology 

firm for forensic authentication and counterfeit 

prevention. We spent some 18 months working to come up 

with this functionality and proving that these products could 

The Air Force has decided to [switch] from JP8 fuel to standard 

commercial jet fuel. This makes you more ready 

because that fuel is available all over the world. Everybody 

doesn’t use military jet fuel. A second thing is if you don’t 

have this unique requirement for military-specification fuel, 

you can rely on commercial industry to store it for you, so 

we can rid ourselves of legacy World War II vintage, belowground 

storage tanks that, frankly, are an environmental accident 

waiting to happen. This effort by the Air Force will save 

hundreds of millions of dollars in infrastructure cost over 20 

years. Plus, standard jet fuel costs a little less. 

On Combating Counterfeit Parts 

We are working to aggressively keep counterfeit parts out of 

the military supply system, and we’re doing this by working 

closely with manufacturers to find innovative ways of 

proving product authenticity. A commodity most at risk or 



“ I introduced my 10 in 5 strategy, 

which means saving $10 billion 

over the next five years by 

focusing on five core priorities: 

decrease direct material costs, 

decrease operating costs, rightsize 

inventory, improve customer 

service, and achieve audit 

readiness. But the targets get more 

aggressive as we go forward. 

We’ve upped 10-in-5 to create 

even more savings; our new 

goal [is to] slash $13 billion in 

operating and material costs over 

the next six years.” 

To learn more about the Office of Management and Budget, 

go to www.whitehouse.gov. 

To hear The Business of Government Hour’s interview with Danny 

Werfel, go to the Center’s website at www.businessofgovernment.org. 





interview with Danny Werfel, visit the Center’s website at 


24 




be marked with botanical DNA during production and that 

those marks could later be read. 

We buy about 80,000 different types of microcircuits, used 

in everything from aircraft and ships to medical equipment. 

Microcircuits are the first commodity DLA is targeting 

because they have a high risk of being counterfeited. As the 

guy that’s responsible for good components in the supply 

chain, this is not a fail-safe method. It’s been very successful 

and we plan to expand that to other commodities as well. 

On Leadership 

I have been very fortunate and blessed to work [with] 

excellent leaders. I recall fondly what I have learned from 

mentors such as General Duncan McNabb, General Norton 

Schwartz, Admiral Mike Mullen, and General Whitcomb. I 

probably have learned the most in the past 10 years given 

the pressures faced while the country’s been at war. My last 

boss before arriving at DLA, General Duncan McNabb, has 

shaped my “Guiding Principles” in my Directors Guidance, 

which in turn has shaped my leadership approach. “We 

are living in historic times doing things we’ve never done 

before. Make some history yourself. Push for smart things 

to do … don’t wait for the requirement or for folks to ask. 

No one knows this stuff better than us—act like it. I trust 

you; prioritize, do it your own way, but get it done or ensure 

it gets done. This is your time; do big things and make it 

better. If not you, who? If not now, when? Relationships are 

key; build them and use them. Take care of one another. 

Keep promises.” ¥ 

To learn more about the Defense Logistics Agency, go to www.dla.mil. 

To hear The Business of Government Hour’s interview with 

Vice Admiral Mark Harnitchek, go to the Center’s website at 






interview with Vice Admiral Mark Harnitchek, visit the Center’s 

website at www.businessofgovernment.org. 



A Conversation with Curtis L. Coy, Deputy Under 

Secretary for Economic Opportunity, Veterans Benefits 

Administration, U.S. Department of Veterans Affairs 

As veterans separate or retire from the military, transitioning 

to civilian life can be hard. The federal government has the 

obligation to ensure that returning veterans have access to 

and use of hard-earned benefits that can ease this transition. 

With some one million veterans likely to separate or retire in 

the next five years and many young veterans unemployed, 

the U.S. Department of Veterans Affairs manages a portfolio 

of educational and job training services for eligible veterans 

to enhance their economic opportunity and successful 

transition. 

How does the VA promote employment opportunities for 

veterans? What is the VA doing to enhance opportunities for 

veterans to obtain knowledge and skills to properly transition 

to civilian life? What programs provide opportunities for 

veterans to obtain, retain, and adapt a home? Curtis Coy, 

Deputy Under Secretary for Economic Opportunity, Veterans 

Benefits Administration, joined me on The Business of 

Government Hour to explore these questions and more. Here 

are some insights from our discussion. — Michael J. Keegan 

On the Mission of VA’s Office of Economic 

Opportunity 

The office was created in 2011 within VA’s Veterans Benefits 

Administration to consolidate different economic opportunity 

programs for veterans under a single office. There are three 

business lines: education service administers VA’s education 

programs that provide education and training to eligible 

service members, veterans, and dependents; loan guaranty 

service provides oversight of the VA Guaranteed Home Loan 

Program and ensures veterans’ rights are protected when 

purchasing a home under this program. We also have the 

vocational rehabilitation and employment (VR&E) service, 

which oversees programs that provide employment and independent 

living services including vocational counseling, job 

search assistance, and post-secondary training. Our portfolio 

of benefits and services is designed to enable both personal 

and economic success. 

We do this with about 4,000 people located in about 56 

VA regional offices across the country, as well as in the 

Philippines. Our budget for fiscal year 2014 is a bit over 

$600 million. To give you a sense of what we are doing, 

in the last four years we’ve paid about $35 billion in Post- 

9/11 GI Bill benefits to about a million beneficiaries. We 

have about 800 vocational rehabilitation and employment 

counselors throughout the country. We just guaranteed the 

20 millionth home loan since the program was established 

in 1944, and those loans for the past 22 quarters have the 

lowest default rate of all cohorts across the country. You can 

see that our veterans take their home loans and financial 

responsibilities very seriously. 

26 




On the Strategic Priorities of VA’s Office of 

Economic Opportunity 

We’ve created three specific strategic goals. The first one is to 

promote employment opportunities for veterans. The second 

is to enhance opportunities for veterans to obtain knowledge 

and skills. Finally, we provide opportunities for veterans 

to obtain, retain, or adapt a home. Each goal has a host of 

[associated] programs. We want to build the foundation for 

veterans to succeed. For example, through our education 

and employment programs—GI Bill, VetSuccess on Campus, 

VR&E—we want to ensure that we’re empowering veterans 

with the knowledge, skills, and opportunities they need to 

succeed in the 21st century. 

We want to make sure that veterans are equipped with the 

tools they need to succeed in school ... that we’re providing 

them the resources to ensure that they continue their education 

and ultimately graduate [and] gain meaningful employment. 

We’re working with many different schools, veteran 

service organizations, community organizations, and other 

partners to ensure that our beneficiaries have access to the 

right information to make informed decisions. 

I gave a keynote address to the Student Veterans of America 

Conference and my message was, in World War II, the GI 

Bill served about eight million of the 16 million veterans that 

served. They were called the greatest generation. I called 

this group in the audience the next greatest generation. We 

believe that the veterans of today are the engine that will get 

the economy moving. 

On the Benefits of the Post-9/11 GI Bill 

It is arguably the most extensive educational assistance 

authorization since the original Montgomery GI Bill in 1944. 

It’s basically three pieces. One is tuition. Specifically, we pay 

for the veteran’s tuition at public schools. There are some 

limitations for private schools. We provide up to a $1,000 

book stipend. Finally, we also provide a housing stipend for 

veterans. Combining these three benefits—tuition, books, or 

housing—veterans can focus on their schooling. 

The Post-9/11 GI Bill provides 36 months of benefits; 

veterans have up to 15 years to use these benefits. The 

program increases accessibility to higher education for 

veterans and their dependents. A unique aspect of the Post- 

9/11 GI Bill is that veterans can provide some of those 36 

months of benefits to their spouses and/or dependents. They 

have to make that election while still in the service. The GI 

Bill benefits have never been available to beneficiaries other 

than the veterans themselves, so that’s key. 

On the Principles of Excellence 

In 2012 the president signed an executive order called 

the Principles of Excellence to ensure that federal military 

and veterans educational benefits programs are providing 

service members, veterans, spouses, and other family 

members with the information, support, and protections 

they deserve. It directs agencies to implement and promote 

compliance with the principles of excellence for educational 

institutions that interact with veterans. The Principles 

of Excellence are a set of guidelines with which institutions 

that receive federal funding, including the GI Bill, agree to 

comply. To date, we have about 6,000 schools that have 

agreed to adhere to them. Described broadly, the principles 

require schools to provide meaningful information about 

the financial cost and quality of the school. It prevents 

abusive and deceptive recruiting practices. It calls for them 

to provide high-quality academic and student support 

services. 

On the Veterans Retraining Assistance Program 

(VRAP) 

VRAP is a joint program between the Department of Veterans 

Affairs and the Department of Labor. This program provides 

12 months of educational benefits to veterans between 

the ages of 35 and 60 who are unemployed and have no 

educational benefits. Today, 80% of unemployed veterans 

are over the age of 35. They may not be entitled to or may 

have exhausted benefits from either the Post-9/11 GI Bill 

and/or Montgomery GI Bill. VRAP provides 12 months of 



Education and Training Tools 

VA’s Office of Economic Opportunity offers many tools 

to help veterans. Veterans can go to www.benefits. 

va.gov/gibill to access a rich library of information and 

tools. Here are a few examples: 

GI Bill Comparison Tool—The GI Bill Comparison Tool 

provides key information about college affordability 

and value so beneficiaries can choose the best education 

program for their needs. 

GI Bill Feedback System—Submit a complaint if your 

school or employer is failing to follow the Principles of 

Excellence. 

CareerScope Interest & Aptitude Assessment—Helping 

Veterans Focus on Success. 

educational benefits for a certificate program or an associate’s 

degree program. Twelve months may not get you a 

complete associate’s degree, but it’ll get you on your way or 

help you finish it. 

We’ve identified over 200 high-demand occupations. A 

veteran has to sign up for one of these high-demand occupations. 

It’s been overwhelmingly successful. In just the last 

couple years, we’ve had over 143,000 veterans apply. We’ve 

approved 126,000 veterans for the benefit. The number one 

occupation is IT support specialist. The number two occupation 

is substance abuse and behavioral disorder counselors. 

[The latter role] shows me that veterans want to continue to 

serve those in need of help. This is pretty true to form. 

On Supporting Veteran Success on Campus 

The VetSuccess on Campus (VSOC) program provides 

supportive services to ensure veteran students are successful 

in their academic pursuits. We help them adjust to campus 

life and transition to civilian life. We have trained and experienced 

vocational rehabilitation and employment counselors 

on campus full-time. They provide professional counseling 

on disabilities, vocational goals, and academic achievement 

and transitions. The counselors are familiar with all the VA 

benefits and can help veterans navigate them and find the 

[right] benefits [for] that veteran. 

The program started as a pilot in 2009 at the University of 

South Florida. Since then, we’ve gone through multiple evolutions. 

We grew from one pilot site to eight campuses, then to 

32 campuses, and today 94 campuses. We’re also working 

with new partners. For example, we’re going to be placing 

AmeriCorps volunteers on several of our VSOC campuses to 

help us deal with some of the issues surrounding veterans and 

to give us more boots on the ground. We’re very proud of it, 

very excited about the program. At 94 campuses, we’re institutionalizing 

the program’s processes, and we’ve seen a great 

deal of success, no pun intended, for this program. 

On VA’s Vocational Rehabilitation and Employment 

Benefits 

The Vocational Rehabilitation and Employment program 

helps veterans with service-connected disabilities and 

employment handicaps prepare for, find, and keep suitable 

jobs. For veterans with service-connected disabilities so 

severe that they cannot immediately consider work, VR&E 

offers services to improve their ability to live as independently 

as possible. 

The VR&E has five tracks: reemployment, rapid access 

to employment, self-employment, employment through 

28 



“We’ve created three specific strategic goals. The first one is to promote 

employment opportunities for veterans. The second is to enhance opportunities 

for veterans to obtain knowledge and skills. Finally, we provide opportunities for 

veterans to obtain, retain, or adapt a home. Each goal has a host of [associated] 

programs. We want to build the foundation for veterans to succeed.” 

long-term services, and then independent living. Under this 

program, veterans who qualify receive the Post-9/11 GI Bill 

benefits with many additional benefits afforded under the 

VR&E program. VR&E counselors also help veterans with 

their resume, job-seeking, placement, mock interviews, 

networking with employers, and negotiating salary requirements. 

We do an entire case management for that wounded 

warrior or disabled veteran. 

One of the other things that we’ve started is the integrated 

disability evaluation system ... it places over 200 vocational 

rehabilitation and employment services counselors 

within DOD bases. Before a service member separates from 

the service, we have a counselor working with prospective 

veterans explaining benefits and services, developing that 

case file while they’re still in service. 

On the Importance of Collaboration and 

Partnerships 

At the VA, collaboration is critically important. We cannot 

do all of this alone, nor would we want to. What we do 

rests on the success of our collaborative efforts with other 

government agencies and the private sector. The Veterans 

Retraining Assistance Program highlights our collaboration 

with the Department of Labor. We work with the Department 

of Education and the Department of Defense. We’re also 

working on an interagency academic credentialing work 

group that’s dedicated to identifying and sharing strategies for 

institutions of higher learning to award or evaluate military 

training and experience. You earn academic credits while in 

the military. 

We’re working with, for example, the National Student 

Clearinghouse and the Student Veterans of America. We’re 

analyzing post-secondary education completion data for one 

million veterans, both Montgomery GI Bill and Post-9/11 

beneficiaries. This will help us measure the outcome of these 

benefits. We also have a memorandum of understanding 

with the U.S. Chamber of Commerce Foundation. It hosts job 

fairs [and the] Hiring Our Heroes program. The Chamber has 

done over 600 job fairs around the country, having helped 

well over 10,000 veterans with their efforts to find meaningful 

employment. We just released a veterans hiring guide 

for employers. We work very closely with veterans service 

organizations (American Legion, Veterans of Foreign Wars, 

or the Disabled American Veterans). Our collaborative efforts 

have been incredible. 

On the Future 

According to the Bureau of Labor Statistics, about 20 million 

veterans live in the U.S. Veterans’ unemployment for the 

month of December 2013 was 5.5%, the lowest since 2008. 

Though these results are encouraging, veterans still face 

many employment challenges. We can ensure that veterans 

have a better outlook by giving them the tools to get the best 

education and training experiences. 



“ I spend much of my time speaking 

to constituent groups and 

employers. Whenever I talk about 

hiring veterans, the first thing I say 

is hiring a veteran makes good 

business sense. I then explain that 

the military experience veterans 

bring to the workforce makes them 

resilient, motivated to succeed, 

dependable, and reliable.” 

To learn more about the Office of Management and Budget, 

go to www.whitehouse.gov. 

To hear The Business of Government Hour’s interview with Danny 

Werfel, go to the Center’s website at www.businessofgovernment.org. 





interview with Danny Werfel, visit the Center’s website at 


30 




We want to make sure veterans know what their benefits are 

so they can leverage them in their life-planning goals. Every 

year, about 280,000 service members leave the services and 

become veterans. With the coming drawdown, we project 

that will grow to about 300,000 to 310,000 annually. With 

more veterans coming into the workforce, we need to be 

ready to process all the applications and claims for program 

benefits. It’s an incredibly busy time, not only keeping up 

with the workload that we have, but projecting forward what 

we anticipate it will be. 

On the Benefits of Hiring Veterans 

I spend much of my time speaking to constituent groups and 

employers. Whenever I talk about hiring veterans, the first 

thing I say is hiring a veteran makes good business sense. I 

then explain that the military experience veterans bring to 

the workforce makes them resilient, motivated to succeed, 

dependable, and reliable. 

Billions of dollars have been invested in the training of the 

specifically Post-9/11 generation of veterans; it’s also the 

most tech-savvy military force in the world. Think about 

all of these veterans and the amount of tools that they’ve 

used in the military and they’re now coming into the workforce. 

I underscore that our veterans are a good investment. 

Employers who have established hiring practices that seek 

veterans are not disappointed. 

Our veterans have unmatched skills in team-building, organizational 

commitment, decision-making, working in diverse 

cross-cultural work settings, and advanced technical settings. 

They’re driven. They’re mission-focused. They have proven 

leadership skills. Think about the young combat infantry man 

that’s over in Afghanistan negotiating with tribal chieftains 

that are 80 years old. Think about that young squad leader 

in charge of the lives of those 10 or 15 squad mates. This is 

the kind of person you want to have in your company. Our 

veterans bring DoD state-of-the-art training with them. 

On Leadership 

I often tell people leaders lead people and managers 

manage things. We often forget that there’s a difference 

between leadership and management. If you don’t know 

where you’re going, it doesn’t matter which way you go. 

Having a vision is key. 

As a leader, you’re responsible for the organization, so take 

the blame and hand out the praise. You always need to be 

ready to make those tough decisions. Governor Tommy 

Thompson, when he was Secretary of Health and Human 

Services, wrote: “God gave you two ears and one mouth. 

Use them in that proportion.” ¥ 

To learn more about the Veterans Benefits Administration, 

go to www.benefits.va.gov. 

To hear The Business of Government Hour’s interview with Curtis L. 

Coy, go to the Center’s website at www.businessofgovernment.org. 





interview with Curtis L. Coy, visit the Center’s website at 



Insights 

Pursuing IT Standardization and Consolidation: 

Insights from Dave Bowen, Director of Health 

Information Technology and Chief Information Officer, 

Defense Health Agency, U.S. Department of Defense 


The provision of health services is a 

critical and significant mission within 

each branch of the U.S. Military, as 

well as an integral part of the U.S. 

Department of Defense’s Military 

Health System, MHS. 

MHS relies on information and technology 

to carry out its mission and 

meet DOD’s quadruple aim: to 

achieve medical readiness, improve 

the health of its people, enhance the 

experience of care, and lower its health care costs. To do 

this, it depends on access to high-quality, timely, and reliable 

information and the technology that makes that possible 

—advances in technology that are clinically relevant, technically 

feasible, and financially viable. 

What is the information technology strategy for DOD’s 

Defense Health Agency (DHA)? How does the creation of 

the Defense Health Agency enhance IT efforts to deliver care 

anytime, anywhere? How is DHA modernizing its technology 

infrastructure and working toward a robust, integrated electronic 

health record? Dave Bowen, chief information officer 

at the Defense Health Agency, shares his insights on these 

topics and more. The following is an edited excerpt of our 

discussion on The Business of Government Hour. 

Would you provide an overview of the continuing evolution 

of the mission of DoD’s Military Health System? 

Dave Bowen: We are a global health care system—direct 

care providers in over 400 military treatment facilities, hospitals, 

and clinics, [and] purchased care through … civilian 

providers and institutions. We strive to provide optimal 

health care services in support of our nation’s military 

missions anytime, anywhere. We also provide premier care 

for military service members, their family, retirees, and their 

families. Our personnel are ready to go into harm’s way to 

deliver care. 

We build bridges to peace through humanitarian support 

whenever and wherever needed, notably [on] hospital 

ships. In FY13, MHS’ budget was $50 billion. It’s the unified 

medical program that supports the physical and mental 

health care of over 9.6 million patients worldwide. Today, 

approximately 230,000 MHS users depend on information 

technology services delivered through civil defense organizations. 

These include the Tricare Management Activity and 

each of the armed services’ medical departments. 

How does the creation of the Defense Health Agency 

enhance your IT efforts? 

Dave Bowen: It has been challenging for our health IT 

customers to determine who was accountable for health IT 

performance. Reforming the management of the IT infrastructure 

will give us the ability to manage health IT delivery all 

the way to the desktop. There will no longer be any confusion 

about who is accountable for health IT. It will be us, 

within the DHA IT directorate. 

[In 2011, an internal DoD task force reviewed the structure 

of the military health system. It provided options to improve 

the system, which in March 2013 called for the establishment 

of the Defense Health Agency. DHA incorporated the 

TRICARE Management Activity (TMA) as well as the Joint 

Task Force National Capital Region Medical, and back-office 

mission support functions.] 

DHA began in October 2013. We consolidated a number of 

back office services into shared services—facility services, 

health plan operational services, logistic services, and IT. 

Under the IT directorate, each health IT business process will 

be aligned to a leader, reflecting our commitment to ownership 

and accountability. We’re basically consolidating the 

health IT component of all the military services. To support the 

transition, the chief information officers and their associated 

service IT management functions have transitioned into the 

Defense Health Agency and [are] actively involved in all the 

planning for providing health IT on a shared-services basis. 

32 



“We face a significant challenge—the 

high cost to support and maintain our 

current systems—and yet, our need to 

transition from the legacy system to new, 

more modern systems that will reduce 

costs. Today, sustainment costs eat about 

90% of our budget—it is this push-pull 

challenge around the high current costs 

and the need to fund the future.” 


“Under the DHA governance structure within the new information technology 

directorate, we’re going to ensure that the right service leadership is involved 

in the health IT requirements generation process, and that we deliver the right 

application in the right way at the right time.” 

The military services’ CIOs actually have a dual role. They 

will continue to advise each department’s surgeons general 

on IT matters and guide IT delivery within the services until 

all IT functions transition under the Defense Health Agency. 

We anticipate that’s going to be about a two-year process. 

The service CIOs will retain direct authority over their 

service-specific resources until we reach full operational 

capability around October 2015. In the end, we seek an 

enterprise-wide, integrated IT environment with standardized 

infrastructure and applications down to the desktop. 

Would you give us a brief overview of the mission of the 

Office of the Chief Information Officer (OCIO) within DHA? 

How is it organized, the size of its overall budget, and the 

number of full-time employees? 

Dave Bowen: In October 2013, we transitioned 744 

people into the office of the CIO. We developed an organization 

that has six vertical divisions, essentially using best of 

breed, best practices from industry. [These] are innovation 

and modern technology, governance, customer relations, 

infrastructure solution delivery, information delivery and 

analytics, and security and privacy. Our budget for this year 

is around $2.2 billion across those six verticals. When we 

reach full operating capability, we expect to be between 

8,000 and 9,000 employees and contractors. Certainly the 

2.2 billion-dollar number will be at least that, maybe more. 

What can you tell us about MHS’ quadruple aim? How do 

your efforts support the department’s overall mission? 

Dave Bowen: We support the overall mission of the 

Military Health System that we call the quadruple aim. There 

are four pillars to the mission. In FY13, senior MHS leadership 

agreed to explicitly emphasize the quadruple aim as the key 

strategic direction for the organization. The four pillars of the 

quadruple aim include readiness, which means being able to 

field a medically ready force and deliver health care anytime, 

anywhere in support of the full range of military operations. 

The second component is promoting better health among 

service members … promoting better health choices and 

reducing the number of clinical visits. We’re moving from 

simply delivering health care to focusing on prevention. 

The third aim is better care … the finest in the world, safe, 

timely, effective, efficient, equitable, and patient- and 

family-centered. 

The final aim [is to do] this more effectively and at lower 

cost. We need to create value by focusing on quality, eliminating 

waste, and reducing unwanted variation. We’re going 

to consider the total cost of care over time, not just the cost 

of an individual health care activity. We have both nearand 

long-term objectives to become more agile in our decision-making 

and maximize longer-term opportunities to 

change the trajectory of our cost growth through a healthier 

population. 

What are your top management challenges? 

Dave Bowen: The MHS health budget is almost 10 

percent of the total budget of the Department of Defense. 

This includes the total defense health program and all the 

care that we provide. Given budget realities, we have a 

strong focus on cost control and reduction, coupled with a 

need to take MHS into the 21st century. 

We face a significant challenge—the high cost to support and 

maintain our current systems—and yet, our need to transition 

from the legacy system to new, more modern systems that 

will reduce costs. Today, sustainment costs eat about 90% of 

our budget—it is this push-pull challenge around the high 

current costs and the need to fund the future. 

The second challenge involves properly collecting health 

care data of our members who receive care from external 

service providers. We need to get the data generated from 

external health care activities back into our members’ military 

record … trying to get data back from them continues 

to be a challenge because of privacy regulations and lack of 

interoperability of systems. 

The third challenge is identifying and selecting a replacement 

for current systems. How do we make a selection? How do 

we deploy a new system across 400 care sites in our direct 

care system alone, as well as properly equipping our ships 

and submarines? 

34 



Insights 

Under the DHA governance structure within the new 

information technology directorate, we’re going to ensure 

that the right service leadership is involved in the health IT 

requirements generation process, and that we deliver the 

right application in the right way at the right time. 

Would you tell us about your efforts in supporting the development 

of the integrated Electronic Health Record? 

Dave Bowen: Much of the activity in this area predates 

my arrival. There was an initial agreement that DOD and VA 

would jointly acquire an electronic health record or jointly 

develop an electronic health record. The plan was to acquire 

a best of breed solution—the best pharmacy system, best lab 

system, best radiology system. The Interagency Program 

Office manage[s] this activity, and they were doing great 

things and moving forward. I joined the agency in September 

2012, and towards the end of 2012 it became clear to 

department leadership that this was going to be a long and 

expensive process. 

Upon this realization and reflection, the strategy shifted to 

adopt a best-of-suite core application strategy. VA chose to 

pursue such a strategy, but instead of buying a new core, 

VA would modify its current core. Now without a partner, 

DoD leadership consulting with Congress decided to buy a 

commercial product. We are moving down this road focusing 

on acquiring a commercial product. The acquisition testing 

and logistics area has been assigned the responsibility for 

overseeing this acquisition. 

My office is going to be involved with implementing what 

is acquired. What are my interface requirements? How do I 

interface to my current legacy systems that will remain and 

not be replaced? What kind of infrastructure footprint do we 

have to lay down for running this on basically a worldwide 

basis? My experience in the commercial world will assist our 

efforts and help identify what’s going to be our training methodology, 

deployment methodology, how we’re going to run 

the new systems at the same time we run the old systems. It’s 

a very important project. 

What are some of the major opportunities your organization 

will encounter in the future; and, how do you envision your 

office will evolve to meet those challenges and seize those 

opportunities? 

Dave Bowen: We have to reduce the cost of our direct 

care system … proactively promote health [and] proactively 

connect with our commercial providers to get our 

members’ health data into our system for as complete a 

record as possible. 

We also have an opportunity to take an enterprise-wide view 

of our system. This will permit us to pose strategic questions 

as we move to realizing our future state. For example, prior 

to buying an application to address a certain need, let’s be 

sure that we’re buying a solution that we can leverage across 

the enterprise for all services and military treatment facilities. 

We must be cost-effective with our investments, taking an 

enterprise view, and making sure that investments are in the 

interest of the overall organization. 

We also have an opportunity to focus on accountability and 

results in the IT arena, results in terms of clinical performance 

in our military treatment facilities, in our hospitals, 

and better results coming from our private care providers. 

We are actively encouraging our business leadership to standardize 

the clinical processes we have in place. We have to 

adopt best practices, reduce the variability of outcomes, and 

drive down the costs of care. 

In an era of fiscal constraint, it’s critical that agency leaders 

act with strategic intent and keep the workforce motivated 

to meet mission. How do you keep your employees focused 

and motivated in the face of dramatic and sometimes 

painful changes? 

Dave Bowen: I would respond to that with three words: 

communicate, communicate, communicate! You can’t 

communicate enough these days. We have a far-flung operation 

and getting information out and feedback from the far 

reaches of our organization is critical. If we can do that well, 

we will continue to have a motivated workforce, despite the 

fact that we’re facing seriously challenging budget 

constraints. ¥ 

To learn more about Defense Health Agency, go to www.health.mil/ 

About-MHS/Defense-Health-Agency 

To hear The Business of Government Hour’s interview with Dave 

Bowen, go to the Center’s website at www.businessofgovernment.org. 





interview with Dave Bowen, visit the Center’s website at 



Insights 

Managing Resources in an Era of Fiscal Constraint 

and Reform: Insights from Nani Coloretti, 

Assistant Secretary of the Treasury for Management, 



Clear strategic focus and sound 

management are essential to the 

effective stewardship of taxpayer 

dollars, enabling federal agency 

decision makers to make tough 

choices on day-to-day and long-term 

management challenges. 

The U.S. Department of the Treasury 

seeks to improve performance 

and operations while managing 

its resources more effectively and 

efficiently. In an era of fiscal austerity, this is even more 

pressing. What is Treasury’s management performance 

agenda? What is Treasury doing to consolidate its office 

space and right-size its operational footprint? How is 

Treasury working to transform the way it does business? Nani 

Coloretti, Assistant Secretary of the Treasury for Management, 

shares her insights on these topics and more. The following 

is an edited excerpt of our discussion on The Business of 

Government Hour. 

Would you tell us about the mission of your office and share 

insights on your duties and areas under your purview? 

Nani Coloretti: I am principal policy advisor to the 

secretary and deputy secretary on development and execution 

of the [department’s] budget, [its] internal management, 

and its bureaus. My area is responsible for budget, planning, 

human resources, information and technology management, 

financial management and accounting, procurement, 

privacy, records, and administrative services to departmental 

(headquarters) offices. 

Given your responsibilities and duties, what are the top challenges 

you’re facing and how have you sought to address 

those challenges? 

Nani Coloretti: The top challenge right now across 

the government is managing with reduced or constrained 

resources. It is a time of uncertainty. We have sort of a 

tagline in my office called “delivering more mission for the 

money.” We merged a couple of bureaus, which has reduced 

our footprint while maintaining a constant level of service. 

We’ve pursued a paperless Treasury initiative projected to 

save about $500 million over five years. This is truly changing 

the way we interact with people. We also are pursuing 

shared services strategies to achieve our mission in the most 

cost-effective manner. 

Another challenge is employee turnover and retirement. At 

Treasury, about 70% of the senior executives are eligible to 

retire in the next five years; that’s a pretty significant reality. The 

department is focusing on succession planning and creating 

leadership networks as a way to prepare for this over time. 

When you come to work in government there are many rules 

to follow that you didn’t issue. The third challenge involves 

pay[ing] attention to these rules and be[ing] keyed in to the 

various government-wide initiatives. To that end, it is very 

important to pay attention to what the Office of Management 

and Budget and the Office of Personnel Management are 

doing. There are communities of practice moving to the next 

thing and the next thing and you really need to keep up with 

government-wide efforts. 

The Treasury Department’s mission is focused on promoting 

economic prosperity and ensuring financial security. I want 

to explore some of Treasury’s key strategic priorities as well 

as its current agency performance goals. 

Nani Coloretti: As you know, the GPRA Modernization 

Act governs how we do strategic planning at the executive 

agency level. It calls for a new plan every four years. [Since 

this interview, Treasury has released its 2014-2017 Strategic 

Plan, which will provide more updated information.] 

Generally, we remain focused on our core mission. 

36 



“The top challenge right now across the 

government is managing with reduced 

or constrained resources. It is a time of 

uncertainty. We have sort of a tagline 

in my office called ‘delivering more 

mission for the money.’”

“At Treasury, about 70% of the senior executives are eligible to retire in the 

next five years; that’s a pretty significant reality. The department is focusing 

on succession planning and creating leadership networks as a way to 

prepare for this over time.” 

We are set to repair and reform the financial system. We are 

supporting the recovery of the housing market. 

Another goal is to enhance U.S. competitiveness and 

promote international financial stability. We are protecting 

national security through targeted financial actions by the 

Office of Terrorism and Financial Intelligence. We’re pursuing 

comprehensive tax and fiscal reform. We are also focusing on 

managing government finances [responsibly]. 

We had two agency priority goals. Increasing electronic 

transactions is [one]. Another goal focuses on increasing 

voluntary tax compliance. [Today these goals are increasing 

self-service options for the taxpayers and focus enforcement 

on high-priority threats using pro-active analysis] 

In response to the need for financial reform, Congress 

passed the Dodd-Frank Wall Street Reform and Consumer 

Protection Act (Dodd-Frank) in July 2010. Dodd-Frank 

established new responsibilities for Treasury and created 

new offices tasked to fulfill those responsibilities. What 

are some of the challenges associated with setting up new 

offices? 

Nani Coloretti: I’ll start with the office I helped set up, 

the Consumer Financial Protection Bureau, which has as its 

mission helping consumer finance markets work by making 

rules more effective, by consistently and fairly enforcing 

those rules, and by empowering consumers to take more 

control over their economic lives. I left Treasury for about 

nine months to help establish the bureau, which is no longer 

part of Treasury. We were doing everything from scratch. We 

were merging staff from six bureaus into one. 

I used to joke that I went from one of the oldest agencies in 

the federal government to the newest with just 10 employees. 

We did a lot of the initial work by detailing folks to the new 

bureau. It was a massive management project with only 

a year to complete. I actually didn’t stay the first year, but 

I learned much from the ground up. Similar efforts were 

done to set up Treasury’s Office of Financial Stability, which 

manages the Troubled Assets Relief Program (TARP). It was a 

massive management project with only a year to complete. I 

actually didn’t stay the full first year, but I learned much from 

the ground up. 

There are several other entities we’ve stood up as a result of 

Dodd-Frank—the Office of Financial Research, which serves 

the Financial Stability Oversight Council, its member agencies, 

and the public by improving the quality, transparency, and 

accessibility of financial data and information; by conducting 

and sponsoring research related to financial stability; and by 

promoting best practices in risk management. 

The department also had to set up the Financial Stability 

Oversight Council (FSOC). The council provides, for the 

first time, comprehensive monitoring of the stability of 

our nation’s financial system. The council, headed by the 

Secretary of the Treasury, is charged with identifying risks to 

the financial stability of the country, promoting market discipline, 

and responding to emerging risks to the stability of the 

United States’ financial system. 

The council consists of 10 voting members and five 

nonvoting members and brings together the expertise of 

federal financial regulators, state regulators, and an independent 

insurance expert appointed by the president. A fairly 

small staff supports the council. As part of Dodd-Frank, the 

department also established a couple of other offices: the 

Federal Insurance Office (FIO) vested with the authority to 

monitor all aspects of the insurance sector, and the Office of 

Minority and Women Inclusion (OMWI). Each has its own 

creation story facing similar challenges to starting anew in 

the federal government. 

Treasury conducts quarterly performance reviews of each 

bureau. What can you tell us more about the quarterly 

performance reviews? 

Nani Coloretti: The department started the quarterly 

performance reviews in March 2010. These reviews are now 

required as part of the GPRA Modernization Act of 2010. 

We have used the sessions to gain visibility into the activities 

and performance of the bureaus and policy offices within 

Treasury. It’s described as a meeting with a framework and an 

agenda that allows for a data-driven discussion. We review 

how we are doing. Are we meeting milestones and metrics 

on certain strategic priorities? 

We use these sessions to identify what we need to do 

better to achieve results. For example, we had a set of 

38 



Insights 

goals from the Small Business Administration that we were 

not achieving. We have a federated procurement model. 

Procurement policy is under me at headquarters, but actual 

procurement activity is delegated to the bureaus. During 

these reviews, we assessed whether goals were being met 

using a dashboard. Every quarter the deputy secretary would 

speak with the bureaus about their performance. 

The very first year, we not only achieved our SBA goals, we 

exceeded them. It becomes clear that what gets measured 

and talked about gets done. The success involved the leadership 

of former Deputy Secretary Wolin, who took a 

keen interest in the operational and managerial aspects of 

Treasury. His leadership helped drive bureaus and policy 

offices to engage in the process and achieve their goals. 

Would you tell us more about the green initiatives to reduce 

Treasury’s environmental footprint and save taxpayer 

dollars? 

Nani Coloretti: We’re pursuing green and environmentally 

sound initiatives across Treasury. Integral to our efforts is 

reducing the department’s physical footprint. The IRS, our 

largest bureau, has done a fantastic job using office space 

more productively. IRS is basically pulling down walls, 

turning offices into shared spaces or bullpens, or hoteling 

space. From these changes, IRS saved $40 million, which is 

significant in a time of budget constraint. 

Treasury is the third oldest department, but it has the oldest 

office building, which received the Leadership in Energy and 

Environmental Design (LEED) Gold certification from the U.S. 

Green Building Council (USGBC). LEED is a leading international 

standard for the design, construction, and operation 

of high-performance green buildings. The Treasury Building 

received its LEED Gold certification based on a number of 

green construction and operation features, from developing 

and implementing advanced control and management of the 

heating, ventilation, and air conditioning systems to simply 

changing light bulbs. Doing these things enables us to reduce 

the environmental impact of this centuries-old building. 

Addressing improper payments is a central component of the 

administration’s efforts to eliminate waste, fraud, and abuse. 

Would you define an improper payment and tell us more 

about Treasury’s Do Not Pay Business Center? 

Nani Coloretti: An improper payment is when funds go to 

the wrong recipient, the right recipient in the wrong amount, 

or lacking the proper documentation to support payment. 

It can be an overpayment or underpayment. Error rates of 

agencies are generally low, but the estimate for FY 2012 is 

about $108 billion of improper payments. The president has 

focused on this issue since 2009 and has issued a series of 

executive orders and memos to guide agencies in reducing 

improper payments. 

One effort has been the Do Not Pay Business Center, which 

Treasury runs. Do Not Pay is a one-stop shop that allows 

agencies to check various databases before making payments 

or awards in order to identify ineligible recipients and 

prevent fraud or errors from being made. 

All our bureaus are active participants in Do Not Pay. We 

were first movers. As we’re asking everybody else to do it, 

we’re setting the example. We’re focusing on the front end, 

catching payments before they go out. We also have efforts 

to reduce improper payments in the tax refund area. There’s 

a whole host of efforts in that arena, including identity theft, 

fraud, and data analysis, that helps us understand how [to] 

get out in front of these risks. 

Given your experience, what makes an effective leader? 

Nani Coloretti: An effective leader knows him or herself 

really well. What I’ve noticed over time as I’ve come up 

through the ranks is that people who have a high degree of 

emotional intelligence make effective leaders. These leaders 

are actually able to navigate uncertainty better. These leaders 

are also authentic in their dealings; they can inspire and 

motivate people to be their very best. People want to work 

for them [and] be as productive as possible when they’re 

working for them. Effective leaders are also knowledgeable, 

incredibly smart, and quick on their feet. Finally, I would say 

an effective leader is a great coach, encouraging staff to 

probe and ask questions. ¥ 

To learn more about the U.S. Department of the Treasury, go to 

www.treasury.gov. 

To hear The Business of Government Hour’s interview with Nani 

Coloretti, go to the Center’s website at www.businessofgovernment.org. 





interview with Nani Coloretti, visit the Center’s website at 



Insights 

Maximizing the Value of Government IT: Insights 

from Mary Davie, Assistant Commissioner, Office of 

Integrated Technology Services, Federal Acquisition 

Service, U.S General Services Administration 


Today, government executives 

confront serious challenges to mission 

effectiveness. The Office of Integrated 

Technology Services (ITS) in GSA’s 

Federal Acquisition Service (FAS) positions 

itself as a facilitator and enabler 

of government IT savings. By reducing 

federal agency customer costs, ITS 

can assist them in focusing on their 

core missions with smarter, more efficient 

IT purchases. At the same time, 

ITS looks for innovative approaches to 

maximize value while lowering cost. 

What are the strategic priorities for GSA’s Office of Integrated 

Technology Services? How does ITS maximize the value of 

government IT while lowering cost? What is ITS doing to 

improve its operations and become more efficient and agile? 

Mary Davie, Assistant Commissioner, Office of Integrated 

Technology Services, shares her insights on these topics and 

more. The following is an edited excerpt of our discussion on 

The Business of Government Hour. 

Would you describe the mission and continued evolution 

of the U.S. General Services Administration’s Federal 

Acquisition Service? 

Mary Davie: It is GSA’s mission to deliver the best value 

in real estate, acquisition, and technology service to government 

and the American people. We focus on the values of 

integrity, teamwork, and transparency to deliver better value 

and savings, serve our partners, make a more sustainable 

government, and lead with innovation. FAS is vital to GSA’s 

mission. Given the needs of government are constantly 

shifting, we are continuously looking at ways to improve. 

I’d like to understand more about FAS’ Office of Integrated 

Technology Services. What services does it provide and how 

is its portfolio organized? 

Mary Davie: About a quarter of all federal IT spend 

comes through ITS. We stand up acquisition solutions for our 

agency customers that allow access to mission-enhancing IT 

products and services. 

We’re currently organized into three groups: Schedule 70 is 

the largest and most comprehensive IT acquisition vehicle in 

the federal government, spending about $15 billion last year. 

The Office of Strategic Programs contains our strategic 

blanket purchase agreements (BPAs)—E-mail as a Service, 

SmartBUY, our USAccess program that provides identify verification 

services, our GWAC program, and a portfolio of 

network services solutions like Networx, Connections II, the 

mobility program, and the Commercial Satellite program. 

We have about 550 people across the country and we do 

everything from making contracts accessible to providing 

people with training on how best to use those contracts. 

We’ve moved away from simply contract build focus to a 

solutions-based approach to administration priorities such as 

cloud and data center consolidation. 

My biggest duty is to support the folks that carry out the 

functions of ITS. Information technology is recognized as a 

critical mission enabler for federal agencies. It helps agencies 

deliver services and improve citizen accessibility to government 

services. I facilitate and manage relationships while 

working to forge collaborative solutions. I strongly believe in 

IT and GSA’s mission as that central buying arm, providing 

central services and support, which is exactly what ITS does. 

40 



“We’ve been focused on sharing information across 

government and across the buying space. Today 

federal buying is so fragmented. We ask ourselves 

what can we provide to agencies to improve their 

buying power and buying decisions?” 


“We have three main strategic goals: deliver efficient operations, drive worldclass 

value, and be agile and innovative. For years, we were focused on 

contracts. Now it’s more about what our customers need and how we can best 

use common solutions across agencies. We’re moving from a contracts-focused 

model to a solution-oriented model.” 

What are your top challenges and how have you sought to 

address them? 

Mary Davie: The first challenge is keeping up with the 

pace of technological innovation. Technology is evolving so 

rapidly that it is difficult for government to keep up, especially 

when technology challenges someone to change a 

business model like cloud, and make it available quickly and 

safely for government. Given government takes extra precautions, 

we realize we’re never going to be right at the innovation 

curve, but we want to be as close as possible. As my 

deputy Mark Day likes to say, we need to anticipate skating 

to where the puck is going. For instance, we have created 

innovative technology Special Item Numbers (SINs), so new 

technologies that do not fit our current structure on Schedule 

70 have a landing pad so agencies can access them quickly. 

We also have flexible contracts like our GWACs that allow 

for companies to make new technologies available. 

A second challenge is how technology evolves. Technology 

no longer means you have new software that you install. 

IT solutions like cloud, cybersecurity, and network services 

require a collaborative effort between chief financial officers, 

chief acquisition officers, and chief information officers. 

We’re also sharing lessons learned, whether for cloud 

implementation, when we switched to E-mail as a Service, 

launched our Mobility program, or made the Networx transition. 

You need that coordinated effort to succeed. 

The third challenge is that for a long time, we were solely 

an acquisition organization. ITS has undergone a major 

recruiting and training effort to ensure our program representatives 

are experts not only in acquisition, but in technology. 

We cannot drive value or create solutions for innovative technologies 

without understanding them. 

What are your strategic priorities? 

Mary Davie: We have three main strategic goals: deliver 

efficient operations, drive world-class value, and be agile and 

innovative. For years, we were focused on contracts; we’re 

moving from a contracts-focused model to a solutionoriented 

model. We’re also looking to increase the amount of 

information available for agencies to make informed decisions. 

We’re looking at making prices paid available for our 

acquisition vehicles so agencies can conduct better research 

and better negotiate prices with vendors. 

Our second priority is delivering world-class value. Today 

federal buying is so fragmented. What can we provide to 

agencies to improve their buying power and buying decisions? 

Part of driving world-class value is sharing best practices. 

Another part is “speed to value.” 

We know cloud has the potential to save government 

millions, but if you can’t access innovative technologies like 

cloud quickly and efficiently, that is lost opportunity. We’re 

working to provide greater visibility on the prices paid by 

government agencies for commonly purchased goods and 

services and related purchasing behaviors to the acquisition 

community, in order to support efforts to reduce total 

cost of ownership for these goods and services. We’ve also 

introduced the solutions navigator tool on our website. We 

have an 800 number and an online chat so people can ask 

questions. 

My third priority is being agile and innovative—being ahead 

of the market. We talk about skating to where the puck is 

going and anticipating if we see a shift toward a specific 

trend. How do we need to start revamping our contracts and 

our solutions to help meet these needs? Our infrastructure 

as a service and e-mail as a service blanket purchase agreements 

really did anticipate that future. We offer choices for 

where we are today, but also give them the ability through 

contract solutions to get them where they need to be. 

Your Network Services Program has undergone some major 

initiatives with Networx Transition being complete, Network 

Services 2020 (NS2020) underway. Could you go over some 

of the things you’re doing and how they’re helping the 

government? 

Mary Davie: It has been a year since we transitioned to 

Networx. This was a heavy lift for the agencies … the 

contract was actually awarded six years ago and the technology 

landscape was changing. It is important to remember 

42 



Insights 

that Networx saved the American taxpayers more than $678 

million in 2013. We can expect that to increase as agencies 

fully use the capabilities of Networx. We are talking to agencies 

to share the lessons learned from the transition and will 

continue to do so. 

NS2020 is not a single contract but rather a strategy recommending 

a portfolio of contracts that address a broad range 

of infrastructure, IT and telecommunications needs. GSA is 

working with industry and our customers to be as forwardthinking 

as possible—putting in place the most robust and 

service-rich contracts possible. The key to meeting the need 

for future technologies will be flexibility. We have to have 

the systems and processes that can support the ordering, 

billing, and inventory management for new services that may 

emerge over the next 10 years. We are working with the GSA 

CIO, agencies, and suppliers to ensure our systems efforts are 

headed in the right direction. One of my priorities is to be 

better buyers of telecommunications and make the transition 

less lengthy, costly, or complex. 

Many agencies actually face reduced or flat IT spending, 

yet missions continue to grow and demands continue to 

expand. What is a winning formula for smarter IT spending? 

Mary Davie: It’s really about continuing to innovate and 

invest while reducing our IT spend. 

While these seem contradictory, I think they actually go hand 

in hand. Feedback from customers shows us that most of the 

time and money is actually spent on operations and maintenance 

of legacy systems. When we talk about things like 

“cloud,” we’re not talking about it because it is just a new 

technology, but because it is a proven way to save on infrastructure 

costs and free up funding to allow CIOs to invest in 

mission-enhancing technologies. 

Governance and program management are also critical. 

We need to make sure that some of the more highly visible 

projects are being executed on time and within budget. 

Collaboration is also important because agencies can learn 

from the experiences of other agencies. Given the changing 

acquisition environment and process, we need to be more 

agile and flexible pursuing modular development. We may 

need to do things in smaller chunks; either it’s successful in 

four to six months and we move on to the next phase or it’s 

not and we change course. 

Tactically, other pursuits can make a difference. GSA 

manages the Presidential Innovation Fellows, deployed 

across government in six to nine-month increments and 

charged with solving a specific problem through technology. 

There is also strategic sourcing. GSA has been helping run 

Federal Strategic Sourcing contracts for some time. ITS has 

the lead for FSSI Wireless and the upcoming large publisher 

BPA. Both of these allow agencies to pool their dollars and 

buy as a federal government rather than individuals. Then 

there is the move to shared services where agencies don’t 

need to invest in their own systems and services, but can 

access mission support functions from recognized shared 

services providers. Lastly, there is also the speed to savings. 

Agencies don’t have to use GSA to acquire their IT needs, 

but besides saving in dollars, we save them time. If an 

agency goes open market for a $100 million acquisition and 

it takes on average a year, that time it takes acquiring the 

technology is time that agencies are missing out on savings 

and they can’t get back. Instead, when agencies use us, an 

average of one year on the open market for a $100 million 

project gets shortened to three months. That is nine months 

of savings realization agencies lose by not coming to us. ¥ 

To learn more about the U.S General Services Administration, 

go to www.gsa.gov/portal/category/21383. 

To hear The Business of Government Hour’s interview with Mary 

Davie, go to the Center’s website at www.businessofgovernment.org. 





interview with Mary Davie, visit the Center’s website at 



Insights 

Promoting the Financial Integrity of the U.S. 

Government: Insights from Dave Lebryk, 

Commissioner, Bureau of the Fiscal Service, 



The Bureau of the Fiscal Service 

(BFS) was formed by combining 

the Financial Management Service 

(FMS) and the Bureau of the Public 

Debt (BPD). BPD financed government 

operations, accounted for the 

resulting public debt, and provided 

financial and administrative services 

to federal agencies. FMS provided 

payment services, revenue collection 

and centralized debt collection for 

the federal government, and prepared 

the financial statements of the federal government. 

How has the Fiscal Service transformed the way the federal 

government manages its financial services? What is the 

Fiscal Service doing to promote the financial integrity and 

operational efficiency of the federal government? How is it 

strengthening its financial management processes to realize 

efficiency, better transparency, and dependable accountability? 

Dave Lebryk, Commissioner, Bureau of the Fiscal 

Service, U.S. Department of the Treasury, shares his insights 

on these topics and more. The following is an edited excerpt 

of our discussion on The Business of Government Hour. 

What is the mission of Treasury’s Bureau of the Fiscal 

Service? What activities does BFS engage in to achieve this 

mission? 

Dave Lebryk: On October 7th, 2012, the Bureau of the 

Public Debt and the Financial Management Service came 

together to form the Bureau of the Fiscal Service. The Bureau 

of the Fiscal Service has a very important mission. We make 

most federal government payments. We collect most of the 

money for the government; we account for the public debt as 

well as report on the financial activity of the federal 

government. 

appropriated budget of around $360 million; 3300 employees 

at six locations located across the country. We have payment 

centers in Kansas City and Philadelphia. We have two 

debt collection centers, one in Austin, Texas, and one in 

Birmingham, Alabama. The bulk of our operations are done in 

the Washington, D.C., area and Parkersburg, West Virginia. 

I’d like to focus more on your specific responsibilities as the 

commissioner of the Bureau of the Fiscal Service. Would 

you describe your duties and areas under your purview? 

How do your efforts support the overall mission of the 

Department of the Treasury? 

Dave Lebryk: My main responsibility is to set strategic 

direction for the organization. At the same time, any good 

leader needs to focus on the operational as well as the 

people aspect of an organization. I probably spend a fair 

amount of my time on the strategic, setting the direction for 

the organization, establishing the priorities, but also making 

sure that we’re delivering on them through out daily functions. 

Every month we make payments to roughly 80 million 

people who rely on their Social Security payments or their 

veterans benefits. We call these lifeline payments, so it’s very 

important that we deliver these payments every month on 

time, every time. We take great pride in doing just that. 

We also finance federal operations. Last year we conducted 

over 268 auctions raising $8.1 trillion. The number of 

Treasury securities that have been issued, payments that have 

been made, or financial statements of the federal government—all 

this information comes from the Bureau of the 

Fiscal Service. It was apparent during the government shutdown 

how critical we are to the functioning of the government. 

If we’re not raising money to finance government 

operations, collecting money, or making payments, it has a 

significant impact on not only the operation of the government 

but on the economy as a whole. 

In addition, we collect debt on behalf of federal agencies 

and provide shared services to 78 customers. We have an 

44 



“The Bureau of the Fiscal Service has a 

very important mission. We make most 

of the federal government payments. 

We collect most of the money for the 

government; we account for the public 

debt as well as report on the financial 

activity of the federal government. In 

addition, we collect debt on behalf of 

federal agencies and provide shared 

services to 78 customers.” 


“We’re probably the only bureau or agency that has shared service as part 

of its mission. We provide shared services in a number of areas: travel, 

procurement, accounting, HR, and IT. Using a shared services model can save 

agencies money and time, so they can focus more resources on meeting their 

missions. It is a very powerful model and there are lots of opportunities across 

government to do more.” 

Regarding your responsibilities and duties, what are the top 

three challenges that you face in your position and how are 

you addressing these challenges? 

Dave Lebryk: It’s fair to say that budgets are going to 

remain tight for the foreseeable future. Demographics are 

changing significantly with the aging of the workforce. 

Technology is evolving very rapidly and our bureau is at the 

forefront of many of these issues. I’ll give an example. 

About three years ago, we started an initiative called the All 

Electronic Treasury Initiative. At that time, roughly 80 percent 

of all payments were being made electronically. Today, close 

to 98 percent of benefit payments are made electronically, 

which is safer and more secure than paper checks. Three 

years ago, we were producing close to 200 million checks 

a year. We’re estimating we’re going to produce 80 million 

checks this year. This has a significant operational impact. 

This change in process enabled by advances in technology 

required that we close payment facilities, illustrating an intersection 

of technology and change. 

Secondly, workforce demographics have changed, so when 

you make these kinds of fundamental changes, you have a 

different dynamic than you would have had 20 years ago 

when fewer workers were retirement eligible. 

Lastly, these changes were driven in large measure to reduce 

budgets; it costs over a dollar to produce a paper check [and] 

less than 10 cents to issue an electronic payment. This initiative 

[will] save close to one billion dollars over the next 10 

years. By going in this direction, we operate more efficiently 

as a government agency. This is one example of how we 

think strategically and carefully about the significant changes 

happening and challenges faced. 

Would you tell us about your strategic vision for the bureau? 

Dave Lebryk: We talk about lead, transform, and deliver 

when we think about the things we’re doing. We are now 

focused on making government operate better and what we 

can do to remain sustainable for the long term. We’ve positioned 

the bureau very well. Many government agencies are 

experiencing the same budget pressures that we did, requiring 

them to focus more on their core missions. The back office 

operations we perform are not core to those missions. 

Agency leaders must find new ways to deliver their missions 

less expensively. There is much receptivity to the kind of 

things that we’re doing—centralizing services or pursuing 

shared services as options for agencies. We were able to 

function well in the budget environment because we went 

from five data centers to two. We went from four payment 

centers to two. We reduced our facilities footprint and 

reduced costs in these areas. There are lessons for government 

agencies that are opportunities to reduce costs. 

What prompted the creation of this newly established 

bureau? How has the consolidation process gone to date? 

Dave Lebryk: In September 2011, we began discussing 

the need to consolidate the two bureaus given long-term 

budget cuts. We asked whether these two bureaus could 

continue to function in the face of budget realities. We recognized 

that we’d have a difficult time continuing to fulfill our 

mission-critical functions. We initially looked at this as a 

budget exercise. Through this and other efforts, we identified 

close to $100 million of savings—about 20 percent of our 

appropriated annual budget from our 2010 level. We have 

significantly reduced our costs. 

By February 2012, we announced it publicly in our budget, 

and by October of 2012, we had actually executed the consolidation. 

All of our employees were given a card that highlights 

our mission and vision, and to remind us all why we’re doing 

what we’re doing. I carry mine with me all the time. 

We’ve also used the opportunity to re-imagine what the 

combined organization could do. The legacy missions of FMS 

and BFD both [were to] “provide services.” We existed to 

provide payment services, financing services, or debt collection 

services. Today, our mission is about transforming government 

… changing the way the government does back office 

operations while also improving financial management. 

46 



Insights 

In bringing these two agencies together, we did six major 

reorganizations. We set up a special site called One Fiscal 

where employees could ask questions. I do what we call a 

“What’s Up email,” every several weeks in which I talk about 

things going on in the organization. This became increasingly 

important during the consolidation period. 

We’ve had to become pretty good at managing change. It has 

become a fundamental part. Sometimes you’re going to do 

things that aren’t popular, but are necessary to strategically 

position the organization for success. It always helps that 

you have a clear sense of where you’re going and engage 

your team accordingly. The first phase was consolidation. 

The second phase involves integration, and the next phase is 

optimization. We are in that integration phase. We have an 

effort underway to reexamine our values. The most important 

thing we can do during this integration phase is ensure our 

people feel valued and that we invest in their training. 

What are some of the recent initiatives you have been 

pursuing? 

Dave Lebryk: Late January [2014], it was an exciting 

period at the bureau when the president introduced the myRA 

in his State of the Union Address. It is a new way for working 

Americans to start their own retirement savings. [myRA is a 

savings bond that encourages building a nest egg]. We think it 

is going to be an appealing way to encourage people to save, 

as well as benefit employers large and small who currently 

might not offer a retirement account to their employees. 

MyRA has some income restrictions similar to Roth IRAs. 

I believe those numbers are somewhere around $129,000 

per individual and $191,000 for a couple. This is part of the 

president’s effort to really encourage savings in the country. 

At the bureau, we have the opportunity to actually build the 

infrastructure that supports the myRA. This is not new for us 

as we run the savings bonds programs and TreasuryDirect, 

which have over 50 million savings bond owners. 

During that same week, and for the first time in 16 years, 

we issued a new security—a floating rate note, successfully 

auctioning around $15 billion in its debut—it has been very 

popular with the investment community. The larger investors 

usually buy these notes, but individuals can buy them as well. 

Finally, we implemented a new governmentwide financial 

reporting system, Governmentwide Treasury Account Symbol 

Adjusted Trial Balance System (GTAS) as the primary means 

of reporting agency trial balance data. A single data collection 

system will pave the way for more consistent and complete 

financial data and will allow for better analytical reporting. 

This enables agencies to report their financial information. 

We can use that to compile a report for Congress, as well as 

make information more readily available and usable. 

In an era of fiscal constraint, federal agencies are always 

trying to find new ways of doing business that can lead 

to cost savings and realize efficiencies. Would you tell us 

more about the push towards shared services in the federal 

government? 

Dave Lebryk: We’re probably the only bureau or agency 

that has shared service as part of its mission. We provide 

shared services in a number of areas: travel, procurement, 

accounting, HR, and IT. We have 78 shared services 

customer agencies. This is where government needs to be 

going. We work closely with the other shared service 

providers in trying to understand the demand for shared 

services, and then how we can collectively meet that 

demand. We’re talking about what agencies are doing, what 

they need to be doing over the course of the next 10 years. 

For example, agencies should consider federal shared 

services providers as viable options prior to investing in new 

systems. In fact, the bureau is working with the U.S. 

Department of Housing and Urban Development right now, 

looking at their core financial system and how we may be 

able to assist them. 

I talked to a federal agency CFO who said he spends 25 

percent of his time on systems issues because he is dealing 

with his agency’s ERP and core financial system. The CFO in 

my organization spends none of her time on systems issues. 

She has time to spend on strategic issues such as internal 

controls and management. Using a shared services model 

can save agencies money and time, so they can focus more 

resources on meeting their missions. It is a very powerful 

model and there are lots of opportunities across government 

to do more. ¥ 

To learn more about the Bureau of the Fiscal Service, go to 

www.fiscal.treasury.gov. 

To hear The Business of Government Hour’s interview with Dave 

Lebryk, go to the Center’s website at www.businessofgovernment.org. 





interview with Dave Lebryk, visit the Center’s website at 



Insights 

Harnessing Evidence and Evaluation: Insights from 

Kathy Stack, Advisor, Evidence-Based Innovation, 

Office of Management and Budget 


The federal government spends tens of 

billions annually on social programs 

with modest or poor results. In other 

cases, billions have been spent on 

programs and funding streams while 

little rigorous evidence exists about 

program outcomes. In a climate of 

fiscal austerity, it is far better to cut 

programs with minimal impact and 

improve existing programs, based on 

evidence from high-quality program 

evaluations. 

What is program evaluation? How can evidence and rigorous 

evaluation be best integrated into decision-making? How can 

agencies conduct rigorous program evaluations on a tight 

budget? Kathy Stack, Advisor for Evidence-Based Innovation, 

Office of Management and Budget (OMB) shares her insights 

on these topics and more. The following is an edited excerpt 

of our discussion on The Business of Government Hour. 

What is the mission of the Office of Management and 

Budget and how is it organized? 

Kathy Stack: We develop the president’s annual budget, 

taking agency recommendations and figuring how they fit. 

We issue government-wide management policies on how to 

promote efficiency. We coordinate review of all legislative 

proposals. We review all the regulations and information 

collection that put potential burdens and constraints on the 

public, trying to make sure that we don’t impose undue 

burden and everything has a clear purpose. 

The budget side of OMB is a vertical structure. Each major 

Cabinet department or agency has an OMB counterpart 

on the budget side that oversees their policies and budget, 

reviews regulations, and thinks about their management. 

The management side is set up horizontally. We’re focused 

on mission support functions such as financial management, 

procurement, information technology, and performance 

management, working with agencies to implement policies, 

guidance, and in some instances best practices. The management 

side is much more focused on how to get the mission 

support offices the capacity and the infrastructure they need 

to support policies and programs. 

What are you doing now at OMB? 

Kathy Stack: OMB is pursuing an aggressive management 

agenda that delivers a smarter, more innovative, and more 

accountable government for citizens. An important component 

of this is strengthening agencies’ abilities to continually 

improve program performance by applying existing evidence 

about what works, generating new knowledge, and using 

experimentation and innovation to test new approaches to 

program delivery. 

I’m advisor for evidence-based innovation within OMB, a 

new role created in July 2013. I have a staff of three and our 

mission is to help federal agencies use evidence and data to 

inform decision-making. It’s all about creating partnerships 

and coalitions of the willing who can try to make things 

happen together. 

What are your top challenges and how have you sought to 

address those challenges? 

Kathy Stack: I am rediscovering how important it is to 

build trust with agencies. Many are not used to sharing 

information. Making progress on my agenda requires encouraging 

people to be candid about the challenges they face or 

their lack of expertise. 

The second challenge has to do with available resources. 

Much of what we do is statutorily mandated, but no statutory 

mandate specifically requires agencies to use evidence, 

48 



“[Performance Partnership Pilots are] one of the most 

exciting examples of bottom-up policy making. Its 

genesis comes from a February 2011 presidential 

memorandum to agencies calling for administrative 

flexibility for states, localities, and tribes. It charged 

federal agencies to work closely with state, local, and 

tribal governments to identify administrative, regulatory, 

and legislative barriers in federally funded programs that 

currently prevent them from efficiently using tax dollars 

to achieve the best results for their constituents.” 


“OMB is pursuing an aggressive management agenda that delivers a smarter, 

more innovative, and more accountable government for citizens. An important 

component of this is strengthening agencies’ abilities to continually improve 

program performance by applying existing evidence about what works, 

generating new knowledge, and using experimentation and innovation to test 

new approaches to program delivery.” 

evaluation, and data to make better decisions. I am doing 

my best to find allies and partners inside agencies and also 

external partners … think tanks and nonprofits. 

The third challenge is maintaining momentum in the face 

of leadership transitions. Fortunately I had a great transition 

from the Bush administration into the Obama administration. 

Along with the challenges you encounter, most governmentwide 

efforts can be fraught with unanticipated or unexpected 

surprises. What surprised you most? 

Kathy Stack: I have been struck by how similar decisionmaking 

is for OMB leadership regardless of a Republican or 

Democratic administration. When OMB leaders are 

presented with very compelling data and evidence they’re 

going to reach similar if not identical conclusions. When you 

don’t have data and evidence, ideology tends to fill that gap. 

It’s [also] amazing, the ability that OMB or the White House 

has, when they can bring agencies in and help them become 

part of creating that vision … they get excited about it and 

then some great things can happen. 

The federal fiscal situation necessitates improvements in efficiency 

and doing more with less. Programs can use a broad 

range of analytical and management tools, i.e., an “evidence 

infrastructure,” to learn what works and what doesn’t. Would 

you briefly describe performance measurement and program 

evaluation? 

Kathy Stack: Performance measurement is the ongoing 

monitoring and reporting of program accomplishments and 

progress toward established goals. It looks at inputs, process 

measures, outputs, outcomes, in order to manage programs, 

set goals, and continually improve performance. It’s well 

suited to dashboards [which show] performance over time on 

different indicators. It can provide valuable information that 

enables you to view your performance and if necessary figure 

out how to course correct. Every organization needs to use 

performance measurement as a management tool. 

Program evaluation answers different questions. They are 

typically systematic studies conducted periodically to assess 

how well a program is working. There are many grant 

programs that address various issues while using a wide 

range of different strategies. We need to identify those that 

have the greatest impact. For example, in the 90s there was 

a battle between phonics and whole language. Fortunately, 

we had a strong child development center at NIH that was 

able to do controlled experiments and discover that phonicsbased 

approaches result in better impacts. It just makes 

sense to drive dollars to where there is evidence of impact. 

It is also essential to bridge these tools, but unfortunately 

there aren’t many places where this is happening. New 

York City established the Center for Economic Opportunity 

to design a portfolio of strategies to reduce poverty. They 

are using data all the time to see which providers are doing 

better, and th[ose not] doing well, they get let go. New York 

City is working with some strong research firms to perform 

rigorous analysis demonstrating whether the intervention is 

getting results before investing more money. 

Federal dollars flow to states and localities through competitive 

and formula grants. Grant reforms can strengthen the 

use of evidence in government. Among the most exciting 

advancements are so-called tiered-evidence or innovation 

fund grant designs. Would you tell us more about these 

designs? 

Kathy Stack: These grant designs focus resources on practices 

with the strongest evidence, but still allow for innovation. 

In a three-tiered grant model, for example, grantees can 

qualify for: 

• The “scale up” tier and receive the most funding 

• The “validation” tier and receive less funding but evaluation 

support 

• The “proof of concept” tier and receive the least funding, 

but also support for evaluation 

50 



Insights 

With a tiered-evidence approach, potential grantees know 

they must provide evidence behind their approach or be 

ready to subject their models to evaluation. The Education 

Department’s Investing in Innovation Fund (i3) is a favorite of 

mine. These grants are expected to expand the implementation 

of and investment in innovative and evidence-based 

practices, programs and strategies that significantly: 

• Improve K-12 achievement and close achievement gaps 

• Decrease dropout rates 

• Increase high school graduation rates 

Grants are awarded to support scale-up, validation, or development 

activities, depending on the level of evidence. 

Ultimately, it is about letting states and localities know what 

works, so they can replicate these strategies in their own 

funding streams. 

Right now, five agencies have tiered program designs. The 

Labor Department runs two programs, the workforce innovation 

fund and a community college initiative, using this structure. 

At HHS we have teen pregnancy prevention and home 

visiting. The Corporation for National Community Service has 

a social innovation fund. USAID has a development innovation 

ventures program. All have shown that the tiered structure 

can be an overlay to a fairly traditional grant program. 

Would you tell us about the new authority for Performance 

Partnership Pilots for disconnected youth that was recently 

included in the 2014 omnibus appropriations bill? What was 

the impetus for this initiative, and how will it work? 

Kathy Stack: This is one of the most exciting examples of 

bottom-up policy making. Its genesis comes from a February 

2011 presidential memorandum to agencies calling for 

administrative flexibility for states, localities, and tribes. It 

charged federal agencies to work closely with state, local, 

and tribal governments to identify administrative, regulatory, 

and legislative barriers in federally funded programs that 

currently prevent them from efficiently using tax dollars to 

achieve the best results for their constituents. 

One of the most compelling examples was a coalition of 

states focusing on disconnected youth … 14 to early 20s, 

school dropouts who don’t have jobs. We have dozens of 

federal youth programs, but the way they are structured, 

it’s incredibly difficult for a locality to make the[m] work 

together. This coalition identified challenges they faced 

trying to weave these programs together to support the 

needs of these high-risk kids. The paper they presented led 

to a meeting with senior officials from a number of agencies. 

It convinced them that things had to change. 

As a result, the 2014 budget would authorize up to 13 state 

or local performance partnership pilots to improve outcomes 

for disconnected youth. Pilots would use blended funds 

from separate youth-serving programs in the Departments 

of Education, Labor, HHS, HUD, Justice and other agencies, 

and the strategies would be subjected to evaluations to determine 

which efforts work best so they could be expanded. 

Interestingly, this authority was given in the 2014 appropriations 

bill. Frankly, it was the states who presented this ineffective 

and onerous situation to the attention of key members 

in Congress. 

So-called “Pay for Success” approaches are another way 

to strengthen the use of evidence in government. Would 

you tell us more about the PFS model (also know as social 

impact bonds)? 

Kathy Stack: At a time when government resources are 

constrained, an innovative approach is the Pay for Success 

funding model. This is where investors provide upfront 

capital for social services with a strong evidence base that, 

when successful, achieve measurable outcomes that reduce 

the need for future services. Efforts underway in New York 

City and Massachusetts look at the cost of recidivism. Many 

of the projects have [gotten] working capital from the private 

sector to run these prevention services. Rigorous measurement 

and evaluation methodologies assure that these new 

projects achieve results. If [investors] get a return, it’s 

because the government has realized savings and they are 

sharing it while the individuals served are realizing improvements 

in their lives. ¥ 

To learn more about the Office of Management and Budget, go to 

www.whitehouse.gov/omb. 

To hear The Business of Government Hour’s interview with Kathy 

Stack, go to the Center’s website at www.businessofgovernment.org. 





interview with Kathy Stack, visit the Center’s website at 



Insights 

Data and Information as Strategic Assets: Insights 

from Dr. Simon Szykman, Chief Information Officer, 

U.S. Department of Commerce 


The federal government invests 

billions on information technology 

each year to help agencies accomplish 

their missions. IT enables federal 

agencies to do this more effectively 

and efficiently. Yet fully exploiting the 

potential has presented long-standing 

challenges. Many federal agency 

CIOs are responding to these challenges 

by focusing on the enterprise 

and coordinating across boundaries. 

The U.S. Department of Commerce is one example. 

Commerce’s leadership has successfully tackled one of the 

most significant challenges facing senior IT leadership—the 

requirement for greater empowerment of decision-making to 

drive efficiencies and improve effectiveness of IT. 

What is the information technology strategy of the U.S. 

Department of Commerce? How has Commerce changed the 

way it does IT? Dr. Simon Szykman, Chief Information Officer 

at the U.S. Department of Commerce, shares his insights on 

these topics and more. The following is an edited excerpt of 

our discussion on The Business of Government Hour. 

What are the responsibilities and duties of the chief 

information officer at the U.S. Department of Commerce? 

Dr. Simon Szykman: The Department of Commerce has a 

dozen bureaus pursuing missions relating to commerce. In 

this federated IT model, my role is principally to provide strategic 

direction and leadership on a variety of initiatives 

(including cost savings and shared services) that have department-wide 

relevance. I develop policy guidance and conduct 

oversight for IT investments within the department. Unlike 

some CIOs, I do not manage the operational IT infrastructure 

across the entire department. Those activities are typically 

done at the bureau level. I have two deputy chief information 

officers. One is focused on management and business operations, 

while the other serves as our chief technology officer. 

We also have a chief information security officer, who is 

responsible for cybersecurity policy, compliance, strategy, 

and providing direction for cybersecurity across the 

department. 

Given the department’s federated IT business model, what 

are the top challenges you face and how have you sought to 

address them? 

Dr. Simon Szykman: My number one challenge is 

cybersecurity; it has been a weakness for the department for 

some time. However, we’ve made significant improvements. 

We still have work to do. The second challenge is working 

within this fiscal climate and the budgetary pressures we 

face. We have to identify opportunities for cost savings while 

maintaining the quality and effectiveness of our services. The 

third challenge is focused on improving the quality of 

services we deliver. 

Commerce views information and technology as strategic 

assets critical to accomplishing its mission. Would you tell 

us about your strategic IT vision for the department? 

Dr. Simon Szykman: Information technology is definitely 

a strategic asset for the department. This is because many of 

the department’s missions rely heavily on information and 

data—from climate modeling and weather prediction, to 

supporting innovation through the Patent and Trademark 

Office, to the research that goes on at the National Institute of 

Standards and Technology. We rely heavily on IT to support 

our mission components, but IT is the enabler. Our real asset 

is the information and the data we use in our products. 

The department has been developing a strategic plan and 

we’re working to align our IT priorities to support [it]. For 

example, we have a greater focus on data. As a result, we 

see the unpublished data we have as an untapped asset. 

What can we make available that can be used to create new 

products, new businesses, which can ultimately lead to job 

creation and help foster economic growth? 

52 



“ An effective technology leader has the 

ability to think strategically, articulate 

a vision, and be a good communicator 

and consensus builder. Today’s 

government IT leader needs to be 

agile, more adaptive in following and 

anticipating commercial IT trends, and 

much more customer-focused.” 


Insights 

The strategic vision for the department as a whole, and the 

importance of data within that strategic vision, is one of our 

key IT priorities. We do have a variety of other strategic drivers 

that follow general technology trends—what’s happening in 

the commercial and consumer markets and how these technologies 

can be used to support our mission, the technologies 

that people in the department want to use, and the kinds 

of technologies that our external customers and stakeholders 

expect to see when they’re interacting with Commerce. 

There is also value in distinguishing commodity IT from 

mission IT. Commodity IT encompasses technology and 

services that are common across the department and not 

mission-specific. For example, e-mail is a department-wide 

technology representative of commodity IT. It can be consolidated 

and operated more cost-effectively. 

In 2012, you were charged by the department’s senior leadership 

to develop, in consultation with the bureaus, an IT 

Portfolio Management Policy. What were the reasons for 

pursuing such a policy? Would you tell us more about the 

actual process? 

Dr. Simon Szykman: The development of the IT Portfolio 

Management policy was led by me with participation from 

the bureau CIOs at Commerce. We did this to get buy-in in 

advance. Everybody [had] a voice in the development of the 

policy, and in fact, the effort was strengthened by the feedback 

provided and recommendations and suggestions made 

from the broader community. 

We pursued a collaborative approach because it was about 

strengthening the department CIO, the CIOs at the bureaus, 

and the way we manage IT. Giving more control over some 

IT decision-making at the bureau level was also a key 

cornerstone. 

Bureau CIOs may not have had the level of visibility or 

control over decision-making and funding that they prefer. 

A good sum of the IT spending actually takes place within 

the programs; 100% of every IT dollar is not under the direct 

control of the bureau CIO. From a governance perspective, the 

delegations in this policy did enable CIOs to have more visibility 

within their organizations, but also to drive change more 

effectively. We now have consolidation of IT staffing under a 

bureau CIO as a result of the policies and the provisions in 

this portfolio management policy. This gives bureau CIOs more 

influence on the performance of staff and gives them more 

control over what’s going on within their bureaus. 

What have you done to strengthen the department’s IT 

capital investment process to ensure that investment decisions 

are mission-aligned and cost-justified? 

Dr. Simon Szykman: We’ve been significantly improving 

the processes, how the Commerce IT Review Board operates, 

its structure, activities, and the mechanisms that we use 

to improve the overall oversight that we’re providing for 

capital planning and capital investments. 

For example, we’ve changed the composition of the board. 

The board is co-chaired by the department CIO and CFO 

with core representation of bureau CIOs. Today, we’ve 

expanded the board to also include representation from the 

department’s acquisition and budget organizations, respectively. 

We have a new Office of Program Evaluation and Risk 

Management, which is also represented at these meetings. 

This is key as it helps us understand as part of our review the 

risks associated with these major investments. We’ve also 

expanded the board to include more regular participation 

from the program management community. 

Our oversight capabilities have improved significantly. In 

addition to our oversight processes, we implemented the 

Office of Management and Budget’s IT dashboard [which] 

inventories all the department’s major IT investments. We 

report on these monthly, including CIO ratings for all these 

major investments. This improves transparency for the general 

public, but has also required us to develop a new set of 

assessment criteria and functions that should lead to a reduction 

in risk and better performance for all of these projects. 

Would you elaborate on your efforts at Commerce to pursue 

cost savings and efficiency initiatives? 

Dr. Simon Szykman: We are seeing documented savings 

with infrastructure consolidation as part of the governmentwide 

data center consolidation initiative. We are also doing 

strategic sourcing, consolidating the acquisition and 

purchasing of technology, hardware, software services to buy 

in larger quantity and drive cost down. 

Commerce had over 100 contracts for buying PCs; today, 

we have a single strategic sourcing vehicle across the entire 

department. We’re realizing 30% to 35% savings … on the 

order of $8.6 million just on PC purchasing solely by going 

to a single contract. 

We’ve [replaced] desktop printers with more efficient work 

group printers. We’re looking to consolidate our mobile 

phones to a single vehicle for better pricing. We’re also 

54 



“In this federated IT model, my role is principally to provide strategic direction 

and leadership on a variety of initiatives (including cost savings and shared 

services) that have department-wide relevance.” 

doing this with our software purchases. We are pursuing 

shared services initiatives (such as help desk consolidation & 

network consolidation within the headquarters building.) 

Mobile computing is a versatile and potentially strategic technology 

that improves information quality and accessibility. 

Would you tell us about the department-wide strategy for 

mobility and the mobile device management program? 

Dr. Simon Szykman: Our department-wide mobility 

strategy is lean. Every bureau can still manage their own 

mobile devices and create their own enterprise services, but 

we have a single department-wide contract for acquiring 

mobile device management technology. The single standardized 

contract gives us better pricing and makes it easier if we 

choose to consolidate and go with one service provider to 

support the whole department. 

There are bureau-level strategies for mobility as well. For 

example, the Census Bureau for the 2010 decennial census 

issued government-purchased laptops to every temporary 

employee. The bureau would like to reduce the cost of the 

2020 decennial census. They’re talking about a variety of 

options; one might be to allow a Bring Your Own Device 

(BYOD) approach or a virtual desktop infrastructure. This … is 

an example of how bureau-level strategies must sometimes go 

beyond department-level strategies to achieve mission delivery. 

I’d like to discuss “open data” and “big data.” What do these 

terms mean? How are they at the forefront of government 

tech policy, and to what extent do they represent the next 

phase of technological revolution in the federal government? 

Dr. Simon Szykman: Open data and big data are distinct 

trends. In my view, open data focuses on how the government 

can more effectively use the data it has, but more 

importantly, share it to increase transparency or provide more 

information to stakeholders so they understand what the 

government is doing and hold it accountable. 

The department has a new strategic focus on data. Right now, 

we publish only a small portion of the data we collect. If 

you’re looking at weather data we’re talking literally petabytes 

per day that we acquire, analyze, and disseminate. The idea is 

that, by increasing the amount of available data, industry, citizens, 

or companies might identify new and innovative ways of 

using that data, which could lead to new jobs, new markets, 

and new products providing economic benefit to the country. 

Big data focuses on scale and complexity. At Commerce, the 

big data issue is linked more directly to the mission delivery 

of our bureaus. The Census Bureau collects data on over 320 

million households across the United States. NOAA and the 

National Weather Service deal with petabytes of data per day. 

NIST deals with large data sets to support different aspects of 

their research mission. The Patent and Trademark Office has 

documented patents going back to the 1800s. The way big 

data is emerging from mission delivery varies from bureau to 

bureau. As a result, we don’t have a single big data strategy 

or big data initiative for the entire department. 

What are the characteristics of an effective leader, and does 

the concept of leadership need to shift because we’re living 

in an increasingly networked world? 

Dr. Simon Szykman: An effective technology leader has 

the ability to think strategically, articulate a vision, and be a 

good communicator and consensus builder. Today’s government 

IT leader needs to be agile, more adaptive in following 

and anticipating commercial IT trends, and much more 

customer-focused. ¥ 

To learn more about the U.S. Department of Commerce, go to 

www.commerce.gov. 

To hear The Business of Government Hour’s interview with Dr. Simon 

Szykman, go to the Center’s website at www.businessofgovernment.org. 





interview with Dr. Simon Szykman, visit the Center’s website at 


Editor’s Note: Since this interview, Dr. Szykman announced he would be 

leaving federal service. 


Forum: Six Trends Driving Change 

in Government 


Edited by Michael J. Keegan 

Government leaders face serious challenges—fiscal austerity, 

citizen expectations, the pace of technology and innovation, 

and a new role for governance. These challenges influence 

how government executives lead today, and, more importantly, 

how they can prepare for the future. 

Government is in the midst of significant changes that have 

both near-term con sequences and lasting impact. Such 

changes have the potential to become more complex in 

nature and more uncertain in effect. At the same time, the 

demands on government continue to grow, while the collective 

resources available to meet such demands are increasingly 

con strained. 

By sharing knowledge and expertise gained from this 

research, we hope to spark the imagination of government 

executives beyond day-to-day urgencies and toward solutions 

to the serious problems and critical challenges that government 

faces now and into the future. 

This forum introduces each trend based on insights offered 

in Six Trends Driving Change in Government. It reflects our 

sense of what lies ahead. In the end, we hope that these 

insights are instructive and ultimately helpful to today’s 

government leaders and managers. For a more in-depth 

exploration of each trend, download or order a free copy of 

the full report at businessofgovernment.org. 


In a special report, Six Trends Driving Change in Government, 

the Center has identified a set of trends that correspond to 

these challenges and drive government change. These 

trends—both separately and in combination—paint a path 

forward in responding to the ever-increasing complexity that 

government faces. The areas covered by Six Trends are: 

• Trend 1: Performance 

• Trend 2: Risk 

• Trend 3: Innovation 

• Trend 4: Mission 

• Trend 5: Efficiency 

• Trend 6: Leadership 

Focusing on these six trends has the potential to change the 

way government does business. The Center will fund research 

into each, exploring in depth their transformative potential. 

Each of the six trends will be addressed in greater depth 

by our upcoming research and by highlighting cutting-edge 

agency actions. Together, they can help federal executives 

across the government understand the art of the possible 

when developing approaches that address the administration’s 

management agenda. 

56 



Forum: Six Trends Driving Change in Government 

Trend One: Performance 

Moving from Measurement to Action 

Results Act of 1993 (GPRA)—which requires agencies to 

develop strategic plans, measures, and annual reports. The 

new law formalizes a performance leadership and governance 

structure that had evolved over the last two decades. It 

also requires the development of targeted agency and crossagency 

priority goals, regular reviews by senior leaders of 

progress toward those goals, and government-wide reporting 

of performance via a single web portal. 

The key challenge that implementers of this new law will 

face: the need to ensure that the many procedural requirements 

in the new law do not overwhelm federal agencies in 

such a way that agency leaders focus on compliance rather 

than on improving performance. 

The federal government’s efforts to improve the performance 

and results of its programs have evolved over the last two 

decades. The goal has remained constant—to change the 

culture of government agencies to be more results-oriented 

and performance-focused in their work and decision-making. 

It has been a long road. The Government Accountability 

Office’s periodic reviews of federal managers’ use of performance 

information shows recent increases in the use of such 

information to: 

• Identify program problems to be addressed (55 percent) 

• Take corrective action to solve program problems 

(54 percent) 

• Develop program strategy (49 percent) 

Administration Policies Open the Gates to 

Accountability 

In addition to GPRAMA, the Obama administration has 

placed a great deal of emphasis on ensuring greater transparency 

and more open access to government data. 

Government-wide, the administration has created a one-stop 

website, Data.gov, for agency data sets, and has set forth a 

series of policies and initiatives to foster greater transparency 

and openness. Agencies have responded. Congress has also 

supported this policy initiative with legislation; for example, 

the Recovery Act required greater transparency in government 

spending data. 

This new openness has also precipitated several new 

forms of accountability, according to professors Dorothea 

Greiling and Arie Halachmi. “Traditional accountability 

These are process—not outcome-related—improvements. 

Yet, progress and hope abound. The federal government’s 

past performance focus was on developing annual performance 

reports based on a supply of information. Today’s 

focus is on achieving a handful of strategic goals through the 

effective use of data to inform real-time decision-making. 

New laws, policies, technologies, and techniques have made 

this shift in focus possible, but more can be done in the area 

of government performance management to drive change. 

Government executives seem to be finding ways to more 

effectively integrate performance management into the decision-making 

processes and culture of government, within— 

and increasingly across—agencies and programs. 

New Law Serves As Catalyst for Action 

The GPRA Modernization Act of 2010 (GPRAMA) reinvigorates 

a 20-year-old law—the Government Performance and 



Linking Data to Decision-Making 

Data and evidence are increasingly being used in agency 

decision-making, in part because of greater leadership 

interest, but also because there are new techniques and 

capacities available. For example, the new GPRA law 

requires agencies to hold regular data-driven decision 

meetings and this new forum has created a demand for 

useful information. 

In addition, the Office of Management and Budget (OMB) 

is supporting a series of initiatives to build an evidence and 

evaluation-based decision-making capacity in agencies. It 

has issued several directives to agencies encouraging their 

adoption of evaluation and analytic approaches and is 

encouraging the development of such capacities as well. 

arrangements are mostly vertically oriented and so follow 

hierarchical lines of control,” explain Greiling and Halachmi. 

They go on to observe that “innovative forms of accountability 

break with this pattern,” and are more horizontal and 

bottom-up in nature. New forms of accountability—such as 

PerformanceStat reviews—are possible. They reflect the new 

interplay between open data, social media technologies, and 

the increasing availability of real-time data. 

Making Real-Time Analytics Possible 

In parallel with the catalyzing effect of the GPRA 

Modernization Act and the greater availability of government 

data, a series of new technological advances offer 

sense-making techniques and access previously unavailable 

for large amounts of structured and unstructured data. 

Sukumar Ganapati, author of the IBM Center report, Use 

of Dashboards in Government, describes the use of dashboards 

as one approach to help busy decision-makers 

synthesize and understand a wide array of data in ways that 

make sense. In his report, he describes how the Obama 

administration has created dashboards on the progress of its 

information technology investments and its efforts to reduce 

the government’s real property holdings. 

Conclusion 

Studies over the past decade show some progress among 

mid-level managers in becoming more results-oriented and 

performance-focused. Recent statutory changes and technological 

advances have led more senior government leaders 

in federal agencies to integrate performance information 

into their decision-making processes. This has contributed 

to better choices that are rooted in facts and evidence. 

For example, the Department of Housing and Urban 

Development set a goal of increasing the number of families 

housed rather than focusing on reducing the number of 

vacant public housing units. This led to improved housing 

outcomes. 

However, increasing evidence-based decision-making among 

senior leaders will likely not be enough to change agency 

cultures. Agency leaders will need to create and embed both 

individual as well as organizational incentives to be more 

results-oriented and performance-focused. Employees on 

the front line need to see how what they do on a day-today 

basis makes a difference for their agency’s mission. For 

example, increasing their access to real-time performance 

information may be one approach. When this has been done 

in some pioneering agencies, this has allowed data-driven 

problem-solving to occur on the front line, in the field. 

Finding these kinds of levers for culture change—which will 

likely vary from agency to agency—will be a challenge to 

both policy makers and agency leaders, but when done well, 

they can have a lasting effect. 

58 




Trend Two: Risk 

Managing and Communicating Risk 

Managing risk in the public sector has taken on new significance. 

Government leaders lack an accepted culture and 

framework in which to properly understand, manage, 

and communicate risk. Risks take many forms, including 

national security risks via cyber attacks, economic risks 

from natural disasters, budget and program risks, or privacy 

risks. Recognizing the spectrum of risks and developing 

strategies and tools to incorporate risk into decision-making 

and action can help government drive change and ensure 

successful management of programs and missions. 

disruption. Further complicating the picture is a different 

kind of risk calculus that faces the national security community 

every day. Long-range, precision threats are now achievable 

via cyberattack to a wide range of people and groups, 

well outside the bounds of nation-state controls. 

Turning from Risk Avoidance to Risk Management 

and Acceptance 

Given the rapid pace of change that government faces, it is 

imperative that agencies turn from a culture of risk avoidance 

to one of risk management. A thought-provoking approach 

to how this change can occur appears in a Harvard Business 

Review article, “Managing Risks: A New Framework,” by 

Robert Kaplan and Anette Mikes. Kaplan and Mikes note that 

“risk management is too often treated as a compliance issue 

that can be solved by drawing up lots of rules and making 

sure that all employees follow them.” In addition, many 

Accepting Risk as a Condition of Action 

Risk is inherent in every facet of society. In our personal lives, 

there are risks to life, health, and property. People understand 

that such risks are inherent, and in most instances find ways 

to reduce the impact of those risks—such as standards for 

food inspections, building safer cars and homes, and securing 

insurance coverage in the event risk leads to loss. 

Risk is Inherent in Achieving Government Missions 

In government, risks have been primarily seen as constraints 

to minimize, avoid, or hide in a corner. Most federal agencies 

tend to pursue risk reduction rather than risk management. 

As a result, when something goes wrong—which, 

given the world in which we live, will inevitably occur— 

agencies, their constituents, and overseers often react to the 

immediate problem, rather than understanding in advance 

how to develop strategies to respond to issues that will arise. 

Few agencies think in advance about how to understand 

what may happen in these and other domains, how to 

communicate that potential in advance to their employees 

and stakeholders, and how to be resilient in the face of 



Kaplan and Mikes observe that “each approach requires 

quite different structures and roles for a risk-management 

function.” One way to integrate these approaches is to 

anchor risk discussions into strategic planning, which already 

brings together organizational goals and objectives and 

points to positive action rather than constraints—turning 

the conversation to a risk strategy that aligns with “the ‘can 

do’ culture most leadership teams try to foster when implementing 

strategy.” 

organizations compartmentalize their risk management functions 

along business lines (credit risk, operational risk, financial 

risk) and this “inhibits discussion of how different risks 

interact.” Such categorizations can miss many kinds of risks 

that organizations face. 

Kaplan and Mikes developed a three-part framework “that 

allows executives to tell which risks can be managed 

through a rules-based model and which require alternative 

approaches.” 

Preventable risks. These are internal and include illegal, 

unethical, or inappropriate actions (such as the recent GSA 

conference scandal), as well as breakdowns in operational 

processes. In the federal government, these are typically 

covered by internal control schemes, and can be controlled 

or avoided. 

Strategic risks. These differ from preventable risks because 

they are not necessarily undesirable. For example, developing 

a satellite-based air traffic control system may be 

seen as taking a strategic risk over the proven, ground-based 

radar-controlled air traffic control system. 

External risks. Organizations cannot prevent external risks 

from happening. So managers need to forecast what these 

risks might be and develop ways to lessen their impact. They 

cannot be avoided, only managed. 

Getting the Word Out About Risk 

A key element of addressing risks facing federal agencies 

involves effective communication: understanding what risks 

might affect an agency’s constituents and proactively getting 

the word out about those risks. FEMA, for example, already 

exercises this strategy, advising individuals living in hurricane 

zones about potential outcomes, so that the public and the 

agency are better prepared if and when a storm arrives. If 

other agencies were to identify risks that could occur and 

similarly communicate them in advance, this would bring 

numerous benefits: 

• Agencies would go through an exercise of more completely 

understanding risks to their constituents. 

• The public would have advance word on what might 

occur, helping to increase preparedness in the general 

population. 

• If the risks become realities, the acceptance and public 

discourse is framed as one that builds around a sound 

response to a problem that has been forecast, rather than 

reaction to an unanticipated event. 

Conclusion 

Operating in a world of increasing complexity, with citizens 

who expect better, faster, and more cost-effective 

results, it is critical that government executives tackle 

risks that can interfere with normal operations head-on. 

Partnering with industry, nonprofits, researchers, and citizens 

can enable government to incorporate more effective 

risk response frameworks into how it does business. By 

doing so, agencies can avoid potential risk traps; they can 

identify risks in advance, communicate their impacts, and 

be resilient in response. Pursuing a serious risk management 

approach can go a long way toward driving change 

in government. 

60 




Trend Three: Innovation 

Leveraging Innovation to Drive Transformation 

Innovation touches every facet of our lives, from transportation 

to communication, from personnel management 

to office automation. This is especially evident in the 

public sector in how agencies provide services and meet 

their missions. As it happens, technology has enabled much 

of this innovation, but it also requires smart leaders who 

apply these technologies and drive change within their 

agencies. 

Weaving Innovation into the Fabric of 

Government Agencies 

Many government leaders have found a way to weave innovation 

into the fabric of their agencies. At the federal level, 

the Department of Health and Human Services (HHS) has 

hired an “entrepreneur-in-chief” while the Department of 

State has an Office of Innovation that reports directly to the 

secretary. Maryland is just one state with a chief innovation 

officer who reports directly to the governor and ensures that 

the state government keeps pace with technology and citizens’ 

emerging needs while using innovative tools to effectively 

manage government programs and services. 

citizen participation, shares its information more easily, and 

delivers services more effectively and efficiently than in the 

past. Given such expectations, citizens aren’t interested in 

paying more for a more responsive government. In fact, most 

want to pay less. To accomplish this kind of government 

involves changing some of the fundamental assumptions 

and methods of government operation through innovation. 

The first task for government executives is to articu late how 

pursuing innovation can form a government that meets the 

demands and expectations of the 21st century. 

The present day differs from the past in two critical ways. 

First, today’s citizens have access to powerful mobile 

computing, so individual citizens can create, access, and 

analyze data at any time. Each individual is able to request 

and consume government services at any time and from any 

place, and governments need to meet that need. 

Second, one result of that access is that citizens are part of 

a culture of participation. The social applications that run 

on phones, tablets, and now wearable technology impart 

the value of participation with every shared picture, every 

request for signers of online petitions, and every opportunity 

to fund a new prospective product or service before it 

hits the market. Governments must therefore make not only 

their services, but their very operations open to participation 

at any time and place. 

The single constant in these examples is that senior government 

executives are leveraging innovation to drive change 

within government, and leading the charge to incorporate 

innovation into government. They are doing so by articulating 

the value of innovation, fostering a culture of innovation, 

aligning it to mission, defining and measuring success, 

and harnessing the benefits of innovation. 

Articulating the Value of Innovation 

Survey findings and poll results indicate that citizens expect 

a government that works dif ferently—one that encourages 



Defining and Measuring Success 

The final piece is to define and then measure success. Unlike 

in the private sector, success in the public sector cannot 

be defined solely through financial data. Even if costs rise 

slightly, a program could be successful if it advances other 

measurable goals such as reaching identified audiences, 

enhancing transparency, or developing new programs to 

address emerging mission components, among many others. 

For each of these goals, agencies will have to identify 

specific metrics at the beginning of any innovation programs. 

Metrics may include web analytics, volume and relevance 

of online participation, or metrics that pertain specifically to 

the agency’s mission: the health of specific populations, for 

example, or compliance with new regulations. 

Government leaders must harness citizens’ desire to participate 

and demonstrate how opening government to that 

participation can help deliver better services at lower 

cost. This is already being done, of course, at many levels 

by involving citizens in co-creation, co-production, and 

co-delivery of services and by tapping into the knowledge of 

crowds through programs like the Securing Americans Value 

and Efficiency (SAVE) Awards. 

Fostering a Culture of Innovation 

Government leaders must also foster a culture that is not 

only open to innovation, but actively encourages it. They can 

develop and invigorate such a culture in a number of ways, 

including: 

• Appeal both to internal and external stakeholders for 

innovation 

Distributing Innovation 

For government leaders to harness the power of innovation, 

they must ultimately unleash the creativity and expertise of 

the employees in their charge. 

Ideally, the mantle of innovation should be taken up 

by as many people within the organization as possible. 

Innovation can be championed by individuals at any 

level, but it is most often effective when it is embraced by 

employees at all levels. 

Trend Four: Mission 

Aligning Mission Support with Mission 

Delivery 

• Create mechanisms for innovation 

• Allow people to fail 

• Offer incentives for trying, and even more for succeeding 

• Institutionalize successful innovations 

Aligning Innovation to Mission 

Though it is important to encourage out-of-the-box thinking, 

it is equally important to ensure that innovations do not 

distract from an agency’s day-to-day mission. With new digital 

tools coming into existence every day, the allure of shiny, 

new engagement channels never dims. It is incumbent upon 

government leaders to act as filters, applying “tests for relevance” 

on proposed innovations before even piloting them. 

Agency and program leaders depend on a range of mission 

support functions, such as finance, technology, acquisition, 

or workforce management, to get their jobs done. The 

delivery of these functions, however, has changed significantly 

over the past quarter-century. 

62 




Twenty-five years ago, federal agencies typically did not 

have key executives leading mission support functions. 

These functions were largely seen as administrative transaction 

services. However, ineffective mission support operations 

can be quite costly. 

Congress Created Chiefs to Improve Management 

As a consequence of such persistent failures and a lack of 

clear leadership in mission support functions, Congress has 

intervened in the management of the executive branch over 

the past two decades by raising the profile, formalizing leadership 

roles, and defining more authority for many of these 

functions. Formalizing these roles mirrored similar trends 

in the private sector to create chief financial officers, chief 

information officers, chief acquisition officers, and chief 

human capital officers. Collectively, these “chiefs” have been 

referred to as the “C-Suite” and most recently, Congress 

formalized the role of chief operating officers and performance 

improvement officers as well. 

Three Core Functions 

These various chiefs reflect different disciplines that have 

their own professional communities and ways of defining 

success. Generally, most of these chiefs report to the heads of 

their agencies and have at least three core functions: 

• Providing services to internal agency customers (such as 

hiring or installing computers or providing office space) 

• Ensuring compliance with government-wide requirements 

(such as merit principles or capital investment guidelines) 

• Providing strategic advice to agency leaders (such as strategic 

workforce planning or financial risk management) 

These functions are not mutually exclusive. In fact, one of 

the challenges for federal government chiefs is balancing 

these distinct functions. 

Developing a Stronger Mission Focus 

The increased prominence of internally focused missionsupport 

functions has raised concerns among externally 

focused mission-oriented line managers in agencies. Mission 

managers deliver services to the public, such as air traffic 

control, environmental cleanup, export assistance, disability 

benefits, or immigration enforcement at the border. These 

mission managers rely on, but more importantly can capitalize 

on, centrally directed mission-support functions, which 

is a trend found in the business sector. Having common 

services provided centrally is not only less expensive, but 

often results in higher quality. However, one former mission 

manager recently noted that in his experience, “the [C-Suite] 

community is the biggest obstacle to success.” 

For example, a 2009 study by the National Academy of 

Public Administration (NAPA) of several mission-support 

functions at the Department of Energy (DOE) observed that 

these centralized functions in the department are seen as 

dysfunctional by line managers, largely because the various 

functions do not coordinate with each other. The lack of 

coordination within and among these functions results 

in “an inwardly focused, regulation-based, transactional 

organization.” 

The NAPA study concluded that “DOE needs to better integrate 

and manage the mission-support offices’ efforts in order 

to develop a coordinated approach to providing essential 

support services.” In addition, it found the mission support 

offices needed to develop a stronger mission focus: “DOE 

does not have formal systems to assess how well the missionsupport 

offices are meeting the needs of the department and 

to hold them accountable for doing so.” Anecdotal evidence 

suggests similar perceptions by mission leaders in other 

federal departments as well. 

Creating Governance Structures That Support 

Mission Leaders 

In addition to encouraging mission-support chiefs to focus 

greater attention on mission delivery, the NAPA study also 

recommended that the U.S. Department of Energy create 

cross-bureau governance structures. This new structure 

would better coordinate mission-support activities by integrating 

them more effectively into mission delivery priorities. 

These include creating: 

• An under secretary for management 

• An operations management council 

• An enterprise-wide mission-support council 

These recommended structures and new roles alone will 

not change tendencies found in mission support areas to 

act independently. Chiefs have to connect with one another 

through formal and informal means, and balance their three 

functional roles. 

Moreover, Congress recently established another chief—the 

chief operating officer (or under secretary for management). 

With this role now enshrined in law and possessing statutory 

authority, the COO serves as a nexus between policy and 

management. Depending on the agency, this role may be 

held by the deputy secretary or filled by an under secretary 

for management. 

Opportunities for Cross-Functional Collaboration 

Both mission-support and mission-delivery executives say 



there are opportunities to improve results if they work 

together more effectively as a team, both within and across 

agencies. One way to do this is have agency executives serve 

in both mission-support and mission-delivery roles as a part 

of their career development, much like the commercial sector 

does. Government executives can develop a better understanding 

of enterprise-wide priorities that goes beyond just 

mission-level priorities: 

• The U.S. Department of Veterans Affairs is doing just this 

within its executive development program. 

• USDA’s Departmental Management Operations Council 

and the PerformanceStat meetings at the U.S. Department 

of the Treasury and the U.S. Department of Housing and 

Urban Development use cross-departmental councils that 

regularly convene to tackle issues of integration. 

Conclusion 

This cross-functional mission-support collaboration could 

also extend to cross-agency mission-delivery initiatives. For 

example, agencies now work across boundaries to solve 

major public challenges such as climate change and food 

safety. Mission-support services for these initiatives have 

previously been ad hoc. The cross-agency mission-support 

councils could support these initiatives in innovative ways 

that increase efficiency and accountability. 

Government executives can harness major technological 

shifts and adapt proven public-sector and commercial best 

practices to make their agencies more efficient and effective. 

Trend Five: Efficiency 

Pursuing Cost-Savings Strategies in a 

Resource-Constrained Era 

Fiscal austerity will be an enduring challenge for public 

managers. It can present opportunities to rethink traditional 

approaches to mission support and service delivery. In this 

environment, identifying innovative ways to reduce costs 

across multiple catego ries of government spending (e.g., 

appropriations, user fees) while maintaining and improving 

performance will be critical. 

New Strategies for Achieving Cost Savings 

In 2010, the IBM Center published Strategies to Cut Costs 

and Improve Performance. Since its release, the fiscal challenges 

facing government executives have become even 

more pressing, with an impetus to reduce costs and allocate 

savings to mission priorities. Constraints imposed by sequestration, 

continuing resolutions, and debt ceilings have made 

“doing more with less” and “operating smarter with less” 

an ongoing reality. Even if a larger agreement is reached 

regarding long-term spending, that agreement is likely to 

maintain a tight hold on current discretionary budgets for 

agencies. 

Across government, new strategies for achieving cost savings 

are in high demand. This goes beyond simple cost-cutting 

to helping the public sector redirect cost savings into investments 

in key priorities, including through gain sharing and 

other savings retention approaches. The imperative to do 

more with less has never been stronger; government executives 

can learn from each other and from the private sector 

how to survive and possibly thrive in this environment. 

Emerging Opportunities to Save Costs 

There are emerging opportunities to save costs through 

improvements in how agencies manage technology, process, 

organization, and data: 

Technology. When used appropriately, technology can 

streamline operations and allow employees to shift from 

transactional processes to strategic insight and cus tomer 

service. Cloud computing allows agencies to spend less 

money. Leveraging the cloud can allow agencies to focus 

internal resources on making mission and program operations 

more efficient and effective even in an environment 

where funding is tight. 

Process. There are great examples of the power of streamlining 

processes such as claims and payment processing, 

supply chain management, and emergency/disaster response. 

Best practices provide clear lessons in how to increase 

mission effective ness at a lower price. For example, applying 

shared services to a broader range of government activities 

can allow agencies to reduce duplicative back-office operations 

across multiple bureaus; this allows for enterprise-wide 

64 




management of finance, HR, acquisition, and other mission 

support functions. 

Organization. The model of an effective organization is 

changing as technology and process enable new management 

approaches to drive effectiveness. Rather than following 

a hierarchical structure where collaboration across boundaries 

is difficult, government executives can capitalize on 

lessons from entrepreneurial firms and move toward a collaborative, 

virtual team model of program management and 

service delivery. 

Data. Information can also be used strategically to analyze 

service patterns to iden tify wasteful processes that can be 

streamlined to reduce time and costs (e.g., grant application 

processes). Increasingly, agencies are using analytics to 

predict and pre vent problems that drain time and resources, 

such as identifying improper pay ments in advance rather 

than stopping them after the fact. Applying analytics to 

administrative data sets can also help determine the costeffectiveness 

of alterna tive interventions. 

In addition, another IBM Center report, Fast Government: 

Accelerating Service Quality While Reducing Cost and Time, 

brings fresh insights and illuminating examples on how 

government executives, by focusing on time and speed, can 

deliver real and lasting benefits through increased mission 

effectiveness and lower costs. It outlines strategies and tools 

that government executives can leverage to fundamentally 

change the way they do business through a focus on cycle 

time reduction and elimination of non-value-added activities. 

Fast Government examines the role of time in bringing 

value to the public sector, and focuses on innovation, disruptive 

technologies, predictive analytics, and other ways that 

leaders can make government more efficient. 

Measuring and Capturing Cost Savings 

It is important that government executives establish baselines 

from which to measure savings. This involves understanding 

total cost of ownership, which is different from and 

often more complex in federal agencies than in the private 

sec tor. Most government programs run off a cost baseline 

that includes a subset of appro priations for the larger department. 

Piecing this together to understand current costs is not 

a trivial exercise. 

Once the baseline is understood, a second challenge 

involves developing financial models and methods that 

can capture savings off the baseline accurately. The federal 

government has experimented occasionally with “share 

in savings” contracting. Even if clear savings opportunities 

emerge, barriers such as federal budget requirements 

impede savings capture and reinvestment. Overcoming 

such barriers will require the use of prototypes and pilots to 

demon strate the art of the possible, with agencies working 

in partnership with their congres sional authorization and 

appropriation partners to build support for pilots and understanding 

how success can scale more broadly. 

Government can also collaborate with industry to draw out 

ideas for savings, perhaps using challenges and prizes as 

a way to promote innovation. Contracts can be written to 

create incentives for industry partners to dedicate a portion 

of their activities to inno vative, rapid experimentation, 

finding better ways to achieve results while lowering costs. 

Conclusion 

Given the budget realities of today, it is critical to identify 

opportunities for efficiency, measure and capture savings, 

and reward those who deliver cost savings. It is essential that 

government executives ensure that federal employees are 

provided the skills and capabilities to succeed in becoming 

more efficient. This can also help identify further ways to 

save money and record those savings, and fuel a continuous 

drive for cost-effective improvements that bene fit all citizens. 



Trend Six: Leadership 

Leading Across Boundaries in an Era of 

Complex Challenges 

Professor Joseph Nye stresses in Leadership, Power and 

Contextual Intelligence, “Understanding context is crucial 

for effective leadership. Some situations [may] call for autocratic 

decisions and some require the [exact] opposite. There 

is an infinite variety of contexts in which leaders have to 

operate, but it is particularly important for leaders to understand 

culture, distribution of resources, followers’ needs and 

demands, time urgency, and information flows.” 

Leading through Complex, Non-Routine 

Challenges 

Complex challenges, or so-called wicked problems, tend 

to have innumerable causes and are hard to define, making 

their mitigation resistant to predetermined solutions or traditional 

problem-solving approaches. In certain instances, the 

scope, nature, and extent of these challenges eliminate the 

notion of quick fixes or one-size-fits-all solutions. 

From budget reductions to a struggling economy, disasters 

to pandemics, the seemingly intractable challenges facing 

government leaders extend far beyond the ability of any 

one agency or leader to respond. These are complex, often 

non-routine, challenges that are increasingly cross-cutting, 

interagency in nature, and go to the core of effective governance 

and leadership—testing the very form, structure, and 

capacity required to meet them head-on. Many are difficult 

to anticipate, get out in front of, and handle. In most manifestations, 

they do not follow orderly and linear processes. 

The right kind of leadership approach and style can drive 

change in government. 

Given today’s context, a specific kind of leadership approach 

seems most effective. It is an approach that recognizes the 

importance of: 

• Reaching across agencies 

• Connecting networks of critical organizational and 

individual actors 

• Mobilizing the whole of government’s capabilities 

• Achieving a result greater than the sum of the agencies 

involved 

As Roger Martin, dean of the Rotman School of Management 

at the University of Toronto, observes, “There was a time 

when leaders shared a sense that the problems they faced 

could be managed through the application of well-known 

rules and linear logic. Those days are gone. Most of today’s 

important problems have a significant wicked component, 

making progress impossible if we persist in applying inappropriate 

methods and tools to them.” 

Understanding Context is Crucial for Effective 

Leadership 

There are different types of leadership approaches, from transactional 

to transforma tive and beyond. A survey of leadership 

experts and government leaders interviewed on the IBM Center 

for The Business of Government’s radio program makes one 

thing clear—there is no one-size-fits-all approach to leadership. 

What does seem evi dent is the importance of context in 

honing a leadership approach. Effective leaders must possess 

and exercise a certain level of contextual intelligence. As 

66 




Exemplifying the importance of contextual intelligence, Dr. 

Collins recognized that it took a certain leadership to launch 

HGP, and another kind to make the changes that took it to a 

successful conclusion. 

Depending on the challenge faced, government leaders may 

need to fundamentally transform how their organizations 

operate to meet mission. For example, when facing the challenge 

of budget cuts and significant resource reallocation, 

transformational change that can deliver mission value more 

efficiently will be increasingly important. 

Collaborative Leadership in Action 

Managed Networks. Ed DeSeve puts a finer point on this 

leadership approach in his IBM Center report, Managing 

Recovery: An Insider’s View. DeSeve led the implementation 

of the $840 billion American Recovery and Reinvestment 

Act in 2009, a perfect example of a complex, non-routine 

government challenge—the doling out and tracking of significant 

amounts of federal dollars. For DeSeve, his success 

relied on forging an integrated system of relationships among 

federal agencies, state and local entities, and other stakeholders 

that reached across both formal and informal organizational 

boundaries—what DeSeve calls a managed network, 

which is a key tool of collaborative leadership. 

Managing “Big Science:” A Case Study of the Human 

Genome Project. Dr. Francis Collins rep resents a new type of 

leader in government. Before becoming NIH director, Collins 

led an international coalition consisting of government organizations, 

the private sec tor, and the academic community as 

part of the Human Genome Project (HGP). 

In Managing “Big Science:” A Case Study of the Human 

Genome Project, Professor Harry Lambright highlights that 

Collins faced the challenge of reorienting HGP from a 

loose consortium into a tight alliance with a small circle of 

performers and decision-makers. Instead of relying on the 

traditional command-and-control leadership style, Collins 

relied on a more collegial, collaborative style. However, as 

the project began to evolve, mature, and face direct competition 

from an external party, Collins recognized that the 

leadership approach of old would no longer be effective. 

Establishing the National Center for Advancing Translational 

Science. Collins now director of NIH, recognized the need 

to more effectively translate NIH’s basic research into actual 

medical applications. This was driven by his desire to focus 

on outcomes. His vision to establish the National Center for 

Advancing Translational Sciences (NCATS) clashed with the 

status quo at NIH. Collins hit the ground running, setting 

goals at the outset, having clarity as to means, using the 

power of his office effectively, and most importantly forging 

collaborative networks and support inside and outside NIH. 

He was once again successful. 

Conclusion 

We are in the midst of an exciting, engaging, yet trying 

period marked by uncertainty, significant challenges, undeniable 

opportunities, and indelible aspirations. Today’s 

most effective government leaders can spark the imagination 

to look beyond day-to-day urgencies and reflect on the 

serious problems and critical challenges they face today into 

tomorrow. Leaders are responsible for envisioning, shaping, 

and safeguarding the future, creating clarity amidst uncertainty. 

This is no small feat and it is made increasingly difficult 

in the 21st century, where rapid, unforeseen change 

seems to be the only constant. ¥ 

TO LEARN MORE 

Six Trends Driving Change in Government by Dan Chenok 

John M. Kamensky, Michael J. Keegan, and Gadi Ben-Yehuda 

The report can be obtained: 

• In .pdf (Acrobat) format at the Center website, 


• By e-mailing the Center at businessofgovernment@us.ibm.com 

• By calling the Center at (202) 551-9342. 


Viewpoints 

Is Moneyball Government the Next Big Thing? 

By John M. Kamensky 

In early December 2013, I attended a sold-out conference 

on performance measurement. It wasn’t the typical government 

crowd. The conference was filled with attendees from 

nonprofits and foundations, all dedicated to figuring out what 

works and putting their money toward programs with the 

most promise. In a ballroom abuzz with enthusiasm, I was 

particularly impressed with the sophisticated conversations 

on advancing evidence-based program decisions. 

This enthusiasm goes beyond the nonprofit and public 

sector. The private sector uses the term “business analytics” 

to describe the use of statistics to inform business decisions. 

Over the last few years, a critical mass of stakeholders has 

quietly worked to build evidence-based decision-making 

into government as well. The media is calling this moneyball 

government, after the 2003 best-selling book by Michael 

Lewis on creating a winning baseball team through the astute 

use of statistics. The common goal is to use performance 

data, evidence, and program evaluation to reframe budget 

and program decisions in ways that reflect the value being 

created, not just the dollars being spent. 

For example, a recent Washington Post article highlights the 

Department of Education’s Even Start program, created in 

1988 to help youths from disadvantaged families do better 

in school. By 2004 the program was spending $248 million. 

Program evaluation studies from more than a decade ago 

found no evidence that Even Start succeeded, so President 

Bush, and then President Obama, recommended abolishing 

it. The program currently is unfunded. 

At the local level, the New York City school system set out 

in 2010 to reduce chronic absenteeism, creating a task force 

that brought together a dozen city agencies and over 20 

community-based and nonprofit organizations to identify and 

expand strategies for keeping students in school. According 

to a study by the nonprofit America Achieves, the task force 

pioneered a new approach to collecting and analyzing realtime 

attendance data and evaluating different intervention 

Moneyball Government 

techniques in 100 schools. The task force identified 

successful approaches such as providing in-school mentors. 

Students with these mentors spent more than 80,000 additional 

days in school compared to students without a mentor. 

What’s Driving the Push to Use Evidence? 

A number of forces drive advocacy, political, and program 

leaders to use performance information, evidence, and 

program evaluation in government programs. 

68 



Viewpoints 

John M. Kamensky is Senior Fellow at the IBM Center for 

The Business of Government. 

What does a “Moneyball” Government Do? 

Governments that use the Moneyball approach: 

• Focus on outcomes and lives changed, rather than 

simply compliance and numbers served; 

• Drive limited taxpayer dollars to solutions that use 

evidence and data to get better results; 

• Use data and evidence to continuously improve 

quality and impact, while also reducing duplication 

and cutting red tape that can strangle new ideas; 

• Invest in and scale innovations that will make greater, 

faster progress on challenges facing young people, 

families and their communities; 

• Direct public dollars away from policies, practices 

and programs that don’t work; and 

• Invest in communities that are collaborating and 

using data and evidence to achieve significant 

community-wide impact. 

Source: Moneyball for Government, 

http://moneyballforgov.com/the-solution 

More data. There is more administrative and other data 

available for analysis within and across agencies. Greater 

access to data, and greater ability to make sense of both 

structured and unstructured data, are raising interest among 

decision-makers. 

More analytics. There are more sophisticated approaches to 

analysis (e.g., not just focusing on the average, but on granular 

data interpretation). Stories in the popular media (for 

example, Michael Lewis’ book and movie, Moneyball, and 

Nate Silver’s book, The Signal and the Noise) and increased 

use of analytics and rapid experimentation in the private 

sector (for example, Jim Manzi’s book, Uncontrolled), have 

raised the attention of public sector decision-makers. 

More interest. Congress and local political leaders are more 

open to supporting investments in program evaluation and 

data analytics, even in an era of tight budgets. Significantly, 

there is corresponding increased interest among federal agencies, 

which are seeing greater value in performance and evaluation 

processes. 

More incentives. Encouraging pilots at the state and local 

levels, and in Britain, are attracting the interest of policymakers 

facing tough austerity tradeoffs and looking for ways 

to creatively invest in programs that make a difference, while 

identifying programs that do not work. 

More leadership. At the federal level, various OMB leaders 

over the past decade have consistently championed using 

evidence and evaluation in budget decision-making. For 

example, then-OMB Director Peter Orszag, a major proponent, 

issued directives to agencies to promote the use of 

evidence and evaluation. Current OMB Director Sylvia 

Burwell has led several large philanthropic foundations that 

used evidence and results as key criteria for distributing their 

funds, so she too is an advocate. At the local level, mayors 

across the country have provided leadership, including New 

York City’s Michael Bloomberg, San Antonio’s Julian Castro, 

and Baltimore’s Stephanie Rawlings-Blake, among others. 

Building an Evidence-Based Culture in 

Government 

Steps are underway to build a foundation for evidence-based 

thinking in the federal government as well as state and local 

governments. 

Step 1: Build Agency-Level Capacity for Evaluation and 

Data Analytics. Agencies are building the infrastructure 

necessary to conduct evaluations and analyze data and 

evidence. For example, they are creating learning networks 

of evaluators from across the government to share best 

practices, including developing common evidence standards 

and spreading effective procurement practices. There 


Viewpoints 

Examples of Evidence-Based Initiatives 

So, what are federal agencies, states, and localities actually doing? 

An increasing variety of activities—often called “what works” initiatives—are underway 

or planned, with the common denominator being decisions based on evidence. 

FEDERAL EXAMPLE 

Tiered-Evidence Grants 

A number of federal agencies are 

piloting the use of tiered evidence 

grants in a dozen different policy arenas, 

including social services, transportation, 

workforce development, 

education, and foreign aid. Under 

this approach, the distribution of 

more than $2 billion in grants is prioritized 

into three categories: 

• Scale-up grants fund expansion of 

practices for which there is already 

strong evidence. These grants 

receive the most funding. 

• Validation grants provide funding 

to support promising strategies 

for which there is currently only 

moderate supporting evidence. 

These grants receive more limited 

funding and support for program 

evaluations. 

• Development grants provide funding 

to support “high-potential 

and relatively untested” practices. 

These receive the least funding and 

support for program evaluations. 

STATE EXAMPLE 

Washington State Institute 

for Public Policy 

The Washington State Institute for 

Public Policy has developed a system 

for calculating the return on investment 

from alternative public policy 

tools. The system is used by the state 

legislature to help make policy decisions 

based on performance rather 

than anecdote. According to the Pew 

Center for the States, the Institute has 

developed a unique approach to supporting 

the policy decisions by the 

state legislature, which includes: 

• Analyzing all available research to 

systematically identify which programs 

work and which do not 

• Predicting the impact of policy 

options for Washington State by 

applying the combined evidence 

of all sufficiently rigorous national 

studies to the state’s own data 

• Calculating various policy options’ 

potential return on investment, 

taking into account both the short 

and long term and the effect on 

taxpayers, program participants, 

and residents 

LOCAL EXAMPLE 

Social Impact Bonds 

According to a report by the Center 

for American Progress, New York 

City is now piloting the use of social 

impact bonds, a new financing 

tool for social programs in which 

“government agencies contract 

external organizations to achieve 

measurable, positive social outcomes 

on key issues, such as homelessness 

or juvenile delinquency.” Service 

providers receive payment from the 

government upon achievement of 

agreed-upon results. In August 2012, 

then-Mayor Michael Bloomberg 

announced the city’s first impact 

bond agreement. According to the 

Center’s report: “The city of New York 

contracted with MDRC, a nonprofit, 

nonpartisan social research organization, 

to reduce the rate of recidivism 

by at least 10 percent over 

four years among annual cohorts 

of about 3,000 young men exiting 

Rikers Island. The working capital 

for the intervention—$9.6 million 

over four years—is being provided by 

Goldman Sachs, structured as a loan 

to MDRC.” 

70 



Viewpoints 

are also multi-agency collaborations around enforcement 

programs, economic development activities, and financial 

literacy efforts. In addition, some agencies are creating 

departmental-level evaluation posts, such as the Department 

of Labor’s Chief Evaluation Office, or empowering existing 

evaluation offices. 

Step 2: Invest in Increasing the Amount of Evidence and Data. 

Set-asides of existing program funding are being proposed 

to support program evaluations. For example, a reserve fund 

of up to 0.5 percent would be created at the Department of 

Education, and the Department of Labor’s reserve fund, overseen 

by the department’s Chief Evaluation Office, continues 

to be permitted to use up to 0.5 percent of the department’s 

appropriations for evaluation. In addition, the 2014 budget 

proposes $2 million for a new Data-Driven Innovation initiative 

within OMB to help agencies expand the use of innovation 

and evidence to support outcome-focused government. 

Step 3: Make Greater Use of Existing Administrative Data. 

Efforts are underway to take administrative data already being 

collected and link it across agencies to help them better 

understand cross-agency outcomes. For example, states and 

localities could link data from early childhood programs 

to data from juvenile justice systems and K-16 education 

systems to produce statistical snapshots that previously might 

The Role of Nonprofits and Philanthropy 

Nonprofits and foundations are enthused by government’s 

growing interest in the use of evidence and 

evaluation. They are chiming in either to support 

government initiatives or to undertake their own. 

Some nonprofits and foundations advocate evidencebased 

decision-making in different policy arenas, 

while others advocate different tools or techniques 

for program evaluation. Other nonprofits are actually 

applying evidence-based approaches in their delivery 

of services. Significantly, as government at all levels 

adopts these approaches, the nonprofit and foundation 

communities are enthusiastically chipping in to help. 

America Achieves 

With some political savvy and bipartisan firepower, 

this new nonprofit is an advocate for evidencebased 

policy. It is sponsoring an initiative to improve 

“outcomes for young people, their families, and 

communities by driving public resources toward 

evidence-based, results-driven solutions.” It has developed 

a scorecard that assesses individual agencies’ 

capacity and use of evidence and program evaluation. 

It has piloted the scorecard on several agencies, 

with more on the way, to highlight progress. It is also 

conducting advocacy and sponsoring research at the 

local level. A recent study of initiatives in six cities 

focused on “the importance of building and using 

evidence of what works in making smart decisions 

about investing public resources.” 

Pew Center for the States 

The Pew Charitable Trusts is cosponsoring a Results 

First Initiative with the MacArthur Foundation. One 

element of this effort emphasizes the use of cost-benefit 

analyses and evidence-based budgeting approaches. 

For example, one of the initiative’s projects features 

work with about a dozen states to replicate Washington 

State’s successful approach to introduce cost-benefit 

analyses into state legislative decision-making through 

its policy institute. 


Viewpoints 

only have been available through costly long-term tracking 

surveys. States and localities are leading by example in this 

area by participating in a foundation-funded initiative called 

“actionable intelligence for social policy” that links “data 

from across multiple systems so that researchers and government 

decision-makers can work together to analyze problems” 

in ways that safeguard privacy. 

Step 4: Create Incentives to Use Evidence. In addition to 

building technical capabilities, OMB seeks to create incentives 

for agencies to actually use evidence when making 

program and funding decisions. One approach is to streamline 

access to waivers of administrative requirements in 

exchange for grantee commitments to collect data and 

conduct analyses. A second approach is to create performance 

incentives for states and localities to use money from 

existing formula grants to support evidence-based practices. 

For example, the mental health block grant program would 

require states to target at least five percent of their funding to 

“the most effective evidence-based prevention and treatment 

approaches,” according to OMB. A third approach is to make 

matching grants to grant-making intermediaries based on 

evidence of the effectiveness of the programs to be funded. 

For example, the $70 million Social Innovation Fund in the 

Corporation for National and Community Service makes 

matching grants to grant-making intermediaries, leveraging as 

much as $150 million in non-federal cash grants. 

Step 5: Create Agency-Level “What Works” Repositories. 

According to OMB, agencies are also expanding their “what 

works” repositories, such as: 

• Department of Education’s What Works Clearinghouse 

• Department of Justice’s CrimeSolutions.gov 

• Substance Abuse and Mental Health Services 

Administration’s National Registry of Evidence-Based 

Programs and Practices 

Conclusion 

Jeffrey Liebman, Harvard professor and an early architect 

of the evidence-based approach in the Obama administration’s 

OMB, illustrates the essence of the moneyball government 

movement. He reflects on his efforts: “fiscal pressures 

make the need for more-effective government more acute.” 

He goes on to say the goal is to “produce more value with 

each dollar the government spends” by reallocating funds 

from less-effective programs to more-effective programs. 

He closes by saying “We need to improve performance by 

setting outcome-focused goals, then using leadership strategies 

… to make the changes to systems necessary to achieve 

those goals.” Liebman is not alone in his assessment, as any 

number of governors or mayors might have made the same 

observations. ¥ 

• Department of Labor’s Clearinghouse of Labor Evaluation 

and Research 

72 



Viewpoints 

Modernizing the Budget Process to Reflect Modern 

Technology Realities 

By Daniel Chenok 

Fiscal constraints will challenge government for the foreseeable 

future. While this might seem daunting, budget pressures 

can foster opportunities to innovate, offering powerful 

incentives to rethink traditional approaches to mission 

support and service delivery. Within this context, it is critical 

to identify innovative ways to reduce costs while maintaining 

and improving performance. In addition, rethinking how to 

finance information technology (IT) and other investments 

can help agencies leverage rapidly evolving offerings in areas 

ranging from cloud and “as a service” computing models 

to real-time review and response to cybersecurity threats. 

Finally, government can reap the benefits of innovation and 

efficiency through a more refined approach to measuring and 

capturing cost savings. 

Innovation in Cost Reduction: Lessons from 

the States 

Federal leaders can learn much from state experiences. 

Earlier this year, the IBM Center released Managing Budgets 

During Fiscal Stress: Lessons for Local Government Officials 

by Jeremy M. Goldberg, University of San Francisco, and 

Max Neiman, University of California at Berkeley. This 

report describes how California’s budget experiences over 

the past several years can provide lessons learned and roadmaps 

for other federal, state, and local governments, who 

face fiscal constraints. Like many local governments across 

the nation, cities and counties in California have been 

impacted heavily by the economy in recent years. The 

report makes recommendations for local governments 

across the nation. These include: 

• Identify and address structural deficits in a finely grained 

manner, leaving no major budget category unexamined. 

For federal budgets, this includes programmatic areas as 

well as functional categories—appropriated dollars, working 

capital and franchise funds, and even user fees. 

• Foster citizen engagement to encourage widespread dissemination 

of fiscal information, thus enhancing the legitimacy 

of public policy choices. Significantly, this recommendation 

complements findings that innovation can be a key lever 

to thrive in a cost-constrained environment. It encourages 

employees and citizens to identify new ways of doing business 

that do not require spending on outdated processes 

without questioning whether they are still needed. 

Budgeting For the Fast Pace of 

Technological Change 

The traditional federal budget process takes up to 30 

months. Agencies start to plan their request in spring before 

presenting a budget. The president presents a budget the 

next winter, then Congress begins enactment the following 

October: almost 18 months after the initial planning or later 

given the many continuing resolutions as outlined in the IBM 

Center report The Costs of Budget Uncertainty: Analyzing the 

Impact of Late Appropriations by Professor Phil Joyce at the 

School of Public Policy within the University of Maryland. 


Viewpoints 

Daniel Chenok is Executive Director of the IBM Center for The Business of 

Government. His e-mail: chenokd@us.ibm.com. 

Finally, after all this the agency often spends much of their 

budget toward the end of the next fiscal year (30 months 

after initial planning). 

In an Internet age, when technological advances are made in 

months rather than years, the traditional budget process lacks 

the flexibility agencies need to capture the benefits of innovation. 

Fortunately, there are established ways that agencies 

can work with Congress to enhance their ability to leverage 

new commercial technologies. Agencies can use “working 

capital funds” or “franchise funds.” These approaches often 

allow dollars to be carried over, across years, enabling more 

flexibility in spending. 

Today, a number of agencies use these techniques to provide 

shared services to other federal agencies. The agencies 

that provide shared services retain a constant capital flow 

to support continued delivery of quality shared services; 

also, agency buyers use working funds to make an investment 

that could not have been foreseen during long-term 

budget planning and/or where the timing of the investment 

requires a flow across fiscal years that is known in advance. 

Technologies offered through “as a service” models, such as 

cloud-based services purchased at regular intervals based on 

buyer demand, can be tailored to an agency’s current needs. 

Of course, pursuing such a step requires early and ongoing 

transparency with agency stakeholders (including OMB, 

Congress, GAO, and inspectors general) as to the means, 

risks, and benefits of using such an approach. 

Agencies can apply these techniques in a variety of 

settings—through pilots on projects funded by annual 

appropriations or greater use of flexible spending accounts. 

Agencies can also collaborate with industry to identify ideas 

for savings, perhaps using challenges and prizes to promote 

innovation. Contracts can be written to create incentives 

Franchise Funds 

Franchise funds are government-run, self-supporting, businesslike enterprises managed by federal employees. Franchise 

funds provide a variety of common administrative services, such as payroll processing, information technology support, 

employee assistance programs, public relations, and contracting. 

Franchise fund enterprises are a type of intragovernmental revolving fund. Such funds all have similar legal authority and 

operations and generally provide common administrative services. An intragovernmental revolving fund is established 

to conduct continuing cycles of businesslike activity within and between government agencies. An intergovernmental 

revolving fund charges for the sale of goods or services and uses the proceeds to finance its spending, usually without the 

need for annual appropriations. 

The original operating principles for franchise funds included offering services on a fully competitive basis, using a 

comprehensive set of performance measures to assess the quality of franchise fund services, and establishing cost and 

performance benchmarks against their competitors—other government organizations providing the same types of services. 

The Government Management Reform Act of 1994 authorized the Office of Management and Budget to designate six 

federal agencies to establish the franchise fund pilot program. 

Source: GAO documents 

74 



Viewpoints 

for industry partners to pursue innovative activities that may 

involve rapid experimentation, and ultimately are focused on 

finding better ways to achieve results while lowering costs. 

Measuring and Capturing Cost Savings 

For any steps government takes to improve efficiency and 

value, it is important that executives establish baselines to 

measure the cost savings of those steps. To understand how 

much can be saved, it is important to understand the full 

baseline costs, which in government are different and often 

more complex than in the private sector. Most government 

programs run off a cost baseline that includes a subset of 

appropriations for the larger department, salary and expense 

accounts not associated with the program, and sometimes 

working capital or franchise funds. Piecing these sources 

together to understand current costs is not a trivial exercise. 

Once the baseline is understood, a second challenge involves 

developing financial models and methods that can capture 

savings off the baseline accurately. The federal government 

has experimented occasionally with “share in savings” 

contracting as a way to operationalize this measurement. This 

is a framework that incentivizes companies to achieve the 

measured savings over time, from which contract payments 

are made. 

Even if clear savings opportunities emerge and there is financial 

transparency for the opportunity, barriers to savings 

capture and reinvestment exist. Federal budget law requires 

that agencies have sufficient funds on hand to cover the 

costs of a contract upfront (including termination costs). 

This requirement makes the use of a gain-sharing approach 

less attractive. In addition, federal agencies must generally 

spend all of their money in a given fiscal year, while savings 

often take months or years to materialize. Overcoming such 

barriers will likely require the use of prototypes and pilots to 

demonstrate the art of the possible, building support for pilots 

and understanding how success can scale more broadly. ¥ 

Editor’s Note: An expanded version of this article will appear 

in The Public Manager. 


Viewpoints 


By Gadi Ben-Yehuda 

Joel Gurin recently released a book enthusiastically titled 

Open Data Now. Gurin, the former chief of consumer 

and governmental affairs for the Federal Communications 

Commission, joins a growing chorus calling on the federal 

government to live up to the spirit of President Obama’s 2009 

Memorandum on Transparency and Open Government. 

Champions of open data exist both within government—Mr. 

Gurin and the Department of the Treasury’s Marcel Jemio, for 

example—and within industry, including organizations like 

Socrata, 1776, and XBRL.US. They note that opening government 

data directly spurs economic activity, enables services 

Americans depend on every day, and increases the efficiency 

of and trust in government. 

But when vast stores of data are already “open”—accessible 

to the public, machine-readable, and in a non-proprietary 

format—what are the next big steps for open data advocates? 

One obvious step is opening ever-greater troves of data and 

switching government data’s default setting from closed to 

open. Another is improving the quality of data already available, 

most notably by ensuring the availability and quality of 

metadata. 

Why Open Data? 

Perhaps the biggest success of open data was achieved by 

accident, and scarcely a panel can be convened or article 

written without referencing it. In the 1980s, the United States 

launched satellites into space so the military could have 

precise location data for training, monitoring, and missions. 

Nearly two decades later, ordinary citizens were given access 

to that data stream. The $26.67 billion GPS market is possible 

only because of that open location-data stream. 

There are other examples of open data spurring economic 

activity. Health data released from the Department of Health 

and Human Services (HHS) is already powering apps, and HHS 

regularly participates in “Health Datapaloozas” to bring its data 

to private-sector developers. Data from the National Oceanic 

and Atmospheric Administration undergirds almost all weather 

apps on the market. The Department of Labor publishes data 

enabling an app that helps with financial decisions. 

Economics, important as they are, represent only one part 

of the story. Another part is the trust in government essential 

to a democracy. Opening the government’s data means 

everyone benefits from their government. Everyone becomes 

a stakeholder and sees the value they personally derive from 

their government’s activities. And opening the data about 

how government operates allows everyone to understand 

how public money is spent and see the alignment between 

public priorities and public expenditures. 

Numbers Don’t Lie 

The popular saying is that “numbers don’t lie,” but it can be 

countered with the equally popular “lies, damned lies, and 

statistics.” When it comes to big numbers, this is even more 

true, as humans are famously bad at grasping the meaning of 

large numbers. 

76 



Viewpoints 

Gadi Ben-Yehuda is the Innovation and Social Media Director for the IBM 

Center for The Business of Government. 

Few likely know that better than Earl Devaney, a former 

inspector general for the Department of the Interior and 

chairman of the Recovery Accountability and Transparency 

Board. Mr. Devaney was asked by a congressional oversight 

panel to estimate how much Recovery Act money would 

be lost to fraud, waste, and abuse. A 2009 study found that 

those losses typically consumed between five and seven 

percent of a government program’s budget. While that may 

not sound like much, the Recovery Act had a budget of $787 

billion, which grew to $831 billion through subsequent legislation. 

So the raw number for waste? Between $40 and $55 

billion projected to be lost. Both numbers are accurate, but 

each tells a different story. 

What makes the Recovery Act such a good example is 

not the amount of money it was projected to lose, but the 

amount of money it did lose. Mr. Devaney writes in Fast 

Government, “The remarkable success the [operations 

center] has had in minimizing fraud and waste is evidenced 

by the numbers: Less than one-half of one percent of the 

nearly 277,000 contracts, grants, and loans awarded under 

the Recovery Act are under investigation. This pales in 

comparison to the five-to-seven percent figure normally associated 

with losses for any large government program.” 

And the important difference between this program and most 

others was that the financial data for the Recovery Act was 

designed to be open from the start. The GPS industry and the 

Recovery Board examples speak to the first goal of open data 

advocates: opening more stores of data. How many industries 

are simply waiting for businesses large and small? How 

much more effective will current industries and markets be 

when they have access to data that is currently inaccessible 

to them? Further, open data advocates point to the increased 

efficiencies that could be realized if more people had access 

to more data. 

And “more data” is where the proponents of metadata find 

common cause with their data-set-oriented comrades. 

The Importance of Metadata 

Marcel Jemio, the chief data architect in the Department 

of the Treasury’s Bureau of the Fiscal Service, is a cheerleader 

for metadata. He uses the metaphor of apple varieties 

(discussed below) to illustrate the value of metadata. He 

says that from metadata, people can derive context, understanding, 

quality, security, analytics, worth, trust, and ultimately, 

innovation. 

To understand the importance of metadata, think of a digital 

photograph with the caption “Sun Rising over Miami Beach.” 

The metadata for digital photographs is called “EXIF” and 

it has certain attributes: the kind of camera that captured 

the image, the time it was taken, the f-stop and aperture, 

whether a flash was used, sometimes even the geolocation. 

If, looking at the EXIF metadata, one saw that the picture 

was taken at 8:00 PM with a camera located 20 miles east of 

Miami (that is: from a boat), one would know that it was not 

sunrise at all, but sunset. The photographer’s veracity would 

be called into question, and their other work would be 

subjected to further scrutiny. This is why Mr. Jemio is right to 

say that metadata can give context (it is sunset, not sunrise), 

and trust (in the form of verifiability). 


Viewpoints 

within those are regional differences and other distinguishing 

qualities that describe a specific fruit. These metadata give 

context, allow for analysis, instill trust, provide specificity, 

and most important, make it more likely that people can use 

the data in ways that add value both for themselves and for 

the larger economy. 

Why the Future Is Open 

Two developments point to a bright future for open data 

advocates. The first is the proliferation of tracking devices 

and software in every facet of American society. The 

complementary development is the growing sophistication 

in understanding both raw data and the visualizations built 

on that data. 

There are other examples of metadata adding value to data 

sets. One company that puts EXIF metadata to fascinating— 

and meaningful—use is OKCupid. In a 2010 blog post 

titled “Don’t Be Ugly By Accident!,” the site’s data analysts 

“aggregate[d]11.4 million opinions on what makes a great 

photo.” They then analyzed the responses and determined 

which brands of cameras took the best pictures, what time 

of day was optimal, what f-stop made people look more 

attractive, and how the use of flash was likely to return a 

better picture. This analysis was performed not using the 

data—the image—but using metadata. And with that analysis, 

people could create better data; that is, they could take 

better pictures! 

It is easy to extrapolate meaningful government uses from 

this. Metadata can accompany any data. Take produce, 

specifically apples. While famously not comparable to 

oranges, apples seem like they should be comparable to 

one another, yet there are many varieties of apples and even 

Data trackers are quietly moving into every part of our lives: 

“Automatic” is a device that plugs into a car’s computer and 

relays real-time data about fuel efficiency, engine operations, 

and vehicle location. Body trackers have gone mainstream, 

and more people are counting their steps, monitoring their 

heartbeats, and using WiFi scales to see not only weight, but 

body composition. Even school report cards are using data 

visualization, not simply reporting raw data in the form of 

letter grades or percentages. And as people grow accustomed 

to seeing data in all parts of their lives and appreciate how 

it is helping them make better decisions, they will press for 

open data from their government. 

Appropriately, the public is also learning how to interpret 

data with more nuance and sophistication. One concern 

about examining and releasing data is what it will reveal. 

People and organizations don’t always accomplish their 

goals, and when they do, it may be with some degree of 

waste or inefficiency. But performance is increasingly seen 

through the lens of data visualizations and dashboards, and 

people can see that sometimes they do not meet all their 

targets. They also see that success is often a sliding scale, not 

a threshold to be crossed. 

All this points to a future in which more people will clamor 

for data and there will be less concern about releasing it. 

And as the government accedes to the requests for more and 

better data, both the government and the citizens it serves 

will be better off. ¥ 

78 



Perspectives: Federal Acquisition and 

Complex Contracting 


Introduction: Perspectives on Federal 

Acquisition and Complex Contracting 

Contract expenditures represent 16 percent of total federal spending. In fiscal year 2012, 

the federal government acquired $517 billion worth of products (“products” includes goods 

and services) through contracts. Purchases range from simple products like office supplies 

or landscaping to advanced weapon systems and program management services. 

Given what’s at stake, it is critical for government executives to understand one of the 

most complex bureaucratic processes in government—the federal procurement system. 

Understanding how this system works is a key ingredient to success in government, and 

improving it is crucial in this era of tight budgets. 

As the challenges confronting the federal government become more 

complicated, so will the types of services and goods needed to address 

them. Increasingly, products or services cannot be clearly or easily 

defined in advance and their quality is difficult to verify after delivery. 

These are called complex products, and their acquisition requires 

sophisticated contracting approaches. 

• Why do federal agencies need to procure goods and services? 

• What are the basic phases of the federal acquisition lifecycle? 

• What are the challenges of acquiring complex products? 

• What lessons can be learned from the Coast Guard’s Deepwater 

program? 

• How can government executives most effectively manage complex 

acquisitions? 

We explore these questions and so much more through the work of the research team 

composed of Professors Trevor Brown, Matt Potoski, and David Van Slyke, authors of 

several IBM Center reports and the recent book, Complex Contracting: Government 

Purchasing in the Wake of the US Coast Guard’s Deepwater Program. 

Deepwater was a major “system of systems” acquisition to upgrade and integrate the Coast 

Guard’s sea and air assets. Brown, Potoski, and Van Slyke discuss the promise and perils of 

government contracting while providing wide-ranging, practical advice on federal acquisition, 

with a specific emphasis on complex acquisition. 

Professor Trevor Brown, of the John Glenn School of Public Affairs at The Ohio State 

University, and Professor David Van Slyke, of the Maxwell School of Citizenship and Public 

Affairs at Syracuse University, joined me on The Business of Government Hour to share 

their perspectives on federal acquisition and complex contracting. The following is an 

edited excerpt of our conversation. 


Perspectives: Federal Acquisition and 

Complex Contracting 

Perspectives on Federal Acquisition and Complex 

Contracting with Professors Trevor Brown and 

David Van Slyke 


Federal Agencies Contract for Goods and 

Services 

Federal agencies need critical goods and services to perform 

their core missions. A recent IBM Center report, A Guide for 

Agency Leaders on Federal Acquisition, highlights the Black 

Hawk helicopter in the interdiction of Osama Bin Laden. 

Without the Black Hawk, the mission doesn’t succeed. In the 

absence of th[e Healthcare.gov] website working successfully, 

the Affordable Care Act doesn’t work successfully. Even more 

narrowly, with the website you’re trying to target a specific 

group of people. In the case of the Affordable Care Act, it’s 

healthy young people. You need [healthy young people] to 

enter the insurance pool, and a slick, fancy, user-friendly 

website—an access point—is one way to attract them. If this 

cohort doesn’t sign up in significant numbers, a critical component 

of that insurance pool is lost; then prices are going to rise. 

Within this context, [you are] not simply purchasing a website. 

You’re buying an integral part of your program. This example 

illustrates perfectly what acquisition is now for federal agencies; 

it enables mission success and program performance. 

It’s important to get these purchases right and that requires 

strategic decision-making. Acquisition is not just buying 

stuff; it’s about thinking through the purpose and end of what 

you are buying and why. Are you buying only products, or 

buying the ability to do something that the government itself 

lacks the expertise, capability, or capacity to execute? 

Basic Phases of the Federal Acquisition 

Lifecycle 

Though an expert may tell you there are hundreds of steps in 

this process, I’ll break it down simply into three phases—preaward, 

award, and post-award. 

The pre-award phase includes identifying the product’s 

charac teristics, assessing the market for the product, and 

consulting the regulatory guidance on how to solicit the 

product. The first step in any acquisition is to define what’s 

Trevor Brown, Ph.D. 

David M. Van Slyke, Ph.D. 

needed and determine whether a product procured from the 

market can fulfill that need. 

The award phase includes tasks associated with actually 

purchasing the product: running the solicitation, evaluating 

proposals, and negotiating the terms of the purchase with 

whatever vendor is selected. 

The post-award phase includes all tasks associated with 

executing the contract, notably monitoring vendor performance, 

evaluating and testing the product upon delivery, 

implementing any relevant incentives, providing compensation, 

renegotiating contract terms, and terminating or 

renewing the contract. 

During post-award, things become a little less clear, and 

there’s much more discretion. During this phase, government 

managers decide how to engage the awardee and how often, 

how to set and negotiate the rules of the relationship and the 

exchange, and how to work together. 

80 



Perspectives: Federal Acquisition and Complex Contracting 

Library of Acquisition Research from Brown, Potoski, and Van Slyke 

The following highlights the IBM Center research on federal acquisition performed by Professors Brown, Potoski, Van Slyke, 

either individually or as a group. 

A Guide for Agency Leaders on 

Federal Acquisition 

Contracted Versus Internal Assembly 

for Complex Products: From 

Deepwater to the Acquisition 

Directorate in the U.S. Coast Guard 

The Challenge of Contracting for Large 

Complex Projects: A Case Study of the 

Coast Guard’s Deepwater Program 

Much of this research contributed to the work culminating in the publication of their Complex Contracting: Government 

Purchasing in the Wake of the US Coast Guard’s Deepwater Program, published by Cambridge University Press. 

Of the three phases, the award phase gets most of the attention. 

We hear about the RFP, the bid, the award decision, 

and how the contract is structured. We tend to hear less 

about the pre-award or the post-award phase. Yet in both, 

management is critical. Buying is managing. The whole 

procurement process is … about managing relationships 

within established rules (e.g., Federal Acquisition Regulation) 

toward an ultimate end. 

Evaluating an Acquisition 

The FAR sets the rules on what’s permissible in contracting. It 

specifies the goals of federal acquisition. Buried in there are 

two approaches to setting the criteria by which we would 

evaluate an acquisition. One is what’s called “best value.” It 

typically involves three criteria, the sort of trinity of contracting—cost, 

performance, and schedule or delivery: 

• Cost: how much does it cost? Did it come in at the price 

we expected? 

• Performance: does it do the things we want it to do? 

• Schedule: did it come in on time? 

In a best value acquisition, a procurement official is allowed 

to balance each proposal along the three criteria and make 

tradeoffs. 

The FAR also specifies “lowest price technically acceptable” 

(LPTA). All three criteria—cost, quality and schedule—are 

still in play, but here, the argument is, if we can precisely 

define the product, we can say, as specifically as possible, 

here are the performance criteria. It’s technically acceptable. 

Well, then, we’re going to focus on price. So we’re going to 

minimize our selection to: does it cost the lowest amount 

to produce? So there, it’s a narrower set of criteria that 

define why we select one bid over another. Depending on 

what we’re purchasing, it may make more sense to use one 

or the other. If we’re buying copy paper, we use the LPTA 

approach, as directed in the FAR just focusing on cost. When 

buying information technology, given various factors, you are 

to pursue the best value approach. 

Often, what seems to be missing in the process is: does the 

product ultimately fulfill the mission requirements of the 

agency that’s purchasing it? It’s important to follow the rules 

while also delivering what is needed when it’s needed, and 



ultimately ensuring that the purchase enables an agency to 

meet its mission more effectively. 

Procuring Complex Products 

Complex exchanges are characterized by two conditions: 

uncertainty about the product’s cost and how it will perform, 

and specialized investments that lock in the buyer and seller. 

The purpose of a contract is to promote a win-win exchange 

by preventing the buyer and seller from doing things that 

would lead to win-lose or lose-lose outcomes. 

Contracts for complex products transform a market exchange 

into an interdependent relationship. The combination of an 

incomplete contract, uncertainty about the product and its 

costs, and the need for specialized investments sets up a 

potentially precarious relationship. Focusing on rules that 

structure and relationships that define can ameliorate the 

conditions that mark these complex exchanges. 

Overview of U.S. Coast Guard’s 

Deepwater Program 

The U.S. Coast Guard has a complicated set of missions. By 

many accounts, the Coast Guard is the standard-bearer for 

“do more with less.” It is resourceful, mission-driven, actionoriented, 

and inventive. The combination of limited fleet 

resources, mission focus, and a bias for action compels the 

Coast Guard to ride its assets hard. By the 1990s, its fleet 

and assets showed that wear. Admiral Jim Loy, the commandant 

in the mid-90s, began thinking strategically about how 

to upgrade, modernize, and integrate a system of assets. 

The Coast Guard’s Deepwater program is a story of how 

a federal agency responded to an opportunity to upgrade 

its decaying capital stock—its fleet of air and sea assets— 

by leveraging political interest in harnessing private-sector 

approaches to public problems. It embraced a system-ofsystems 

contracting strategy in which a single lead systems 

integrator (LSI) would design the fleet as a whole (e.g., how 

many of the different types of ships and aircraft would be 

in it), detail the performance specifications of each (e.g., 

how fast and far they would go), supply the communications 

structure to tie them all together, and then manage the 

contract process for buying them. 

Part of the reason the Coast Guard opted for an LSI to 

perform contract management was because it lacked the 

capacity itself. The Deepwater program involved a high 

degree of uncertainty about the system’s components, specifications, 

and costs. Specialized investments were required to 

produce and deliver the system. Given these characteristics, 

it is an excellent illustration of a complex acquisition. 

We wanted to understand the Deepwater case better, 

draw out lessons. It was a great journey of inquisitiveness 

into something that on its face looked simply like a failed 

procurement, but was much more. There were innovations 

in contract design, procurement processes, and supplier 

relations. Some aspects did not work … the reasons for 

that are discussed in detail in our reports and our book. To 

that end, we owe the IBM Center nothing but thanks for its 

support of our original research in this area. Our two reports 

for the Center set the foundation for our book, Complex 

Contracting: Government Purchasing in the Wake of the US 

Coast Guard’s Deepwater Program. 

The Three Phases of the ICGS–Deepwater 

Relationship 

The Coast Guard envisioned the multi-decade, multi-billion 

dollar Deepwater program as the solution to its decaying 

fleet of air and sea assets and inadequate command and 

communications systems. By pitching a novel procurement 

approach—the use of a private LSI to design, purchase, build, 

and integrate a system-of-systems—the Coast Guard secured 

authorization and funding. In selecting the Integrated 

Coast Guard Systems, a partnership of two leading defense 

82 




contractors, to serve as the LSI, the Coast Guard hoped to tap 

the expertise and experience of two of the world’s preeminent 

defense contractors. The result would be sparkling new 

boats, planes, helicopters, and information technology that 

would dramatically enhance the Coast Guard’s ability to 

perform their wide-ranging missions. 

In reality, the ICGS–Deepwater relationship moved through 

three phases. In the first phase, the “honeymoon,” the Coast 

Guard and ICGS embraced each other as partners. Each 

party took meaningful steps to make the partnership work, 

sometimes at a sacrifice to their own, immediate interest. 

In the second phase, as the volume of contract and production 

activity accelerated, things became foggier. The Coast 

Guard and ICGS each did things during this period that 

appeared consummate, but at other times did things that the 

other party could interpret as perfunctory. 

Finally, in the third phase—the divorce—the fog cleared for 

both sides. The challenges of trying to determine if the other 

party was behaving consummately or perfunctorily were too 

great, and the likelihood of receiving consummate behavior 

in return was diminishing. Both the Coast Guard and ICGS 

decided to cut their losses and look out for their own interests, 

both short and long term. This proved insufficient to 

cement the partnership and change the relationship from a 

tragedy of failed collective action to a cooperative success. 

A Series of Missteps: the Unraveling of the 

Deepwater Program 

Success hinged on the Coast Guard and ICGS managing 

Deepwater’s complexity: crafting rules to incentivize 

consummate behavior in numerous areas where the contract 

could not detail product specifications, and structuring a 

relationship so the shadow of the future created incentives 

for win-win cooperation. Success would require the Coast 

Guard to communicate its needs, ICGS to present product 

options to meet those needs, and both to jointly make decisions 

and shoulder costs in the contract’s cooperative spirit. 

If all went well, a win-win outcome would result: the Coast 

Guard would receive an affordable product that enhanced its 

ability to perform its mission. ICGS would receive compensation 

above its costs and the prospect of future business. 

A series of early missteps had cascading consequences that 

brought down the once promising partnership. Two central 

governance rules were improperly designed and implemented 

and failed to establish the incentives to contribute to 

the contract’s goals. The IPTs (integrated project teams) got 

underway without clear rules for decision authority and cost 

responsibility. 

The performance incentive system was likewise ambiguous 

since Deepwater’s assets—the desired outputs of the 

program—would not be completed until years later. Absent 

the guidance of clear rules, each side struggled to determine if 

the other’s behavior was in the partnership’s cooperative spirit. 

Lessons Learned from the Deepwater 

Program 

There have historically been two approaches to acquiring 

complex products: rule-driven and relationship-driven. The 

former focuses almost exclusively on following the rules 

while the latter relaxes the rules while building trust among 

the parties. 

Some look at Deepwater as an example of too much focus 

on the relationship. Our view is, we have to have rules that 

promote cooperation. You can’t write everything down at 

the outset, but you can put in certain governance rules that 

promote cooperation of all parties in gray areas. 



Second, you need to structure a relationship that creates opportunities 

for trust and cooperation building over time. When 

faced with a choice, you’re going to preserve the relationship 

rather than choose a short-term, personal benefit. We lay out in 

our book a series of criteria for good rules that promote cooperation 

and good relationships that enhance that cooperation. 

The third part is creating the conditions under which both 

parties … build a mutual understanding of what it means 

to be cooperative. If I receive something that doesn’t meet 

expectations, there are agreed-upon, established processes 

and mechanisms that allow us to remedy the situation. 

Our book guides the reader through this general framework 

of crafting the right rules, setting up the right relationships, 

and building that mutual understanding that can only be 

born over time. 

There was much discussion about banning the use of lead 

system integrating in the wake of Deepwater. That’s foolish. 

You need a general contractor. A great example of this is the 

Healthcare.gov website. A principal failure is the absence 

of an LSI. Not one of those 55 vendors was specified as the 

one who was going to have to put all of that stuff together. 

The presumption of all the vendors was that’s the Department 

of Health and Human Services’ job … but they don’t have 

the capacity to perform the integration functions. Maybe in 

the future we’ll live in a world where the federal government 

will build that capacity, the systems integrators and the 

program managers … [until then], agencies are going to have 

to buy it. 

Complex Contracting: Government Purchasing in the Wake 

of the US Coast Guard’s Deepwater Program. 

System-of-systems acquisitions are not doomed to fail 

The Deepwater contract did not fail to achieve the win-win 

because the Coast Guard sought to buy its assets through 

a system-of-systems program. Federal government agencies 

regularly purchase products made up of integrated and technically 

sophisticated components. The challenges of complex 

contracting arise when either the finished product or its 

component parts are difficult to write down contractually 

and require specialized investments. System-of-systems and 

complex products are not necessarily synonymous. 

Lead systems integrators do not doom complex 

contracts 

The Deepwater program did not fail because it relied on 

an LSI. Just as government agencies buy system-of-systems 

products all the time, they also use LSIs to do the work of 

acquiring and integrating system components. The challenge 

in working with an LSI to procure a complex product 

is to find ways to facilitate cooperation where the contract’s 

terms fail to fully define and incentivize the parameters of a 

win-win outcome. For Deepwater, the root of the problem 

was not the reliance on an LSI, but a contract that was 

ill-suited to the complexity of what the Coast Guard was 

buying. The Coast Guard and ICGS struggled to quickly 

establish governance rules like the integrated project teams. 

We highlight the Nimitz-class aircraft carriers as a successful 

procurement of a complex product. Here you have a 

very challenging market situation in which there is only 

one purchaser and a single provider. This has been a very 

successful long-term relationship between the buyer and 

the vendor. A tremendous effort has gone into identifying 

the rules right, setting up contractual vehicles that promote 

cooperative relationships, entering into a relationship, and 

building that relationship. 

Prospects for Successful Complex 

Contracting 

Complex contracts can be successful (Nimitz) or they can fail 

(Deepwater). Our aim is to offer a theory for how to improve 

the prospects for successful complex contracting. Our analysis 

of what worked and what did not in Deepwater suggests 

some guidance for the practice of complex contracting. You 

can find a fuller description of these insights in our book, 

84 




Contracts for complex products require internal contract 

management capacity 

Just as successful procurements for complex products require 

the active participation of users and manufacturers, they 

also require enough highly trained contract professionals 

to fully manage the process. Contract managers have principal 

responsibility for translating what the buyer wants into 

contract terms to convey to the seller, and then ensuring the 

seller delivers. Contract management capacity stems in part 

from the contract managers’ experience and expertise—their 

knowledge of the product and the steps they can take within 

the boundaries framed by public laws like the FAR. Capacity 

is also in part a result of the sheer number and continuity of 

contract managers on a particular procurement. 

The Deepwater program was plagued by insufficient contract 

management capacity within the Coast Guard and ICGS. 

Contract managers on both sides rotated in and out of assignments, 

exacerbating the lack of clarity about decision-making 

processes within the IPTs and undermining the relationship 

building needed to foster a virtuous cycle of reciprocal 

cooperation. For example, in 2004 the GAO estimated that 

one-fifth of the acquisition positions needed to staff the 

Deepwater program were unfilled. 

Well-functioning IPTs, with clear distributions of decision 

authority and cost responsibility, would have helped avoid 

much of the confusion about which side was responsible for 

making decisions. 

Successful procurements for complex products require 

user and producer input 

Buyers and sellers of complex products need information. 

Two types of information are particularly critical in complex 

contracting: what will product users do with the product, 

and what steps do product manufacturers need to take to 

construct the product. One of the principal goals of an IPT is 

to bring together the two groups of people (users or buyers; 

makers or sellers) to produce this information. Deepwater’s 

IPTs suffered from insufficient involvement of both Coast 

Guard users and manufacturers from IPTs in the decisionmaking 

process for many complex contracts components. 

The building acquisition workforce has to be a priority. 

“Insourcing” (or the use of government personnel to perform 

functions that contractors have performed on behalf of federal 

agencies) may be a priority with the current administration, but 

even there resources need to be made available for training, 

development, and capacity building. You need to have the 

people in house who are competent and able to do it. ¥ 

Trevor L. Brown is Associate Professor at the John Glenn 

School of Public Affairs at The Ohio State University in 

Columbus. 

David M. Van Slyke is Professor in the Department of 

Public Administration and International Affairs at the 

Maxwell School of Citizenship and Public Affairs at 

Syracuse University. 



in GovernmentManagement 

This article is adapted from Jennifer Bachner, Predictive Policing: Preventing Crime 

with Data and Analytics, (Washington, DC: IBM Center for The Business of 

Government, 2013). 

Predictive Policing: Preventing Crime 


By Jennifer Bachner 

The history of quantitative crime analysis spans centuries. 

Crime mapping first appeared in the 19th century. In 1829, 

an Italian geographer and French statistician designed the first 

maps that visualized crime data. The maps included three 

years of property crime data as well as education information 

obtained from France’s census. The maps revealed a positive 

correlation between these two layers of information; areas 

with higher levels of education experienced a higher incidence 

of property crimes. 

The discipline of crime analysis emerged following the 

formation of London’s Metropolitan Police, the first organized 

law enforcement service. The service’s detective branch, 

formed in 1842, was tasked with using pattern recognition to 

prevent and solve crimes. Formal police departments were 

established throughout the U.S. in the 1850s, though their 

use of analytical techniques lagged behind London’s. 

In 1900, the U.S. federal government began collecting 

national data that aided the development of crime statistics. 

Mortality statistics, which indicate the cause of death, 

were used to calculate homicide rates. Additional measures, 

such as prison rates and arrest data, were collected by cities 

and states during the 1920s. In 1930, the Federal Bureau 

of Investigation (FBI) was given the authority to collect and 

disseminate crime data. The FBI continues to publish Crime 

in the United States annually, and this comprehensive publication 

served as the chief data input for crime analysis 

models in the latter half of the 20th century. 

With the advent of affordable computers, both police organizations 

and scholars began to explore automated crime 

mapping. Academic researchers investigated the relationship 

between environmental characteristics and the incidence for 

crime. Sociologists, for example, used mapping to uncover 

a quantifiable, causal relationship between the presence of 

taverns and the incidence of violent and property crimes. 

Police forces initially hoped crime mapping would serve as 

a means of improving resource allocation’s efficiency. The 

technical and personnel demands of mapping, however, 

prevented police departments from integrating this tool into 

everyday police work until recently. 

Today, the availability of massive data sets, data storage, 

sophisticated software, and personnel that can both perform 

analyses and communicate actionable recommendations 

to officers in the field has rendered crime analysis a central 

component of modern policing. Further, collaborative efforts 

between police officers, scholars, and businesses have led 

to the development of analytical techniques that have strong 

theoretical foundations; accompanying tools, such as software 

programs, enable their widespread use. 

The Role of Predictive Analytics in Crime 

Prevention 

Crime prevention, defined as efforts to restrict crime from 

occurring, is generally considered to encompass three pillars: 

• Primary prevention strategies attempt to minimize the risk 

factors associated with criminal behavior. These programs, 

often housed in schools and community centers, are 

intended to improve the health and well-being of children 

and young adults. 

• Criminal justice strategies address known offenders; juvenile 

correctional facilities and prison rehabilitation aim to 

prevent convicted criminals from offending again. 

• Law enforcement strategies focus on decreasing the 

probability that crime occurs in a particular area. This is 

achieved by reducing the opportunity for criminal acts 

and increasing the risk of arrest. Predictive analytics is one 

law enforcement strategy to accomplish this form of prevention. 

By compiling and analyzing data from multiple 

sources, predictive methods identify patterns and generate 

recommendations about where crimes are likely to occur. 

The reliance on statistics and automated mapping, termed 

CompStat, has been widespread since 1995, when it was 

first implemented by the New York City Police Department. 

This philosophy has since been adopted by nearly every 

86 



Management 

Jennifer Bachner is the Program Coordinator and Lecturer in Governmental 

Studies for the M.A. in Government in the Johns Hopkins University 

Center for Advanced Governmental Studies. Her current work examines 

the implications of data and analytics on governance, the use of emerging 

technologies in online education, and partisanship metrics in Congress. 

Her dissertation work, which she has presented at national conferences 

and research universities, analyzes youth political engagement. 

law enforcement agency in the country. Under the original 

framework of CompStat, crime data are collected and 

analyzed—primarily using geographic information systems 

(GIS)—to improve accountability and resource allocation. By 

mapping the distribution of criminal activity across low-level 

geographic units (e.g., city blocks and individual buildings), 

police can deploy officers to high-crime areas and track 

changes over time. 

Whereas traditional uses of CompStat are fundamentally 

reactive, the goal of predictive policing is proactive—to 

prevent crime from occurring in the first place. Predictive 

policing is therefore a component of intelligence-led policing 

that is focused on what is likely to occur rather than what has 

already happened. It is the frontier of crime prevention, and 

the data and methods required for this approach have only 

recently been developed and employed. 

Predictive Methodologies 

There are three categories of analysis techniques that police 

departments use to predict crime: 

• Analysis of space 

• Analysis of time and space 

• Analysis of social networks 

These categories are not intended to be all-inclusive, as the 

number of methodologies available to analysts is large and 

increasing. Instead, the following provides an overview of 

the different types of analysis commonly undertaken and the 

advantages and disadvantages of each. 

Predictive Methodology One: 

Analysis of Space 

One of the original uses of crime mapping is the identification 

of criminal hot spots, namely areas in which there is a 

greater likelihood of crime than in the surrounding areas. In 

a retrospective context, hot spot detection has increased our 

understanding of the characteristics associated with highcrime 

areas, such as transportation routes, entertainment 

establishments, and a high population density. In terms of 

predictive policing, hot spot detection can inform short-term 

decision-making about resource allocation and long-term 

policies related to crime reduction. 

It is important to keep in mind that a hot spot is a perceptual 

construct. Because geographical space is inherently continuous, 

the placement of a boundary to delineate a hot spot is 

somewhat arbitrary. The final location, size, and shape of a 

hot spot are influenced by judgments made by the analysts, 

such as: 

• Which criminal incidents are included in the analysis 

• Whether the hot spots are determined by the concentration—or 

clustering—of past criminal incidents, environmental 

characteristics associated with crime, or both 

• The amount of time captured by the analysis (e.g., one 

year of crime data vs. five years of crime data) 

• The weighting scheme applied to past criminal incidents 

Predictive Methodology Two: 

Analysis of Time and Space 

Various statistical methods to analyze clustering are all aimed 

at identifying areas with high crime levels. In a forecasting 

context, clustering methods detect locations or areas where 

crime is likely to occur based on where crime has occurred 

in the past and, in the case of risk-terrain modeling, environmental 

characteristics. These methods, however, do not 

take advantage of temporal patterns in crime. Although some 

clustering algorithms weight recent events more heavily in 

generating forecasts, they do not illustrate how the incidence 

of crime changes over time. Clustering does not illuminate 

movement in criminal activity. 

In practice, clustering without much regard to the temporal 

dimension of criminal activity is often sufficient. Hot-spot 


Management 

maps are easy to read and can help officers make quick, 

informed decisions about how to allocate their time during 

a shift. Some tasks, however, demand attention to temporal 

patterns. If a police department has observed a rash of 

robberies and is attempting to predict the next incident in the 

string, it is critical to identify both the spatial and temporal 

path taken by the suspected offender. 

CrimeStat III, a software program developed by sociologist 

Ned Levine and the National Institute of Justice, allows 

users to analyze both the spatial and temporal components 

of crime patterns. If the analyst is interested in a descriptive 

summary of a sequence of events, they can compute a 

spatial-temporal moving average (STMA). An STMA permits 

examination of the path a criminal has taken. It is calculated 

using the average time and location for a subset of incidents. 

For each incident, the averages are calculated using the incidents 

that occurred just before and just after. A subset generally 

includes three, five, or seven incidents. The resulting 

map includes a line through the incidents, which marks that 

“average” path taken by the offender. 

To forecast when and where the next crime in a sequence 

will occur, an analyst can perform a correlated walk analysis 

(CWA). A CWA examines the temporal and spatial relationships 

between incidents in a given sequence to predict the 

next incident. The first step in performing a CWA is to determine 

if there is a systematic pattern in an observed sequence 

of criminal incidents. This is accomplished by computing the 

correlation between intervals. 

Predictive Methodology Three: 

Analysis of Social Networks 

The chief purpose of the previous two categories of methods 

discussed is the targeting of geographic locations in which 

to focus time and resources. Social network analysis (SNA) 

is a third category of methods on the cutting edge of crime 

analysis, but it is primarily used to detect persons of interest, 

as opposed to locations of interest. Through SNA, police can 

identify individuals that are central to criminal organizations, 

such as gangs and drug networks, and develop effective interdiction 

strategies. 

The relevance of social networks to criminological analysis is 

well-established. Organized crime, such as drug trafficking, 

gang violence, and serial robbery, requires the creation and 

maintenance of various relationships. A drug-dealing network, 

for example, may include suppliers, distributors, smugglers, 

buyers, and money-launderers. Further, criminal networks are 

embedded in the social context in which they operate; they 

are nourished by, and victimize, members of the community, 

including family, friends, and retailers. SNA is a tool 

police agencies can use to map these numerous interpersonal 

connections and mine them for actionable information. 

The building blocks of a social network are relationships 

between two actors (either individuals or entities). Actors are 

referred to as nodes and the relationships between them are 

termed links or edges. 

In crime-fighting applications, social network analysis is 

frequently used to identify central nodes—individuals who 

have a high level of connectivity within the network. 

Using centrality measures, an analyst can identify individuals 

of interest in the context of a given problem. If a police 

agency seeks to acquire information about a network without 

dismantling it, contacting an actor with a high level of closeness 

might be effective. Alternatively, a goal of inserting 

information into a network might best be achieved using 

an actor with a high betweenness measure. If an agency’s 

mission is to take custody of a network’s leaders or central 

actors, the measure of degree may be most useful. 

Places on the Frontier of Predictive 

Policing 

Santa Cruz, California 

The Santa Cruz Police Department (SCPD) was one of the 

first in the nation to employ predictive policing in its daily 

operations. The software in use was developed by researchers 

at the University of California, Los Angeles, and Santa Clara 

University, with input from crime analysts from SCPD. The 

program was first implemented in July 2011. In July 2012, 

the program moved from its experimental phase into full 

operational use. 

The core of the SCPD program is the continuous identification 

of areas that are expected to experience increased levels 

of crime in a specified time frame. A computer algorithm 

draws upon a database of past criminal incidents to assign 

probabilities of crime occurring to 150x150 meter squares 

on a grid on a map of Santa Cruz. The database includes 

the time, location, and type of each crime committed. In the 

calculation of probabilities, more recent crimes are given 

greater weight. The program then generates a map that highlights 

the 15 squares with the highest probabilities. Prior to 

their shifts, officers are briefed on the locations of these 15 

squares and encouraged to devote extra time to monitoring 

these areas. During their shifts, officers can log into the webbased 

system to obtain updated, real-time, hot-spot maps. 

88 



Management 

The department opted to use 15 squares after experimenting 

with different numbers; analysts observed a dropoff in probability 

after 15. Further, the department has the resources 

to devote extra personnel time to 15 squares. Larger departments 

identify a far greater number of high-risk squares. The 

Los Angeles Police Department, for example, generates 20 

high-risk squares for each of its 19 divisions. 

The developers of the software took great care to ensure 

its accessibility by officers with minimal technical training. 

The program is relatively simple to use and its output (maps 

with square hot spots) can be tailored to specific crime types 

and times of day. Moreover, the department has adopted 

the perspective that predictive policing tools are intended to 

empower officers, not replace them. Officers are not required 

to base their decision-making solely on the hot-spot maps. 

Instead, officers are encouraged to view the maps as additions 

to their existing toolkits. 

SCPD has achieved a high level of officer buy-in with respect 

to predictive policing. Zach Friend, a crime analyst with 

SCPD, emphasizes that for predictive policing to take root 

in a department, there cannot be top-down implementation; 

it cannot be imposed on unwilling officers and treated as a 

replacement for experience and intuition. Friend draws an 

analogy to fishing, explaining that predictive methods can tell 

officers where the best fishing holes are located but not how 

to cast a line or bait a hook. And once officers begin using 

the predictive tools, they usually observe positive results. 

Officers who use the tools see reductions in crime on their 

beats, and these success stories motivate other officers to do 

so as well. 

It is critical that SCPD find efficient ways to reduce crime, 

as their current staff level is 20 percent lower than in 2000. 

Further, the department is not expected to increase the size 

of its staff in the foreseeable future. As a result, the department 

must take steps to ensure its officers are each achieving 

the most benefit possible. The software itself is affordable and 

requires minimal training. Further, predictive methods supplement 

experience, thereby standardizing the talent level in a 

police department between seasoned officers and novices. By 

Santa Cruz PredPol’s Crime Probability Predictions 


Management 

simply being in the right place at the right time, as dictated 

by a hot-spot map, novice officers can make a valuable 

contribution to reducing crime. 

The department currently assesses changes in crime rates 

to determine whether or not the program is working. 

Preliminary evidence indicates that the program has been 

successful, particularly with respect to burglaries. A comparison 

of burglaries in July 2011 (when the program was first 

implemented) to July 2010 indicates a 27 percent decline 

(down to 51 from 70). Aggregating over the six months 

prior to implementation (January 2011 to June 2011) and 

comparing this number to the amount of burglaries in the 

same time period in 2012 (January 2012 to June 2012) 

reveals a 14 percent decline (down to 263 from 305). It is 

not surprising that SCPD has experienced the most success 

with preventing burglaries, as this type of crime lends itself 

to prediction. Potential burglars carefully design their plan 

of attack, often taking into consideration the environmental 

characteristics of the geographical area. 

In contrast to Santa Cruz, other departments instead measure 

success using arrest rates. The concern with this measure is 

that predictive policing is intended to reduce the incidence 

of crime through deterrence. When potential criminals see 

police officers monitoring an area, they are less inclined to 

commit an offense. It is, of course, quite difficult to measure 

deterrence, as we cannot calculate how many crimes would 

have occurred if not for the increased police presence. ¥ 

TO LEARN MORE 

Predictive Policing: 

Preventing Crime 


by Jennifer Bachner 


• In .pdf (Acrobat) format 

at the Center website, 


• By e-mailing the Center at 

businessofgovernment@us.ibm.com 

• By calling the Center at (202) 551-9342 

90 




in Government Management 

This article is adapted from Daren C. Brabham, Using Crowdsourcing In Government, 

(Washington, DC: IBM Center for The Business of Government, 2013). 


By Daren C. Brabham 

There is growing interest in “engaging the crowd” to identify 

or develop innovative solutions to public problems. This 

trend has been inspired by similar efforts in the commercial 

world to design innovative consumer products or solve 

complex scientific problems, ranging from custom-designing 

T-shirts to mapping genetic DNA strands. The Obama administration, 

as well as many state and local governments, have 

adapted these crowdsourcing techniques with some success. 

Crowdsourcing is an online, distributed problem-solving 

and production model that has grown in use in the past 

decade. While many of the exemplar cases of crowdsourcing 

highlighted in the scholarly research have been for-profit 

companies or ventures managed by for-profit companies, 

crowdsourcing has been gaining traction as a public participation 

tool for governance and planning, as well as a method 

for building common resources or processing large batches of 

data to streamline government functions. 

Simply put, crowdsourcing happens when: 

• An organization has a task it needs performed 

• An online community voluntarily performs the task 

• The result is mutual benefit for the organization and the 

online community. 

An important distinction between crowdsourcing and other, 

similar forms of online participatory culture and user-generated 

content activities is that crowdsourcing entails a mix of 

top-down, traditional, hierarchical management process and 

a bottom-up, open process involving an online community. 

In crowdsourcing arrangements, the locus of control must 

reside between organization and online community rather 

than primarily in one or the other (see figure). An example of 

a high degree of organizational control that made insufficient 

use of the online community’s input is the “vote for your 

favorite flavor” marketing contest, such as Mountain Dew’s 

DEWmocracy campaign. And examples of a high degree of 

online community control with insufficient organizational 

directive are Wikipedia or open-source software projects 

such as Mozilla Firefox. 

It is important to distinguish crowdsourcing as a process, 

rather than a tool. Crowdsourcing is an online process for 

connecting online communities and organizations in pursuit 

of a product or solution to a problem. Crowdsourcing can 

be accomplished through any number of new media tools, 

including wikis, blogs, websites, social networking sites (e.g., 

Facebook, Twitter), mobile apps, mapping software, and so 

on. Many tools enable communication, and so many tools 

can make crowdsourcing possible. 

When an organization embarks on a crowdsourcing venture, 

it is important to consider first the kind of problem it wants to 

solve and the kinds of solutions it wants to receive. 

The author has developed a problem-based, four-part 

typology for crowdsourcing. This typology is problem-based 

in the sense that a practitioner can use it to assess what 

kind of problem he or she needs solved, identify whether 

crowdsourcing may help solve the problem, and decide 

Crowdsourcing as a Blend of Traditional Top-Down 

Production and Bottom-Up User Production. 

A top-down, 

hierarchical process 

TRADITIONAL PRODUCTION 

Locus of control is 

in the organization 

Examples: 

• In-house product 

development 

• Simple voting 

marketing campaigns 

(e.g., DEWmocracy) 

Source: Brabham et al., 2013 

A shared top-down 

and bottom-up process 

CROWDSOURCING 

Locus of control is 

between organization 

and online community 

Examples: 

• Peer to Patent 

• Amazon Mechanical 

Turk 

• InnoCentive 

• Threadless 

USER PRODUCTION 

A bottom-up, 

grassroots process 

Locus of control is in 

the online community 

Examples: 

• Wikipedia 

• YouTube 

• Open Source 

Software 


Management 

Daren C. Brabham is an assistant professor in the Annenberg School for 

Communication & Journalism at the University of Southern California, as 

well as the founding editor of Case Studies in Strategic Communication. 

He was the first to publish scholarly research using the term crowdsourcing 

in 2008 in an article in Convergence. 

which type of crowdsourcing approach is most useful. You 

first need to determine whether a problem at hand is (a) an 

information management problem, where the challenge is to 

locate or analyze existing knowledge; or whether it is (b) an 

ideation problem, where the challenge is to develop entirely 

novel ideas or solutions. 

These four problem-based crowdsourcing approaches— 

the Knowledge Discovery and Management approach, 

the Distributed Human Intelligence Tasking approach, the 

Broadcast Search approach, and the Peer-Vetted Creative 

Production approach—cover the range of problem-solving 

activities suitable for government to crowdsource (see Table 1). 

Table 1: A Typology of Crowdsourcing Problem Types for Governance 

Type How it Works Kinds of Problems Examples of Uses in Government 

Type One: 

Knowledge 

Discovery and 

Management 

Type Two: 

Distributed 

Human 

Intelligence 

Tasking 

Type Three: 

Broadcast 

Search 

Type Four: 

Peer-Vetted 

Creative 

Production 

Organization tasks crowd 

with finding and collecting 

information into a common 

location and format 


with analyzing large 

amounts of information 


with solving empirical 

problems 


with creating and selecting 

creative ideas 

Ideal for information gathering, 

organization, and reporting 

problems, such as the creation of 

collective resources 

Ideal for large-scale data analysis 

where human intelligence is 

more efficient or effective than 

computer analysis 

Ideal for ideation problems with 

empirically provable solutions, 

such as scientific problems 

Ideal for ideation problems where 

solutions are matters of taste or 

market support, such as design or 

aesthetic problems 

Example: SeeClickFix; USGS’s Did You 

Feel It?; USPTO’s Peer to Patent 

Possible Uses: Reporting conditions and 

use of public parks and hiking trails; 

tracking use of public transit; cataloguing 

public art projects and murals for 

historical boards 

Example: Transcribing digital scans of old 

handwritten census records 

Possible Uses: Language translation for 

documents and websites; data entry; 

behavioral modeling 

Example: White House SAVE Award; 

NASA’s use of InnoCentive for a solar 

flare prediction formula 

Possible Uses: Finding better algorithms 

for timing traffic signals; improving 

actuarial formulas for Social Security 

Example: Next Stop Design bus 

stop shelter design competition; ITS 

Congestion Challenge for alleviating 

traffic congestion 

Possible Uses: Designs for public 

structures and art projects; urban plans; 

transit plans; policy proposals; school 

redistricting plans 

Source: Adapted from Brabham, 2012a 

92 



Management 

Type One: Knowledge Discovery and 

Management 

In type one crowdsourcing, government agencies can use 

online communities as a way to extend their abilities, relying 

on communities to bring new information into play in efficient 

ways that lead to better decisions and resource allocation. 

In this arrangement, an organization issues a clear 

information management task to an online community with 

clear instructions for how that task is to be performed, and 

the online community responds by finding and reporting that 

information in the specified format. 

An example of the type one approach is the U.S. Geological 

Survey’s (USGS) Community Internet Intensity Map, known 

more fondly as the Did You Feel It? map. Did You Feel It? is 

a website that automatically maps reports of user-submitted 

seismic activity. When the first tremors of an earthquake are 

felt, citizens visit the site and report their locations and an 

estimate of the intensity of the tremors. In combination with 

a network of sensors around the world, these user-submitted 

reports allow USGS to assemble a more nuanced map of the 

intensity of an earthquake’s activity, deepening the agency’s 

understanding of how earthquakes work and informing emergency 

response planning and modeling budgets for disaster 

relief. Where SeeClickFix allows citizens to fill information 

gaps for city maintenance departments and improve government 

efficiency, USGS’s Did You Feel It? project allows citizens 

to fill information gaps about the impact of earthquakes 

that sensors cannot fully capture. 

Type Two: Distributed Human Intelligence 

Tasking 

Type two crowdsourcing extends the data-analytic capabilities 

of government, decomposing and distributing large 

batches of information to an online community that performs 

small tasks, often for small financial rewards. Similar to type 

one crowdsourcing, type two crowdsourcing deals with 

information management problems, except with type two 

the challenge lies in how to process a batch of data that is 

already in hand. Type one crowdsourcing is for finding and 

assembling information, while type two crowdsourcing is for 

efficiently processing information. 

For example, the U.S. Census Bureau released raw digital 

image files from 1940 Census records and made them available 

to the public for the first time. The handwriting from 

seven-decades-old scanned documents required manual transcribing, 

since computerized optical character recognition 

(OCR) was not feasible. Taking a cue from Luis von Ahn et 

al.’s (2008) human computation reCAPTCHA system, which 

revolutionized the digital transcription of books by weaving 

transcription micro-tasks into security tests on several social 

network sites and blog comment functions, McHenry, 

Marini, Kejriwal, Kooper, and Bajcsy (2011) proposed that 

the government use a crowdsourcing approach to employ 

an online community in the rapid, accurate, inexpensive 

transcription of the Census records. The way such a system 

works is by decomposing the massive data set—the entire 

corpus of scanned records—into smaller tasks and distributing 

them online to people willing to transcribe a few words 

or sentences for small monetary rewards, say, transcribing a 

dozen words for a few pennies. 

Type Three: Broadcast Search 

Broadcast search crowdsourcing applications help government 

agencies find the needle in the haystack, the one 

scientific mind that can see a solution in a difficult ideation 

problem, by broadcasting a challenge widely on the Internet. 

Scientifically oriented government agencies like the National 

Aeronautics and Space Administration (NASA) and the U.S. 

Geological Survey, agencies that deal with actuarial formulas, 

and other engineering agencies could take the most advantage 

of broadcast search crowdsourcing ventures, opening 

the problem-solving process to an online community often 

motivated by their enjoyment in solving difficult problems. 

In broadcast search, an organization poses a challenge to an 

online community, often with detailed scientific parameters in 

the form of a problem brief, and the online community offers 

up complete, original solutions to address the problem. 

Many broadcast search crowdsourcing initiatives, as well 

as type four crowdsourcing (peer-vetted creative production) 

initiatives, take the form of contests or competitions, 

and prizes are common for winning ideas. The America 

COMPETES Reauthorization Act of 2010 added a provision 

for prize competitions to an existing technology innovation 

act, giving federal agencies the authority to offer 

prizes as incentives to spur innovation (Executive Office of 

the President, 2012). At the same time, Challenge.gov was 

launched as a flexible platform for a wide variety of government-sponsored 

innovation competitions and challenges, 

even using the language of seekers and solvers used by broadcast 

search crowdsourcing companies like InnoCentive. This 

legal and technological infrastructure has been responsible 

for a number of U.S. government-sponsored broadcast search 

and type four competitions from agencies as diverse as the 

Department of Health and Human Services and NASA. 


Management 

Type Four: Peer-Vetted Creative Production 

Not all ideation problems have empirically “right” answers. 

Policy, aesthetic, and design problems are matters of subjective 

taste or public support. For these ideation problems, 

this approach to crowdsourcing is most appropriate. In type 

four crowdsourcing, an organization issues a challenge to 

an online community, the community replies with possible 

solutions, and the community is also empowered to choose 

among the submitted solutions, often through a commenting 

and voting mechanism. 

The most prominent, classic business case of this form of 

crowdsourcing is Threadless, a clothing company whose 

members submit graphic T-shirt designs and vote on the 

designs of peers. Threadless prints the top-rated designs and 

sells them back to the online community. 

With support from the U.S. Federal Transit Administration 

and in cooperation with the Utah Transit Authority (UTA), 

the Next Stop Design project ran in 2009–2010 as an 

attempt to replicate the business case of Threadless in a 

transit planning context. At Next Stop Design, participants 

were asked to respond to the challenge of designing an ideal 

bus stop shelter for a real transit hub in the UTA system. 

In just a few months and with no tangible reward offered, 

nearly 3,200 participants registered on the site, submitting 

260 high-quality architectural renderings for bus stop 

shelter designs and casting more than 10,000 votes in the 

competition. 

Conclusion 

For a term that did not exist seven years ago, crowdsourcing 

has enjoyed quite an enthusiastic embrace by government 

agencies in the U.S. and abroad. In the U.S., there have 

been high-dollar calls for proposals from the Departments 

of the Army, Navy, and Air Force; the Defense Advanced 

Research Projects Agency (DARPA); the National Science 

Foundation; NASA; the Broadcasting Board of Governors; 

the Department of the Interior; the Department of Veterans 

Affairs; and other agencies that specifically use the word 

crowdsourcing, demonstrating a level of commitment to 

continue funding these innovative processes. Around the 

world, other governments have invested in crowdsourcing, 

too, and so has the United Nations, which held a meeting 

in 2012 to explore crowdsourced crisis mapping for disaster 

relief. Considering the common criticism that government 

moves slowly and is notoriously unwilling to take risks, the 

rate at which crowdsourcing has taken hold in government, 

in spite of its many risks, is perhaps a signal that there is a 

sea change happening in the business practices of government 

and the way citizens engage with elected officials and 

public administrators. In the spirit of participatory democracy, 

this is no doubt a good sign. ¥ 

TO LEARN MORE 

Using Crowdsourcing In 

Government 

by Daren C. Brabham 








94 




in Government Management 

This article is adapted from Andrea Strimling Yodsampa, Coordinating for Results: 

Lessons from a Case Study of Interagency Coordination in Afghanistan, (Washington, 

DC: IBM Center for The Business of Government, 2013). 

Coordinating for Results: Lessons from a Case Study 

of Interagency Coordination in Afghanistan 

By Andrea Strimling Yodsampa 

Interagency coordination is an essential element of effective 

public leadership. Few agencies have the funding, expertise, 

or influence to achieve their goals single-handedly. 

Moreover, complex problems require interdisciplinary—and 

hence interagency—solutions. To succeed, public executives 

and managers must leverage the financial, human, and 

organizational resources of multiple agencies. This requires 

coordination. 

Coordination, however, is easier said than done. Agencies 

differ in their goals, priorities, and cultures. They compete 

for resources and turf. And they have different interests and 

concerns relative to coordination itself. Coordination also 

takes time and money; coordination processes must compete 

for resources with other mission needs and priorities. 

Compounding these challenges, executives and managers 

rarely have line authority over agencies and individuals with 

whom they must coordinate. 

In the face of these challenges, how can executives and 

managers deliver consistent coordinated results? Those 

who have led or served on interagency teams often argue 

that coordination is driven by personalities and relationships. 

Personalities and relationships do matter, of course. 

Public executives and managers must pay careful attention 

to the composition of interagency teams. But they must not 

stop there. Attitudes and relationships are deeply affected 

by organizational factors. Therefore, public executives and 

managers must institutionalize systems and processes that 

foster the attitudes, relationships, and behaviors conducive to 

coordination. 

A case study of U.S. stabilization and reconstruction efforts in 

Afghanistan from 2001 to 2009 illuminates concrete examples 

of successful coordination amidst extensive coordination 

failures. It then identifies the organizational systems and 

processes that made those successes possible. 

While the Afghan context was unique in many respects, the 

agencies on the ground faced many of the same challenges 

domestic agencies face in attempting to coordinate. The 

lessons about interagency coordination therefore are broadly 

relevant. 

Background 

The U.S. experience in Afghanistan demonstrates that coordination 

is possible even in the most challenging of contexts. 

Civil-military coordination in Afghanistan was immensely 

difficult. The Department of Defense, Department of State, 

and USAID differed not only in their priorities and timelines, 

but also in their organizational cultures, lexicons, and operating 

norms. 

Power disparities, reflected in DoD’s overwhelming financial 

and human resources on the ground, contributed to longstanding 

mistrust and tension between civilians and military. 

Add to this the fact that they were working seven days a 

week in complex, volatile, and often dangerous conditions, 

and a perfect storm for interagency conflict and competition 

ensued. In such a context, it is not surprising that coordination 

often floundered. 

What is significant is that civilians and military on the ground 

delivered some important coordinated results. These coordinated 

results, in turn, advanced agency missions, saved 

resources, and contributed to the achievement of U.S. and 

multinational goals in Afghanistan. 

The case study shows that when coordinated results were 

achieved, it was because civilians and military put in place 

organizational systems and processes conducive to coordination. 

When coordination failed, it was because critical factors 

necessary for consistent coordinated results were lacking. 

While these lessons emerged in a unique context, they 

are relevant to public executives and managers seeking to 

enhance coordination in any issue area or context. 


Management 

Andrea Strimling Yodsampa is Senior Researcher/Program Manager, The 

Fletcher School, Tufts University. She is a social scientist, practitioner, and 

consultant specializing in interagency, civil-military, and public-private 

cooperation. In addition to her work at Tufts University, she serves as 

a consultant and senior social scientist on DoD-sponsored “innovative 

research” efforts on interagency assessment and planning. 

Findings: Systems and Processes to 

Enhance Coordination 

Finding One: Co-location and convening provide opportunities 

for face-to-face interaction that facilitate joint analysis 

and planning and foster relationship development and 

mutual learning. 

Co-location of civilians and military at the U.S. embassy in 

Kabul and at various levels of the military structure in the 

field, including the provincial reconstruction teams, facilitated 

information sharing and joint analysis and planning 

and enabled civilians and military to learn from one another 

and develop a greater appreciation of each agency’s comparative 

advantages. Co-location of the senior civilian and military 

leaders at the embassy in the second phase also served 

as a powerful symbol of high-level commitment to coordination, 

reverberating to lower levels of their respective chains 

of command. 

When co-location was not possible, convening of civilians 

and military provided opportunities for regular, in-person interaction 

and thus facilitated information sharing, joint analysis 

and planning, relationship development, and mutual learning. 

The benefits of regular convening were evident in the 

Bagram process, where civil and military leaders met 

monthly for a full day. As one military officer puts it: “The 

process worked very well because it put the embassy, 

USAID, [and the military] in the same room, at the same 

lunch table, working the same things. The synergy from 

doing that, versus talking with someone you don’t know on 

the other end of the phone, paid huge dividends.” Another 

official agrees: “Before you can collaborate, you must coordinate. 

Before that, you must know the names of people. 

Before that, you must break down some barriers so that 

you’re not separate vessels.” 

Finding Two: Regular information sharing and joint analysis 

and planning enable participants to develop a shared assessment 

of the situation, identify common goals, and agree on a 

division of labor. 

The experience in Afghanistan shows that regular, structured 

opportunities for information sharing and joint analysis and 

planning are necessary to develop a shared assessment of the 

situation, identify common goals, and agree on a division of 

labor that leverages complementary resources and capabilities 

in support of shared goals. 

In the early stages of U.S. reconstruction efforts in 

Afghanistan, the lack of a joint interagency plan and associated 

lack of information sharing caused numerous coordination 

failures, including situations in which civilians and 

military inadvertently worked at cross-purposes, wasting 

resources and undermining effectiveness. 

As time went on, civilians and military instituted systems and 

processes for joint analysis and planning. Examples include 

the Joint Interagency Task Force established at the embassy, 

the focused planning for priority sectors that contributed 

to coordination in road construction, the Bagram process, 

and the Civil-Military Action Group. These systems and 

processes made possible concrete coordinated results. They 

also fostered mutual learning and the development of strong 

working relationships, creating foundations for enhanced 

coordination moving forward. 

Finding Three: Facilitative leadership is necessary to convene 

and lead effective joint analysis and planning processes. 

One of the most significant challenges public executives and 

managers face in coordinating across agency lines is lack of 

line authority over many of the stakeholders involved. To be 

successful, executives and managers must exercise facilitative 

leadership, or leadership without authority. 

96 



Management 

In Afghanistan, civilians and military reported up different 

chains of command. Facilitative leadership was the glue 

that held the joint analysis and planning processes together 

and enabled them to succeed. In some cases, it was people 

in formal leadership roles who exercised facilitative leadership. 

General David Rodriguez, for example, had direct 

authority over military officers who served under him, but not 

over the many civilians involved in the Bagram process. To 

be effective convening and leading that process, in concert 

with his civilian counterparts, he had to exercise facilitative 

leadership. 

The military is an intensely hierarchical system, and directive 

leadership is the norm. Thus, it is telling that a number of 

senior military officers who served in Afghanistan emphasize 

their learning about the importance of facilitative leadership. 

Facilitative leadership need not be limited to people in formal 

leadership positions. Interagency processes are complex, and 

facilitation of joint analysis and planning processes is necessary 

to keep the dialogues focused and on track. During 

the technical working group breakout sessions at Bagram, 

civilian participants selected to serve as ad hoc facilitators 

were credited with contributing to the effectiveness and efficiency 

of the process. 

Finding Four: Delegation of decision-making is essential, but 

it must be paired with professional incentives to coordinate 

and accountability for results. 

The case study shows that delegation of decision-making 

authority to the field, combined with incentives to coordinate 

and accountability for downstream results, is necessary for 

consistent coordinated results. 

In Afghanistan, the lack of decision-making authority on the 

part of many USAID officers in the field undermined coordination. 

Without the ability to make decisions and allocate 

resources, USAID officers were unable to respond quickly 

and in concert with their military counterparts to emerging 

challenges and opportunities. 

Delegation of decision-making authority without the requisite 

incentives and accountability systems, however, was counterproductive. 

In Afghanistan, military officers in the field were 

authorized to allocate significant amounts of money to development 

projects in the provinces under the Commanders’ 

Emergency Response Program. However, incentives emphasized 

spending money quickly, rather than taking the time to 

coordinate with civilians, and military officers were rarely held 

accountable for the downstream effects of their spending. 

The high level of decision-making authority, combined with 

perverse incentives and insufficient accountability, led to a 

go-it-alone attitude at many provincial reconstruction teams 

that resulted in wasteful duplication of efforts and working at 

cross-purposes with civilians. 

The military was not alone in struggling with perverse incentives 

and insufficient accountability. USAID officers in the 

field also faced pressure to spend money quickly. And, civilians, 

like their military counterparts, were not held sufficiently 

accountable for the downstream effects of their 

decisions. The vast flow of resources to civilian and military 

efforts in Afghanistan, the incentive to spend money quickly, 

and the lack of accountability for downstream results led to 

ongoing coordination failures, wasting resources and undermining 

the effectiveness of U.S. and multinational reconstruction 

efforts. ¥ 

TO LEARN MORE 

Coordinating for Results: 

Lessons from a Case Study of 

Interagency Coordination in 

Afghanistan 

by Andrea Strimling 

Yodsampa 










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Kevin C. Desouza 

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Kevin Desouza provides a clear, useful introduction to the concept. He writes, “Big data 

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processes, create customer value, and mitigate risks.” Over the last year, Professor Desouza 

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98 




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Traffic Organization 

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managers as they increasingly move activities to the cloud. 


Daren C. Brabham 

The growing interest in “engaging the crowd” to identify or develop innovative solutions to public 

problems has been inspired by similar efforts in the commercial world. The Obama administration 

and many state and local governments have been adapting these crowdsourcing techniques with 

some success. By understanding the different types of crowdsourcing and the different approaches 

they require, public managers will have a better chance of success. The author provides a strategic 

view of crowdsourcing and identifies four specific types: knowledge discovery and management, 

distributed human intelligence tasking, broadcast search, and peer-vetted creative production. He 

focuses on the strategic design process and sets forth 10 emerging best practices for implementing a 

crowdsourcing initiative. 



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Ideation platforms are modern tools for collecting and synthesizing group knowledge into actionable 

next steps. The reward is potentially high, especially for large organizations in both the 

private and public sector. Included are examples of how four federal agencies are using off-theshelf 

tools and proprietary applications to harness the knowledge of crowds and help agencies 

fulfill their mission. In addition to the four case studies, Professor Lee presents strategies and 

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Government, the Center has identified a set of trends that correspond to these challenges and 

drive government change. These trends—both separately and in combination—paint a path 

forward in responding to the ever-increasing complexity that government faces. These trends 

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in Afghanistan 

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between U.S. civilian and military efforts in Afghanistan from 2001 to 2009. These initiatives 

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100 





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of the Department of Veterans Affairs 

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questions, this report also outlines the three acquisition challenges that government executives now 

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through contract design, and improving the acquisition workforce. It concludes setting forth strategies 

for overcoming each challenge. 


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