How a small cadre of technocrats is trying to make government more efficient
The Obama Administration's huge ramp-up in spending has given rise to a national debate over the size and role of government. It has provoked fears the country will be buried in debt and fueled skepticism about government's ability to spend tax dollars wisely. So the pressure is on: If this is to be an era of bigger government, can Obama's people make it work better?
Jeffrey D. Zients, a little-known ex-consultant, bears a big chunk of the responsibility. He became the nation's first chief performance officer on June 29. His task: making sure the government's 24 major agencies and departments are running smoothly and getting as much bang for their budgets as possible. Working closely with Zients are Vivek Kundra, the chief information officer, and Aneesh P. Chopra, chief technology officer. "At 30,000 feet, the goal is to make government more effective and efficient by making it faster, smarter, and cheaper," says Zients, an intense, crisp-spoken 43-year-old.
Zients, whose name rhymes with science, says he wants to create a "new performance compact." He presses government leaders to set clear priorities and goals and to measure their progress, and he provides management and technology tools to help them deliver. In addition, Zients and his team swoop in to put out fires—such as embarrassing delays in GI Bill payments and the Cash for Clunkers program. The "SWAT team" is how Peter R. Orszag, director of the Office of Management & Budget and Zients' boss, refers to the trio.
Policy experts from the right and left are skeptical Zients can make any substantial progress in his mission. They warn that the federal government—with 1.8 million employees and more than 10,000 computing systems—has become so big and complex that it's nearly unmanageable. Management experts praise Zients for pressing agencies to set goals and show results, but they fear his approach isn't ambitious or grand enough to make much difference, given the task at hand. He's more pragmatic than visionary, they say. "These times require a rethinking of the federal government," says William D. Eggers, head of government policy research at Deloitte Consulting. "Unless we redesign the structure and systems, government will fall farther and farther behind business and society."
Zients disagrees. Although he is aiming to tighten up operations and squeeze more benefits from technology, he doesn't believe a radical reorganization of government is needed. "It's not a time for a brand-new vision. It's a time for execution and results."
Zients and his colleagues have shown they can move fast. This fall, when nearly 280,000 veterans applied for an improved GI Bill education benefit, the demand overwhelmed a stretched Veterans Affairs Dept. staff and an antiquated computer system. The VA sent out emergency checks of $3,000 to tide over veterans, but many were suffering hardships because of the breakdown. The VA asked for help from Zients at a meeting on Oct. 8. At 5:30 the next morning, Zients' team and VA managers caught a flight from Washington to a VA document-processing center in St. Louis. There they paired off with claims processors at computer workstations for three hours and sized up the problem.
On the return flight, a dozen people gathered around Zients and Under Secretary for Benefits Patrick W. Dunne in the aisle of the aircraft and divvied up tasks. VA Chief Information Officer Roger W. Baker recalls that Zients came up with a breakthrough: Since it might take months to hire and train new VA employees, why not outsource simpler tasks to a private firm? The idea has sped up the payments, though there are still some delays. Baker says it demonstrates the quick, commonsense approach Zients, Kundra, and Chopra brought to the crisis.
The three have a history together. Chopra worked under then-CEO Zients at the Advisory Board, a research company that promotes operational excellence in the health-care industry. Later, when Chopra was Secretary of Technology for the Commonwealth of Virginia, Kundra worked for him.
There's no mystery about who runs the SWAT team. During a BusinessWeek interview in Zients' corner office in the Eisenhower Executive Office Building, he sat at the end of a long table and ran the 90-minute meeting as if it were an audit review, moving quickly from topic to topic and calling on Chopra, Kendra, and adviser Michael D'Amato to fill in details.
A native of D.C.'s suburbs, Zients went into consulting after graduating from Duke University, working at Bain and Mercer Management Consulting. He joined the Advisory Board in 1992 to become head of strategy at age 25. David G. Bradley, the company's founder, made Zients CEO three years later because of his relentless drive. Bradley, now chairman of Atlantic Media, predicts his protégé will be a big asset to the government. "Any discrete problem he's allowed to go deep on, where he's given authority, will be resolved to a high standard," he says.
Zients can come across as intense, but colleagues say he knows how to tone it down. He relaxes by going to Washington Nationals games and spending time with his wife and three sons. Agency managers he has worked with say he is more collaborative than controlling. "[He tries] to help with expertise, ideas, and analysis. [He doesn't] dictate or berate," says Robert S. Rivkin, general counsel for the Transportation Dept.
A MIDDLE PATH
Still, the precedents for trying to boost government performance are sobering. Clinton's "Reinventing Government" initiative led to good ideas but little progress. George W. Bush's top-down approach was aimed at making managers more accountable and outsourcing work to private industry. Some managers felt constrained and outsourcing was no panacea.
Zients is taking a middle path. He has asked agency heads to come up with a handful of high-priority operational goals, with firm deadlines and measurable results—but he leaves it to them to choose the goals. He also encourages letting smart ideas bubble up from the lower ranks.
The goal-setting process won't end until Feb. 1. But Zients showed BusinessWeek a preliminary plan for the Interior Dept. The goal is for the department to green-light enough renewable energy projects on Interior-managed land by 2011 to generate at least 9,000 megawatts—a fivefold increase. Zients says that although most of the goals have deadlines one to two years off, he plans to measure progress on a regular basis.
Zients has set his own cross-agency priorities. They include improving the use of technology, making contracting more efficient, and speeding up hiring. His department just unveiled an initial set of contracting reforms aimed at taking advantage of the government's purchasing power and saving $40 billion annually from its $500 billion bill for all types of contracts with outside vendors. Each agency is required to come up with a plan that will knock 3.5% off baseline spending on contracting in fiscal 2010 and another 3.5% the following year.
Technology, on which the government spends $76 billion a year, is a key piece of the performance-improvement plan. Until now, each agency ran its tech operations independently. As a result, the number of data centers rose from 438 in 1998 to over 1,000 today. Kundra plans to get agencies to share resources, in part by tapping so-called cloud computing services. In an early test, the government cut the costs of running its main Web site 70% by outsourcing to a cloud provider.
One of Kundra's moves so far is a computer dashboard that publicly exposes government tech projects, warts and all. The Web site, with graphs and charts reminiscent of a car's dashboard, shows an overview of federal IT spending and detailed breakdowns by departments and projects. After the site was unveiled on June 30, it was flooded with comments. In response to one, Kundra is requiring the agencies to publish their plans for corrective actions on the dashboard. "We're changing the government from being secret and opaque to being transparent, open, and participatory," he says. The dashboard prompted the VA to suspend 45 of its 300 tech projects that were behind schedule or over budget.
The VA also solicited performance-improvement suggestions from its own workforce of 19,000 using a social networking-style system of voting on ideas. More than half of the employees participated, and 70 proposals are now wending through a review process. "The fact that we're being asked for ideas is really wonderful," says Herman Cohen, a VA training officer. "You can throw in an idea without having to go through the bureaucracy."
Zients and his team use what he calls a "divide and conquer" approach. They gather in his office every Thursday to compare notes about ongoing projects and to launch new ones. Then they split up the tasks. "We get involved early. We uncover root causes that might be different than what people thought was the problem" says Chopra.
In their first SWAT-team engagement, Zients and his colleagues were called on to help U.S. Citizenship and Immigration Services (USCIS) handle problems with the green card application system. It can take years for applicants to get approvals, and in the meantime, it's difficult for them to find the status of their cases. On June 25, Senator John McCain (R-Ariz.) and other legislators criticized the system to President Obama at an immigration workshop, and the President gave the USCIS a 90-day deadline to make improvements. Zients and the SWAT team helped the agency with an extensive upgrade to the site, reorganizing the information and making it possible for applicants to get more detailed status reports on their cases. After the new site was unveiled on Sept. 22, 50% more people used the status feature and the volume of calls to the agency's customer service call center dropped by 22%. "We figured out that what the applicant was looking for was not an easier way to get information; it was getting information they didn't have access to before," says Chopra.
But the difficulties with the SWAT projects show how hard it will be to overhaul the government's operations. Take the Cash for Clunkers program. The Web site auto dealers used to submit applications for rebates crashed repeatedly after the program was launched and took so long to process payments that many gave up in disgust. "The payment side of the program was a disaster," says Craig Ploetner, president of Towne Auto Group in Union City, N.J. At one point, his Chevrolet dealership was waiting for $70,000 in checks, and he quit the program.
Zients and his colleagues knew they were in for trouble when they were called to help fix the program on Aug. 18. The main problem was excess demand. The computer system had been built for 2,000 applications per day, but more than 20,000 were coming in. So it crashed frequently. Kundra recalls being up until 4 a.m. one night because of a particularly bad crash. They scrambled, increased the number of document handlers from 400 to 4,000 in two weeks, and added dozens of computers. By mid-September all the dealers were being paid. But the reputational damage had already been done.
The GI Bill hasn't been much better. Christen DeNicholas, a 23-year-old veteran, has been scraping by since starting at Savannah College of Art & Design in September because her payments have been delayed. "I can't even afford Cocoa Puffs," she complains. "Does it make sense to have government do more when it can't take care of what it's doing now?"
Until Zients and his colleagues come up with an answer to DeNicholas' question, the critics of Big Government will have the force of public opinion on their side.
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In an era of big government, how can officials execute effectively? Deloitte Consulting's William D. Eggers and John O'Leary aim to answer that question in If We Can Put a Man on the Moon...Getting Big Things Done in Government. The book examines 75 initiatives since World War II and identifies what has worked and what hasn't.
To view a podcast interview with Eggers, go to http://bx.businessweek.com/obamas-stimulus-plan/reference/