Obama's Budget Watchdog: Nancy Killefer

US President-elect Barack Obama(L) listens as Nancy Killefer speaks on Jan. 7, 2009 at the Presidential Transition office in Washington, DC. MANDEL NGAN/AFP/Getty Images

George W. Bush may have been the first President with an MBA, but President-elect Barack Obama is filling the role of the country's first "chief performance officer" with a partner from one of the world's top management consulting firms.

The task ahead of her is exceptional. Even as Killefer is charged with making government more efficient, her new boss has warned of trillion-dollar deficits for years to come. Killefer will oversee the "line-by-line" scrutiny of the vast federal budget Obama mentioned frequently during his campaign. And filling government jobs with talented, efficiency-minded individuals will be a major challenge as federal employees begin retiring en masse: The average age of federal employees is 46 and rising, according to . The public sector also has a higher proportion of older workers than the rest of the workforce. "Employees of government have been viewed as costs rather than as valuable partners," says Max Stier, the president and CEO of the nonprofit Partnership for Public Service, on whose board Killefer sits. McKinsey partners are often behind-the-scenes advisers to government officials, but large-scale government consulting engagements are less common, notes Tom Rodenhauser, vice-president of Kennedy Information, which publishes information on professional services firms. "The government can't afford McKinsey rates," Rodenhauser says. In addition, many government consulting contracts are for information technology gigs rather than the organizational and strategy work McKinsey and its peers specialize in. Outside the U.S., says Rodenhauser, the firm has traditionally done more government work, particularly on privatization efforts that involve the kind of mass reengineering efforts that play to McKinsey's strengths. What will Killefer's priorities be? If McKinsey white papers are any indication, she'll focus on improving transparency and reviving government . As Killefer and her colleague Lenny Mendonca wrote in a 2006 column, the Bureau of Labor Statistics stopped measuring productivity in 1996. "We think a radical new approach to transparency of how government programs are performing is required," the pair wrote in "Only this will push Congress to exert performance pressure on government agencies." They go on to suggest a Morningstar-like body called "Gov-Star" that would provide "completely independent measurement of government program performance."

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