[Senate Hearing 111-]
[From the U.S. Government Publishing Office]
PERFORMANCE ``STAT'': MEASURING PRIORITIES, PROGRESS, AND RESULTS
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MONDAY, JULY 12, 2010
U.S. Senate,
Committee on the Budget and the Task Force on Government
Performance, Annapolis, MD
The Committee met, pursuant to notice, at 2:07 p.m., in the
Governor's Reception Room, Maryland State House, 100 State
Circle, Annapolis, Maryland, Hon. Mark Warner, Chairman of the
Task Force, presiding.
Present: Senators Warner and Cardin.
Also present: Representative Sarbanes.
Staff present: John Righter, Ben Licht, Ronald Storhaug,
Amy Edwards, and Gregory McNeil.
OPENING STATEMENT OF SENATOR WARNER
Senator Warner. The hearing will come to order. I want to
first welcome everyone and thank you for being here. In
particular, thanks to Governor O'Malley for hosting us here in
the Maryland State House in Annapolis. Our task force greatly
appreciates the cooperation and assistance provided by you and
your staff.
I want to thank my colleagues Senator Cardin and
Congressman Sarbanes for accompanying me to this hearing. Of
course, it was perhaps a little shorter trip for both of them
than for me--although maybe not. Coming from Alexandria, it is
not that far.
I want to particularly thank Senator Cardin. He is an
important member of both the Senate Budget Committee and the
Government Performance Task Force, and I have benefited greatly
from his guidance and support.
This is an official hearing of the Government Performance
Task Force of the U.S. Senate Budget Committee. The hearing is
being webcast, and an official record of it will be provided to
our colleagues in the Senate. The record will include the full
written statements provided by each of the witnesses, and we
are going to have two panels today.
Let me make my statement, then I will call on Senator
Cardin and Congressman Sarbanes for comments, and then we will
get to the Governor.
I would like to begin by welcoming everyone to the
Government Performance Task Force Hearing, ``Performance
`Stat': Measuring Priorities, Progress, and Results.''
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Today we will explore how the Stat performance management
model uses data to directly improve outcomes and how it has
been used at all levels of Government in the State of Maryland.
Today also marks the tenth anniversary of the Stat model in
Maryland, and I know Governor O'Malley started it in Baltimore
as CitiStat.
As I mentioned, I am honored to be joined by both Senator
Cardin and Congressman Sarbanes. When I first came to the U.S.
Senate, I was asked to chair this task force. The task force
works to examine the Federal Government performance policies.
Now, this is normally a fairly wonky category, but as we are in
periods of enormous budget challenges, trying to get this part
right in terms of Government performance measurements and
procedures is going to become, I think, a wave of the future.
And, again, we are with one of the leaders here with Governor
O'Malley.
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This task force works to improve the information base for
Federal decisionmaking, helps us refocus goals. We focus a lot
on data and reporting information that matters to Congress, and
we are looking at how we can perhaps use some of these tools to
develop cross-cutting policy goals across various agencies and
departments. Our goal is to create a more efficient Government
and identify savings for the American taxpayers.
Now, this is a particular area of interest for me. As some
of you in the audience know, I am a former Governor of
Virginia. This was an area that I focused on during my tenure
there. We developed some of the similar cross-cutting policy
goals and measures to support them, similar to what Governor
O'Malley has done. As a matter of fact, we even changed our
budget processes so we could see those results, and I was proud
that during my tenure Virginia was named the best managed State
in the country. Of course, I will acknowledge that was before
Governor O'Malley was in office.
Today the Stat model is sweeping across the country. If we
could go ahead to the next chart, this initiative started in
Maryland. If you look all across the country at how many other
locations, you can see the model is used in D.C., San
Francisco, St. Louis, Atlanta, Washington State, among others.
A total of 11 cities have adopted CitiStat.
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The Federal Government is also implementing the Stat model;
however, we have a lot of work to do in D.C., and we need to do
what Governor O'Malley has already done in Maryland: create
governmentwide goals and incent our Federal agencies to work
more closely together to achieve those goals.
The Governor's administration has worked to define 15
strategic and visionary goals to improve the quality of life in
Maryland. The Governor's delivery unit was created to work with
agencies to align State and Federal resources around those 15
goals. Now, as somebody who wrestled with this issue at the
State level, how you align Federal funding flows to actually
meet your State goals, I am anxious to hear if you cracked that
code. I am anxious to hear, again, from the Governor on his
successes and challenges.
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The Stat model, as we have up here on this chart, is
relatively simple. Government must set clear goals. You have to
hold agencies accountable. You have to make sure that once you
set those goals and you tell the agencies you are going to hold
them accountable, you actually have regular progress meetings.
Time and again I found that even as Governor, if you set a
directive, unless you are consciously relentless on following
up the progress of reaching those goals, there are some in the
work force that might just say, well, this guy is going to be
gone at some point, and even more so in Virginia where it was a
4-year term. But I think that regular progress meetings are
very important. Strong analytical support and then aggressive
followup.
I would add that the Obama administration has taken the
Stat model as well and is implementing it at the Federal level
with TechStat, launched by the Federal CIO, Vivek Kundra.
TechStat provides a forum for examining at-risk and failing IT
projects. An IT dashboard website was established to help
provide data to inform TechStat meetings. Plans are underway to
convene quarterly meetings between the OMB and agencies to
discuss progress in achieving high-priority performance goals
and to establish a Federal Government web portal that focuses
on performance. This area around IT projects and failure
sometimes of those projects, I think most of us have read
about. I have personally been involved as the local Senator on
the failure of Arlington Cemetery to keep appropriate records
of our fallen heroes, and if there was ever a case of an
example of an ill-performed and ill-monitored IT project, it is
what has been going on at Arlington Cemetery. We are in the
process of trying to get that fixed.
While overall we are starting to see signs that our economy
is growing again, millions of Americans are still facing
hardships and turning to State and local governments at a time
when governments are cutting back on services. Again, it is
critical for governments at every level to identify savings to
improve the services they offer.
While most Stat initiatives have been well received as
efforts to institutionalize good management practices, some
concerns have been raised about agency capacity and workload
and the limitations of the data that is collected. However,
critics cannot deny that the Stat model has enhanced
transparency between high-level officials and the
organizations' operating units. One of the things I hope the
Governor will at least comment on is, in moving toward this
Stat model, whether part of encouraging the work force is also
to look at ways you would eliminate some of the past data
collection efforts that might not be useful data.
I believe the model is working, and I believe that we can
at the Federal level learn a lot about what is going on, not
only at the State level here, but in our second panel when we
get to what is going on at the county and city level as well.
So, with that, I will turn to my colleague Senator Cardin
and then Congressman Sarbanes for comments, and then we will
get to the panel.
OPENING STATEMENT OF SENATOR CARDIN
Senator Cardin. Well, first, Governor O'Malley, thank you
for your hospitality in allowing us to use this historic State
House for our Committee hearing. I cannot think of a more
appropriate place, so thank you very much for your hospitality.
Senator Warner, I want to thank you and congratulate you
for your leadership.
This task force was the recommendation of Senator Warner.
Senator Warner brings a wealth of experience in Government
management to his position as the Senator from Virginia, and he
is looked upon by his colleagues in the U.S. Senate as a person
who can lead us in the right direction in trying to get a
handle on our most important responsibility, and that is
Government oversight, accountability, performance standards,
spending the taxpayers' money in a correct way, not only in the
allocation of priorities but in the manner in which those
dollars are spent. So I thank Senator Warner for his
leadership.
It is nice to have Congressman Sarbanes with us.
Congressman Sarbanes is my Congressman, and I think he is doing
a great job in the U.S. Congress. It is always nice to be with
him.
To Ike Leggett, our county executive from Montgomery
County, who has one of the toughest jobs in America, the size
of his county, the complexity, and demands of his constituency
are second to none, and he does an incredible job in managing
resources with very, very high expectations from the people who
live in Montgomery County. County Executive Leggett is meeting
those expectations. So it is nice to have all of our colleagues
here.
Our State is home to more than 50 Federal agencies,
including the Census Bureau in Prince George's County; the Food
and Drug Administration, the National Institutes of Health in
Montgomery County; the National Security Agency in Anne Arundel
County; and the Centers for Medicare and Medicaid Services and
the Social Security Administration in Baltimore County. In all,
more than 132,000 Federal employees, many of whom, work in
Washington, D.C., reside in the State of Maryland.
The Task Force on Government Performance represents an
opportunity for us to evaluate how effectively Government is
functioning and to examine the mission assigned to our Federal
employees and whether they are given the necessary tools and
resources to fulfill it. Whether by increasing agencies'
coordination, improving management, or streamlining hiring or
other personnel practices, our efforts in Congress in
conjunction with those of the Obama administration can improve
the outlook on both of these fronts.
I am honored to serve on the Budget Committee. One of the
most important responsibilities of the Congress is to pass a
budget to establish the priorities of our Government. But it is
more than just establishing our priorities. The Budget
Committee is also responsible for the budget process, to make
sure that we have efficiency and accountability in the manner
in which we determine the budget for the Nation. And that is
why this task force is so important. These are most challenging
times with unprecedented deficits and, to be a little gentle
about this, skepticism among our constituents as to how well
Government is doing its work. It is even more important than
ever for the work of this task force to restore the type of
confidence necessary for us to be able to govern. So I think
all the work that we are doing is very, very important.
I just want to point out that our witnesses today can be
extremely helpful. As mayor of Baltimore and then Governor,
Martin O'Malley has been nationally recognized for developing
tools to quantitatively measure performance. Two of his
initiatives, CitiStat and StateStat, use data to increase
accountability, transparency, and cooperation between agencies.
These initiatives have been studied by international
organizations and local governments across the country, and
they have been recognized by the Harvard Kennedy School of
Government. In addition, Lieutenant Governor Brown has
developed BRACStat to evaluate the BRAC-related progress in our
State.
Now, Senator Warner, let me tell you, I have seen Governor
O'Malley use the Stat process, and I must tell you, I haveten
there a little bit early and I've seen the administrative heads
come into the meeting a little worried and concerned, because
they know that either Mayor O'Malley or Governor O'Malley has
really studied the material and expects to see performance
improvement. He does not just have one meeting and then 2 years
later have another meeting. He has regular meetings with his
department heads, using the information with expectations as to
how he can improve performance, and having the administrators
sign off on what Stats should be improved at the next meeting.
And then when they show up at the next meeting, the Governor
will quiz them as to whether they have accomplished that
increase. And I must tell you, it has been extremely effective.
I think Governor O'Malley is one of the most effective
Governors not only in the history of our State but I think in
our Nation in using hese performance evaluations to make sure
taxpayer money is being properly spent.
We can learn a lot at the Federal level from what has been
done in Maryland and what has been done in Montgomery County,
Maryland. I understand that the State budget is $32 billion and
the Federal budget is $3.5 trillion. But we can learn from how
things are done at the State level. The Montgomery County
budget is--I have your budget here, Ike--$4.6 billion. Now,
that is a lot of money by anybody's calculation. Again, we are
dealing with multi-trillion-dollar Federal budgets. But if we
do not break it down to smaller elements, we will never really
get the type of efficiency and accountability needed.
So I really do think we can take the best practices from
Montgomery County, the best practices from Baltimore City, the
best practices from the State of Maryland, and we can do much
better at the Federal level, and that is why I was so pleased
that this hearing was scheduled here in Annapolis.
Let me just give a little advance warning to the three
witnesses. There are three areas that I will be asking specific
questions about.
We will not have a Government that performs at its highest
potential without a work force that is given the opportunity to
perform at that level as well. Interestingly, employee
performance management dates back to 1883 when the Civil
Service Act established a merit system to handle promotions.
This is a longstanding reform effort that continues today. I
will be interested in hearing how our witnesses have modified
your personnel practices, including retention strategies,
training, and merit increases as a result of the information
you gather from your performance evaluation programs. In other
words, how are we putting information into practice to best
incentivize our workers to do the work that we want them to?
Second, as the world's largest buyer of goods and services,
with purchases of more than $425 billion each year, the Federal
Government has an unparalleled opportunity to promote
efficiency and entrepreneurship through awarding contracts to
American small businesses. We have a Federal set-aside program;
23 percent of the Government's procurements are targeted at
small firms, and individual agencies have goals set in
coordination with SBA for contracts with veteran-, women-, and
minority-owned firms.
Unfortunately, our record of meeting these goals is spotty.
Last year, only one agency--GSA--met its goals in all areas,
and two agencies--OPM and USAID--met none of their goals. So as
a member of the Small Business Committee, I believe these set-
asides are critically important for economic growth in our
community, for creating jobs, and for encouraging the type of
innovation that comes from small businesses.
How can these performance evaluations can be used to help
us meet the goals for small business contracting; what
obstacles you have encountered in meeting those goals; and what
strategies are you developing to improve Government performance
in this area?
And the third area I would like to talk to you about is the
coordination between the legislative and executive branches.
Senator Warner talks about this frequently. If we are going to
be successful, we have to be on the same page. You can do a lot
of work in identifying issues, at the Executive level, but if
we do not enact the policies or support you with our actions,
then the executive actions will be overruled by the efforts
made by the legislative branch. How can we get the legislative
and executive branches on the same script to make Government
work more accountably? Also, I would be interested in your
observations as to how your findings have been used by the
General Assembly or by the County Council in implementing the
type of policy changes that reflect the good work that you have
done with your staff programs.
With that, Mr. Chairman, I look forward to our witnesses
and look forward to the exchange we will have after their
testimony.
Senator Warner. Thank you, Senator Cardin. Thank you for
your leadership on this issue. And setting out, I know,
Governor, we are going to have a few questions for you
afterwards.
Congressman Sarbanes?
OPENING STATEMENT OF CONGRESSMAN SARBANES
Mr. Sarbanes. Thank you very much, Senator Warner. I am
going to keep my remarks brief because I want to hear from the
Governor and from the other witnesses. But I appreciate the
opportunity to participate in the hearing today. I think all
the witnesses are going to give us some good information about
how the Federal Government can model some of our practices
after what you have done at the State level and the county
level to improve efficiency. I have been very involved on the
House side with procurement reform, which is designed to do
this, and I will have some questions along those lines when we
get to that part of the hearing.
I do want to salute the Governor, though, because he has
been a leader on this from day one. And I will tell you the
impact it had in Baltimore City, because when CitiStat was
started, I was still in the private sector, and the effect it
had on the private sector's perspective on the public sector
was tremendous. In other words, when the private sector saw the
kinds of efficiencies and the management improvements that came
from CitiStat, it made the private sector more willing to step
up in the partnership with the city. And I think that is one of
the things that we can gain from this. If there is a perception
that Government is managing its affairs in an efficient way,
that is going to promote more collaboration between the private
sector and the Government sector.
Then the last thing I just wanted to mention is I do not
think anyone understands better than this Governor how you have
to never forget what the stats are about. It is easy to become
mesmerized by the Stat model, but at the end of the day it is
about using it to improve the quality of lives, in this case of
Marylanders, and help them get through their day and do the
right thing for Maryland families. And the Governor has always
understood that this is just a tool to that end.
So we are really looking forward to your testimony today,
Governor, and I yield back.
Senator Warner. Thank you, Congressman Sarbanes.
You have heard this line from me before, but as the former
co-founder of Nextel, it does not offend me at all if cell
phones go off during hearings like this.
[Laughter.]
Senator Warner. One quick last comment before I introduce
the Governor, and that is just picking up on what both Senator
Cardin and Congressman Sarbanes have said. I want to hear your
testimony, but I want to also commend you because you have to
be relentless on this stuff. You know, everybody talks about
saving money. Everybody talks about bringing efficiency. But
this is hard work, and to try to keep whether it is your
legislators, your work force, the press interested, people's
eyes glaze over when you start talking about some of these
performance metrics. But since this is now 10 years that you
have been at it, I salute you for your efforts.
Our first panelist will be Governor Martin O'Malley. He has
a long history of public service. He served as Assistant
State's Attorney for Baltimore City, a member of the Baltimore
City Council, and eventually mayor of Baltimore City. Governor
O'Malley has been a real innovator in the area of performance
measurement and management in Maryland, building and improving
upon the Stat model that he started during his tenure as mayor.
His administration has been focused on developing goals for the
State of Maryland to achieve real results. The Governor has
also received national recognition for his and Maryland's
implementation of the American Recovery and Reinvestment Act
funds.
Governor, we are again pleased that you were willing to
host us here. We are anxious to hear your testimony, and the
floor is now yours.
STATEMENT OF THE HONORABLE MARTIN J. O'MALLEY, GOVERNOR, STATE
OF MARYLAND
Governor O'Malley. Mr. Chairman, thank you very much. We
are flattered by your visit to Baltimore and for bringing the
Committee here, and I also want to thank Senator Cardin for his
very kind words and also Congressman Sarbanes, and also for
their leadership. I have a great delegation. You do not mind if
I brag about them a little bit. I do not think there is another
Governor in America that has a delegation as strong as our
delegation is in Maryland, and, again, we really appreciate
your leadership on these issues. And I personally appreciate,
Senator Warner, when you were Governor Warner, that you took
the time to spend with me and gave me some great advice as I
was taking over the responsibility and the trust of running our
State government. And I welcome you to the oldest State capital
in America in continuous legislative use, and I am also looking
forward to hearing Ike Leggett's testimony, who has really
picked up the Stat model, run with it at the county level in a
very large and complex county, and he is one of the best county
executives in the country and is taking my home county to
another level.
In times when governments are finding an increased
necessity to do more with less, measuring performance is more
important than ever, and the topic of this Task Force on
Government Performance could not be more important than it is
right now. I believe that our Government should actually work
to protect our quality of life, improve our quality of live,
and improve the conditions that allow us to create jobs, save
jobs, and that allow small businesses to create and save jobs.
And having a functioning, livable city or State, making timely
investments in effective ways in the talents of our people and
the health of our people is all a part of that.
The things that get measured are the things that get done.
We have heard that said time and again. But it does require
that expectation of progress, and it does require a relentless
system that forces human beings into the same room to actually
coordinate, cooperate, communicate, and find ways to make
things better even though there might be a lot less dollars to
do them this quarter than there were the last quarter.
It is hard to believe that it has been 10 years since we
began that first CitiStat meeting in the city of Baltimore, and
Congressman Sarbanes reminded me of the perspective of business
people. That room was visited so often during my 7 years that I
served the people as mayor there, and people coming from
government, Chairman Warner, would come into that room, and
they would say, ``I cannot believe you guys are doing this.''
Then people from business would come into that room, and they
would say, ``Thank God you guys are finally doing this.''
Today, if you plug the term ``CitiStat'' or ``CompStat''
into Google, you will see them popping up all across the
country, in big cities and small. It is a testament to any good
idea when people want to adopt it, which is what we did at the
inception of CitiStat, actually adapting and bringing home the
tenets which helped New York City's Police Department achieve
such dramatic reductions in crime under the leadership of
Commissioner Bratton and also Deputy Commissioner Maple.
The Stat model which we have brought with us to State
government merges emerging technologies that we just did not
have in widespread use 10, 15 years ago, like GIS, geographic
information-based systems, with certain timeless human
principles, mainly setting goals openly and accountably
measuring progress, and on that one, Jack Maple would say
everyone, when you say that second one, measure progress openly
and accountably so that everybody has the information, you will
always get pushback. People say, well, you mean some people get
the information. No. All people get the information, and the
most important people that need to be able to see that
information is the public, which we can now do because of the
Internet, and broadly sharing information rather than hoarding
it, finding the willingness to change course when necessary to
move our graphs in the right direction before a headline or a
bad story tells you that it is not going in the right
direction.
Governments tends to do, have traditionally done a decent
job of measuring inputs: how much we are budgeting for a
specific priority. But the Stat model is really governance by
outputs--measuring how effectively and efficiently we are
delivering results, taking action to get better results.
I enjoy laying out these two tenets of city government and
human nature. They are timeless, actually. These were the old
tenets of city government, and it was true across the country,
and it was true in our State government. If the Governor really
wants to know, we can find out, but we will have to pull all
our people off their other jobs and it will take weeks.
Tenet number 2, we will get to it as soon as we can, but it
will take a few months longer because our budget was cut last
year.
Tenet number 3, my favorite, that is the way we have always
done it, or we are already doing that, or we tried that and it
did not work. And how many of us have heard all of those
things.
Or the fourth one that Senator Warner alluded to, I hope
the legislature forgets about this before next year's budget
hearing. This cannot be episodic. It has to be a system.
When faced with the adversity of turning around the public
safety situation in the city of Baltimore, these were the new
tenets, the Stat tenets that we used there, that we use here.
Timely, accurate intelligence or information shared by all, and
all means all, including the public, not just top managers,
including workers, not just top managers; rapid deployment of
resources; effective tactics and strategies; and relentless
followup and assessment.
When we faced the adversity of turning our city around from
violence and addiction, schools that had been failing for a
long time where not even one grade was majority proficient in
reading or math, tons of vacant houses in neighborhoods with a
lot of vacant hearts, and we began measuring and geo-mapping
every conceivable service problem and opportunity. And the
great thing about the map is a map does not know whether a
neighborhood is black or white or rich or poor, Democratic or
Republican. The map tells us where our opportunities are and,
therefore, where we need to deploy our limited resources to
take advantage of those opportunities for improving our quality
of life.
This is an example of our pothole map. We have a map for
that. We were accused in the early days by a former mayor of
Baltimore of not having any vision, so we came out with the 48-
hour pothole guarantee, and we were able to hit it with a 98-
percent success rate, and part of that was because we already
knew we were hitting it in 53 hours. And so people rise to
those higher expectations.
Another example, sadly, we call it the kidneys of death.
This shows the concentration of homicides and shootings in the
city of Baltimore in 1999 and then 2000, 2001, 2002, 2003. You
get the point. Baltimore over the last 10 years has achieved
the biggest reduction of Part 1 crimes--that is, violent and
property crimes--of any of the major cities in America. We are
third in violent crime reduction, only behind Los Angeles and
New York, thanks to courageous police officers and thanks to a
much better system of timely, accurate information, relentless
follow-up, tactics, strategies, and making the graphs move in
the right direction.
Let me run you fast-forward through some of the examples of
this as we have been applying it to State government, where
oftentimes, as the Senator knows, and actually both Senators
know from both having worked at the highest ranks of State
government, a lot of times the movement from municipal services
or county services to State government becomes more complex,
less immediate to the eye, and can sometimes defy measurement.
But we still subscribe to Jack Maple's belief that everything
can be measured.
So through the State Stat process, senior staff and I meet
with key agency leaders not once a year or once a quarter but
every single month to track our progress, to share information,
to determine where things are working, and where we need to do
better. And our delivery unit works with agencies every day to
help them deliver better results around big goals that we have
openly set for our States--15 major goals, dozens of sub-goals.
And there are some who warn against setting big goals: It is
political precarious. What happens if you do not hit your goal?
Everybody will say, Aha, you only got three-quarters of the way
there. I find that people are pretty smart, and they would much
rather have a government that is setting goals and sometimes
falling short than a government that is not setting any goals
and is instead slipping backward. We have exceeded some goals,
and some we have not hit, but always we move forward in an open
and transparent way.
Over the past 4 years, we have been able, together with law
enforcement, to drive down violent crime in Maryland to its
lowest level since 1975, including the steepest 3-year
reduction in homicides, I think, over these last 3 years,
driven homicides to their lowest rate since 1975. Our violence
prevention initiative, we now track the most violent offenders
who statistics and probabilities tell us have the highest
propensity to commit further acts of violence if they are not
tightly monitored, and so that is what we now do.
When we took office, we found that our predecessors had
allowed a backlog of 24,000 unanalyzed DNA samples to collect
dust, had neglected to collect an additional 15,000 that were
legally mandated, samples that were to have been taken from
people that have been convicted. We used our State Stat process
to guide our efforts to eliminate both of these backlogs, and
since that time, we have made 245 arrests of some pretty bad
actors that would not have been made had we not knocked out
that backlog of DNA samples, uploaded them so that law
enforcement could clear those cases.
We have also created a public safety dashboard where we are
integrating--boy, this is a nightmare graph, isn't it? Our
public safety dashboard has led to the integration of data that
we had always had, had always collected, but had never been
accessible to a law enforcement officer who is working a case
with one click of a button. We have now put together data from
our prison system, parole, probation, firearm registries, our
fingerprint systems, mug shots, DNA, motor vehicle records,
taxation records, and many other sources, and all a law
enforcement officer needs is a user name and password to have
real access to all of that data in realtime. We are now
receiving 25,000 to 40,000 queries a day from 100 different
agencies all around the State. It is almost like Google for
crime solving where we have been able to put together this
data. NASA actually came to see how some smart people forced to
meet relentlessly without any additional money came out with
clever ways within existing budgets to piece this together.
The Department of Public Safety and Correctional Services,
we have been able to reduce overtime by 20 percent. It did not
happen overnight. It happened by measuring it every week, every
day, every 2 weeks, and when you look over your shoulder, you
save $10 million in overtime by constantly doing the little
things that together get you the big results over time.
You might have heard some of the ads in the
telecommunications industry. There is a map for that. You could
summarize our strategy as that we are geo-mapping everything.
One person explained it to me this way: We always hear about
the pyramids of human organizations, in this case different
departments, and those pyramids, you could spend a lifetime
trying to connect through IT solutions up and down that pyramid
with the complexity of individuals doing complex jobs up and
down that pyramid. But if the base of all of those pyramids has
to land on a common map with GIS, with coordinates, people
start organizing their information in such a way that those
efforts become integrated and collated together.
We have created for the first time in our State a number of
GIS maps. We have created a base iMap. We have created
GreenPrint and AgPrint through which we now have done an
ecological ranking of every parcel of land in the State of
Maryland so that when we preserve land or use precious dollars
for the preservation of open space, we are able to give the
public an objective criteria ranking this. You can pull it up
in your own county and see in a dashboard type way how much of
our GreenPrint have we preserved, how much remains to be
preserved, in order for the bay to have a fighting chance at
functioning.
We have done the same thing with our agriculture lands to
better see where those lands are so hopefully at the county
levels and municipal levels we can better protect contiguous
farm economies that still, thank goodness, exist in our State
and that we need, that our ecosystem needs to breathe, and that
all of us need in order to buy local and sustain ourselves in
better ways for the environment.
For the first time in our State, we are also mapping now
our capital budget so citizens can click on and see where the
dollars are being invested in their neighborhood. We are using
BayStat to guide our efforts to restore the Chesapeake Bay.
This is one slide from that map which shows the sources of
nitrogen, phosphorous--no, in this case it is actually just the
nitrogen and the sectors that contribute to that. Whether it is
wastewater treatment plants, farms, stormwater run-off, septic
systems, or the forests, we can click on to any of those ten
tributaries and show you how it differs from one area to
another. And we also have about 26 solutions that we track on a
tributary-by-tributary basis. This one is commodity cover crops
in order to keep the nitrogen from rolling off over the course
of the winter.
The Federal Government has now adopted a BayStat initiative
for their own drive to help us clean up the Chesapeake Bay and
get in all six of the watershed States to agree to two things:
One of them was the 2-year milestones, critically important.
Things that get watched are the things that get done, if you
measure them and you have deadline. And so now instead of a 20-
year deadline, we have 2-year milestones so we will know
whether we are hitting it, whether we are not hitting it. And
also the Federal Government is creating ChesapeakeStat, which
is a GIS-based system, so that all of these six States can also
coordinate and cooperate.
This is from our 2-year plan on--our 2-year milestone. The
green line is where we are trying to move. The red line is the
human activity across all of those various actions from cover
crops to upgrading stormwater rules and regs, upgrading
wastewater treatment plants, installing more modern septic
systems, getting communities off of septics and on to sewer.
And so we have set 2-year milestones, and we are committed not
only to holding ourselves accountable but really the value of
this is not--the value of this is that the public--that we are
able to hold one another accountable as neighbors for what it
is that are common platform that we call our State government,
or in this case our county, State, and Federal Government is
doing, what we are doing together to improve our quality of
life.
Beth, let us click through the Recovery and Reinvestment
Act. President Obama and Congress very courageously and rightly
passed the Recovery and Reinvestment Act. Had we not done that,
we would all be sitting in the middle, in the depths of the
second Great Depression instead of debating whether we were
moving quickly enough into recovery. We took the President's
challenge on the Recovery and Reinvestment Act very seriously.
He challenged all of the Governors to make sure that we measure
performance at a level of openness and transparency the likes
of which we had never seen before. Fortunately, we already had
the iMap in place, so we were able to just plug in the dollars
that came to the State. We used StateStat and our first in the
Nation iMap to target those Recovery and Reinvestment Act
dollars, to rapidly deploy the resources, to ensure that we
were hitting our goals for Minority Business Enterprise when we
award these contracts, and to guard against the possibility of
waste, fraud, and abuse. And we believe that the best elixir
against waste, fraud, and abuse is openness and transparency.
Information shared by just the legislature? No. Information
shared by all. Just by the legislature and the managers and the
county executives? No. Shared by all. The press that serves the
public, the public themselves that is served by all of us.
Beth Blauer, our StateStat director, is demonstrating our
recovery website. It has been rated the No. 1 site in America.
The head of President Obama's Recovery Act and Transportation
and Accountability Board has cited our mapping initiatives as
the basis for those that are now being implemented by the
Federal Government.
Beth, what do you want to tell us here? We are clicking on
to any of those icons that can tell you in transportation, in
Montgomery County. This is a resurfacing project. It is on I-
495, Potomac River Bridge to 270, construction costs--hold on
just a second. My old eyes. What is that, 7.48?
Ms. Blauer. 7.49.
Governor O'Malley. 7.49. Estimated jobs is----
Ms. Blauer. It is 98.
Governor O'Malley. 98.
Ms. Blauer. It was advertised.
Governor O'Malley. Advertised on February 17, 2009. There
is the bid date. There is the--what is the NTP?
Ms. Blauer. Notice to Proceed.
Governor O'Malley. Notice to Proceed date. And there is the
MBE goal, 18.9 percent on this particular contract.
We have used this on our MBE program. You know, we have
long had, thanks to Parren Mitchell's leadership, the highest
MBE goals of any State in the Nation, but for the first time,
we actually believe we are going to hit that 25-percent goal
this year. It did not happen in the first year, it did not
happen in the second year. But every year we got closer.
What are you showing me here, Beth?
Ms. Blauer. This is the MBE attainment for just ARRA----
Governor O'Malley. I am sorry. I did not see that you had a
microphone. You might pull that over for--that is why I was
repeating as you were whispering in my ear.
Ms. Blauer. Each quarter we also put out the MBE
performance for all of the ARRA contracts separately on their
map so you could see where we are toward our goal for just ARRA
spending.
Governor O'Malley. The nice thing about this is you can go
into--any person in any county can go on this at home and say
those Recovery and Reinvestment Act dollars, where are those?
What are those projects? Let me click on it.
It is also a way that we are able to make sure that those
dollars are being invested in a way that is fair to all the
jurisdictions, that does not leave our rural Maryland or inner
Beltway in the Washington area or the city of Baltimore.
As I close, I just want to whip through a few more examples
of some of my favorite sites, which are graphs that are moving
in the right direction. Mr. Chairman, we have graphs that move
in the wrong direction. We have chosen not to share them with
the Committee today.
[Laughter.]
Governor O'Malley. Reducing the number of children placed
in--are we OK, Beth?
Ms. Blauer. Yes, we are good.
Governor O'Malley. Reducing the number of children who are
placed in group homes. Instead, we drive up adoptions, drive up
other things so the children--because place matters.
Cracking down on Medicaid fraud, moving in the right
direction.
Inmates participating in employment programs so they have
some sort of job skill and hope when they come out instead of a
higher likelihood of recidivism, moving in the right direction.
Energy performance contracts, something we never did in the
State until recently, moving in the right direction.
Reducing fatalities on our highways, moving in the right
direction, and if you save just one life, it is as if you have
saved the world.
Expanding health care coverage to more of our fellow
citizens rather than fewer, moving in the right direction.
Robert Kennedy once said that there is no basic
inconsistency between ideals and realistic possibilities, no
separation between the deepest desires of the heart and of mind
and the rational application of human effort to human problems.
And that is what this system is all about, is the rational
application of human effort to human problems. And that is what
performance-based government is about, and, again, thank you so
very, very much for coming to Maryland and bringing your
Committee here.
[The prepared statement of Governor O'Malley follows:]
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Senator Warner. Thank you, Governor O'Malley. Thank you for
your presentation. In respect of your time, we will try to make
sure each of us takes 5 or 6 minutes in our question period,
and particular kudos on not only the whole presentation but the
data you have on the Recovery and Reinvestment Act. It is so
critical because I think--I can only speak for my State--a lot
of folks did not understand what that act involved, did not
understand it was the third largest tax cut in American
history, did not understand the dollars that went to the State
or other programs, and what you have done with ARRA funds is to
be commended. Also on MBE, that was an area that we were
woefully behind in Virginia in just not having data, and being
able to do that buy project, I give you great congratulations.
Governor, you tried this model out at the city level where
you could get your arms around it. You grew it to the State
level. We are thinking now about how do we take it to the
Federal level. I guess I have a two-part question as my first
question.
One, advice or counsel to us as we try to think about how
we implement this or implement portions of this at the Federal
level. Should it be done on a holistic basis? Because you set
15 policy goals broadly as your basic function to start the
whole process. Or recognizing the enormity of the Federal
Government, would you recommend taking it in chunks as opposed
to Federal Government-wide? And could you also talk for a
moment about, as you get these goals and as you lay out these
details, clearly they do not all fit into an exact silo of a
particular department, so you have to have these goals embraced
by, I would imagine, agency leadership beyond a particular
agency. So how did you get at that cross-cutting ability to get
all of your various silos to work together on these common
goals?
Governor O'Malley. I would say the two biggest--the
foundational decisions we made as CitiStat started ramping up
was that we were all going to use a common GIS map, and we were
all going to use a common template for reporting information.
Now, we did not care what you labeled these columns, but
those were the two standards that we really insisted upon. And
it took a little while because some departments would come and
say, ``Oh, but we really like our software and the way we have
done our map.''
``Well, we are sure you do, but we are going to use''--I
think it was the Department of Public Works that picked the
best GIS system. That can only come about, I think, with strong
executive insistence. If you leave it to people to do it on
their own, I think you are in for trouble. It is like trying to
run a railroad on 25 different gauges of track. You have to
have one gauge of track. You have to have one map. You have to
have one common template that then can be shared among all the
departments, and something that is as user-friendly, as off-
the-shelf as possible. People would come from other cities and
be shocked at how cost-neutral we were able to ramp up the
CitiStat process. Well, that is because we used off-the-shelf
software. The GIS map at the time was a new thing, but that is
pretty ubiquitous now.
Ms. Blauer. Our application, if another State wanted to
come in and replicate what we have done with RecoveryStat, all
of the application is free. You can just go onto a resource
page and download it. So it is a very minimal cost, and most
States already have pretty well developed GIS programs, and all
they need to do is just basically download the application.
Governor O'Malley. Now, having said that, we did ramp up
one department at a time. I mean, there are only so many hours
in a 14-day cycle, and so we did ramp up those meetings adding
a new department every few weeks for that first year. And so we
added the departments one at a time, but it was only after we
let them know, You are coming, here is your turn in the queue,
you might want to think about what the primary colors of
measurement are.
One of the things that we learned--I think it was--someone
on the panel talked about how you can become mesmerized with
the--John was saying you become mesmerized with all the things
you can measure now that you could not measure before. You have
really got to hone in on the main goals, especially in order to
get cross-departmental collaboration. At the municipal level,
our mission statement was a cleaner, healthier city, better
place for kids, a place where people want to invest and grow
their businesses. Those were our big goals, and every
department knew they had to contribute to those in some ways.
At the departmental level, in solid waste, one of the
things we did was to--we had a competition before Christmas,
not on A to Z performance measurement, but the primary colors,
if you will, of solid waste becoming better: the tonnage they
collect, fewer citizen complaints, less absenteeism and,
therefore, less overtime. And based on those four things, I
think the Abell Foundation gave us some cash incentives for the
crews that could finish first, second, third. The crew that
went from last place to first place, that actually happened.
One crew that was in last place stayed in last place, I believe
made more overtime by keeping their absenteeism high and their
unexcused absences than if they had gone after the prize.
But the thing that we have done at the State level was to
create a unit that we borrowed from Tony Blair called the
Delivery Unit. In our State government, we used to have--there
was really no robust policy office. We never had one. No
Governor ever had one. But out of legislative frustration, the
legislature would see that we were not coordinating in ways
that would allow us to grow in a smarter way between
transportation, housing, planning, and other departments, so
they created by legislative initiative, usually--although this
one, I think, came from Governor Glendenning--Office of Smart
Growth. We would see that we were not coordinating like we
should across social services, education, health in order to
protect children, youth, and families, so we created an Office
of Children, Youth, and Families. So we consolidated those
offices.
Another one, Governor's Office of Crime Control and
Prevention. Well, why do we need that office? Because we are
not cooperating in order to control crime and prevent crime
across rec. departments and police and the like.
So we have consolidated all of those now into a delivery
unit in State government that works in conjunction with the
performance measurement around 15 big goals and links together
what is a much more attenuated chain of delivering results at
the State level than we had, say, in filling that pothole,
which took about three steps. You know, a person calls, the
crew goes.
Senator Warner. Let me ask one more, recognizing I want to
get my colleagues time in, too. We actually did have Michael
Barber come in and talk to us about the Delivery Unit model
from the U.K., which was very helpful. But one of the things,
just as Senator Cardin and I have delved into this, we see at
the Federal level, every new administration reinvents the wheel
on what performance management and performance metrics ought to
be. Go back. Clinton had one, Bush had one, President Obama has
got one now. And one of the things we are hoping, working with
President Obama's administration, is with a legislative partner
we can institutionalize this.
Talk to me a little bit about how--you have talked for a
moment about how you get the public involved, but how do you
keep the press involved as using this as a way to measure your
performance? How do you get your legislators to buy into that
these are the right measurement tools and that they could all
argue if you agree that the charts ought to be going this way,
you can argue about how you get there, but if you at least
agree on what the common framework is, you are halfway through
the battle. I mean, have you found ways to try to bring your
legislature involved in this? Have you found ways to keep the
press and the public actively engaged?
Governor O'Malley. The city council, we were able to get
them on board by giving them all portals so that they could
access--we created a 3-1-1 system on the front end for city
services as well. So that is how we got the city council on
board when they were a little bit concerned that we might be
cutting them out of the constituent service business. The
openness and the transparency allows everybody to use it.
The legislature here has embraced it. It has been very
supportive of it, appreciative that they can come to the
meetings if they like and see whether we are moving in the
right direction or not. I hope over time it informs better
legislative policy if we continue to keep it going and open and
transparent.
The media has been a tougher sell because some of this
stuff, if you only look at it incrementally, can be like
watching the paint dry and not the stuff that in an overworked
press corps makes the headlines. We are trying to drive more
and more people to the website, and it has been a bit of a
frustration--I should not say frustration. We have yet to
really communicate to the public just how much more open,
transparent, and accessible their State government has been
made. The Recovery and Reinvestment opportunity was a good shot
at that, doing some of the town halls around it.
Beth, did you want to chime in on something?
Ms. Blauer. I think also we have for the first time all of
the data and summaries of what happens in the meetings is
available on the website as well. So we certainly--States that
have been asked to come and meet with legislators during the
session as they are articulating their ideas before the
session, we were brought in. And this session was really
probably the first time where we really spent a lot of time
sharing the information and explaining how to access the
information that is available on our website.
Governor O'Malley. We had been putting it on the website in
such a dense way that nobody could sort through it. So now we
haveten a little better at boiling it down and giving people
more sort of the executive dashboard summaries like I receive
when I go into a meeting and sit there. This is how they look.
It is in English. You have the charts and the graphs. Hopefully
more and more people--we find our labor leaders will look at
this site a lot more than anybody else does. And some of the
things we are doing on stewardship with the bay is driving a
lot of traffic to the BayStat website and a little bit to this
website as well: Marylanders plant trees, Marylanders grow
oysters, and children and nature, and those sorts of thing.
Senator Warner. We appreciate it. I personally appreciate
it. I hope you will stick to it, and with that, Senator Cardin?
Senator Cardin. Well, thank you, Governor O'Malley. I am
always impressed by, and enjoy watching, your the
presentations. I have looked at it many times, and it is very
impressive, and it really does help the public to understand
what you are trying to get done. It gives them more confidence
that you are trying to use resources in a most effective way.
I want to followup on Senator Warner's point about how the
legislature and executive can be on the same page on this. You
have given many examples in which legislators have been part of
the process. They have had a chance to see the statistical
information. They have had a chance to challenge whether you
are using the correct barometers, and you have been receptive
to their comments.
But let me just challenge you as a former House of
Delegates speaker and as a former State about legislator how we
judge the independence of the legislative branch of Government.
Probably there is no more clear place in the Maryland budget
process than in the capital budget. And you have indicated you
are putting more information up on the capital budget right
now.
I am curious as to how your evaluation process would be
used. If your evaluation process shows that you are getting a
better return for the public dollar in one area of Maryland
versus another, but yet your political challenge is from the
legislature, particularly on the capital budget, which can
alter the Governor's budget, how do you resolve that? What have
you learned about how to get legislators to overcome their
local bias or their political bias to work together to use the
public resources as efficiently as possible to get the best
results for the citizens of Maryland?
Governor O'Malley. You are clicking on the live map?
Ms. Blauer. Yes.
Governor O'Malley. I have found whether it was tough
decisions like closing firehouses in the city of Baltimore or
the tough decisions like the capital allocations in the budget,
if everyone can see where the dollars have landed and where the
investments have gone, and if you have done it to the best of
your ability, in a way that is fair and equitable, and also
promotes the statewide one Maryland policy goal, that takes a
lot of the pushback that you would otherwise--that is otherwise
part of the legislative process. Let me say that another way.
In our State--and I will not name any counties, but you
know that there is always a reason why ever major county or
rural areas believe that they are not treated as fairly by the
Governor, whoever the Governor is, because--and then you fill
in the blank: Because we are so loyal and Democratic, you take
us for granted. Because we are poorer than other jurisdictions,
you take us for granted. Because we have more wealth than other
jurisdictions, you take us for granted.
But when you actually put it out on the map and everybody
can see that they are not getting shortchanged and that their
neighbor is doing better than they are on the merits of things,
that I have found to be the single most helpful--one of the
single most helpful tools in getting through these tough
budgetary times and the cuts is the fairness that the map so
brings home. The willingness to have yourself held open and
accountable and audited by that map, by showing where the
dollars are landing.
I saw a great demonstration of this. Jack Dangermond, who
is the head of a company called ESRI--it is the company that
does all of our GIS thing, great company. He was showing Ed
Rendell, Governor Rendell, who is a big-time advocate for
transportation funding and making sure the dollars get to the
right places, and he had a map of a State that showed where the
most structurally deficient bridges are. He did an overlay on
that map to show where the greatest numbers of people travel
over those structurally deficient bridges. And then he overlaid
on top of that where the Federal dollars for structurally
deficient bridges go. And when he clicked that third
application, the dollars were all over the map instead of
landing on the targets, to which Governor Rendell rightly said,
``None of the money is landing on the targets.'' To which Jack
Dangermond responded, ``No, but they are all landing on the
map.''
[Laughter.]
Governor O'Malley. And so our challenge is the rational
application of human effort to human problems, and in that
openness and transparency to get it to land--you know, since
they are landing on the map, we have just got to coordinate it.
And I think the only hope--every legislator feels a tremendous
burden to make sure they bring home everybody's fair share of
their tax dollar, and I think the map and showing people that
we are all in this together and having objective criteria--I
mean, for all of the dollars that we have protected for open
space, I am not sure we have ever had someone, once we grade it
and do it openly, make a solid case that we are not deploying
those dollars properly or fairly. And where the GreenPrint is,
that is another one. People were afraid, Senator, that if we
put the GreenPrint there, people would see where the GreenPrint
is, and maybe they might get in the way or obstruct efforts to
fulfill that policy goal. But we are taking the chance that our
best hope of this republic having better and stronger days is
better and more information in the hands and the minds of
citizens.
Senator Cardin. Well, it would be very useful to do this
type of exercise at the national level. I chair the Water and
Wildlife Subcommittee on the Environment and Public Works
Committee, and we are trying to develop a water bill that
reflects the Nation's needs. The politics of this is extremely
difficult. It will be interesting to see this type of analysis
used at the national level.
One last question dealing with your comment about labor
leaders looking at these pages rather carefully. I want to hear
how the State workforce looks at this and what lessons you have
learned. They have legitimate concerns that resources should be
made available so they can get their jobs done. And they have a
legitimate concern as to whether there is the right motivation
as to how we operate the Government for the work they are
doing.
What have you learned in working this system as it relates
to the confidence of our work force?
Governor O'Malley. These have been really tough years for
public employees. We have had to do furloughs for 3 years in a
row. We had to do some consolidations that resulted in layoffs.
We have tried our very best to place people in other places
wherever possible. But as far as the system itself, it has been
my experience that the public employees, like all human beings
want to know that when they work hard it is recognized by
somebody making the decisions that is leading their
organization or their piece of the organization. And so I would
like to believe from my interactions, especially around the
environmental things and the bay and the like, that there is a
certain esprit de corps that is developing even in these tough
times from that shared sense of commitment and that openness
and that ability to see that, hey, when we are doing things and
working hard, somebody at the top recognizes that we are going
in the right direction.
A lot of times when the press would initially report on
this, they would make it seem like it was a firing squad and
that the public employees were coming in and offered a
blindfold and a cigarette. But that was not the day-to-day
experience. The day-to-day experience was men and women would
come in and the high performers, when they were recognized, the
rest of the organization would recognize that.
The great Jack Maple described it to me this way. He said
90 percent of us fall in the middle of the bell curve, and in a
big organization it can either lean this way to the leaders or
it can lean that way to the slackers. And if the top of the
organization recognizes and celebrates the achievers and the
leaders and lets everybody know, that organization will tilt
toward the leaders. And in that is nation-leading progress.
Senator Cardin. Thank you.
Thank you, Mr. Chairman.
Senator Warner. Thank you.
Congressman Sarbanes?
Mr. Sarbanes. Well, I was going to ask you a question along
those lines, but I will just echo what you said, and that is, I
think when you go to change culture, particularly to introduce
more performance-based measure, it is critical that there be a
feeling on the part of the work force that you are supportive
of them, that they are not under attack. And that is a
challenge we have had at the Federal level, because sometimes
when the initiatives come along, they cause the work force to
circle the wagons, and then you cannot make progress in terms
of changing that performance culture. So you have to create the
accountability, as you have indicated, but also make it clear
that there is really strong support for people all through the
ranks. And then you get the success that I think you have been
able to demonstrate in Baltimore and also at the State level.
I have one question. One of the things we are wrestling
with at the Federal level is the proper balance between what
sort of the inherently governmental jobs are that are done by
Federal employees and then what gets outsourced to third
parties, to outside contractors. And for a while there in the
last administration, my sense and the sense of many was that
there was an ideological push toward outsourcing that put
things out of whack. I would imagine that the Stat process has
allowed you to drill down in a way that you can understand what
this proper balance between sort of the employee of the
Government is and those resources you need to pull in from
outside to deliver a good product to the State. And I thought
maybe you could address that.
Governor O'Malley. Sure. This process helps you manage your
contracts a lot better because, I mean, they also have to
perform in their part of this. We have not done a lot of
privatization because of the Stat process. What we have done,
though, is imbued the State organization, public employees, the
bureaucracy of our State government, with a much higher level
of managed competition than there was before. Mayor Goldsmith
of Indianapolis 10 years ago did a lot with bidding services
out for contracts, seeing who could bid better and do it more
efficiently. We have not had any success in doing a lot of
that. We had one incident some 10 years ago that I will not
bore you with where we actually did go totally private on--I
think it was building security in the city of Baltimore, and
part of that was a loggerhead, and in retrospect I think some
of us wish we might have done things differently there.
But we did measure the trash collection crews against each
other. We measure soil conservation districts against each
other now when it comes to signing up farmers for cover crops.
We measure parole and probation in terms of the supervision
that they provide to our more violent offenders and also the
speed with which they get their warrants processed so that we
get those offenders off the street more quickly.
So if I am answering the call of your question, we have
not--we have used this to imbue the entire bureaucracy with a
better--with that tool of managed competition, recognizing the
leaders, making sure the leaders are seen as leaders by their
colleagues. We have not done a lot on the privatization. This
has helped us to reduce some redundant contracts where we
realized, hey, we had somebody in this department who is
providing one technical service, and guess what? Another
department was retaining the same company to do the same
technical service. Why don't we put them together in one
contract? Or, worse, a different company to do the same
service. So it has helped us to save some money by
consolidating contracts.
Mr. Sarbanes. Thank you.
Senator Warner. Well, Governor, thank you very much. You
have been very generous with your time, and congratulations on
this 10-year experiment. I think I go back to that second slide
we had when we were up to see the way that this Stat effort has
spread across the whole country. Kudos to you and your team.
And, again, a final comment, as somebody who has been grappling
with some of these issues, particularly more in my old job than
this current position, I commend you as well for sticking to
it, because getting the public, the press, other shareholders
and legislators engaged, involved you got to have the metrics
and the measurement tools first, and you have clearly set a
way. So congratulations.
Governor O'Malley. You know, I think the White House--the
Federal Government--not to belabor this, but I think that
relentlessness has been something that has been lacking in the
way that we have--that the national Government has, to the
extent they have approached us in the past, I mean, I cannot go
to every meeting, especially now with the campaign in full
swing. But, by golly, somebody very close to me is running this
whole operation as the chief operating officer all the time.
And I think we need a person like that.
Senator Warner. Well, if you look at the last three
administrations, usually with big fanfare in their first year
in office, they announce a reinventing government or Bush had a
different one, Obama has got a chief performance officer and
others. But it has got to have that relentless----
Governor O'Malley. Right.
Senator Warner. Because it is not coming easy. But thank
you again for your good work and thank you for appearing before
us today.
Governor O'Malley. Thank you.
Senator Warner. We will now call up the second panel.
Our first panel focused on lessons we at the Federal level
could learn from State government. This second panel is going
to focus on local government. We are very honored to have two
distinguished panelists: Ike Leggett, who is the county
executive from Montgomery County, and Deputy Mayor Christopher
Thomaskutty, the Deputy Mayor for Public Safety and Operations
in Baltimore. I will introduce both of our panelists, and then
we will hear testimony from both.
Ike Leggett has served as the Montgomery County executive
since being elected in November 2006. He has also served four
times as an at-large member and as the council president three
times and as its vice president three times. He served as a
professor of law at Howard University Law School from 1975 to
2006. He ran the day-to-day operations of the law school as its
assistant dean from 1979 to 1986. Mr. Leggett served as a
captain in the United States Army. His tour of duty in the
Vietnam War earned him the Bronze Star Medal, the Vietnam
Service and the Vietnam Campaign medals.
Christopher Thomaskutty serves as Deputy Mayor for Public
Safety and Operations for Mayor Stephanie Rawlings-Blake,
overseeing departments that include public safety--fire and
police--and health, public works, general services, CitiStat,
and other operating agencies.
You have a much longer list than I initially thought here.
Christopher began his career in Baltimore City government
as a CitiStat analyst in 2003--so you were there at the
birthplace--under former mayor Martin O'Malley. In 2007, he was
selected to serve as the Director of CitiStat and later
promoted to the position of deputy mayor. Christopher received
a B.A. in Political Science from Birmingham-Southern College in
Birmingham, Alabama. While at BSC, he was named a Truman
Scholar by the Harry S. Truman Scholarship Foundation. He has a
master's in Public Policy and Urban Planning from the John F.
Kennedy School of Government at Harvard.
We will start with Executive Leggett, if you would go
ahead, please, sir.
STATEMENT OF THE HONORABLE ISIAH ``IKE'' LEGGETT, COUNTY
EXECUTIVE, MONTGOMERY COUNTY, MARYLAND
Mr. Leggett. Thank you, and thank you, Senator Cardin,
Senator Warner, and Congressman Sarbanes, for undertaking an
effort that I think sometimes is not fully understood by the
public, but it is so, so important to the efficiency and
effectiveness of governments today.
Let me say that I came at this through the efforts of the
then-Mayor O'Malley in Baltimore, and as county executive I
fully adopted it as one of the principles of leadership in my
county. But when I first heard of it many, many years ago, I
was not impressed when I first heard it because I thought it
sounded like something that managers would get together, hold
hands, and sing ``Kumbaya,'' and come out and maybe adopt some
principles and ultimately get something done. And it was a
skeptical public who, in fact, heard and saw many of the things
that we are talking about today and were not very, very
impressed. It was not until, I think, people started to see the
connectivity between budgets and outcomes in a way that
impacted their lives that it started to take on a different
meaning.
The main objective for us in Montgomery County, CountyStat,
is to improve the efficiency and responsiveness of government
by using up-to-date data as an ongoing focus for day-to-day
management and long-term policymaking. For us, I believe that
our government can and must do a better job in its use of
finite public resources to help achieve and sustain Montgomery
County residents' priorities and objectives and deliver
meaningful results.
The objectives for us are outlined in what I put together
with a task force immediately upon my election, which is to
provide a responsive and accountable county government,
affordable housing in an inclusive community, an effective and
efficient transportation network, children prepared to live and
learn, healthy and sustainable communities, safe streets and
secure neighborhoods, a strong and vibrant economy, and vital
living for all of our residents.
I mention this because one of the things I think we fail to
recognize is that unless CountyStat or the Stat programs are
tied to some meaningful objective which the public fully
embraces and understands, then we will not have the kinds of
results that I think we want. Unless it is also part of a
comprehensive program, we still would not meet the objective.
Most recently, we followed the example of the Governor and
others, and we introduced in Montgomery County something called
MC311, a comprehensive integrated program that is online and
call online for people to call with any requests for services
and programs in one central comprehensive data base unit which
we can track. In addition to that, we use other tools
consistent with the CountyStat program. So we have consistency,
we have a comprehensive approach, and it is not something in
isolation, and it is tied to our objectives.
Now, here are a couple of lessons learned that I think- -
some of which you have heard this afternoon, but I want to
emphasize again. To be successful and lessons learned, you need
to ensure commitment and support for performance management at
the highest level. At the highest level. Unless the executive,
chief administrative officer, Governor, whoever, is not
personally involved, then you will not have the results that
you see. You need to partner with the community, develop buy-in
from directors and managers, because it is not easily always
understood. You heard earlier buy-in through the legislative
branch that was talked about, establish a collaborative
relationship, focus on what matters, because despite the
technology, despite all the efforts, we simply cannot do
everything we want to do.
You need to have a dedicated staff who performs and assists
the departments, take a long-term, comprehensive view of this.
You are not going to have the results overnight.
Develop capacity within department offices to measure and
manage performance and institutionalize this new approach.
The process is valued. The people understand the process,
it is open, it is transparent, and there is some consistency in
the followup.
And, of course, we separate it; the CountyStat process is
not the budget process. It is a tool to help us in our budget
process. So those are separate operations.
Now, in terms of things that we have seen and that we have
had some success with, I just want to go through and track just
a couple things for us. First of all, we look at overtime. Look
at this chart. You will see that we have had some success. The
success for us, when you look at it cumulatively now, would
probably be over $7 million. That is a considerable amount of
money.
It also helps us to explain and track the performance. For
example, if you look at that yellow line there, that yellow
line represents the Department of Transportation's overtime.
And all of a sudden you will see a number, that line going sky
high there. That line represents the most recent efforts
related to snow, snow removal. So now we get to a question of
the tracking devices that we have had, looking at overtime,
savings that we have had traditionally by the use of the
tracking system that we have in place, quarterly reports,
constant management of this, and the county executive or any
executive in a position will have to make a decision at some
point. Do I utilize an excessive amount of overtime in order to
respond to the challenges of the snow? Or do I stay and
continue on this path?
Well, by having this system in place, it allows us a tool
for which a person can simply click on and see and track, and
having this explanation allows us to in some way explain to
citizens that we did not meet our objective at this point in
time because we had a challenge before us; i.e., to move the
snow, to respond to your concerns of safety in the community,
or respond to the efficiency problems of reduction in overtime.
Very good for explaining it.
We have similar results that you look at in terms of the
savings that we have had. We had additional challenges in a
number of charts here that you may see from the overtime itself
going through department by department, quarter by quarter, and
staying on top of our managers and walking through this,
getting explanations as to why the performance is one way or
the other.
We have also had another initiative called our Pedestrian
Safety Initiative. Huge numbers of collisions, and we have
tried to target the entire county. The dots that you see
represent incidents of collisions, annually about 450 or so
collisions. Probably 17 to 18 deaths per year. We targeted four
high-incident areas, and interestingly enough, the efforts that
we are making now on education, enforcement, and engineering,
one of the things that was revealed to me, despite the fact
that I have been looking at this for years in county
government, one area that had been completely under the radar
for many years has been the fact that a quarter of the
collisions occur in parking lots, shopping centers. Our efforts
for the most part were on the streets, intersections. So we had
to refocus our efforts to, in effect, look at what we were
doing as it relates to the parking lots, especially related to
the elderly.
Paper. Huge amounts of paper. You can see the chart as it
indicates where we were headed. We have been able to monitor
that. It is inconsistent with our environmental goals. It is
cost-challenging for us, and we have been able to save, I
think, somewhere in the neighborhood of $1.4 million just in
following and tracking paper.
Overall in the county in the last 2-1/2 years, we have held
114 meetings on CountyStat, and we have looked at possibly 80
different subject areas. I have with me our chief
administrative officer who is the person that oversees this on
a day-to-day basis, and his staff, but it is a considerable
amount of time that we spend following this.
There are quite a few other things that I would like to
talk to, but I know that time is limited, but I want to end
where I started, No. 1, to thank you for coming here today, to
thank and congratulate our Governor for his leadership in this
role, and to let you know from a local perspective that this is
something that works. In times of tough budgets, it is
something that is needed. The transparency, the efficiency with
which this operates, and the savings that we have had over the
last few years justifies, in my opinion, the need for this at
the Federal level.
There are a number of things that I would like to address,
and we provided information for you that I think you need to
look at, that I think may be helpful from a Federal
perspective. But in order to preserve time, I am going to turn
it over to the deputy mayor to----
[The prepared statement of Mr. Leggett follows:]
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Senator Warner. Thank you, Executive Leggett.
Deputy Mayor Thomaskutty?
STATEMENT OF CHRISTOPHER THOMASKUTTY, DEPUTY MAYOR, PUBLIC
SAFETY AND OPERATIONS, BALTIMORE, MARYLAND
Mr. Thomaskutty. Thank you, Senator, and Senator Cardin and
Congressman Sarbanes. It is definitely an honor to be here, and
it is an important hearing, and we appreciate your interest in
what we have been doing. I am here for my mayor, Mayor
Rawlings-Blake. She is out of town today. You mentioned earlier
that I would not be here but for the fact that Mayor O'Malley
hired me in 2003 to work for him in CitiStat.
Governor O'Malley. He was a great hire.
[Laughter.]
Mr. Thomaskutty. There are many others who he has helped
groom and bring along to focus on performance. I think those of
us who live in Maryland are very fortunate that we have an
executive, a Governor, who understands governance and
performance the way that he does, and it has translated
throughout the counties and maintained in Baltimore City.
You have heard a lot of very good examples, I think, of
specific improvements that we have seen at the State level, and
especially in Montgomery County. What I would like to focus my
few minutes on are some of the hidden benefits and some of the
aspects of our strategy that I think are beneficial, and there
may be tangible links to the Federal Government.
First off, as you have heard, this is the 10-year
anniversary. There is a longevity to our strategy that has
lasted. I think that is because there is a very good fit
between what is needed in our city and what this strategy
brings. CitiStat has also helped, I think, three different
mayors through their transition. What probably started out as a
question, would CitiStat last without that executive leadership
from Mayor O'Malley, has now turned into an answer that it is a
tool for an incoming executive. It flattens that learning curve
because you have an exceptional opportunity to learn very
quickly the strengths, the weaknesses of your operations and of
your et.
I think Mayor Rawlings-Blake was hit with a pretty nasty
snowstorm within days of her taking office. Within weeks, by
reading a lot of these executive memorandums, by looking at a
lot of the analysis, by attending CitiStat meetings, she was
able to learn her agencies and learn her managers quickly and
well. She was able to turn the ship toward the direction that
she wanted to see the city move in much quicker than I think
other executives who have not taken advantage of this type of
strategy.
One of the other things I just want to talk about in terms
of the speed with which an executive can put their stamp on an
operation. We are 10 feet from each other now. Imagine if you
got to be 10 feet from each of your managers on a bi-weekly
basis. Communication improves, what your expectations is
better, and you quickly see, as the Governor mentioned, who
your stars are. And I think one of the things that we have been
able to do is develop a cadre of leaders in the city over the
last 10 years who are managing based on performance, and that
is incredibly important for a large organization to get that
mentality and the culture of leadership ingrained. It started
with Mayor O'Malley, and it has continued under the last two
mayors.
It has also enabled us, I think--an unexpected benefit is a
lot of our CitiStat staff--and we are joined by Spencer
Nichols, one of my staff members today. We have been able to
groom and place leaders throughout our government, chiefs of
staff, department heads, division chiefs, all who have been
brought up in this mentality of what gets measured gets done.
A few of the other things I wanted to point out. Over 10
years we have evolved. Every successful management strategy
must adapt to its people, to its time, and to its resources.
What once was a process that focused on an individual agency or
an individual department, we have now evolved to where we are
focusing on policy issues. As Senator Warner mentioned, very
few public problems can be isolated to a particular department.
For example, CleanStat, our city requires a tremendous
amount of effort and collaboration to try to keep it clean. Our
Bureau of Solid Waste cannot do that by themselves. It involves
our Recreation Department, our Transportation Department, our
housing code enforcement officials. We have been using
CleanStat as a method of unifying six or seven different
operating groups under a common theme and under common
principles with common objectives.
With the past year, we have revised our collection process.
We have increased--as I think both Senator Cardin and
Congressman Sarbanes have seen, our recycling collections are
up 53 percent in a single year. That is unprecedented change
for a city like Baltimore. We have seen an 80-percent increase
in sanitation enforcement citations because we were able to
move resources to where we needed them. And we are finally
obtaining convictions in court for illegal dumping. That is
done by the housing department. We used to only talk about it
with the trash department. Everybody has got to be on the same
page to have good, effective results.
The next example may be one we want to think about the
most, and that is GunStat. This is where we have a session and
a meeting on a monthly basis based on a common shared goal
across city, county, State, and Federal levels of government.
And I have to say, without, I think, the Governor's
participation from the State agencies and those that are
involved in the State of Maryland, it would not be as
successful. But we have the police department, the county
police, State police, all the State agencies that are involved
in supervision, our local State's authority and our U.S.
Attorney, all focused on targeted enforcement and increasing
sentences for those who are carrying illegal guns. You know, I
will be frank. At the beginning part of the struggle is getting
folks who do not report to the same person. You know, this is
not about the same boss. It is about the same goal. And once
everybody understood that here is what we all share in common
in terms of what the outcome should be, you begin to develop
the trust around data sharing. I am not a law enforcement
official. There was some initial concern that why should I get
access to certain data, you should, but we got to the point
where we had certain agreements about what would be shared and
what would not, and now we are all looking at the same amount
of data, and it has been incredibly effective at the city
level.
Just to give you an example--and I am purposely showing you
a map that we did not create. Probably one of the Governor's
staffers created this map. This is showing in the city of
Baltimore. You know, we mentioned this earlier. You can collect
all the data you want, but if you do not have a system in place
to take action on that data, you are wasting your time. This
shows where we have mandatory releasees under the age of 25 who
have been out of jail for less than 6 months of two or more
federally significant convictions. We know based on a year-
plus, almost 2 years of solid data collection on felony gun
crimes that that is the population of people we need to be
touching. The Governor has people in place in his VPI unit who
are in regular contact with them from the State level. And we
at the city level have patrol officers on their post who are
aware of these particular individuals who have served their
time, but we want to make sure they know that we know where
they are, that we love them and we want them to see us. So they
see a coordination between the city and the State that has
never been there before, and as the Governor mentioned, we are
seeing the results in our homicide reductions.
Another evolution of our strategy I think has to do with
the way we are beginning to make links with our budgeting
process and with our operations. Outcome budgeting is the
process we brought to the city this past year, and a long story
short, you normally build your budgets, you start from the
baseline of where you were the previous year as opposed to the
objectives you want to accomplish. The intent of outcome
budgeting is to say what are your priorities, what do you
really want to accomplish, and then you start putting your
dollars at what you think is important. And through a pretty
intensive process, you are able to determine what your
priorities are. And so you have heard this many times. We have
tried to start taking the scalpel approach instead of the
sword. Instead of across-the-board cuts, we are able to see
what is the incremental impact of an increase here or a
decrease there, and that has been able to help us have in very
difficult austere budget times a lot more confidence in what we
are funding and what we are not funding and explaining that to
our citizens better.
Here is just a sample of what an outcome budgeting template
would look like for us. I just grabbed a water example from our
Water Bureau. We unapologetically in CitiStat have always been
heavily focused on outputs. So this attention to purchasing
outcomes, to funding the outcomes that you want is different,
and it is not always simple to measure an outcome, at least at
the city level. But we are becoming more and more comfortable
with taking a step back on a quarterly basis, looking at these
broad city-wide outcome measures, and bringing the same level
of attention through our Stat meetings that we typically do
through more of your everyday operational inputs and outputs.
They are much easier to measure.
Finally, just some quick thoughts on the application. I
think both the Governor and the county executive have spoken to
some of this. I am not a management professor, and I do not
know the Federal Government all that well. But the four tenets
that we use are effective. I think they are effective if you
are running a coffee shop or if you are running a $2 or $4
billion operation.
The first thing I would say is learn the lesson that we
learned from the Governor, and that is just get started, pick
an operation, pick an agency, pick a section, pick a sector,
and just get started. I think there are clear applications, as
I have seen your BorderStat and others in the Federal
Government that are doing direct service delivery, especially
those where there are clear lines of authority and
accountability. The application there I think is much simpler
and much more straightforward.
But for those Federal functions and agencies that are
perhaps less involved in direct service delivery, that may be
pass-throughs of Federal funds or more focused on compliance, I
think there is something to this collaborative model that we
have started along the lines of GunStat with multiple levels of
government. Again, not focused on the same executive, but
focused on the same goals. And as long as you can agree to a
common shared outcome, you can find smart people to help you
figure out the way of measuring it, sharing information, and
then you have to figure out the way to keep the ball moving
forward in terms of that executive interaction. There may be
multiple executives at the table, but I think that is possible.
There is a dynamic that I think the Governor is probably in
the best position to speak to, the geographic size. In the city
we have the benefit of crossing the street to find many of our
managers. At the State level, and especially at the Federal
level, just the lack of proximity to some of those who you are
managing is something that has to be thought through. There is
definitely an appeal and an advantage in managing people you
can talk to and see face to face. There is a limit to what you
can do via videoconferencing and other things. I think there is
a way of applying the strategy to specific divisions within the
departments, within agencies, that folks can think through. I
think there is definitely promise. I think the four tenets are
solid, and I very much appreciate the opportunity to tell you a
little bit more about the city and to think through some of the
ways this could help the Federal Government.
[The prepared statement of Mr. Thomaskutty follows:]
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Senator Warner. Thank you both for excellent testimony from
both of you, and I am just going to ask two questions, and
either one of you can respond to both or either one.
One, it just seems to me that as I look at--from the
Governor's presentation and the county's and the city's
presentation, a lot of this is pre-framed by what questions are
asked. And I would be curious from both of you who is making
the determination of what Stat is being measured or what
outcome is being measured. Do you solicit collaboration from
the work force in the county executive's position in terms of
the council? How do we make sure we are asking the right
questions, No. 1, in terms of what we are going to measure?
And then No. 2, it seems that most of the efforts here have
been on relatively objective criteria which you can measure
against. So, for example, as we--and this may actually--I am
just going to get into your area about the budgeting piece. If
we were to measure, on a CitiStat, CountyStat, or StateStat, a
child's readiness for school, that readiness for school pushes
us more into the policy area, and it might be health care, it
might be pre-school, it might be parental supervision. You
know, have you consciously in CountyStat and CitiStat tried to
stay on the cleaner, more objective questions? Who gets the
input? And at some point could this be drawn or is it being
drawn now into actually the broader policy areas?
Mr. Leggett. Thank you, Senator, for your question. I think
it somewhat evolves, because I think the first task is to
demonstrate to people in a very clear, straightforward way what
are the meaningful results. Our demonstration, for example, of
the overtime used grabs the attention of a lot of people.
Senator Warner. Right.
Mr. Leggett. They could see it, they could feel it, they
know about it, it is there. We will--and I see that we will
evolve to more subjective areas that you cannot measure quite
as well. But the first thing that we have done would be to
establish the value of the program itself. But until you have
that buy-in, I think it would be very difficult to go to the
``soft'' objective areas and demonstrate the efficiencies of
the program rather than to do it the other way around.
Senator Warner. And when you started even on the --in the
ability to demonstrate the effectiveness of the program, did
you sit with your leadership team and try to sort through which
questions, did you have your staff--how do you even decide
which is your----
Mr. Leggett. It is all of the above, but more importantly,
I think, from the people involved directly, the managers, the
employees, and for us even the public itself. So our process is
open. The results are online. You can see every report that we
have conducted. If you want to participate, if you want at
least to come in and watch what is going on, the public is
invited to do so.
So we have input of the question from individual components
of the work force, especially the managers, and also from
average citizens.
Mr. Thomaskutty. And I will speak to your comment about
trying to put the strategy around something like childhood
readiness. That is exactly where we are going, because I think
you start with what is your immediate operational needs, and
then you take that step back as to what is your city or your
county or your government need. So childhood readiness, what
are the factors that impact that? The mayor wants us to start
ChildStat for this very reason, and we know that a kid is not
going to be ready for school unless a few things happen. One,
they have to be loved by their city. Two, you have to take care
of them immediately upon their birth outcome. So are we taking
care of the mom during the prenatal stages? When the baby is
born, are they getting a home visit from a trained nurse? How
are we doing the immunizations throughout their early term?
Then it is being healthy and safe in their home, and there are
tests, right? Honestly, you give us a lot of money for Head
Start, both private Head Start and public Head Start, and there
are certain providers that we have not yet started to measure,
but we know we get better results from some than we do from
others.
So that is what I already know and what we already know.
What we do not know is how to turn the needle, how to make the
investments that you are providing us, give us better outcomes
than what we are currently getting. But it can be measured, and
there can be a way of applying the strategy around that
particular policy issue to where those at the table,
nonprofits, foundations, private citizens, State agencies, city
agencies, are sitting there around common objectives, and
instead of every time saying, well, you need to do this
differently, it may be you are developing the policy that is
going to help someone else make that decision. But it is
possible. It is just you have to adjust what you have seen
applied successfully, I think, so far to your typical municipal
operations and county operations.
Senator Warner. It would seem to me--and I will turn this
over to Senator Cardin--that if you can rank order child
readiness for school and the goal is 90 percent of our kids are
going to be ready for school by kindergarten and then you have
to rank order that versus the other goals you have, but you can
then argue as policymakers between how much prenatal versus
early childhood health versus brain development activities. But
until you can get that goal set--and then you have the inputs
and some tools to measure, and I think this is where this--and
you guys are at the lead of this, or hopefully this journey
will take you all and then hopefully at some point the Federal
Government behind it, because it is--you know, the notion of
unlimited dollars or even dollars circa 2006, 2007, fiscal year
2008, fiscal year--I just do not think we are going to see them
again anytime soon.
With that, Senator Cardin.
Senator Cardin. Well, thank you very much, Senator Warner.
You both have said there has got to be buy-in at the
highest level for it to effectively work. Can you define what
you mean by that? What is required from the county executive to
make this work? What is required from the mayor of Baltimore?
Are you talking about your personal time? Are you talking about
delegating it to another person? Give me an idea of what is
required for this to work at the county level.
Mr. Leggett. Well, buy-in means that I fully embrace it and
adopt it as a policy consideration, or me as county executive
that I show and demonstrate that level of commitment by
participation, by involvement. You can delegate some of it, and
the person who probably does the day-to-day operation is the
chief administrative officer. For those outside of county
government, it is the city manager. But I would not delegate
beyond that point that it must be at that level, because the
chief administrative officer is the head of the county
government in terms of its day-to-day operation. All the
department heads report to the chief administrative officer.
If you go much below that, I think that you lose a
commitment. Again, you are making a transition. Many people,
believe it or not, in government believe that they are doing an
excellent job with what they have, and they have been doing it
for the last 25 or 30 years and do not see a need to change.
They see a narrow focus. And so you have to educate and
transition them. So unless you have the people at the very top
making that personal commitment, then it would be a very, very
difficult challenge, as well from the legislative branch. You
know as well as I do that unless there is that commitment from
the top of the executive branch, the legislators are not going
to be so tempted to go and make these changes on their own.
Senator Cardin. In Baltimore City, what does it mean to
have buy-in at the highest level?
Mr. Thomaskutty. It is the way we are going to do business.
It is understood. And so the mayor has spent a lot of her
personal time, especially early on, but she will not have to
moving forward. It is understood that I am speaking on her
behalf, and it is as if she is always in the room. So this is
just the way we are going to manage, it is the way we are going
to keep score. I think after 10 years it has been ingrained in
the culture in the city.
Mr. Leggett. Let me just add something. We have only been
in it about 2-1/2 years. I would hope that at some future point
it is not so dependent upon the individual executive, that it
becomes a way of doing business, and that it is a standard
operating procedure for all county executives and for all
agencies of government. I hope we get to that point, and we are
moving in that direction. I am not sure we are quite there yet.
So it requires a direct, personal involvement. But the way we
would make certain that this is successful long term, that it
is not dependent on an individual, but it is a way of doing
business. And I think that is the direction we are moving.
Senator Cardin. My second question is: In a time of
declining budgets, is there concern that the Stat program is
being used to justify budget cuts and, therefore, agency heads
are more suspicious about cooperating with the program?
Mr. Leggett. Let me take our situation. In the last 3-1/2
years, we have closed budget gaps of about $2.5 billion. We
have reduced the overall work force by 10 percent, 1,100
positions. We have had furloughs. We have had eliminations of
COLAs and a variety of other things. Certainly there were
challenges as a result of that. We faced some difficulties. But
the way I approached this was to personally engage myself both
in the CountyStat process as well as the rec. department. This
is why I stated earlier you cannot look at this in isolation.
There are other tools that you have to employ with this in
order to make it as successful as possible, the 311 system. But
I engaged in the last year 33, 34 separate meetings with
individual employees to walk through the potential challenge
that we had, to talk about what CountyStat had found. And I
think that we have developed a level of credibility of
CountyStat that it is not looked upon as a political tool but
as sort of a neutral, fact-finding, data analysis, clear,
succinct, that goes above--it is over and above the political
consideration. That is where the policy comes in where you then
have to make the decision between is it early childhood
development, something else, do you priority A versus B. But
the data is clear. It is consistent. It is neutral. It speaks
for itself. And the people that you have--and this is why it is
so important to have competent people operate in the system and
over and above the political considerations.
Senator Cardin. In Baltimore City, does the mayor say,
``Where can I get another $10 million of cuts?''
Mr. Thomaskutty. The finance director might. I would say it
is a tool. I think through CitiStat and through our budgeting
process, we definitely were able to cut smarter than I think we
otherwise would have been. But your good managers view that
podium as a two-way street. They advocate just as much as they
take questions. And so you will find through this particular
budget we spent money on things that we probably otherwise
would not. We never could find a way to fund a $140,000 program
in our fire department that would put less expensive vehicles
out to go to some of our most frequent callers of 911. Because
we could show the value of that particular service through this
new budgeting model, we had the confidence and the proof in the
data to say it makes a heck of a lot of sense to send an SUV
than a fire truck to someone who calls the city 180 times a
year for 911 service.
Senator Cardin. Well, thank you both very much.
I will just make one final observation, and that is, you
can tell there is a buy-in at the highest level when you meet
with the Governor and he wants to take your laptop and show you
a new website that he has on statistics. You do not want to
challenge him on his technology.
Senator Warner. And when the Governor stays for the second
session, too, which is really a commitment.
[Laughter.]
Senator Cardin. Thank you.
Senator Warner. Let me just add a couple of quick closing
comments. Again, my thanks to the Governor, to the county
executive, and the deputy mayor.
Two things, just observations at the Federal level. I think
at the city and the county level, as a mayor or county
executive, this is your job to run the city or the county. I
think it gets harder at the State level, but you still have
that chief operating officer role as the Governor or someone in
the Governor's office. There really is not that equivalent at
the Federal level, and I think that has been one of the
challenges. President Obama has appointed somebody who I think
is extraordinarily talented, Jeff Zients, to be chief
performance officer. But whether this position will be
maintained, whether it will have enough juice I think the jury
is still out. I am hopeful.
But, conceptually--and, candidly, there is very little buy-
in, I think, to our efforts at the legislative level. There is
governmental oversight, but there is not a governmental
efficiency metrics performance group. And you got to have a
legislative, I believe, at least at the Federal level, partner
as well so you do not have this constantly reinventing the
wheel every 4 to 8 years. Again, I commend the Governor for
having the stick-to-it-iveness with CitiStat that now it has
been implemented at the State level and others like Montgomery
County are implementing it.
The other thing I think we have one challenge at the
Federal level--I am a new Member of Congress, although I think
I have been guilty of this as well--that to our Federal work
force we are always additive on reporting requirements, and we
never subtract. So I think our Federal work force at times
feels overwhelmed with whatever--whoever is coming in has got a
new set of reporting requirements, we never get rid of any of
the old ones, and the volumes of data--I think about the PART
initiative under President Bush, huge volumes of data, but not
user-friendly, and I think it was well intentioned. I am
concerned that as we think about how we get better performance
and metrics, at least at the Federal level, when we add new
reporting we ought to be thinking as well maybe we could take
away some of the others, because that sends a message, I think,
as well to the work force that this is not just make-work, but
this is going to be critical and it is going to be evaluated,
it is going to be viewed, it is going to be useful. And I will
close with the comment that all three of you have made, and
that is, you have to be relentless, that none of this is easy,
none of this comes quickly, and kudos to all of you for having
that relentlessness.
With that, I again want to thank the Governor, the county
executive, and the deputy mayor. The hearing record will be
kept open for additional questions for our witnesses until noon
tomorrow. I ask that each witness respond promptly to any
questions submitted to them.
The Government Performance Task Force will hold its next
hearing this Thursday at 10 a.m. in the hearing room of the
Senate Budget Committee. The hearing will cover the issues of
Federal procurement and contracting.
If there is no other business, the hearing will come to an
end. Thank you.
[Whereupon, at 3:54 p.m., the Committee was adjourned.]
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RESPONSIBLE CONTRACTING: MODERNIZING THE BUSINESS OF GOVERNMENT
----------
THURSDAY, JULY 15, 2010
U.S. Senate,
Committee on the Budget and the Task Force on Government
Performance,
Washington, DC.
The Committee met, pursuant to notice, at 9:58 a.m., in
room SD-608, Dirksen Senate Office Building, Hon. Mark Warner,
Chairman of the Task Force, presiding.
Present: Senators Warner, Cardin, and Whitehouse.
Also present: Senator Murray.
Staff present: John Righter, Amy Edwards, Ron Storhaug, and
Gregory McNeill.
OPENING STATEMENT OF SENATOR WARNER
Senator Warner. The hearing will come to order. Welcome to
the Senate Budget Committee's Government Performance Task Force
hearing on ``Responsible Contracting: Modernizing the Business
of Government.'' I want to thank my colleague Senator
Whitehouse, who actually was the instigator of this hearing,
for his leadership and interest in this subject and for the
willingness of our more senior members on the Committee and in
the Senate, Senator Murray, for being here as well.
As I have explained to a number of the witnesses, let me
acknowledge on the front end there may be some shuffling of the
gavel. Things here happen on strange time sequences that as a
new guy I do not fully understand yet. Today we have a key vote
at 11. I personally have a NASA markup going on right now that
is very important for facilities in my State, so there will be
a bit of shuffling. I know Senator Whitehouse has an important
conference call he has to take midstream, so I ask the
indulgence of the witnesses and our audience.
So, let me go ahead and make my opening statement, and then
I will ask Senator Murray and Senator Whitehouse if they would
like to make a statement. Then we will introduce the witnesses.
Today we will take a closer look at the Federal
Government's contracting procedures and practices and learn
about opportunities to improve contract oversight and leverage
greater savings.
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Specifically, I hope our witnesses will tell us more about
contracting reforms that are already underway at Federal
agencies; second, the potential savings from contracting
improvements; and, third, steps to modernize procurement
operations.
This Task Force on Government Performance has held several
hearings examining opportunities to improve the performance of
the Federal Government to achieve better savings and service.
As we attempt to scale back and deal with our growing fiscal
challenges, we must also look at ways to modernize the business
of Government, and contracting practices are due for some
upgrades.
Unfortunately, as my colleagues know, whenever I make any
comments, I always refer back to my previous job for at least a
moment. During my tenure as Governor of Virginia, we developed
a centralized approach to State procurement and developed an
online marketplace that has achieved some impressive results.
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Thank you, Amy, for holding up the chart.
Senator Whitehouse. How well managed was Virginia during
the time you were Governor?
Senator Warner. Thank you, Senator Whitehouse, for that
very important----
[Laughter.]
Senator Warner. You know, as a matter of fact, it was
ranked No. 1 in the whole country, a designation that we
maintained until changes just in the last week or so. I think
we fell to No. 2. But you can only keep good practices going
for so long.
But part of those good practices were represented here on
our procurement activities. As of last year, Virginia's
electronic procurement system has registered more than 38,000
vendors, has supported more than $20 billion in purchases, and
saved Virginians more than $280 million from streamlined
purchasing--something that I think could be brought to the
Federal Government as well. I know firsthand that results can
be achieved by smarter spending, and, again, I think we can do
that at the Federal level as well.
But effective contracting and procurement is more than just
saving money. Contracting is also critical to providing the
quality services the public deserves. A recent example and one
that has been important to me as the home-State Senator--but I
know Senator Whitehouse and Senator Murray have expressed
concerns as well--has been the mismanagement of millions of
dollars to develop what should be a basic data base at
Arlington Cemetery.
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The Army's Inspector General found that Arlington Cemetery
improperly paid millions of dollars to contractors that failed
to deliver a new data base to hold the cemetery's records. As a
result, they found 211 misplaced or misidentified graves for
our fallen heroes, and that is actually only three sections of
the 75 sections of the cemetery that have been audited so far.
This was literally a system where they were still using three-
by-five cards because all of the millions of dollars that have
been spent on upgrading the data bases had never been
coordinated. The IT functions had never been put in place. And
right now the Army is scrambling. We have put in place a series
of private sector folks who would like to come in on a pro bono
basis and help. But if we do not have good contract management,
this is the results that we could see. And, again, that is what
our hearing is about today.
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Chart 4, the Federal Government spent $538 billion on
contracts in 2009, and 70 percent, or $372 billion, was spent
on the Defense Department alone.
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And as our final chart shows--following in the footsteps of
our great Chairman, Chairman Conrad, you cannot have a Budget
Committee hearing without charts and graphs. As our next chart
shows, defense contract spending has more than doubled over the
last decade.
It is worth pointing out that this growth is in line with
the growth in the overall defense budget, which has also
doubled over the last decade.
Given the growth in contracting, I hope our witnesses today
will discuss the oversight structures in place to ensure that
this growth has been effectively managed.
I am also pleased with the Obama administration's focus on
contracting and procurement improvements and mandates to save,
and I would like our first panel to discuss how they are
currently working to ensure effective contracting oversight and
to better leverage the spending power of the Federal
Government.
With that, I would like to call upon first Senator Murray
and then Senator Whitehouse for opening statements.
OPENING STATEMENT OF SENATOR MURRAY
Senator Murray. Well, thank you, Mr. Chairman, for holding
this hearing, and I will not have an opening statement. I just
want to welcome both of you and look forward to the question-
and-answer period. I have several questions I would like to
ask, and thank you for hosting this hearing today.
Senator Warner. Senator Whitehouse.
Senator Whitehouse. Thank you very much, Senator Warner. I
think this is exactly the sort of hearing that we envisioned
when I asked Chairman Conrad to set up this Task Force on
Government Performance for the purpose of trying to better
evaluate Government performance, efficiency savings, ultimately
toward the goal of, I hope, being able to put an efficiency
number into our budgets in the future and hold administrations
to account to try to achieve those efficiency savings.
Clearly, Government contracting is an important area
because, as you have pointed out, the extent of it and the
hundreds of billions of dollars that flow through it just gets
bigger every day. Anytime you have that much money out there,
it is a target for waste and abuse and for greed and for
laziness and all of those human characteristics.
So particularly when you have for-profit corporations
involved, there are all sorts of risks. The oversight and
management function becomes incredibly important. It is not
unheard of, particularly--I am on the Intelligence Committee--
in very classified programs where there is little oversight and
highly technical issues at stake, to question whether the
Government actually has the capability to oversee what it is
being told by the contractors or whether the contractors are
running the show, running the oversight, running every element
of it, because they have simply run ahead of the capability of
Government to keep track of what they are doing and to
understand the technical substance of what they are doing.
There is always the danger in the contracting oversight
world of what I call and what economists have for a long time
called regulatory capture, that over time slowly but steadily
the influence of the regulated entity--the contractors, in this
case--through revolving doors, through putting their own people
into Government, through threats of litigation if you do the
wrong thing and subtle rewards if you do the right thing, step
by step it gets to the point where the regulator or the
oversight authority becomes more beholden to the industry than
to the public. And that is a common theme throughout
administration, but particularly acute where you are dealing
with very big corporations with huge resources and enormous
public dollars at stake. And then, of course, campaign and
political activity by these corporations can compound the
problem and make it even more acute.
So I think it becomes very important that we take an active
role to defend the American taxpayer and make sure that these
moneys are being wisely spent. Clearly, there is an important
role for corporations and for contracting in Government. But it
is also a role that we have a responsibility to carefully
oversee. So I applaud you for holding this hearing and look
forward to the testimony of the witnesses.
Thank you.
Senator Warner. Thank you, Senator Whitehouse. Thank you,
Senator Murray.
Our first panel, we have Daniel Gordon, the Administrator
of the Office of Federal Procurement Policy at OMB. Mr. Gordon
is responsible for developing and implementing acquisition
policy, supporting over $500 billion in Federal spending
annually. Prior to joining OFPP, he spent 17 years at GAO and
served in several posts in the Procurement Law Division before
being appointed Deputy General Counsel in 2006 and Acting
General Counsel in April 2009.
Our second witness is Mr. Shay Assad, the Acting Assistant
Secretary of Defense-Acquisition in the Office of the Under
Secretary of Defense for Acquisition, Technology, and Logistics
at DOD. Mr. Assad is responsible for all Department of Defense
acquisition and procurement policy matters. He serves as the
principal adviser to the Deputy Under Secretary of Defense for
Acquisition and Technology and the Defense Acquisition Board on
acquisition procurement strategies for all major weapon system
programs, major automated information system programs, and
service acquisition. So clearly, Senator Whitehouse, I think we
have the right two guys in terms of oversight, both overall
Federal Government and particularly at DOD.
Let us start with Mr. Gordon, and before you begin, let me
make clear that each of the witnesses' full written statements
will be included in the hearing record. So, gentlemen, thank
you for both being here.
STATEMENT OF THE HONORABLE DANIEL I. GORDON, ADMINISTRATOR FOR
FEDERAL PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET
Mr. Gordon. Thank you. Senator Warner, members of the
Committee and the Task Force on Government Performance, I
appreciate the opportunity to appear before you today to
discuss Federal acquisition and the part it can play in
improving the performance of Government.
What I would like to do is briefly highlight now some of
the progress we have made following the President's direction
in March of last year to achieve real, sustainable improvements
in our acquisition system. As Senator Warner pointed out, the
context of the President's direction was the fact that in the
years 2001 through 2008, we had been seeing an unsustainable
increase in spending on contracts and contractors, rising an
average of 12 percent a year during that period, so that the
amount we were spending on contracting each year more than
doubled in that period.
The Government's acquisition work force, however, barely
grew in size, which meant they could not cope with this tsunami
of buying that was taking place with predictable results.
I cannot tell you today that we have solved all the
problems. Far from it. It took years to dig the hole that we
are in, and we cannot dig ourselves out of it in a few short
months. But I can tell you we have made real, measurable
progress.
First of all, we are finally investing in our acquisition
work force. They are the lifeblood of the Federal procurement
system. Agencies have started hiring acquisition professionals,
albeit in modest numbers, and we are working on improving the
training that they get. For fiscal year 2011, the President has
requested that Congress appropriate $158 million for the
civilian agencies' acquisition work force, and I urge you to
support that request. This is a relatively small investment
that will have a high return, especially when you consider that
our acquisition work force is handling more than half a
trillion dollars in contract spending every year. And in terms
of where we are with that enormous annual outlay, the big
picture headline is that we put the brakes on spending.
Instead of the 12 percent annual increase that we have been
seeing, in fiscal year 2009 we had an increase of only 4
percent. Across the executive branch, both at DOD and the
civilian affiliate agencies, we are more carefully reviewing
what we buy and how we buy it. My colleague Shay Assad will be
telling you about DOD's commendable efforts in this regard, and
we at OMB are, of course, working very closely with Shay and
his colleagues at DOD. But the heightened sense of fiscal
responsibility of acquisition is, of course, not limited to
DOD. We are seeing proof of it and encouraging it every day in
every agency.
My written statement has statistics about our
governmentwide progress in savings and risk reduction. What I
would like to do very briefly, though, is give you five
examples of how our agencies are demonstrating fiscal
responsibility in their procurements, one of which is going to
resonate with Senator Warner's comment about e- procurements in
Virginia where I do think the States and local governments have
done extremely well.
No. 1, agencies are pooling their buying so that we are
finally leveraging the purchasing power that the Federal
Government should have as the world's largest customer. Perhaps
the best example is the set of agreements GSA recently
negotiated for office supplies. Those agreements will guarantee
for the first time that every Federal buyer in every Federal
agency, whether they buy in person, over the phone, or on the
Web, will receive deep discounts for hundreds of different
office supplies. That may sound mundane, but the result could
be as much as a quarter of a billion in savings.
Second, agencies are focused on increasing competition, and
a great example I would like to mention about increased
competition comes from DOD, the Military OneSource Program,
which provides important support services for our military
personnel and their families. That procurement has never been
competed until now. DOD collaborated with the Department of
Interior's Acquisition Assistance Center, which ran a full and
open competition. That competed contract is expected to save
taxpayers $300 million as well as to provide better services to
our military families.
Third, agencies are moving away from pricing arrangements
that have the Government, which means the taxpayers, bearing
too much of the risk, to more prudent fixed-price contracts.
For example, EPA recently shifted from a cost reimbursement to
a fixed-price contract for remediation clean-up services at a
Superfund site and is now paying 65 percent less.
Fourth--and this is what the Senator's comment about EVA
made me think of--agencies are now routinely driving down
prices by conducting electronic reverse auctions on the Web in
which vendors are bidding online for the Government's business.
One example, again: DHS last year ran more than 2,000
electronic reverse auctions, saving us millions of dollars.
Finally, agencies are giving long overdue attention to
contract management. FEMA, for example, has put together high-
quality training for its COTRs, as they are called, the
contracting officer's technical representatives. They play a
key role in ensuring that taxpayers get the price, the
schedule, and the quality that the contractor committed to
deliver.
I realize these are only examples. We need to make these
success stories the norm across the Government. To do that, we
are working with the agencies' chief acquisition officers,
their chief procurement executives, and directly with the work
force. I am meeting them, we are meeting with them in town hall
meetings, by e-mail, on a wiki, to share best practices and
push for their adoption across the Government.
There is much work yet to be done, but our early results
show that we are on track in our efforts to achieve savings,
reduce risk, and achieve better results for our Government and
our taxpayers. I look forward to working with you and other
Members of Congress on this important endeavor, and I would be
delighted to answer any questions you may have. Thank you.
[The prepared statement of Mr. Gordon follows:]
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Senator Warner. Thank you, Mr. Gordon.
Mr. Assad.
STATEMENT OF THE HONORABLE SHAY D. ASSAD, ACTING ASSISTANT
SECRETARY OF DEFENSE FOR ACQUISITION, OFFICE OF THE UNDER
SECRETARY OF DEFENSE FOR ACQUISITION, TECHNOLOGY, AND
LOGISTICS, U.S. DEPARTMENT OF DEFENSE
Mr. Assad. Senator Warner, members of the Committee, thank
you very much for the opportunity to speak with you today. The
subject of today's hearing is ``Responsible Contracting:
Modernizing the Business of Government,'' and it is a matter
that is one of Secretary Gates' highest priorities. He recently
directed all echelons of the Department to take a ``hard,
unsparing look'' at how we operate with the goal of cutting
overhead costs to transfer those savings to force structure and
modernization within the programmed budget. Just over 2 weeks
ago, Dr. Ashton Carter, the Under Secretary of Defense for
Acquisition, Technology, and Logistics, directed that all DOD
acquisition professionals find ways to improve the way we
conduct business in order to deliver better value to the
taxpayers for the goods and services we acquire for our
warfighters. Dr. Carter's memo is really about increasing the
buying power of the Department and getting a better deal for
the taxpayers.
In directing us to re-examine every aspect of how we do
business, Secretary Gates has told us that we should ask two
questions. First, is what we are doing respectful of the
American taxpayer at a time of economic and fiscal duress? And,
second, is this activity or arrangement the best use of limited
dollars given the pressing needs to take care of our people,
win the wars we are in, and invest in the capabilities
necessary to deal with the most likely and lethal future
threats?
We need to examine not only what we are acquiring, but also
how we are acquiring these activities and programs. Within the
Department of Defense, we process over 3 million contracting
actions a year. This year we will spend somewhere between $350
and $400 billion in goods and services on behalf of the
taxpayer.
There are a number of actions that we can and must take to
infuse arrangements into our contracts and motivate industry to
achieve greater efficiency, and we must expect to reap the
benefits of those efficiencies, and we will insist that
industry share those savings with the Government.
In the coming months, Dr. Carter will issue final guidance
to implement this initiative. I will conclude by stating that
there is a significant opportunity to save billions of dollars.
But the savings will only be realized if we have a well-trained
and sufficient work force to implement the change that is
necessary.
As the individual responsible for overseeing the growth and
the development of the acquisition work force, I know I speak
for the entire work force in expressing my gratitude to
Secretary Gates, Deputy Secretary Lynn, Dr. Carter, and Members
of Congress in supporting the much needed growth and increased
capability of our work force. We will not accomplish this
savings without a competent, capable, well-trained, and
properly sized work force.
I thank you for the opportunity, and I welcome your
questions.
[The prepared statement of Mr. Assad follows:]
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Senator Warner. Thank you, Mr. Assad, and thank you, Mr.
Gordon.
Let me start by echoing what you both have said, that as we
see these dramatic increases in the amount of contracting, the
worst example of penny-wise, pound-foolish is not investing in
the Federal contracting oversight work force so that we have
the appropriate procurement officers, we have the oversight,
and we have the expertise. Again, I know from limited prior
experience as Governor that not having folks familiar with new
techniques, new tools, and simply loading up additional
responsibilities without increased oversight is a recipe for
disaster. I think Secretary Gates is right, and I know Mr.
Gordon has also been a big advocate for this.
I have a couple of questions. Then as I mentioned earlier,
I may have to step out for about 15 minutes.
First, perhaps both of you could address this. One of the
things we have seen in contracting--and perhaps this goes to
work force issues--is the appropriate size and scoping of a
contract. When we go low bid, which at first blush sounds best,
but if we get the inappropriate sizing in the contract on the
front end, time and again we see contractors come in on a low
bid and then with change orders see the original contract size
doubled, tripled, or quadrupled. How do we put in place better
sizing procedures and framing procedures and have both
appropriate penalties and restrictions both on contractors who
have underbid and expect to have change orders and agencies
that do not have any line responsibility in terms of doing the
hard work up front in terms of sizing a contract?
Mr. Assad. Senator, there really are two types of products
that we buy. We buy products--that is, equipment, goods--and we
buy services. And we have to look at them slightly differently.
In the world of services, we are now spending more money in the
Department of Defense than we do on major weapons systems and/
or goods. We spend about 53 percent of our funds on services,
47 percent on major equipment and goods. And in the world of
services, the key is to expand competition as much as we
possibly can when we buy services, and to ensure that the
scope--that is, the work statements that we are asking
contractors to bid to--is understood and that we are using the
proper types of contracts to buy the goods and services that we
are about to do.
In the world of services, one of our problems has been
that, again, probably for convenience and expediency, we hold a
competition, we select a particular contractor, and that
contractor becomes an incumbent over an extended period of
time. What we are trying to do at the Department is to extend
the number of contractors that will compete on a competitive
basis continuously, to reduce the length of time of our
services contracts so that the scope of work can be more
properly understood and we can get more effective control over
what is being performed, and then be able to conduct the
oversight to ensure that we actually got the services that we
contracted for.
In the world of major weapons systems, it is a little bit
of a different situation. In that world it is all about
properly defining your requirements. And Secretary Gates has
talked a lot about the 75-, 80-, 85-percent solution versus the
solution which shoots for the moon. and the idea and concept
being we are much better off getting equipment into the hands
of our warfighters 3 or 4 or 5 years down the road that
increases their capability rather than taking 15 or 20 years in
an effort to try to produce something that remarkably increases
their capability but inevitably takes longer than we thought
and costs the taxpayers significantly more money.
So in that particular case, what we are doing is we are
spending a lot of time up front talking about what are the
technologies that are risky and have we made the proper
investments up front before we begin making significant amounts
of spending in engineering, manufacturing, and development, of
ensuring that we are not asking our contractors to achieve
things that are incredibly difficult to achieve, and that there
is a recognition of the proper type of contract that is fair to
both sides in terms of expectation.
What we have failed to do in the past is create contracts
that are reflective of the outcomes that we want to get, and
what we were doing was measuring process rather than measuring
the outcome. And at the end of the day, that is what the
taxpayer wants. Did we get what we paid for? And are we paying
a fair price?
So I think what you are going to see from the Department is
a lot more time spent on the front end of programs because much
like in industry--and I spent a good deal of my career in
industry, in major corporations--the fact of the matter is most
of the time is spent in defining the requirement.
Senator Warner. I guess very briefly, because my time has
expired, Mr. Gordon, do you want to----
Mr. Gordon. I will be very brief. Shay's office and mine
work very closely together. I agree with everything that Shay
said. The one point I might add is that the challenge of
requirements definition is directly tied to the weakness of the
acquisition work force and the need for the acquisition work
force and the program people to work together. When we do not
write the statement of work properly, we end up with
contractors coming back and saying they need more money, saying
they want an equitable adjustment. Starting the acquisition
properly makes all the difference in the world, and for that we
need better trained acquisition professionals, and we need them
working with their program people.
Senator Warner. You are consistent on your points, but I
would only add two quick points--and we are joined by Senator
Cardin. I appreciate Senator Cardin being here as well. One, I
would have liked to have heard in that answer, Mr. Assad,
something that said, And we are laying out both specific
incentives and penalties to reward good behavior in terms of
contracts, not expanding beyond scope and size, and clearly I
understand the weapons system differently than, say, the
services piece, particularly focused on some of the IT
contracting, which is very robust in my community, but how we
size that correctly and reward contractors or keep to that size
and penalize both contractors and/or agencies who get it wrong
on sizing. And since my time has expired, Mr. Assad, you will
not get, at least at this point, the very pointed question I
was going to ask you right now on how did we get into this
outrageous mess at Arlington Cemetery and what are we going to
do to make sure--and I know the Secretary of the Army and I
have had a number of conversation about this to make sure that
it is corrected and never happens again. It has been, a
national embarrassment. But if I can get another round, just to
forewarn you, that is what I am going to come back to.
Senator Murray?
Senator Murray. Thank you very much, Mr. Chairman.
Mr. Assad, thank you. We are all focusing on the Federal
deficit, and bringing down the national debt. In light of that,
it is more important than ever that we make sure all of our
programs are running as cost-effectively as possible. Every
penny counts here.
I want to talk to you--because the GAO recently testified
that the reliance on contractors continued to increase and we
heard that again today that this is leading to overall cost
increase. In their testimony, the GAO noted that of the 50
programs in their 2010 assessment, only 19 had filled all of
their authorized positions, and 86 percent of the programs
providing data needed to hire contractor support to do the job.
How can Congress better assist the Department of Defense in
recruiting qualified candidates so we can avoid using these
contractors and save the taxpayer money?
Mr. Assad. Senator, the point you made is absolutely valid
and on point. The reality is one of the things that we are
looking at right now is we grow the acquisition work force some
20,000 people over the next 5 years. About 10,000 of those
folks will be in program management, systems engineering,
logistics management, business management roles. It is in those
roles that the growth of the contractor community has really
burst to points where it is way beyond where it should be.
Mr. Gordon talked about inherently governmental work, and
the fact is we need to bring back into Government more of the
capabilities so our program managers and our program offices
can, in fact, properly oversee these contracts with an arm's-
length relationship. We are making good progress.
Senator Murray. And are there hiring incentives----
Mr. Assad. Yes, and I would like to talk about that. We are
making good progress. At this point we would have--we were
planning to have hired about 3,400 people over--it is a 5-year
plan. Of those 20,000, we thought we would be at about 3,400.
We have, in fact, hired about 4,600. So we ahead of schedule.
We are hiring quality people, and I think the flexibility that
Congress gave us with the 852 funds and the increased funds
provided by Congress with regard to hiring our acquisition work
force give us the tools we need.
So I think it is a little bit too early for us to request
additional assistance from Congress. We need to actually go out
and do what you have given us the authority to go do. And I
think we are well on our way to do that.
Senator Murray. OK. And are we working to get veterans
into----
Mr. Assad. Oh, absolutely. Absolutely. One of the key
things we are finding is a number of our technical--especially
at the Defense Contract Management Agency, we are finding that
a lot of veterans, especially retired E-8s, E- 9s, folks with
tremendous maintenance experience, are now coming into our work
force to help oversee the very equipments that they were
maintaining. So that is a good thing.
Senator Murray. OK. And I also wanted to ask you a really
important question. As you know, on June 30th this year, the
WTO publicly announced that Airbus had received illegal
subsidies that have damaged the U.S. aerospace business.
According to U.S. Government estimates, that is about $200
billion in today's dollars in total subsidies to Airbus. That
has artificially lowered their prices, and tens of thousands of
our American work force have lost their jobs because of those
illegal subsidies, and our U.S. industrial base capacity has
been reduced significantly, including our knowledge base that
we need to build our defense system.
Now, competition is key--we all know that--in making sure
the Department of Defense gets the best value for their dollar.
But it is also really important that the DOT factor in any
unfair competition that another company may be receiving. And I
wanted to ask you today, in light of that, how is the DOD
planning to account for those illegal subsidies that have been
received by Airbus--WTO has said that publicly now, and very
clear--in the upcoming bid for the KC-X aerial refueling
tanker?
Mr. Assad. I have to be measured in what I say, Senator,
because this is an ongoing source selection. But we think that
we have taken adequate steps to ensure that the taxpayers are
protected from any findings that might come out of a WTO
ruling. As you know, there are two particular cases--one, the
European Union versus the United States, the United States
versus European Union. I personally--my office represents the
Department in supporting the Trade Representative in both of
those cases. And it is an extremely complicated situation and
matter. It is a matter that is not likely to be resolved and is
going to be subject to appeal, and it is going to take a
significant amount of time for that to play out.
What we have ensured is that in any instance the taxpayers
will be totally protected if, in fact, there is a ruling, a
final ruling----
Senator Murray. I know why you are saying what you are
saying to me, but I just want us all to remember the taxpayers
have been harmed now, significantly, and our work force, our
industrial base, and our capabilities. So I know why you are
saying what you are saying, but I will tell you, there is a lot
of us that feel very strongly about the fact that we are now
competing against a company with a plane that has been
illegally subsidized so they can artificially lower their cost,
and that is not a fair competition. And I know what you have to
say.
Mr. Assad. Yes, ma'am, I certainly understand your
position.
Senator Murray. Thank you.
Senator Whitehouse [presiding]. I have a call that I am
supposed to take at any moment, but it has to come in first. So
what I might do is go ahead, and if the call comes, I will
yield immediately to Senator Cardin. But if you are answers my
question and somebody taps me on the shoulder and I suddenly
jump up, it really does not have anything to do with what you
have said, so please take no offense.
Mr. Gordon and Mr. Assad, what is the total amount that the
U.S. Government spends annually on contractors, both generally
and within the Defense Department?
Mr. Assad. Well, I can tell you that the total amount of
funds that we spend for the goods and services we buy is
approximately--in fiscal year----
Senator Whitehouse. Define the ``we'' in your answer.
Mr. Assad. The Department of Defense.
Senator Whitehouse. Department of Defense, yes.
Mr. Assad. $372 billion last year, and about 53 percent of
those funds were for services, and services typically are
getting contractors to provide service to support the
Department.
So it is a significant amount of money that we spend in the
contracting of services, so it is about 53 percent of the
funds.
Senator Whitehouse. Mr. Gordon, governmentwide, what is the
number?
Mr. Gordon. Government-wide, including DOD, of course,
Senator, it was in fiscal year 2008 something like $535
billion, maybe $537 billion. And in 2009, when we slowed that
increase from the 12 percent we had been seeing annually on
average, it was about $560 billion. It would have been much
higher if we had continued on the prior track.
Senator Whitehouse. So to go from $535 billion to $560
billion was actually a reduction in the rate of increase that
we were seeing?
Mr. Gordon. Yes.
Senator Whitehouse. That is a pretty significant tell-tale
all on its own, isn't it?
Mr. Gordon. It is, sir. More than half a trillion dollars a
year.
Senator Whitehouse. Is it the case from time to time,
indeed relatively regularly, that under the services contract
side of the Defense Department contracting you will find
American soldiers and Government employees providing similar
services, in some cases side by side in the field, to
Government contractors with the Government contractors being
paid more than the soldier or Government employee?
Mr. Assad. I think that there is no doubt that we have a
large contracted work force in the field working side by side
with our warfighters. What we have done is basically logistics
support of our warfighters in terms of what we call life
support--dining facilities, laundry, things like that. We
really do not have warfighters doing much of that anymore. It
is provided by contractors. But there is no doubt that
contractors make more money than our military work force. I
mean, there is no question about that.
Senator Whitehouse. What effect do you think that has? I
mean, clearly there is a bit of a morale effect if two people
are more or less side by side, suffering the same risks, doing
the same work, pursuing the same goal, and one is being paid
significantly more in the private sector than the other one on
the Government payroll. But in addition to that morale effect,
does it clearly to recruitment, revolving door, other concerns?
Sometimes I feel that people get trained at Government expense
and then move out into the contractor world where they take the
training that they received at Government expense to go back
and do the same work for the Government at a higher rate, and
that is sort of an unfortunate result that merits a little bit
of attention.
Mr. Assad. It does merit oversight, Senator, but I do not
think it is as widespread as your concern might be. For the
most part, we have tried to divide those responsibilities so
that what the contractors are performing is work that really
our soldiers--either the choice has been made by our commanders
in the field they do not want soldiers and marines performing
those responsibilities, or they are of a technical nature such
that our marines and soldiers are doing certain amounts of
maintenance and the contractors are doing perhaps more
sophisticated maintenance.
Senator Whitehouse. The Commission on Wartime Contracting
in Iraq and Afghanistan report identified in particular KBR,
which collected nearly $32 billion since 2001, was connected to
what the Commission called the vast majority of war zone fraud
cases and a majority of the $13 billion in questioned or
unsupported costs, and in particular, an issue that we focused
on a lot has been the payment of at least $80 million in
bonuses to KBR for the allegedly faulty electrical work that
resulted in the fatal electrocutions of more than a dozen U.S.
soldiers in the field. That sounds like a massive failure of
oversight and really a bitter irony for the families of those
dozen soldiers to realize that KBR was paid bonuses for that
work.
How are we responding to the Commission's report in terms
of trying to protect against this sort of stuff happening
again?
Mr. Assad. Senator, in fact, the information is not exactly
accurate. The fact is we paid zero award fee to KBR during that
period of time for which we deemed them to have unsatisfactory
quality oversight of their electrical performance. That was
between, I think, the period January of 2008 to around May of
2008. The fees that they got--I mean, the reality of life is if
you go to the field and you talk to the commanders in the
field, they will tell you that in general KBR does an adequate
job in supporting our troops. The amount of money--and $80
million is a lot of money. But they also performed a lot of
work outside of that particular period for the electrical work,
and I think what we awarded them was about 40 percent to 50
percent of the fee that was available for the work beyond the
electrical work. But we actually awarded them zero--
irrespective of what they performed during that period, it was
zero award fee. My office oversaw that.
Senator Whitehouse. Senator Cardin.
Senator Cardin. Well, first, thank you both very much for
your service. We very much appreciate it. The Federal
Government is the largest purchaser of goods and services in
the world, and Congress has made it clear through statutes that
we want a certain amount of that procurement work reserved for
smaller companies, 23 percent. There are five goals that are
spelled out in law, and the most recent survey indicated that
only one agency complied with all five of the goals and two
agencies failed to reach any of the goals set out.
So, Mr. Gordon, I want to ask you whether you are satisfied
with the efforts we are currently making for small businesses
to be able to participate in Federal procurement as Congress
has envisioned. As you know, small companies are the living
force behind job growth and innovation in this country. Are we
doing enough, or do we have to do more?
Mr. Gordon. Senator Cardin, we are not doing enough. The
President and the administration are not satisfied with the
situation. We need to be meeting those statutory goals not only
for small businesses, a 23-percent goal, but also the goals for
the subsets, such as the service-disabled-vet-owned small
businesses.
The President, as you know, signed a direction to us on
April 26th to set up an interagency task force to look for ways
to expand the opportunities for small business contracting. We
in OMB are working with the Department of Commerce, the Small
Business Administration, and the buying agencies right now,
this summer, to come up with concrete recommendations for ways
to move forward. There have to be more opportunities.
I will tell you, Senator, too often people think, Oh, well,
if you buy smarter, if you use strategic sourcing, that is
going to mean you turn to the big companies. Not true. In my
opening statement before you arrived, Senator, I talked about a
new initiative to buy office supplies through blanket purchase
agreements at much lower prices. At the time those were rolled
out at the beginning of June, GSA awarded 12 of those
agreements. Eleven of the 12 were to small businesses. Eleven
of the 12 were to small businesses, two of which were service-
disabled-vet-owned small businesses.
In our experience, we can make progress on small business
contracting and get a better deal for our taxpayers. We can
meet both of those goals if we are open to flexibility and
looking for opportunities for our small businesses.
Senator Cardin. Well, thank you for that reply. You know,
one of the major problems we have is the abuse of bundling,
which is somewhat related to whether the different agencies
have enough personnel to be able to evaluate the number of
interested contractors. In the Department of Defense, I must
tell you a frequent complaint I receive from defense
contractors is that they are often required to work with the
larger companies in order to be able to have their work
seriously considered, leading them to be subs or in some cases
actually bought out by the larger companies.
Mr. Assad, I know your background, and you have had a
distinguished private sector career working for one of the
Nation's largest companies. With no aspersion at all as to the
company you work for, there has clearly been intimidation
within the defense contracting industry to partner with a
larger company if you intend to do business with the Federal
Government. What is your response for more direct contracts
between small companies and the Department of Defense so that
they do not have to rely on being subcontractors or in some
cases being bought out by the larger company?
Mr. Assad. Senator, right now our goal is 23 percent. We
are running at about 18.9. That is not good enough. That is
nowhere near good enough. And one of the things--I do not know
if you have had an opportunity for your staff to show you Dr.
Carter's recent memo that he put out into the work force, but
the biggest single area where we have an opportunity to
significantly increase small business is in the world of
services. And we are going to focus on this like a laser beam.
We get a better deal when we have small business
participation, and especially competitive small business
involvement. And where we are going is if we establish multiple
award contracts in the future, we are going to insist that not
just a certain amount of the work be set aside for small
businesses, but that small business participation exists in
every multiple award environment, and if there are two or more
firms that can accomplish that work, we want it competed
amongst the small businesses.
So what you are going to see from us is a tremendous focus
in trying to grow in the world of services opportunities for
small business, because what happens on our hardware side of
the street is--you know, when we buy an aircraft carrier or we
buy some major pieces of equipment in any particular year, it
really hurts our ability to get that percentage up. However, I
just mentioned to you that we spend 53 percent of our money on
services, and so that is where we are going to focus to grow
small business opportunity. And I could not agree with you more
about small businesses being in that limbo state of not being
able to compete on the hardware side of the street with a major
equipment supplier, and we do want to foster, for example,
through our Small Business Innovative Research Program,
opportunities for small business in that environment, too.
There is a lot of work to be done in this area, Senator,
but I can assure you that--I am personally responsible for
small businesses in my acting role, and I can assure you that
we are focused on growing this.
Senator Cardin. Thank you.
Thank you, Mr. Chairman.
Senator Whitehouse. Thank you, Senator Cardin, and thank
you, gentlemen. This more than half a trillion dollars a year
in climbing is clearly a geyser of taxpayer funds that needs to
be carefully watched, and I appreciate your efforts to increase
and improve the oversight on it.
As you depart, I would ask if you would take as a question
for the record and respond in writing, Mr. Assad, to the
question that Chairman Warner asked having to do with
Arlington.
Mr. Assad. Yes, sir.
[The information referred to follows:]
Senator Whitehouse. And if you could both respond to the
recommendations of the Commission on Wartime Contracting in
Iraq and Afghanistan and their September 21 report and let me
know whether you think those recommendations are advisable and
any comment you may have on those recommendations, I think that
would be helpful. So I appreciate it very much and you are both
excused. I thank you for your presence here today.
[The information referred to follows:]
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Senator Whitehouse. We will take a 2-minute recess while we
call up the next panel of witnesses. Thank you both so much.
Thank you for your service.
[Recess.]
Senator Warner [presiding]. The Committee will reconvene. I
want to again thank Senator Whitehouse, Senator Murray, and
Senator Cardin for chairing, whoever did, while I slipped off
to the Commerce Committee. And I thank our second panel as
well.
Our second panel will offer outside perspectives on both
contracting practices and suggestions for improvement. I think
it is going to be a lively panel. I know we have different
views here, which I think is important that we as members hear.
First we will hear from Dr. Allison Stanger, a professor of
international politics and economics and Director of the
Rohatyn Center for International Affairs at Middlebury College.
Dr. Stanger's most recent book, ``One Nation Under Contract:
The Outsourcing of American Policy and the Future of Foreign
Policy,'' was published by Yale University Press in 2009. She
is a member of the Council on Foreign Relations, Academic
Leadership Council of Business for Diplomatic Action. She was
also a contributor to the Booz Allen Hamilton project on the
world's most enduring institutions, the Woodrow Wilson School
Task Force on the Changing Nature of Government Service, and a
whole lot of other stuff which will be submitted for the
record.
Our second witness is Dr. James Carafano, the deputy
director of the Kathryn and Shelby Cullom Davis Institute for
International Studies and director of the Douglas and Sarah
Allison Center for Foreign Policy Studies at The Heritage
Foundation. Dr. Carafano is a historian and teacher as well as
a writer and researcher on the fundamental constitutional duty
of the Federal Government to provide for the common defense.
Dr. Carafano's most recent book is ``Private Sector, Public
Wars: Contractors in Combat--Afghanistan, Iraq, and Future
Conflicts.'' He is also a 25-year veteran of the Army, manages
the day-to-day research program as the director of the Allison
Center, and has a series of very distinguished background as
well.
We will get to the panel. Dr. Stanger, you go first.
STATEMENT OF ALLISON STANGER, PH.D., RUSSELL LENG 1960
PROFESSOR OF INTERNATIONAL POLITICS AND ECONOMICS, MIDDLEBURY
COLLEGE
Ms. Stanger. Senators, it is an honor and privilege to
share some thoughts with you here today. I have submitted a
longer statement for the record, and I am going to use my 5 or
6 minutes here to make a simple argument: that our cherished
value of self-government now depends on radical transparency in
all Government business transactions.
As we have heard on the first panel, the business of
government is increasingly in private hands, and there is broad
consensus that the current Federal acquisition system is
antiquated, ill-equipped to deal with the surging demands
placed upon it. A few key figures from USASpending.gov make the
general trend clear. In 2000, DOD spent $133.2 billion on
contracts. By 2008, that figure had grown to $391.9 billion,
which is an almost threefold increase. Again, the same period,
2000 to 2008, the State Department spent $1.3 billion on
contracts. Eight years later, contract spending had grown to
$5.6 billion, an increase of 431 percent. In 2000, USAID spent
$478.6 million on contracts. By 2008, the figure had grown to
$3.3 billion, which is an increase of 690 percent in 8 years'
time.
Despite this paradigm shift in how Government conducts its
daily business, contracting, I think, continues to be perceived
as something peripheral to policy itself. Yet when contracting
and grants comprise 83 percent of the State Department's
requested budget, as they did in 2008, 82 percent of the
Pentagon's budget, and a whopping 99 percent of USAID's net
cost of operations, it is clearly no longer the case that
contracting is something peripheral to policy. In the foreign
policy realm, with America's first two contractors' wars in
full swing, contracting has clearly become a strategic issue.
It must be treated as such.
Now, I am a Vermont-based professor without a security
clearance. I can present these numbers to you here today
because of the 2006 Federal Funding Accountability and
Transparency Act, or FFATA, which created USASpending.gov.
In preparing my written testimony, the figures I cited to
you, I pulled them from that website in December 2009. But I
discovered last week that sometime in early 2010
USASpending.gov's platform and interface were totally
redesigned. Once significant change caught my immediate
attention. The old version of USASpending.gov used to have a
page entirely dedicated to subcontracts and linked to the home
page. The subcontracts page used to report that the site was
under development. It really provided a clear place holder for
important forthcoming information. Today there is no
subcontracts or sub-grants page linked to the home page, and
the category does not even exist in the menu of choices.
Given recent revelations that U.S. taxpayer money has been
flowing through subcontracts into the pockets of the Taliban in
Afghanistan, the evaporation of the subcontracts page is
troubling. Without transparency in subcontracts, we are
effectively pouring taxpayer money into a black hole in
Afghanistan with no real means of knowing how well that money
is likely to be spent or even who is receiving it.
FFATA required that information on subcontracts be made
available to the public by January 1, 2009, and the old website
really made it clear that USASpending.gov was a work in
progress, that this information was forthcoming. Today that has
changed. The irony here, at least at the level of appearances,
is that a website designed to show American taxpayers where
their money is going, whose very existence is owed to
legislation championed by then-Senator Obama, has grown less
rather than more transparent under President Obama's
administration.
Writing in Federalist No. 10, Founder James Madison saw
what he called ``the mischief of factions'' being neutralized
that the plethora of special interests in vast colonial America
canceled one another out through both federalism and
representative Government. In 21st century America, however,
Government by contract instead encourages inside-the-Beltway
special interests to coalesce and carry the day.
Government by contract means that Government is entirely
dependent on the private sector to conduct its daily business,
so effective oversight is too often hostage to a corporate
bottom line. Whenever the economy falters, the profit motive
encourages businesses to cut safety and security measures
unless Government insists they do not do so. And our disdain
for bureaucracy makes it difficult for Government to secure the
staffing it needs to ensure that these short cuts are not
taken.
Congress and the White House can, therefore, have the best
of intentions yet be unable to escape the quagmire that
Government itself has in part created through its incessant
outsourcing. And I want to be sure that my basic point here is
not misunderstood. There is no partisan villain in this tale,
no conspiracy. We have together constructed a system that no
longer functions as the Founders intended.
Rescuing Government by the people from the current
Government by checkbook is a project for a generation, but we
need to get started now. When so much of the work of Government
is in private hands, standard approaches to transparency will
no longer suffice. President Obama's March 4, 2009,
Presidential memorandum ordering a governmentwide review of our
contracting practices was a bold step in the right direction.
The next step is to ensure that the spirit and letter of FFATA
are upheld.
Thank you for your attention, and I welcome your questions.
[The prepared statement of Ms. Stanger follows:]
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Senator Warner. Thank you, Dr. Stanger.
Dr. Carafano.
STATEMENT OF JAMES JAY CARAFANO, PH.D., DIRECTOR, DOUGLAS AND
SARAH ALLISON CENTER FOR FOREIGN POLICY STUDIES, THE HERITAGE
FOUNDATION
Mr. Carafano. I do not know if--
[off microphone].
Senator Whitehouse. Oh, come on. Try.
[Laughter.]
Mr. Carafano. I would like to highlight five quick points
and highlight three recommendations. My first point is
contracting in the private sector, if it is done right, is a
huge competitive advantage for any nation. World global product
is $58 trillion. About a fifth of that is the United States.
Most of that wealth was created by the private sector. Much of
it was created by small and medium businesses, so harnessing
that power is really the key to being the winner in the 21st
century. And if you are a free nation, you actually start out
with a competitive advantage. If you have rule of law, if you
have transparency, if you have low rates of corruption, if you
have a media and other people that bring transparency and
sunlight, you have an enormous advantage in executing this
thing. So getting this right--really, it is not even just about
fiscal responsibility. This is about protecting and keeping the
Nation free, safe, and prosperous in the 21st century, and
leveraging one of the absolute most powerful advantages on the
known planet is a big piece of that.
I and a team at Heritage, we have been looking at this
issue for a very, very long time, and after years of study I
come back again and again and again, when I get to the root of
the problem, 99.9 percent of the time the root of the problem
is Government is not a very good customer. And a lot of what I
hear today is the right discussion. The enemy is largely us,
being the people that contract for goods and services.
My concern is it is great to hear all this discussion and
talk about fixing the problem and do this, and we can put aside
the fact that we have heard this for decades and decades and
decades from administrations both Republican and Democrat.
Intentions are great, but intentions have to be meaningful, and
analysis that focuses on outputs as opposed to outcomes to me
is very troubling. So when we just throw numbers around out of
context, numbers independently as if they mean something,
whether they are good or bad or we are going to do this or we
are going to do that, and it is not tied to a specific outcome
that is clear and compelling, then I wonder whether reforms are
actually going in the right direction.
The fourth point I would make is by and large the solutions
that I would argue for, my personal prejudice is always people
overprocess, particularly where you are dealing with very, very
huge, complex systems. Probably a great example of this is back
in the 1990's, when information technology was really
exploding, people had a good heart, and so we had the Clinger-
Cohen act, and the notion was Government has to get on top of
this. So we added a process. We said, Look, consider IT a major
enterprise acquisition for your Federal agency, period. And
that seemed like a good thing. We were putting people in
charge. Well, of course, we were really at the dawn of the IT
revolution, and the people who were put in charge were
clueless. They did not have any ideas on what good IT was. So
it is like we gave matches to the kid, and as a result in the
1990's Government locked itself into a lot of stupid decisions
that the private sector did not make in terms of buying
proprietary software and different services. And we have been
locked into that, and in large part you could argue that our IT
policies and acquisition have stunk for decades because we put
stupid people in charge at the beginning, and now we are just
playing catch-up.
When you get the people piece right, everything else falls
into place. And I want to just emphasize three areas of that.
Getting an acquisition work force, I think everybody agrees
that is absolutely right. We powered down our acquisition work
force, particularly in DOD, at the end of the cold war. Huge
mistake because we knew the only way we were going to grow
capacity in time of war was to use the private sector and to
take away the head that was supposed to run that. That was just
dumb. And we have to build that back.
When we build that back, we have really got to be smart,
and there is a good analogy here. If you look in the scientific
community what keeps scientists at a university or a research
center? And it is not just what you are paying them. They like
to hang out there because it is cool. They have cool research
facilities. They got great work. They have the tools that they
need, and they are doing exciting things. So when we build this
IT work force, we have to give them the tools and the
capabilities and the authority to do their job; otherwise, they
are not going to stick around. And if we just have a lot of
people cycling through the system every 12 or 18 months, we are
not going to get any oversight. Particularly in the area of the
IT systems that support the acquisition oversight and
management process, we have to put the investments in there and
get the right systems in place.
The second piece I would emphasize is auditing. Everybody
talks about auditing. Auditing is great. When we look at the
history of the auditing of the auditor of the Defense
Contracting Auditing Agency, it is not a pretty picture in the
last couple years. You know, we have to get that piece right,
and we have to, I think, make a distinction and re-create the
difference between doing auditing of fiscal processes and what
the Inspector General does.
And I am very concerned that in our rush to fix things, we
are tending to blur these things together to the point that it
actually might get counterproductive. They are important
activities, they are interrelated activities, but they ought to
be cleanly separate activities, and they ought to be a resource
and run appropriately.
Then the last point I will make is we have really got to
end the process of micromanagement. The concept of risk
management was created to help leaders make decisions. It was
not created to childproof the universe. You are never going to
eliminate risk. And if you make laws and rules and processes
that their sole purpose is to drive risk out of the system and
not get anything done wrong, at the end what you are going to
do is drive a process that is incredibly inefficient and
incredibly risky.
So risk management works when it is in the hands of the
people who have responsibility, so we need to be empowering
program managers, we need to be empowering the acquisition work
force, we need to have the oversight and transparency. But we
cannot continually saddle them with more and more regulations
and requirements and have them in turn impose more and more
regulations and requirements which are actually creating a more
inefficient system. So we get to the point where we are buying
absolutely nothing with zero risk and spending an awful lot of
money on it.
With that, I thank you for having me here today.
[The prepared statement of Mr. Carafano follows:]
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Senator Warner. Thank you both. I think there may be some
spirited disagreement, but I think--not as much as you promised
me, Sheldon. But I do think it was important that we have heard
from all four of our panelists that the acquisition work force,
getting those folks right, and getting them trained is key.
Dr. Carafano, I would like you to expand on your comment in
a moment. I am going to ask one broad-based question and let
you both answer. This notion of fiscal auditing responsibility
versus the Inspector General role, I agree with you. They were
different functions, and the two tend to blur sometimes and
trying to recognize one--in the normal course of business, one
is looking for that outlier, bad instances. I would love you
both to expand on that.
What this Task Force has looked a lot at is the next level
of Government performance geekiness, which we would all like
but most folks' eyes roll over, which is performance metrics.
And we have talked here a little bit about how do we have
transparency, how do we get the contracting right. I would like
you each to talk a little bit about, let us take DOD as an
area. How do we get some common consensus on those performance
metrics and what they ought to be?
My personal bias is--and I would like you to both comment
on this, particularly Dr. Stanger. I think Dr. Carafano has a
point that we are--we want to do our oversight job well, but at
times what we do is simply layer on more requirements, layer on
more reporting, without taking anything away. And I think
sometimes the work force was caught with this 20 years of
accumulated reporting requirements, and nobody sorts through
what is important and what is not important. And then when we
get to the question of how do we present that information in a
website that is user friendly and understandable by somebody
other than distinguished professors with incredible
backgrounds, we do not get it right. So I would like your
comment on, in this move toward more transparency, would you be
willing to say we ought to audit a little bit of what all the
reporting requirements are already out there and see what we
can actually remove and prioritize so that the work force can
do a better job of recognizing what is really important for us
to know to do our job right. Broad-based throwing in questions,
and recognizing that at the front end will be my only question.
Then we are going to move to Senator Whitehouse because the
roll call vote has just started, so we are going to have to
probably slip out in about 10 or 12 minutes.
Ms. Stanger. Well, the point I would make is I am not an
expert on auditing requirements, but I know that there has been
this layering of requirement upon requirement, and when you get
accumulated regulations over time, it tends to operate in
irrational ways. So I definitely think that would be something
for review.
But my point about transparency is just a simple one. It is
not allowing everybody to understand ordinary citizens to
understand the requirements. It is simply letting citizens know
where the money is going. That is the part that concerns me, is
that if you have these enormous percentages of business, the
business of Government, in private hands and it is flowing
through contracts to subcontracts and we cannot see where it is
going, that to me is at odds with the principle of self-
government and needs to be corrected. So I am a keen advocate
of transparency for those reasons.
I think we would all agree that the acquisition work force
needs to be increased and better trained. I am wondering
whether you might want to consider linking appropriate
training--increased funds for building up the work force to
appropriate training.
I will stop there.
Mr. Carafano. I think there is a real lesson to learn here
from GPRA, the Government Performance and Review Act, which,
again, interestingly, is another product of the legislation in
the 1990's in a time when we were facing a similar fiscal
situation that are today. We wanted to reduce Federal spending.
We were trying to grow the economy, and so we wanted to make
Government more efficient and more effective. So we introduced
GPRA, which is by and large borrowing concepts from the private
sector and applying them to Government, without clearly
recognizing that Government business processes are different
than private sector business processes because we have a
Congress and we have rules and we have the foreign--the private
sector does not. And if you actually look at the implementation
of GPRA over time, what has increasingly happened is we have
seen an increasing proliferation of metrics which are
increasingly outputs as opposed to outcomes. So what we have
actually been doing is, again, driving a bunch of behaviors
which do not necessarily lead to the key things that we are
interested in, which is getting the best value and the best
services for the taxpayer.
So, clearly, I think from Congress' perspective, fewer,
more truly meaningful metrics that are truly outcome-based are
something that is worth striving for. So I commend your notion
and your idea of where it is really worth going and delving
into, because I think there is some real ``there'' there.
Senator Warner. I personally believe we have gone from GPRA
to PART to now the Obama administration's efforts as well. It
seems like we reinvent the wheel. Part of the challenge and
part of what this--it seems to me the administration has come
in and, in a flurry in the first year, talk about transparency
and performance metrics, and that quickly gets very tedious to
people other than folks like us who get excited about it, and
that process recedes, and then a new administration comes in
and we reinvent the wheel. Part of the goal--and I appreciate
Senator Conrad and Senator Gregg giving us this task force--is
to try to get an ongoing legislative entity that beyond a
particular administration will keep that focus in place.
I would ask you to--Dr. Carafano, you took on the issue
around metrics performance. Dr. Stanger, you came back to
transparency again. I would like you to reverse role each other
and, Dr. Stanger, if you could talk a little bit about how do
we get those performance metrics right. And, Dr. Carafano, I
assume--I would like you to say Dr. Stanger's point, which is
we at least ought to know where all the dollars are going. It
seems to me like pretty common sense. I would take a little bit
of an exception maybe to the notion that there are differences,
but as somebody who has spent a career in the private sector
and now some in the public sector the notion that they are
totally apples and oranges, that there ought to be some ability
to measure in a better way the outcomes, as you said, because
it should not be outputs.
So if you could address more the performance piece, Dr.
Stanger, and, Dr. Carafano, if you could get more into the
transparency issue, I would be curious.
Ms. Stanger. I think with respect to performance metrics,
we can all agree that enhanced competition is key to both
lowering costs and also encouraging innovation and the energy
on which our economy's growth depends. So I think actually
transparency is linked to putting in place the right incentives
for the private sector, because if we really do want to, as we
heard on the last panel, increase the involvement of small
business, if we want to be sure that every contract is properly
competed, then transparency is key, because if you want small
business involvement--and we see this in the development realm
in particular--you know, having the information out there on
what is possible and what has taken place in the past is
absolutely critical. So I see a definite link between my
transparency theme and getting better Government performance in
that realm.
Senator Warner. Let me just ask, before we go to Dr.
Carafano, the point I made and the point that I think Dr.
Carafano made, which was sometimes under the guise of
transparency we add on more and more requirements, I do think
he has a point in terms of at some level in oversight a 535-
member board, which in effect the Federal Government has with
both the House and the Senate, each trying to ask specific
items, can get into a level of micromanagement. How would you
as an advocate for transparency sort through those? You know,
should we be doing an audit of all the reporting requirements
and all the management requirements that are out there to hone
that list down so that we could focus on more important items,
or the most important items?
Ms. Stanger. It sound to me like that would make a lot of
sense, but I would just add to that that--I have lost my train
of thought.
Senator Warner. It happens to me all the time. Because we
are seeing--what we are focusing on here is I hear from Federal
employees all the time. Every administration comes in with a
new set of reporting requirements. The Congress adds in every
piece of legislation new reports requirements. It is hard to be
against any new reporting requirement that sounds when you are
arguing and there is an amendment that this is in the guise of
transparency and to get us to greater effectiveness and better
value. But at times I have seen the GPRA reports and PART
reports. They are so voluminous that, again, perhaps with very
few experts around there there is not a focus to them.
Ms. Stanger. My thought came back to me. Can I speak again?
Sorry about that. I think it makes sense to perhaps redefine
how we think of transparency, because in the way you are
discussing it, transparency is very much a question of what
Government is requiring what needs to be provided in terms of
reporting to satisfy Government.
I would suggest that we instead think of transparency as
being something that is in the eyes of the beholder in the
sense that it is not what Government thinks needs to be
required or put out there but, rather, that we ask people who
are providing the services what they would like to see publicly
available or not publicly available and that transparency
exists when the people who are depending on open sources agree
that it is there. In other words, Government does not define
transparency; the people do. And so I would encourage thinking
about transparency in that sort of way with respect to
regulations as well.
Senator Warner. The only question I would have with that is
I am not sure in this case more is always better and that at
some point limitations--you could have--whether it is your
contracting officials, whether it is your senior management,
spending a disproportionate amount of time on simply reporting
rather than doing their job.
Dr. Carafano?
Mr. Carafano. I would just like to jump back to the point
on metrics, if I may for a second. Competition in small and
medium businesses is actually a really good example, so
defining--for example, small and medium businesses truly are
the backbone in this country, enormous amount of innovation and
a great resource for Government, absolutely. The question is:
As a metric, is defining small business contracts as a
percentage, is that a really useful metric, or is that just
another output? And in driving to get to that metric, will you
drive inefficient and poor behaviors as opposed to--I mean, and
we really looked at why do small and medium businesses not do a
lot of Government contracting, and it is usually because of the
Tower of Babel of regulations and everything they have to go
through to even find out about contracts and get them. So if we
remove the barriers to entry level in the Government
contracting, wouldn't that be maybe more effective than just
establishing a percentage? So that is just a thought.
On the transparency side this is an enormous issue for
Government, and I think one of the problems is when we try to
address the field of contracting we try to come up with a
silver bullet to solve every problem for everything. And
Government contracting is incredibly complex. It is a lot of
different vehicles doing a lot of different things. You should
look at them all differently.
So if you are looking for a place to start, looking, again,
at the IT support for the acquisition work force and the
resources they have available and the adequacy of them I think
is a very good place.
You know, the notion that giving us a lot of information is
burdensome, that was true in the 19th century, and it was true
in the 20th century, but I am not so sure it is true in the
21st century. We are creating new network tools, new social
network tools so that places an enormous amounts of data
incredibly quickly and allow you to slice and dice every way
you do that. So I can go buy a piece of social ware, and I can
tell you everything on the Web everybody is saying about
Senator Warner today and who likes him and who does not like
him, and I can give you all that data in about 5 minutes. And
if I went to an acquisition work force and I asked you where
are all the subcontractors working on this contract, he would
say, ``I will get back to you in 3 or 4 months.''
So the IT is out there to give us a lot of information to
solve a lot of these transparency problems, and if you work
that piece at the start, at the acquisition start, it is not
going to solve the transparency problem for all of Government
and all of Federal contracting. But it sure gives you a good
start point to look at things.
Senator Warner. Your point being that getting that--again,
back to that initial sizing of the requirements right, at least
on the IT piece, that--and I think you are saying then you have
unlimited access to the data and how you slice and dice may not
be as burdensome as in the past.
Mr. Carafano. Right.
Senator Warner. I am going to turn it over to Senator
Whitehouse to close out this part of the hearing, and I
appreciate both of your testimonies and answers to questions.
In terms of a written response I would love both of your
thoughts as this administration takes on this conversation
about what is an inherently governmental function, that whole
broad-based philosophical basis of how we are going to sort
through this. It is something I think we are going to have to
be engaged in as well and would love at least your thoughts
about how we ought to at least even approach that debate, and I
would look forward to those written responses.
[The information referred to follows:]
Senator Warner. I will turn the balance of the hearing over
to my colleague Senator Whitehouse. Thank you.
Senator Whitehouse [presiding]. Thank you, Senator Warner,
and thank you both for your testimony. As much as we have joked
a bit back and forth about the dispute that often comes between
majority and minority witnesses, what struck me was that the
areas of overlap between your testimony were far, far greater
than your areas of disagreement. Even when you go to the more
thorough written testimony, you guys are very much in synch
about the need for better management of this contracting
practice and the tools for doing that.
A couple of things struck me. The first is that you seem
both to agree that the practice of contracting has to a very
significant extent run ahead of the policy about how we should
be doing it. I noticed in Dr. Stanger's book, ``One Nation
Under Contract: The Outsourcing of American Power and the
Future of Foreign Policy,'' two quotes that seemed to
illustrate this a bit. Susan Yarwood, Deputy Director of
Enterprise Services in the Office of the Secretary of Defense,
in June of 2007 said, ``We do not even know how many contracts
we have now.'' And General Zinni, Anthony Zinni, the former
commander-in-chief of the U.S. Central Command, said, ``If I
had to revamp how we do things, I would start with what should
be contracted and what should not.''
So we are at a fairly basic level to start with where the
questions are what should be contracted and what should not and
how many contracts do we have. Do you agree that we are--that
the practice of contracting has run ahead of the policy as to
how and when we should do it and how it should be overseen and
there is a gap there?
Mr. Carafano. Maybe I will just start. Yes, I think that is
very true. A great example of that is the A-76 process that was
developed to determine whether some things should be inherently
governmental or outsourced. So the A-76 process was a peacetime
process, and it was designed for a very different military. And
when you go back--and I discussed this example at length in my
book. When you go back and you look at the tragedy of Walter
Reed, the tragedy of Walter Reed was everybody was just doing
their job, they were just clunking through on the A-76 process
as it existed and doing what it said, and the result of that is
we have tragically failed to take care of our soldiers because
the A-76 process did not recognize the notion that there would
be a war tomorrow and all of a sudden you have to surge
capacity and then you need to stop and go in a different
direction.
So I think the answer to the question and where I would
disagree with General Zinni is there is--and General Zinni
knows this, and I am sure that is not what he said. You know,
when they say how do you fight a war, the answer is, well, if
you have seen one war, you have seen one war. You know, what
should you contract? And the answer is, well, it depends.
Technology is going to evolve. Governance is going to evolve.
People's needs are going to evolve. So what is incredibly
appropriate to contract today might not be a good idea to
contract tomorrow.
What we tend to do is to use always economies and dollar as
the key determination about whether something should or should
not be contracted out or not. Oftentimes, that is not good.
And, again, to my mind, no contracting vehicle is perfect, and
nothing is more virtuous than others. A fixed contract is not
more virtuous than a sole-source contract because it is all
developed in a context. But certainly in situations where, you
know----
Senator Whitehouse. Certainly some are a little bit more
risky than others, though, and would need strong oversight.
Mr. Carafano. It depends on context, absolutely. Certainly
where national security is involved and people's lives are on
the line, such as a contingency theory, contingency situations
best value, I think--that is in the FAR for a reason, because
that allows you to do the risk assessments that you need. So
get the system and the people right, and then the decision
about should I buy this or should I hire--you know, should I do
this in the Pentagon, I think that will fall out more
rationally.
Senator Whitehouse. Yes, so you are behind the perspective
that you presented. You accept the presumption that our policy
as to how we should do this is not adequately settled for the
extent of the practice we are engaged in.
Mr. Carafano. Absolutely, and if I just may very quickly,
one of the reasons why I was a big fan of Secretary Gansler's
report that he did for the Army was because they focused on
exactly the right thing, which is how to build a system that is
flexible and agile and accommodate the Army's changing needs as
they change over time to in a sense get the policy and the
structure ahead of the problem, not to wait for the war to
figure out how we contract for it, but to have the things that
we can adapt to the war and the needs we have. And I thought
the philosophy and the structure behind the Gansler report was
a good step in the right direction.
Senator Whitehouse. Dr. Stanger.
Ms. Stanger. I think you are absolutely right that our
policy has lagged practice, that we are only just beginning to
think strategically about this issue, and much of it is due to
what Secretary Gates has aptly called willy nilly contracting,
that we wanted to pursue two wars simultaneously and to do so
without a draft, and I think it is pretty clear that
contractors have filled that gap, have enabled us to fight both
wars without a draft. And with a draft, of course, we would
have a very different political situation.
But there have been some negative consequences of that. One
of the big ones--and I think you pointed to it--is that
accounting systems have really lagged reality. So the FFATA can
ask for certain information, and the reality is that agencies
simply were not collecting it. Even though billions of dollars
were going out the door in contracts and grants, there were
simply not systems in place to track that explosion in spending
that everybody has identified and talked about.
So part of the reason I am insisting that the spirit and
the letter of FFATA be upheld is I think it is going to keep
the pressure on to get those accounting systems in place and be
sure that the information that should be in the public domain
is indeed there.
I think there is one thing where we might differ. I am not
sure. I am not----
Mr. Carafano. I do not like a draft.
Ms. Stanger. Yes. That was not the point I was going to
make. It might be on----
Senator Whitehouse. Going to my next question, it is
actually more helpful to me to single out that places where you
do agree----
Ms. Stanger. Sure.
Senator Whitehouse [continuing]. Because that gives us the
foundation for moving forward and taking action, which is the
ultimate purpose of the hearing.
The second place where you both seem to agree is that, in
addition to the policy gap, there is also an accountability
gap. Dr. Stanger, you document this in your book with a note
that there are over 300 reported cases contracting mistakes or
abuses in Iraq from 2003 to 2007, and the Government
Accountability Office testified that there was not a single
instance of anyone being fired or denied promotion in
connection with those cases. That is sort of just one example,
and it is really secondary. It has more to do with the
oversight function. But do you both agree that there is a very
substantial accountability gap both in terms of oversight of
the contractors and oversight of the oversight function, who is
watching the watchman?
Ms. Stanger. Absolutely. I would totally agree with that.
Senator Whitehouse. Dr. Carafano?
Mr. Carafano. Yes, my concern is how in our effort to
strive for greater accountability is we have actually
accomplished the opposite because we have put more
requirements, more requirements on, and what that has done is
create a risk-averse acquisition work force that does not make
decisions. So we see the train wreck coming, but a lot----
Senator Whitehouse. I would actually add that what it also
does is it creates a sufficiently complex contracting process,
that it gives strategic advantage to larger and professional
contractors who can leverage their ability to negotiate the
process; whereas, the new company, the small company, the
company with the bright idea that is not an institutionalized
Government contractors, finds that forbidding and in many cases
gets trapped in its snares and may not actually work its way
through the process, even though they have a better, cheaper
product. So it actually, I think, hurts at both ends. It hurts
at the oversight end in terms of the way the accounting folks
work, the oversight folks work in the Government, and it is a
deterrent or at least--a deterrent or an advantage in a way
that is not relevant to the quality of the product and creates
an artificial distinction between different contractors.
Mr. Carafano. I would argue that excessive regulatory
requirements are the single greatest barrier to entry of small
and medium businesses in Government contract competition.
Senator Whitehouse. People get hired into the big
contractors because they are expert at negotiating the snares
and mines of the process. So we have the policy gap. We have an
accountability gap. It also strikes me that we have a
transparency gap. You both have mentioned that also. And in
that context, one of the things that interests me is that if
you are a Government employee and if you have a Government
program, that is subject to considerable amounts of public
scrutiny and the boundaries of what is amenable to public
scrutiny and what is not is usually determined by national
security concerns and the classification process, which has a
sort of regimented nature of its own. And we can argue about
how wise that is, but it is what it is.
Once you step out into the world of private Government
contractors, the question of corporate proprietary interests
rears its head, and that brings in a whole other level of non-
transparency and non-disclosure that does not necessarily match
with what should be classified or not. And I would submit that
there are probably a great number of activities that if the
Government engaged in them and then tried to claim that it was
proprietary, the roof would fall in on whoever made the claim,
and it would probably not withstand legal scrutiny; whereas, by
having outsourced it, now suddenly you have raised this new
barrier to public transparency in our democracy.
So you have to--I think we have to recognize that there is
an inherent transparency problem with private contracting where
proprietary protections are honored; on the other hand, you do
not want to force people to give up trade secrets. Any thoughts
on how we could improve in our contracting the way--what we
demand that a private corporation should disclose when it is
executing a governmental initiative?
Mr. Carafano. You know, as a general principle, I think it
is a difficult question to answer. It is much like do you want
security or liberty, and the answer is yes, right? And
democracy is set up to create a natural tension so you seek to
maximize both qualities simultaneously. So it would be hard for
me to propose an overarching principle to address that. So I
think there are some one eaches that we could start with in
looking at some of these issues, and a related issue I would
raise, for example, is the Defense Cooperation Act with
Australia and Great Britain, which are treaties which are now
pending before Congress, both designed to open up governments
to having more knowledge about what contractors are doing and
allowing contractors to have more knowledge of each other. So
large companies in the United States which have, for example,
subcontract--have divisions in Australia and one of the part of
the company cannot even talk to the other part of the company
because of proprietary restrictions and ITAR and all the rest.
So those treaties are some good examples of the kinds of
baby steps, but I think this is particularly an issue where it
would have to be work on the eaches rather than trying to
implement a general principle across the Federal enterprise.
Senator Whitehouse. Now, one of the--Dr. Stanger, did you
want to answer that, also?
Ms. Stanger. I would just add to that that I think just as
we need to rethink what transparency means in the information
age, we may need to rethink this as proprietary and how it
relates to work done for Government. I think there has to be a
higher standard of openness if it is done for Government,
precisely because such a large percentage of the work is in
private sector hands.
Senator Whitehouse. Yes, and not to mention that we are
well over half a trillion dollars a year going down this pipe,
so it is worth making sure we can track it to the end.
In that context we are charged on the Budget Committee with
trying to put a budget together every year. I am hoping that
the process that we undertake through this task force will
ultimately lead to having some confidence to add a savings
number into the budget when we go through the process in future
years. We obviously have to develop some ground work for that
because you do not want to be willy nilly about throwing a
number in the budget any more than you want to be willy nilly
about your contracting practices.
But in terms of our enthusiasm to pursue this question of
contracting, it will relate to results, and so I am going to
ask each of you for a real ballpark-range number. If we are
doing $560 billion a year in contracting and if we were to by
your standards get it right, what order of magnitude savings
would you guess we might expect? Are we talking about 1 percent
and nibbling at the edges and, therefore, probably not worth
devoting a lot of time and energy from this task force to the
problem? Are we talking about 5 to 10 percent, 20 percent,
maybe 50 percent, maybe 80 percent? Where is your range of
comfort as to where those numbers might lie? And, again, I am
not trying to pin you down, but this is a new effort, and we
need to deploy our resources wisely as well. And if it comes
back with everybody saying at best you will be able to knock
$560 billion down to $555 billion, well, frankly, we should
probably go look somewhere else then.
Mr. Carafano. I am going to give you a very unsatisfactory
answer to that question, which is it is the wrong question,
because we know for a fact that we do not really understand
fully Government business processes. So anybody that comes to
you and says, well, you can save X amount of money, they are
just guessing, right? There are no analytics behind that.
I have been very critical of Secretary Gates who said we
are going to save $100 billion in defense practices, and then
they turn right around and issue out a letter, a request to
people saying, ``Give us some ideas.'' So they have defined a
number which has no rigor behind it whatsoever. What the number
is is the gap between what they have and what they need, right?
So, again, driving to get $100 billion savings in the end
may cost us how many trillions of dollars of inefficiencies, we
do not know. So driving to get to a number that we do not know
if it is the right--how it got there, where it makes sense, I
am very opposed against. I am very laudable of your effort, and
I am all for fiscal conservativism, and I think you are on
exactly the right intellectual track. But I think you are not
ready to ask that question.
Ms. Stanger. I think you are ready to ask that question,
but there is an inherent problem here that needs to be
acknowledged, and it is what makes this so difficult, your job
so difficult; namely, that everybody is talking about we need
to buildup the acquisition work force because we cannot have
oversight without some threshold level of employees to do it,
to have them properly trained to be able to manage contracts in
this new world. Yet obviously building up a work force is going
to cost money in the short term, and you are doing it in the
short term in order to get long-term savings. But on its face,
it looks like you are adding to the budget rather than getting
savings. But you need to do that in order to realize the long-
term cost savings and restore oversight to Government.
So just one example to illustrate, I know that your
Committee proposed cuts to the operating expenses budget of
USAID. USAID is probably the hardest-hit Government agency. It
has really become a contract clearinghouse.
Senator Whitehouse. Contracting service, yes.
Mr. Carafano. It is all contractors.
Ms. Stanger. It is all contractors, and they want to
restore that oversight function. Yet they cannot do it without
an increase in the operating expenses budget, yet it looks like
a good place to actually get immediate savings. So to me, that
is the real conundrum, and it is a difficult one politically.
Senator Whitehouse. But, I mean, encourage us a little bit.
Assuming that we did this right, are we talking about
potentially saving the American taxpayer a couple of million
dollars here and there? Are we talking about potentially saving
the American taxpayer a billion dollars here and there? Are we
potentially talking about savings in the tens of billions of
dollars if we got this right?
Ms. Stanger. Senator Whitehouse, I think we would be saving
lots of money, probably billions of dollars, but I think more
importantly we would be saving self-government. That to me is
the central issue here.
Mr. Carafano. You know, I actually very much agree with
that. I think we are shortsighted when we look at this in
dollars and cents. We have a Government----
Senator Whitehouse. Bearing in mind that you are in the
Budget Committee. There are some obligations in that regard.
[Laughter.]
Mr. Carafano. And we have a budget for a purpose, right?
And the purpose is to have a Government that serves the people.
So the virtue of your effort, regardless of whether at the end
of the day the Federal budget is bigger or smaller--and I could
just say we could deal with entitlements growth and that would
solve the whole problem. But you know what? Even if we solve
the problem of Social Security, Medicaid, welfare, and all the
other Federal programs tomorrow, I would still say that this is
an incredibly virtuous effort, because what is at risk here, as
you well stated, is Government is supposed to serve us. If
Government is not contracting correctly, if they are not doing
the people's business, then democracy is at risk. And as I said
in my opening statement, this is a huge competitive advantage
for America. Tapping in to the most vibrant, exciting, capable
private sector in the history of the planet is an enormous
source of power. It is better than oil. And we cannot do that
if we cannot do this right.
So if you never could credit saving a Federal nickel but
you made a Government that served the people, I would add a
statue for you out there.
Senator Whitehouse. Final question. Was President
Eisenhower right to worry about the military-industrial
complex?
Mr. Carafano. No.
Senator Whitehouse. We finally have disagreement because
Dr. Stanger was nodding her head.
[Laughter.]
Mr. Carafano. Read the introduction in my book.
Senator Whitehouse. All right. So at least we ended with
some disagreement, although through a great deal of it there
was much agreement, and as I said, the agreement between
witnesses who come from different perspectives and points of
view is a very helpful place for us to move forward from. So I
thank you both for your areas of agreement and disagreement,
and thank you for your testimony and all the hard work that you
have put in in this area, and I encourage you to continue,
because we depend on people like you who are willing to look
hard and persistently at these important questions.
The hearing will remain open until the end of the day
today. Sometimes the hearing record stays open a week.
Sometimes it stays open 2 weeks. We are on a short leash, so
the hearing record will close at the end of the day today. So
if anybody wants to get anything in to add to the record, they
have to do it today. But the hearing is adjourned, and I thank
both witnesses for their testimony.
[Whereupon, at 11:41 a.m., the Committee was adjourned.]
[GRAPHIC] [TIFF OMITTED] T8155.083
[GRAPHIC] [TIFF OMITTED] T8155.084
Response from Daniel I. Gordon, Administrator for Federal Procurement
Policy
Questions for the Record
Senate Budget Committee
QFR's from Senator Warner
1) Can you describe some of the success agencies have
experienced in using strategic sourcing to date, and also
identify any future plans for strategic sourcing in other areas
of procurement?
As noted in my written statement, agencies are using
strategic sourcing to help them achieve savings and efficiency
goals. Agencies use enterprise-wide initiatives, such as VA's
efforts to leverage the buying power of its own medical cengers
through an integrated network of national and regional
contracts, and also participate in government-wide Federal
Strategic Sourcing Initiatives (FSSI). The current FSSI efforts
for express delivery services and office supplies are available
government-wide and further leverage the government's buying
power. In the case of office supplies, for example, GSA
projects government-wide savings of nearly $50 million
annually. Additionally, the Strategic Sourching Working Group
(SSWG) of the Chief Acquisition Officers Council is pursuing
FSSI opportunities for wireless services, software licensing,
and a variety of IT equipment and servcices.
2) Do you have plans to evaluate more strategic sourcing
opportunities with government-wide technology?
As mentioned above, we plan to evaluate government-wide
strategic sourcing opportunities for a variety of IT equipment
and services. To support this evaluation, we have expanded the
leadership of the Strategi Sourcing Working Group, the senior
governance body for FSSI, to include as Co-Chair OMB's Deputy
Administrator for E-Gov and IT. The SWWG is working closely
with GSA to identify new opportunities in wireless services,
software licensing, and other areas.