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brad golson: all right. good morning, everyone. welcome to the march 27thpresident's management advisory meeting. my name is brad golson, thedesignated federal official for this board. thank you for joining us. reminding you, thisis a public meeting. so for those present andthose joining us via webcast,

thank you for joining us. for those around thetable; before you speak, remember that you mustpress the red button. when you're done, it's probablyin our best interests that we untap it. we can only have threemics open at one time. so again, thank youall for being here. with that, i will turn overto my chair, beth cobert. beth cobert: all right.

i'm starting by violating brad'srule of turning on my button. thanks for joining us. apologies to folks here andthose of you who might have been waiting on the webcast forour being slightly late. there was a long line ofschoolkids waiting to get in to visit the executive officebuilding in the white house today, and we were -- the numberof people were behind us in line. we could probably slidedown a little bit.

we've got a broad agendatoday to go through, and we're really excitedabout the conversation. i'd like to extendmy thanks, as always, to the members of thepresident's management advisory board for the time that theyinvest in helping us work towards our collective goals ofhelping make the government that we all here in d.c. andelsewhere around the country are working on moreeffective, more efficient, and more responsive to theneeds of the american public.

and what we wanted to do todayis to really engage in a dialogue on some of the placesand get your input and comments, as well as the comments from therest of the folks around the room, from the various agencies-- and agencies that are here, around how we can continueto make progress against the management agenda, andthe things we're doing. so with that -- and i alsowanted -- and i'll go a little bit briefly, because -- tomake sure we got time for the conversation -- i wanted to juststart with a brief update on

some of the things and thework we've been doing on the management agenda. these members of the advisoryboard and others who couldn't be here today were really criticalin both shaping the overall agenda and the action planswe've put in place to work against it. and i just feel like it's bothour responsibility -- all of you, and a good chance for allof us to step back and say, "where are we going?

what are we doing?" i'd say, overall, i think we aremaking really good progress and we still have anopportunity-rich environment in front of us, and so more inputand more good suggestions will be really helpful. if you flip to page three,you'll find a slide. i guess it's -- which has thecore elements of the agenda, the purple/green/orange/blueslide, which is sort of the core wekeep coming back to in terms of

what are we trying to do. and we'll talk about acouple of these things today. the next slide, which i'm notgoing to go through in depth, we took these and made themanagement agenda goals, as you all know, part of thecross-agency priority goals. we're mandated through the gpramodernization act to have a set of cross-agency priority goalsthat we both are committed to deliver on -- the faces of theaccountable officials are up on performance.gov -- and we arerequired to both set up plans

and report it on progressquarterly to congress and, importantly, to theamerican public. and so we post the resultson how we're doing on performance.gov. what i've included in the decktoday is a bit of a highlight and i just wanted to call outa couple of things in terms of where we are. i'll come back to customerservice at the end because we've done some things there.

we continue to do a lotof focus, as you know, on smarter it delivery. effective it is at the core --not just because we need it to work well, but because we needthe government to work well. you can't do anything in allof our lives together without technology touching it somehow. and so unless we get that rightas part of the backbone we will not be able to deliver. and tony scott is here tojoin us, our new federal cil.

we'll hear from hima little bit later. we are thrilled that tony ishere and part of the team. we also on the efficiencyfront -- again, we want to make sure we'regetting return for taxpayer dollars. we talked with this group in thepast about bench marking for administrativesupport functions. i have just completed my secondround of visits to all the cxo councils, where we told themlast year we were doing bench

marking, and we're coming back. so i told them that i'm back andwe're coming back again next year. when we did this last year wecollected a set of data across we collected about 40 differentmetrics mostly round costs, virtually all around costs,and that was really helpful. we had meetings with everysingle agency to talk about where they were, and hear fromthem: what it showed them about performance and performinggaps both across agencies,

but really importantly,inside of agencies. most of the agencies are anagglomeration of different activities, sometimessimilar activities. in the case of epa, you'vegot lots of regions, or v.a. in the case of thedepartment of agriculture, you've got (unintelligible), orcommerce, or hhs, or frankly, many places. you've got manydifferent activities. you've got research activities.

you've got citizenservice activities. you've got statisticalactivities. and so the best comparators areoften not always inside your agencies because you've only gotone sort of core research thing. you want to know how thatcompares to the research function at hhs, or what's thenational science foundation doing? so we both got the data at thecomponent level and with the support from gsa built a very,very simple tool that enables

people to say -- it's like,very basic: "these are the components. this is the metrici want to look at. these are the components. show me the data." this year we'll have time seriesand importantly we are starting to add data onquality of service, and we'll come back to this whenwe talk about shared services later today.

so with gsa support we sent outa survey to 130,000 people, which in the federal governmentis actually a small survey, and have enough of aresponse rate from that, that we can now use it to sortof look at cost and at least some indicators of qualityfor what we're doing. this is a big effort and one ofthe things that we're really excited about isinstitutionalizing it, bringing it together, and doingit this year earlier in the spring so we can make it part ofthe budget formulation process.

we'll hear more about sharedservices in category management a little bit later. we continue to dowork on open data. we have a new u.s. chief data officer at thefederal government working in ostp named dj patal. he's fantastic and is reallygoing to take the ball forward. and lastly one of the thingsi'm most excited about, and we'll hear about theemployee engagement piece of

this today, is the work we'redoing on people and culture. i know this group contributeda lot of discussions early on around the scs -- thescs leadership core. we have built those thingsinto training programs. and we've also -- i was tellingsam when we were chatting before the meeting -- have createdan advisory group of scs from across -- and senior leaders. there's scs, s.l., s.t.,and foreign service, a bunch of different categories-- across the federal

government, who are sort of anadvisory on how do we leverage the scs we have, bring moregreat people into government, sort of revitalize thebrand of that group? we've combined them with anumber of the agencies where we're running pilots ondifferent ways to manage and lead that group. and so we had that group and thechief human capital officers from the pilot agencies joinus for a meeting last week. we've formalized thisgroup and actually,

it was an incredible -- becausethe president came and spoke with this group for 45 minutes. actually, the moreaccurate description is, the president came and listenedto this group for 45 minutes to hear their ideas, and hischallenge to all of them was, "be bold. think -- push harder." and it was an incrediblyenergizing experience. we also -- building up thespeech he gave to this group in

december, we've endedup with an, actually, list serve of all the seniorleaders across the federal government, which is a harderthing to get than you would think, but that'sa different story. we can come backto that one later. but we now have it, and so we'retrying to also think about how do we continue to communicatewith that group and get tools off to them, andtown out to them, and sort of create abunch of enthusiasm.

and we're excited about that. we're doing a lot ofthings on engagement, what you'll hear aboutfrom some groups later. i got to talk at thedepartment of agriculture, had all their seniorleaders together. quite inspirational. how many -- 300 plus folks inan auditorium talking about employee engagement,leader effectiveness. the secretary was there.

he was fantastic. so a bunch of good things. on customer service: a fewthings we owe back to you. some of you will recall i thinkit was two meetings ago we had a discussion aboutcustomer service awards. i remember liz's advice veryclearly that if the guidance for the award was, like, longer thanit would take to describe what a person had done, we hadthe wrong system in place. we tried to execute that.

it's not -- i mean, it'sprobably a little longer than it, but not much. and basically we have chargedeach agency with developing or leveraging a customer serviceprogram that recognizes individuals and teams providingdirect front-line service. we've actually put that out. agencies are startingto implement that. they will have nominations comeback to us at the beginning of the summer, and wewill then take those,

and have a presidentialrecognition in october. we are really excited about thisbecause there's so much great stuff that happens, and we thinkthat it's a real opportunity. but we also tookthis group's advice. we didn't want to makethis too prescriptive. and honestly, the wayit works in each agency, the existing things they haveare all a little different. so we've sort of said,the basic requirement is, you need an awards program thathas to recognize

front-line folks. it can't just recognize just 10,but it can't recognize 10,000, so find the right numberfor you between that, and come back to us in thesummer with people your agency thinks are great, and then we'llfigure out how to both recognize them and -- male speaker: beth -- beth cobert: -- findthe best of the best. male speaker: -- sorryto interrupt, but --

beth cobert: yeah? male speaker: -- couldn't youhave one government-wide award, and then awardsspecific to each agency? beth cobert: so the idea isthese will come in together. there will be a presidential-- let's sort of call it the presidential customerservice award, that's the whole thing -- andthen -- but each agency's -- the mechanism for trying to make itcompletely consistent will flow up through the agencies.

a little bit easierto do it that way. male speaker: yeah, i'm justthinking maybe the agent -- and i'm sorry -- beth cobert: go. male speaker: -- and maybethey're doing this already, but independent of thegovernment-wide presidential award, the agencies themselvescould be doing their own programs that are particularlysuited to theirs -- using the presidential one as a model.

beth cobert: that's the idea. maybe i didn'texplain it clearly. male speaker: yeah. i'm sorry. beth cobert: so the idea -- theysort of figure out what's the best way to do customer servicerecognition inside their agencies. and you've got the flexibilityto do it for both individuals and teams.

of their group that they thinkgets their agency piece -- those, then, get funneled off -- beth cobert: -- and wetry and create a cross.0:11:33.192,1193:02:47.295male speaker: i see. male speaker: got it. beth cobert: i thinkthat's what you mean? male speaker: yes. yes. beth cobert: good. male speaker: thank you.

sorry. beth cobert: thenthat's what we're doing. male speaker: good. (laughter) beth cobert: (laughs)we've also -- sort of, if you think aboutthat as top down, we've started somestuff bottom up. we have a -- you know, 85percent of the federal work force does notsit in washington,

d.c. it's hard to think aboutwhen you're here, but it's true. and so lots of the service tocitizens actually happens much closer to where americans live. and so we've started aninter-agency customer service group in denver. ssa -- carolyn is theagency lead on this, and she and her teamhave been phenomenal. and so ssa: there's a largefederal government community, actually, in denver and so we'vecreated a cross-agency group

there of front-line folks. we had a workshop that i joinedto kick off at the beginning of march. we had -- schwab's call centersare actually based in denver, and the guy who runs the schwabcall center came and talked to the group about they thinkabout client satisfaction, the journey they wenton from, sort of, the depths to really goodrankings, and what that took, and how they did that.

i think the group foundthat really interesting. and so one of the things we cantalk about is -- here or after, is how we can leverageyour personal experiences, or folks on your team, whoare in different places, because i think getting that outto the folks doing the work -- i know the individuals in theroom came away with some really specific ideas aboutwhat they wanted to do. there was a great descriptionfrom him of, you know, when they get a survey backwhere someone's unhappy,

there's a hotline to the managerwho reaches out not to sort of critique the persondoing the service, but to actually find thecustomer and find out what went wrong -- how can i fix it? have we satisfied you? and so people took away fromthat, a bunch of really, really tangible,actionable ideas. and we are working on thisfederal feedback button pilot that will be rolling out soonboth for online and a place

where we want to start innon-digital environments. ssa, again, has been at theforefront in volunteering. to talk about we dothis: very simple, right? the how do you like it? one, two, three, four, five. basically, yeah. and make it simple. and it's not perfect, butit will give us a start. so more to come there.

and the last piece, whichi will leave for you later, but the -- the other things thisgroup has worked on -- real estate. we now have a -- we have freezedthe footprint, you might recall. we now have reducedthe footprint, which was released this week,thanks to dave's great work, with actually real data aboutwhere the footprint is. so it's amazing to doa database strategy. we got all sorts of other things-- i just literally printed out

-- these are the last three --this week's blogs in the omb thing on stuff we'redoing on the agenda. so lots of impact. you guys should feel greatabout the contributions. and that was the wiz-bangversion so we can get to the conversations. one of the places wherewe're doing a lot of work, building off of where we were onstrategic sourcing but frankly -- looking at what worked andwhere we weren't getting the

traction we felt like weshould, is around strategic sourcing/category management --we're sort of -- and how we move the ball forward there. anne rung, who is theadministrator of the office of federal procurement policy,who was confirmed in -- anne rung: september. beth cobert: -- september? anne rung: (affirmative) beth cobert: -- hasbeen on a whirlwind.

and i'm going to turn it over toanne and have her describe a bit of what we're doing, and thenalso get some guidance from all of you. and i will encourage the restof my colleagues in the room to both add questions and comments. i know all the people in thisroom and this is not a shy group. so really this meeting is mostuseful if it helps all of us, individually, movethe ball forward.

so as both a user and customerof category management, or someone trying to do things,please feel free to chime in. anne rung: thank you. so i think if you were asked todesign the optimal structure for procurement, or the optimalorganizational structure to drive performanceand efficiency, you would not come up with thecurrent federal structure. so we have over 3,300 differentcontracting offices across the globe, comma, that i know of.

and lots ofduplication of effort, and very little visibility intowhat everyone else is doing, so absolutely --almost no transparency. one of the results is that wehave huge price disparities, so we're all paying vastlydifferent prices for the very same items. and so, you know, i think a lotof well-intentioned acquisition reform legislation has hadsome unintended consequences. so at one point, for instance,in reinventing government they

called for an end togovernment monopolies. and we're talking aboutdifferent functional areas, but one of the areas they werereferring is gsa being the sole entity to purchaseit acquisitions. so they wanted to bring thatauthority back to the agencies, but one of the unintendedconsequences was that we had this massive proliferation of itcontracts -- very duplicative contracts across government. so we now have this model thatwe've got to do something with.

and we'd like to create a verynew framework for thinking about how we tackle this space. so on the next slide, you'llsee that we've taken the $440 billion that we spend every yearand we've removed the weapons spending, so we're really leftwith what we think is common spend across government, whichis about $270 billion in spend. and we've divided itinto 10 super categories. and this was designed based ona dod template and working with other large civilian agencies.

and this is really sort of aguiding and organizational principle for us moving forwardon how we tackle this major sort of initiative. and i've met witha lot of companies, like macy's and boeing, totalk to them about how they do category management. i've talked to the u.k. about how they've donecategory management. but what i've found is no onehas really tried it on

this scale. so in the u.k., they're talkingabout $14 billion in common spend -- boeing and othercompanies like macy's is much smaller, so how do you reallytackle $270 billion in common spend? how do you bring someorganization and transparency into this space? so the way i'm thinking abouttackling this is really in two ways: one, thinkingabout it in phases.

so i think phase one would bejust shedding light and bringing transparency into existinggovernment-wide solutions, contracts, into pricinginformation so our contracting officers could betternegotiate pricing. bringing transparencyinto best practices, so providing common templates. so really critical piece of thiscategory management is what gsa is designing: theacquisition gateway, which we'll walk you through.

so it's an online site, wherecontracting officers can go to find one, existinggovernment-wide contract, so they're not going out tothe market and creating new, duplicative contracts. two, where they can find pricinginformation for the first price. ideally prices paid but we'restarting with prices offered. and also best practices, socan we give them templates for statements of objectives? so we're moving away from the200 page overly prescriptive

government specific rfps, tosort of something that's a little more streamlined. so laura will walkyou through that -- jeffrey kindler: can i justask you a quick question? anne rung: yeah, absolutely. jeffrey kindler:-- if i can just -- beth cobert: (unintelligible)interrupt any time -- jeffrey kindler: -- i just -- beth cobert: -- please do.

jeffrey kindler: -- i justwanted to interrupt, though -- jeffrey kindler: -- thequestion, though is, so people get onthe gsa schedule, and what we've been toldrepeatedly is that every time that an agency wants to goout and get a new service, whatever it is, they negotiatedirectly with the vendors set, and get a different set ofprices than what is available on the gsa schedule, and sothat's done every time, is what we were told.

anne rung: yep (affirmative). jeffrey kindler: and so thequestion is -- that seems like a pretty broken system. and how do youcentralize that system? and what we haddiscussed was, let's say, nit having thetelecommunications category, having an expert who would be sogood at the notion of just -- of negotiating with the carriersthat no one would want to go around them.

they would say this person isthe very best at dealing with at&t, verizon, you know,the usual suspects. so there'd be a real incentiveto leverage that expertise. they would know whatthe prices were. they would know whatwas done previously, and each agency wouldn'tnegotiate separately. anne rung: yeah. dan tangherlini used tosometimes refer to the schedules as perhaps like kodak.

you know, decades ago? so it's probably anantiquated model. having said that, they'renegotiating these master contacts based on a volume ofone, so every agency is, indeed, expected to then negotiatefurther off of that contract. but yes, you then end up havingtwo or three layers beyond that master contract. but that is a nice lead in tokind of how we're thinking about category management, where youhave teams of experts really

running these categories. beth cobert: andi think the gap, because i know this group had alot of conversations about this in category management,the challenge, i think, we had in trying to implementthat -- because, honestly, we -- the conceptsare still the same. it's this pact to implementationthat got in our way, right? we all would nodour heads and agree. you know, trying to persuade-- or even mandate, right,

that agencies go through this? like, there was no data. there was no way to sort ofconvince somebody -- who wouldn't then go around(unintelligible) like you're paying too much, it'scosting too -- so like, one of the things -- and that'swhy we sort of stepped back and said, how do we getback to this vision, that all of you havehelped us develop, is -- this lack of transparencywas really a problem.

like, you really didn't know. and so getting something therethat actually helps people do that is sort of one thingwe went back and said, "without that, we can't getthe --" we still are going to, by the way, put in placea category manager. in fact, our job descriptionfor the it category manager -- anne rung: just went out today. beth cobert: -- went out today? anne rung: so this would be ourfirst government-wide full-time

category manager. (talking simultaneously) beth cobert: -- the levelof expertise in that. but it was the -- atleast, my view was, we had the rightconcept -- sort of, the implementationof it kept stalling, and i think it's because wedidn't have the data to get both ourselves there,or anybody there. jeffrey kindler: and on thepoint of the data -- and i think

it's great that you're startingwith just basically getting the facts and what the data is. and while this is on anobviously, much greater scale, i think all of us in corporateamerica have experienced something very similar to this. beth cobert: yeah. jeffrey kindler: and one of thethings that's pretty obvious, and therefore, you're probablydoing it -- but one of the things we discovered --we had 150,000 employees,

every one of which thought theywere free to hire -- i'll make it up, it's a consultingfirm that begins with an m. just as imaginary. anne rung: a lot of peoplearound the state will have worked for them. jeffrey kindler:and the problem was, everybody was cuttingtheir own deal. beth cobert: yep. jeffrey kindler: so what we didwas, we asked the firm itself,0:23:01.379,1193:02:47.295anne rung: yeah.

the vendor, to provideus with that data, as opposed to trying tocollect it internally, which is very hard to do, sothe deal was, i went to the, you know, senior relationshippartner, and i said, "tell me everybody who's usingyou, and what they're paying, " on condition ofdoing business with us. anne rung: right. jeffrey kindler: so if you usethis kind of parrado approach and hit the really big billersin these different categories,

and rather than try tocollect it internally, make it the job of the vendorto tell you what they're doing, and then you can --because they have data, -- jeffrey kindler: -- they knowexactly who's paying what. jeffrey kindler: -- and theyhave it -- they can press a button and give it to you, whichis a lot faster than you trying to collect it yourself. anne rung: and we've found thatwhen i was at the department of commerce with alan, where wewere trying to collect prices

paid for dell computers, weattempted to get that from our bureaus and we discovereddell had the information -- enrique salem: of course. anne rung: -- in a snap. and it was betterinformation, right? but here's what happens. everybody ends up -- so we havethese issues, as jeff said, and what we had to do is, weused to have to measure every quarter at the executive level,we would see what we called

"spend under managementby category." and so what would happen is,if you pick your category, that got rolled up tothe executive team, and the executive team then hadthe ability to go back and say, "no, we don't have the targetpercentage under management, " and then they'd look at eachexecutive and say, "tony, what are you doing? enrique salem: "becauseyou're at 22 percent, and we said we'd be at 40percent spend under management

in this category." and so if you can't measurespend under management consistently, and there'sno ability to say, "yes, we will hit our target at xpercent by y date, and -- anne rung: absolutely. enrique salem: -- everybody'sheld some level of accountability, my question -- enrique salem: -- really comesdown to -- as a ceo of a company, i have the ability tohold people very accountable.

how do you hold peopleaccountable to hit that spend -- spend under management target? because, otherwise, i don'tthink you'll get there. no, that's a fair point. so on first, how do you firstbaseline spend under management? how do you even know whatspend is under management? we spent the last three monthscoming up with a methodology to really track this acrossgovernment, creating a, sort of, three tiered approach.

so level one, leveltwo, level three, level three being the mostmature spend under management, and we're not at levelthree for anything. and that would be when you havea government-wide solution and a full-time government-widecategory manager. but we have someagencies in level one, so we've begun tocollect that data, and we're close to revealingthat number of where we are at level one spendunder management.

when i talked a little bit abouthow do you approach such a massive enterprise -- you know,to really try to drive home category management? and the way we're approachingit is not just in phases, but we want to go deepinto one category, and we're starting with itbecause there's a lot of momentum around it. it made the gao high risk list. we've got tony's great talent.

and so we are -- beth colbert: (unintelligible)we have a new law called fitara that requires usto do some things. anne rung: yes, and we have somedata through the portfolio stat process, so it made senseto us to start there. we are now going out to hireour first it category manager, who will report to tony. so in their performance planwill be -- one of the metrics will be how much spendis under management?

we also want to set a goal forourselves as part of a dashboard that we presentto the president, who asked for quarterly, onwhere we are at spend under management. and we think that will be a goodincentive for our agencies. enrique salem: and are theagency heads incented in any way? what -- so how do they -- howdoes the agency head benefit from participatingin the program?

beth cobert: so i'm going toask some of the agency folks -- beth cobert: i'm looking at myfriends on that side of the room. beth cobert: ellen, or ned,or anybody else want to? ellen herbst: so hi, i'mellen herbst from commerce. i'm the cfo asa here for dpsac. as anne mentioned, she was atcommerce and she got us started on the -- we were calling itstrategic sourcing back then -- and we are true believersbecause we have experienced

the savings. and when we started it was aheadof sequestration and budget caps and the savings we saw overallin the department were obviously part of protectingmore mission dollars. now, having said that, i wantto make a point around that, and then make asuggestion as well. so what we did find was thedollars that would -- the cost avoided, if you will, was notobvious enough to the individual program managers onthe mission side.

so we've recognized we have todo a much better communication job to sell them on thebenefits, that's number one. and number two, the acquisitionstaff: it takes work to collect all this data, come up withrequirements that everybody will agree to, and then, frankly,force people down the chute of these contracts. and i wanted to share -- someof you -- i know dave has heard this -- we are also engaged ina shared service initiative in commerce and one of theareas is acquisitions.

and we are a verydata driven agency. we discovered that 88 percent ofour transactional activity in the acquisition shops were onwhat's called the simplified acquisition thresholddollar level, which is buyingsomething under $150,000. eighty-eight percent of theactivity, 18 percent was spent. what that did for ouracquisition people is go, "holy cow. if we can find -- a, findsomebody else to do this for us,

b, dive into what thatrepresents in terms of what we're buying and makeit more automatic, " all of a sudden we've gotthe acquisition people pretty excited about the ideaof working on this. because of what they seeis, in a time of diminishing acquisition workforce, you know, putting their best people on ourmost important mission critical unique buys, and lettingsomebody else deal with what is commodities stuff.

so just offer that. that's pretty new data. anne rung: i know, i'm shocked. ellen herbst: i know. well, it's the old ad20 rule. ellen herbst: right? ellen herbst: so yeah. it was transformational in thethinking of our acquisition leaders when they saw that data.

yeah. krysta harden: cani just add, beth? krysta harden: just, talk abouthow do you get employees to buy in and understand there'senough benefit to them? for us, we started a processabout three years ago -- blueprint for stronger sharedservices strategic sourcing. when finally folks kind of wokeup is when we had -- we saved $1 billion. no furloughs, no rifts,no shut -- you know,

all the things that would'venormally have happened otherwise. and folks and vanpools wereseeing -- you know, on fridays, they're not full, because otheragencies were having cuts. we did not. and that's how it --the light bulb went on. it actually doesmake a difference. beth cobert: krysta can you --krysta harden is the deputy secretary at agg.

krysta harden: oh, sorry. beth cobert: and folks, both forthe benefit of our guests who don't all -- krysta harden: sorry. beth cobert: -- go to meetingwith you all the time, and for the folks who arejoining us on the webcast -- if you just say who youare before you speak, it will just help folks putyour remarks in context. krysta harden: thanks.

beth cobert: thanks, krysta. krysta harden: thank you. beth cobert: ron, i'm sorry. ronald williams: that's okay. just a couple ofcomments and questions. one is, is there a -- excuseme, thank you -- is there a development of toolsthat are shared? because it seems thatthe data analysis, the collecting ofthe information,

as well as the communicationtools that help demonstrate the impact on the average employee-- if each agency has to develop that, that's a, kind of, arduousprocess as opposed to thinking about this as a toolkit that canbe shared and made appropriate, so that people can really focuson the task as opposed to figuring out the infrastructure. the other comment i wouldmake centers around reporting intervals. and if you think about reportingintervals on mission critical

activities, if youdo it quarterly, you basically get fourbites of the apple a year. if you do it monthly, youget 12 bites of the apple. and if you're thinking aboutperformance improvement on something that'simportant, personally, i'd rather have 12opportunities than four. now, somewhere in there, eachgroup has to find what the right answer is for them, but i wouldthink deeply about the reporting interval and earning the rightto less frequent

beth colbert: thatis a really -- ronald williams: so -- beth colbert: yep. ronald williams: -- you know,when you hit a certain amount of spend under management, you getto go to every other month, or every thirdmonth, or whatever. but i would encourage you tothink about how to apply -- anne rung: that's probably ahuge incentive for the agencies, more than money.

beth cobert: i will put thatdown as -- one of many -- but that is a great idea. many, many great ideas, butthat's one we can actually like. i want to take your commentabout tools -- we are trying to build some tools, and ithink what this conversation illustrates, to me, is sort ofwhere -- as we were trying to implement, sort of, the sameprinciples that you guys had talked to us about, sort ofwhere we honestly got a little bit stuck.

and it was partly this tools anddata that we sort of -- like, you'd say to people,should we do this? and they would nod theirheads, because of course, you should do it. but as we move we gota little bit stuck. and so i want to talk -- i'mgoing just do a -- laura, if you can do the quickgo-through of the basic tools we're working through to try anddo this -- except sam's going to talk first.

sam gilliland: yeah, and thismay -- this is just a question that may actually be asegue to that comment, but -- and how do you know on-- let's just choose it since that's where you're focused. we talked about acouple concepts. one was spend under management. and then jeff's example wastrying to understand total spend. how do you know that thenumber is $50 billion?

and at, you know,one of the problem -- anne rung: great point. sam gilliland: -- yeah,the only problem -- anne rung: -- because idon't know it's $50 billion. sam gilliland: okay. okay. because i -- we had heard inprior sessions that some of the procurement is so deeplyembedded within -- sam gilliland: -- the agencies,it's very hard to ferret out --

all of that spend. so is this just your kindof rough guess of this? or do you really feel likeyou have better data now -- anne rung: no. sam gilliland: -- thanyou had, say, a year ago, or two years ago, whenwe talked about this? anne rung: so great question. this is a very rough cut. and i know it's not accurate.

and so the first job of thecategory manager is going to be to dig through this data, andreally tell us what is the spend for it? we don't know that. it is embedded inother categories. and so this $270billion will change. jeffrey kindler: sorry, butyou -- i'm sorry to interrupt, but -- you do know, again,using an ad20 approach, you do know who the vendors are.

anne rung: we do. jeffrey kindler: so why notask the vendors how much we're spending with them? anne rung: so the vendors -- aparticular company may have lots of different spend areas, andsometimes the it is buried a contract for professionalservices, or some other service, so it's very difficult to get atwhat exactly is your it spend. but i think, if you can get tothe level two and three data, you'll have a clearer picture.

beth cobert: and i think thisidea of using the vendors as part of this process, is a -- jeffrey kindler:yeah, i'm just saying, if you know who the vendors are,ask them how much we're spending with them, and inwhat categories. they may account for itdifferently than we do, but that's going to beextremely accurate information. enrique salem: you know, theproblem though, as i've seen it, you've gone primes,you've got subcontractors,

so that's going to-- that indirection, is actually going to make itmuch more complex than the m example you gave -- -- but it's stilla worthy endeavor. anne rung: absolutely, and wewill start with the vendors. jeffrey kindler: can i just -- jeffrey kindler: -- i'msorry to keep jumping in -- beth cobert: oh, no, go ahead. jeffrey kindler: -- but i wantto go back to enrique's original

question, and i ellen'scomments just for a minute. so problem i've experienced inthis field is that the true believers are the ones thatreally do experience savings. they're not the problem. the problem are the people thatare cutting their own deals that think they will do better thanif they participate in the whole. anne rung: yep. jeffrey kindler: sothe trick, to me,

is you've got to find a way of-- and you can't just discipline them and say, "you know what,for the sake of the greater good, we're going tomake you pay more." that's against human nature. so the trick -- and human natureprevails in most organizations, not always, but -- i think thetrick is to find a way to share the overall savings, even withthose people that may, today, be paying less, because they'recutting their own deals. because they're the ones thatare going to be the problem,

in my experience. people like alan -- who totallyget it, and are benefitting it, they're going to be all over it. but there's agencies in thisgovernment, i'm guessing, that are out therecutting their own deals, and their view is"stay away from me, because i can dobetter without you." and they're goingto be the problem. so you've got to find a -- goingback to your original question

-- you've got to find a way toincentivize them to participate for the greater good. anne rung: that's a great point. and i think every agency canalways point to one off, to say, "i can find thisless expensively." and we have to reinforce thepoint that in its totality, it's a savings for their agency. jeffrey kindler: right. anne rung: good point.

beth colbert: can we dothe whirlwind tour -- anne rung: yes, let'swalk you through the -- beth colbert: -- of thetool -- yes (inaudible) anne rung: so this tool isdesigned to support category management, and really shed alight on existing contracting solutions, so we heard from ourcontracting officers: they have no idea what existing contractsare already out there, so they go out tothe open market. they don't have access topricing data, or best practices.

we want to have everycontracting officer go to this site, every morning, beforethey start their day. laura stanton: thank you, anne. my -- laura stanton, generalservices administration, head of the commonacquisition platform. so what we're call -- thisis the acquisition gateway, and as we'retalking about tools, and as we're talkingabout the changes, it's a massive change managementeffort that we need to drive

through our government. and it needs tooccur on two levels. it needs to occur -- what ithink of as the institutional level, where we have thespend under management, we have documentation, andit needs to occur at the contracting officer andrequiring official's level who need to understand how tobuild those requirements, and how to -- what optionsare available for them to buy through what may already exist,and how to actually put all of

that into process, to change howwe think about how we acquire within government. so what -- as you see, thetheme of this is acting as one, to address that -- forsmarter acquisition. so that's what we're doing. we're building thisinfrastructure, and this is -- this tool hasbeen available since october 1st. we're syncing it upto the categories.

and very much aligning it to thedifferent categories that anne's showing, and so that whensomebody's looking to buy, they come in, and i'm -- andsince we're short on time, i will go through this quickly. they go into theacquisition gateway. and what they're seeing here isactually what do they want if they're buying administrativesupport, it software, it hardware,professional services. so if i go into theit hardware category,

what the first things theysee are -- and as soon as the computer wakes up and actuallydoes it -- the other piece -- so the first things they see arethey compare the solutions. these are the government-widesolutions that are available to them, so they don't have to goand do that one off comparison. and one of the firstthings we heard is, people don't even know what'savailable -- what anne was just saying. so you go in, you take a look atthe different contracts that are

available -- and my apologiesabout the speed of the connection. so what it does is it lists allcontracts that are available across the government. and seeing a pdf of contractsmay seem very simplistic, it may seem like this is aboutten years out of date -- this is the first timethat we've done it. okay? so let me just be very clear,this -- that gathering this

data, even understandingwhat's available within these categories, is a massive effort. so we're starting with themost simplistic data access. put the contractsin front of people. put the historical pricing datawhere we have it, which is very, very limited, infront of people. beth colbert: but we'll havemore at the end of the month. laura stanton: wewill have more. and i'm very excited about that.

and then we begin to put theexpert advice in front of people. so how do you buildan acquisition plan? how do you do developsolid requirements? federal strategy sourcinginitiative for common requirements fordesktops/laptops? how do we begin to put all ofthis in front of somebody who may buy a laptoponce every few years? and so we begin to share thatand start with what i think of

as the retail behaviorchange of the individuals. the other piece is, contractingofficers and people with requirements are reallylooking for community. so what we've done is we'veactually built out a community here so that they can startto connect to one another. it's not -- we're a long wayfor a government facebook, but it's a start where peoplecan post a question and begin to engage. and so while what we're seeingat the -- at the office of

federal procurement policy isthe institutionalization in driving it that way. we're trying to change thebehavior on the lower level -- on the working level of thepeople making these decisions, and that's part of it. the other piece i'd like tohighlight is also with the emphasis on it. we're beginning to put up how doyou engage the digital services playbook?

how do you use the techfar? how do you use the -- how doyou manage to actually buy it without asking fora policy change? it's possible. we've done it. but it also is something thatif you're not accustomed to it, you don't know how. so this is beginning to put upthe resources so people can understand howothers have done it.

so we're trying to reallytackle this on two levels. there's a number ofresources in here. i'm not -- i promised beth iwouldn't go through all of them -- (laughter) -- but we -- the goal here is -- beth colbert: we're happy toshow people or you can -- male speaker: ithink it's great. what kind of uptakeare you getting? laura stanton: we are seeingabout -- it's slow at this point

because we're still buildingout all the materials. and so i don't want people goingthere without having something there -- male speaker: sure. laura stanton: -- so we've beenreally focused on building about 100 -- about 75 to 100users a week at this point. male speaker: great. laura stanton: and then we'realso planning on beginning to put in tools and digitalservices that would allow

somebody to actually immediatelygo into the transaction. male speaker: one of the thingsthat i imagine will be useful over time, just going back tothis point about true believers versus not-true-believers, is totrack which agencies are using it and which ones aren't. laura stanton: yes. male speaker:that'd be revealing. anne rung: and one of ourmetrics for category management will be how many uniqueusers we get to this site.

laura stanton: yeah. so we are -- so we're lookingat all of those things. we're looking at how do we buildthis in a very thoughtful way? how do we also put the toolsin place so that somebody can actually do their -- puttogether their cost estimates, put together all of their toolsusing data from other agencies so they can see if they'reactually paying more, or if they're outof sync with others. and we're trying to think abouthow to present that in a very --

as i said, a very thoughtful wayto get -- without overwhelming people. anne rung: and this wasdeveloped with lots of input from our front-linecontracting officers. laura stanton: yes, it was. so we spent most of our timeactually understanding their needs. as we get the data, as we getthe spend under management, all of that as wellas the analysis tools,

we will be up here to begin tomove it forward on the more institutional level as well. so that's what we've beenworking on to support. anne rung: great. and just one thing that i'mthinking through is that i recognize some of us areonly here for a few years, so how do we reallyinstitutionalize it's at least afive-year process. and so -- at least fiveyears -- and so you know,

are there regulations? (sneeze) bless you -- are thereregulations that we should be thinking about? really how do we embed this inthe sort of dna of the federal organization? stan meiburg: beth, this is stanmeiburg with the environmental protection agency and i want tocome back sort of to a thread of this conversation, whichis what incents people.

at least we are not the size ofthe epa of some of my partners around the room in terms ofhow many procurements we do, but i will guarantee that whatincents people is scarcity, at least in my agency. we cannot -- we do not have theresources to do things the old way. we know that. some of the challenges we havethough are not the hard stuff or even the numbers, it's thesoft stuff, it's culture,

what i would callthe power of myth. and since we're on it i cangive you a perfect example. i came into this job from havingbeen in regional offices and epa went through a process atheadquarters to come up with a centralized providerof it services. well it was so bad --or reportedly so bad, that in the regional officesthey said they would do anything but get that provider. and so we did not do a good jobof having the -- holding the

provider to service standards. but what peopleheard is, "oh my god, you're going to -- you're notgoing to make us get that centralized system." and so you really haveto struggle with that. the other thing we strugglewith in my agency as a cultural matter is status for peoplewho are doing acquisitions. the heroes of epa tend to beengineers, scientists, lawyers. they tend not to be people whodo contracts, procurements,

acquisition, so we've gotto address one head-on, along with some first-linesupervisory issues, but that is a culturalissue that we have to do. and to have folks who areengineers, and scientists, and lawyers recognize itwithout these other folks, you can do -- you can wave yourarms all you want but you won't get anything done. so those are two issues we have. victor mendez: beth.

i'm victor mendez. i'm the deputy secretary at thedepartment of transportation. some really good pointsthat have been raised. i don't know if it's a culturalissue or maybe a recognition of the politics of the worldthat we're in, but, you know, the issue was raised, you know,does this get embedded in a system that survives thepolitics because, you know, this administration, we know,is here for another couple of years.

and i think what iheard from our folks, of course we want to be moreefficient and there are some cultural issues that have beenin place for a long time so you've got to workyour way through that, but i think what peoplerecognize -- what they were saying was, "okay, weunderstand your philosophy. we want to be more efficient andwe can actually save money and reinvest in our owncompany, if you will. but what's going to happenwith the next administration,

not knowing who that willbe, will they have the same management philosophy or willthey take the savings and redeploy it on their own. so i think those are someof the issues that we face. you know, give where we aretoday i think we're doing a very good job at trying to figure outwhere we are -- where we can save. the benchmarking effortsactually raised a lot of questions that to me kind ofdemonstrated culturally how

people view the worldwithin at least dot. and a lot of reasons why weshouldn't get this data or how we compare and allthat kind of stuff, which was actually prettyinteresting to hear from our folks. but i think once you get throughthat i think the long-term implications of, you know, howdoes this play out four years from today, is actually a veryimportant question for our folks because they're going to be herefour years from now and

we're not. ronald williams: you know, ithink that's a very practical and real world concernthat people have. and my experience is you haveto present it as a bit of a no-regrets strategy or tactic,meaning that they are better off reaping the savings and figuringout how to get the work done in a world of fewer resources,whether the current policy continues or there'sa new policy, because there won't be moreresources no matter who is in.

there simply is going to be aworld of increasingly financial constraints. and i think having thatconversation in a plain english way gets people focused on thefact that figuring out how to be more productive is really intheir own best interests. sam gilliland: i do think thoughthat your comments place more pressure on your team with theacquisition gateway to get it right, because it can act asthis operating system that transcends administrations andif people get used to using it,

and it's a community-type ofportal where people are learning from one another, andthey're using it day-to-day, they're going to continueusing across administrations. so i think it's really, reallyimportant that you get this right and i understandyour view of, "let's make sure that wehave a good critical mass of information available before weget too many people on here, " because we don'twant to turn them away. anne rung: all right.

i would just say in closing,acquisitions is very much a team sport and so we're workingclosely with the cio community, the cfo community, the humancapital officers, which is key, which is a combination ofcareer and political people. and also i would love to sharewith you the new ad we have out and position description for afull-time it category manager. we'd love to haveyou circulate that. and our heading here is, "jointhe executive office of the president and help transform howwe buy over $50 billion dollars'

worth of information technology"and the subheading is probably, "and tell us if it's $50billion dollars or not." beth colbert: thanks, anne. thanks, laura. and thanks everybodyfor the comments. i think, as always, we've comeout of this with some good things to think about as well asa few practical things we can do like starting tomorrow,which is always -- well, probably starting tomorrowactually, knowing this team.

i want to take a couple minutes-- and i think we'll squeeze the time in -- you know, we have abreak that's 15-minutes long, which is always the excuse tomake it slightly shorter -- and turn the floorover to tony scott. tony is in week four or five? tony scott: six actually. beth colbert: six, oh my gosh. tony joined us six weeksago as the federal cio. his incredibly impressivebio, which you all can read,

is in the paper. i think beyond all of thosegreat accomplishments, when we were talking to tonyabout joining the team i was impressed by anynumbers of things. one was his passion for thetopic of how we can use it to transform the federal governmentso it really works better for the american people. two, his just calm wisdom aboutthinking about how do you make change at this scale happen?

and how do you dothis from the center? i know when tony wasinterviewing and talking to us and we were having him come inand talk to some folks here in this building, he said to me,"well that's great and i'm happy to talk to you andwhoever you want, but i actually want to go talkto some people in the agencies because if i'm going to makethis job and have it work, those are the people i'm goingto work with and that's where change is going happen.

you know, those of us sitting inthis building are actually not where change happens at scale. and so i want to go talk tothose folks and see who are going to be my partners inchange and in making the path forward." and at the end of that questioni was like, "okay, i'm done." and so we are thrilledthat tony is here. he's going to just share someinitial thoughts and we will have him back to talk morebecause there's an unending set

of things we can talk about herebut i wanted to make sure that he had a chance toget to know you guys. i think he probably knowssome of you already. and over to tony. tony scott: well thanks, beth. i appreciate thewarm introduction. so it's actually beena great few weeks. and i hadn't spent a lot of timein the federal government space prior to taking on this role,except for a few years ago i was

on the board ofassessment at nist. so i only kind of saw thefederal government through those lens, although in my prior rolesi've certainly had lots of sessions with executives fromthe various it organizations across the federal government,usually trying to help sell something or, you know, sharewhat our common experience was. i think the focus -- and i did acouple of sort of introductory speeches this week -- myfocus is really, i think, shaping up to be somethingi call "land the plane,

" which is we've had a bunch ofgood initiatives get started and a lot of good thinking aroundstrategy and design and so on. and it's now time to realizesome of those things and make them scale acrossthe government. so we've got good things goingon in a number of spaces, but now we've just got to growthem and institutionalize them in a way that's much strongerthan i think where we're at today. i think there's three sort ofmain areas that i would sort of

describe as areas of focus. the first one, and probably themost obvious one in some sense, is just cyber. we're -- from a securityperspective this is the issue of our fera, you know, whetherit's this year or next year, this is certainly a huge issue. and sort of one of theperspectives that i have there is that this is aspace that's, you know, obvious very rapidly moving, andone that is going to require

some innovation and creativityon the part of what we do. in typicalinstitutional fashion, and i've seen this in privateenterprise as well as the government so far, effortsare often quite siloed. and one of the things that i'mstarting to talk about -- or talk to our folks about is ithink cyber can be addressed as just another formof a quality issue. it's risk and it's thecombination of things that you do that has an outcome.

and so we're havingsome, you know, kind of interestingconversations with the cyber community already about what canwe do if we look at it a little bit differently thanjust the towers. and so in our world we thinkof security as, you know, the device, the network, thesoftware that's on it, you know, the building, and allthose kinds of things. enrique will know this(laughs) space really well. but you have to look at what thecombination of all those

things are. and, you know, you could thinkof it as a quality problem if you have some issues. the second area, and we've spenta lot of time alluding to it here, is just cost. the -- we've had a number ofgreat initiatives underway: data center consolidation, this --spend management will result in a lot of good work. there's probably two areasi would highlight there.

one is the way wedevelop applications and institutionalize a new way ofdeveloping applications is under fundamental change inthe federal government. we have, you know, many examplesof programs that have gone on for years, cost a lot of money,and ended up delivering a lot less than what was expected. and so there's some good effortsunderway to institutionalize more agile developmentmethodologies and deliver things on a pace of, you know, everyfew months versus, you know,

two or three or four years out. and it's both an attentionspan as well as a process and technique that i thinkholds lots of promise. the -- a lot of efforts underwayaround data and, you know, how we can leverage thatacross the government, but also make it available tothe american people so that it can be a source of economicgrowth or an economic engine. and then the last space i wouldhighlight is just a people agenda.

again, many of you wouldrecognize this problem in the organizations that youhave been a part of, but we have a whole generationof it leadership in the federal government that's about ready toretire in the next few years. these are the, you know,pioneers that have been here for a long time. they've provided, you know,leadership and management, but many are going to retire andwe have to do things to grow our leadership, grow our capability,particularly in these new areas.

and so we're going to have avery strong sort of people skills agenda. in that sense, one of the teamsthat we have is a team called the digital services team thatwe're using to surgically insert in each agency to help bringnew skills and new approaches, including thisagile development, and the early indications ofthis are that it's delivering great value and we've got somegreat examples where -- whether it's, you know, healthcare.gov,or things at -- immigration,

or other areas where things havebeen delivered much more quickly and with much less cost thanwhat would have taken place otherwise. but those teams, bothcentralized and distributed into the agencies, as well as in gsaso that those resources can be contracted, form a centralstrategy around injecting a new sort of digital servicesorientation to our approach for developing and deliveringsoftware and assisting with the various business processesin each of the agencies.

the last thing that i'll sayis we have a new law, fitara, that we're in the process ofproviding the right guidance for the agencies on. this strengthensthe role of the cio, puts very clear accountabilitieson the role of the cio. but, you know, good agencies arealready following a lot of those practices. some agencies aren't, and ithink it's going to call on the leadership of everyagency, not just the cio,

to be a lot more engaged in howit is done and be responsible for the outcomes ofthose kinds of projects. so i'm very encouraged by theconversations and dialogue that we're having with the agencies. we've got a lot of great inputon how to go implement that and i think at the end of the day,done right it will be a very good thing for both cost, butprobably morning importantly, speed of deliver, which today isthe most precious commodity in some sense.

jeffrey kindler:that sounds fabulous. i just wanted to make a commentthat goes back to what the gentleman from theepa -- i'm sorry -- beth colbert: stan. jeffrey kindler: -- stan, whichi thought was a really good insight, which is that in manyorganizations functions like it are not seen as mission criticalthe way you were describing -- tony scott: yeah. jeffrey kindler: -- andit strikes me, tony,

that you have a really uniqueopportunity to create a community of the cios across theorganization that makes them feel that they are a communitybeyond the particular job they have, that they are recognized,that they have a very prominent leader in yourself. and, you know, i'd justencourage you to, you know, which you're probablydoing anyway, to think about helping themfeel that importance both with respect to the government as awhole and with respect to the

agencies they're in and havingsomebody like you in this job really lends itself to that. tony scott: thankyou, appreciate that. ronald williams: yeah, iwould -- just a few comments. one, thank you for joiningand agreeing to serve. it's really something that willhave a very big impact on us here. you did mention a few thingsabout cyber and i want to leverage off one ofjeff's comments, with is,

any executive who has toface a cyber-breach instantly understands the value of achief information officer. ronald williams: so i wouldencourage you to leverage that opportunity to avoid anyexecutive finding themselves in those circumstances -- beth colbert: (laughs) ronald williams: -- because it'ssomething that you do not want to have to deal with. and i think generally thecustomer orientation toward

social, mobile, online banking,all the things that people now do, represents a very importantlever to help, again, position the cio as an externalcommunication entry point in terms of social, mobile,and digital activity. enrique salem: so justto continue, so tony, it's great to haveyou in this role. one of your peers in theprivate sector once said, "as you move to the cloud itgives you freedom from choice." so one of the initiatives herewas this notion of how do we go

cloud first for a lot of things. and i think there's been somebarriers as the public sector has tried to adopt some ofthese cloud initiatives. and i'd like you to look at thata little bit more and see what have been the barriers to theadoption of some of these new cloud services because i thinkit will give you the ability to move more agilely where you canbecause you don't have to build it all yourself. and you've seen this in spades,given the things you've done,

and so i'd like to just ask youto look at what have been some of the barriers to adoptingsome of these services. tony scott: sure. actually we are -- i'mdeep into this already. and one of the observationswe've made -- this is part of also the data centerconsolidation effort that we've had, and it turns out, at leastthe preliminary look that i have so far is that we don't havea high level of digital asset management in the data centersfor the applications and the,

you know, things that arerunning in the data center. so in the past we've askedpeople to go inventory things. it's required somebody to outwith a clipboard and a bar code scanner and runaround and figure out. and one of myexperiences in, you know, microsoft and at disney, wasif you don't have that digital asset management and it's realand it's, you know, timely, it's hard to do things likefigure out which of these applications can i, you know,reduce capacity on or leverage

virtualization for, what are thecommon things that i can do that i could move to the cloud, allof those kinds of things become just very hard. the second thing that we'veidentified is while a lot of the cloud services today tendto be more, i'll say, consumer application oriented,we've identified a couple of critical servicesthat we're very, very close with the big cloudproviders if we can just get over that hump, then it formsthe building blocks for a bunch

of applications that wecould then go leverage cloud technology a lot morefully than we are today. so i think we're, you know, atthat sort of very interesting point where we're, you know,that close and it's going to take just a little bit more pushand then we're over the top of the hill. beth colbert: so i'm going toplay time cop and say we're going to come back to thisbecause i actually think it would be great to come back tothis group when tony's been here

a little longer than -- beth colbert: -- his six weeks. male speaker: yeah, that's fair. beth colbert: and onyour point on cyber, i'm looking around at mycolleagues on the pmc and wondering if -- i think we --when we went through our agenda for last year, if you thinkabout -- and this, you know, this is at the deputysecretary level, right? this is not, you know, who haveoverall sort of operational

oversight, it was the -- thatand people and culture were the two topics that we had coveredthe most often at pmc, which pretty much meant that wehad a discussion about cyber every month. and they would shareyour comment, ron, about as one of them once said,"if you haven't had one yet, you will." so you know, i think the -- ithink i'm -- i can confidently say that all of them would feelthat they have real ownership

for the role they play asoverall organizational leaders. it is not a delegated authority. it has come up againand again and, in fact, we'll be talkingabout it next week. so -- because that's the onlyway you can actually get there. so i'm going toshift gears again. sorry for the -- movingthings along here. one of the other placeswhere i know we've had some conversations with this group,and as we're trying to sort of

move the ball forward, isaround shared services. dave mader also joined the teamlast year as the controller. dave brings a phenomenalset of experiences. he was a long-time incrediblydistinguished career civil servant -- most senior careercivil servant in the irs with a tremendous record ofachievement in that role, then left and went tothe private sector. and then we had the opportunityto steal him back last year and it's -- he has reallytaken this agenda on.

dave has many greatcharacteristics, there's too many to name, butone is i think he knows every senior financial managementleader inside every single agency in thefederal government. and when you're trying to makechange happen this is really a valuable secret weapon. so with that i willturn it over to dave. dave mader: thank you, beth. let me introduce beth angerman.

beth, actually this is going tobe an interesting conversation because beth is actually partof the treasury department with brody, and she leads withintreasury the office of financial innovation and technology, whichwas set up about two years ago to actually operationalize thepresident's management agenda with regard to shared services. because when you think aboutshared services, i mean, the government has been ona 20-year journey on shared services.

and it's been a little bit fitsand starts and a little bit haphazard. and i think the recognition inthe president's second term that if we really neededto make progress, which i think we've all talkedabout certainly in the context of acquisitions and itapplies to the rest of the administrative functions, thatthere needed to be a way of institutionalizing it andcreating the framework, the governance, the processes,that were uniform

across government. so omb two years ago went andasked treasury, you know, "would you serve as our agent?" and beth has been leadingthat organization since its inception. now the focus has been primarilyfor the last two years around financial management andfinancial management systems. when you look at shared servicesobviously we're talking much broader than that: we'retalking about acquisition,

we're talking about humancapital, we're talking about it. what we want to touch on, andi'm going to ask beth to talk a little bit about some of theprogress that we've made over the last two years with regardto financial management, recognizing that we needto broaden the scope. and some of the challenges thatwe are facing that we want, really, to get your insight in,are some of the things that we've talked about. it's, you know, how do youcreate the business case?

how do you create the incentiveto move the organization? how do you manage the changeprocess within a very large, diverse organization? so, beth? beth angerman: thank you, dave. so i'm -- to give everybodycontext, i'm looking at page 15. so i think -- (clears throat)excuse me -- i think the first thing we should start at islooking at the current landscape of shared services today andreally recognizing the fact that

the departments haveorganically, if you will almost, over the 20 years really stoodup these organizations in building their own subjectmatter expertise for a lot of these mission support functions,and building and establishing that expertise, and thentaking it a step further, which i think in the spirit ofgood government is offering those services toother agencies. and we've seen a lot of thoserelationships grow over the years and i think to stan'spoint is they need to continue

to grow now. we need to continue to maturethese organizations because we're seeing less resourcesdedicated to these mission support functions and morefocus on the mission critical functions. so a lot of creditdue to these agencies. and you can see that whilewe're talking about financial management, that'sreally within my scope, you can see that they offerservices much broader than

financial management. so the question really becomes,if i'm a customer and i'm looking for shared services,i'm rarely just shopping for i am looking for shared servicesin all of these other mission support functionsand where can i go. and who's managing theseorganizations across these lines of business, and who'sestablishing these marketplaces or this ecosystem, if youwill, of shared services, and how are we making sure thatwe're creating an ecosystem that

is competitive but alsoleveraging all of the good work that these agencies have doneto build these organizations to date. jeffrey kindler: i'm sorry, justa point of clarification of vocabulary. we're talking about sharedservices within an agency, not across agencies. dave mader: both. beth angerman: both.

dave mader: both,we're talking both. jeffrey kindler: okay, so whenthese x's are here they refer to both? dave mader: it couldbe servicing the -- beth angerman: large -- dave mader: -- fire departmentand then bringing on external problems. beth angerman: yep. jeffrey kindler: got it.

thank you. dave mader: just to -- enrique salem: why isn't therean x in every one in the column that says payroll? what would -- so for example,there's department of transportation and it saysthere's no x in payroll. what does that mean? dave mader: so payroll -- wheni mentioned that we've been on this 20-year journey, itactually began 20 years ago with

the beginnings of consolidationof payroll providers. in the 20-year -- 25 years agoevery department was doing their own thing, you know, includingwhen i worked at the irs. we ran our own payrolls. like, "this is insane. why am i doing this? i'm not, you know, it'snot part of my mission." so it took literally 20 years toconsolidate down to these four payroll providers.

so these four supportthe entire u.s. government. beth colbert: so at the -- atleast at omb we get paid through the dfas, defense, finance,and accounting service. that's who issuesour direct deposits. i was going to say paychecks,but we don't get paychecks. dave mader: right. ned holland: i'm ned holland. i'm the assistant secretaryat health and human services. i'm here for ourdeputy secretary,

who is actually aboutto leave the department. just to emphasizewhat beth says, we operate a thing calledthe program support center, which began backin the mid-'90s. vice president gorehad a project called, "reinventing government," andthe program support center was created by then. we do pretty close to a billiondollars' worth of business. sixty to 70 percent of it isdone outside the department of

health and human services. it's for -- virtually everymajor department is a customer of ours for onepurpose or another, so it really is ashared service effort. enrique salem: sorry, so i justwant to go back to my question. so i know it's a journey, but inpayroll -- i was on the board of one of those providerscalled adp and no longer, but the point is payroll issomething that has a lot of complexity to it whenyou really understand it.

and the question is: where thereisn't an x what are they doing? how are they -- howdo they pay their -- dave mader: through oneof the other providers. beth angerman: theyuse the others. enrique salem: ah, that'swhat you were saying. beth colbert: so this is -- theway this -- the way to read this -- maybe i'm (unintelligible),these aren't all the agencies. these are the peopledoing shared services -- multiple speakers: ah.

(laughs) beth colbert: --as opposed to -- beth colbert: you're lookingat this as the other chart. what you're saying is -- male speaker: okay,i missed that, too. beth colbert: -- departmentof transportation, who does their payroll? dave mader: theseare folks that are -- beth colbert: this is just proofthat some of us have been here

18 months, we'vebeen here too long. beth colbert: sothese aren't the -- dave mader: these are thepeople that are providing -- beth colbert: so these arethe agencies of the world? dave mader: -- theshared services. beth colbert: providingthe shared services. but beth -- just -- jeffrey kindler: but if you thentake enrique's question just to play it out if we don'thave this chart --

jeffrey kindler: -- are thereagencies that are not on one of the -- how many did you say? dave mater: four. jeffrey kindler: four? male speaker: no,everybody's on it. jeffrey kindler:everybody's on it. beth colbert: everybody'son for payroll? jeffrey kindler: that'swhat you were getting at. enrique salem: that'swhat i was getting at.

thank you, jeff. sam gilliland: so beth --your ultimate goal, beth, with be to have the column underfinancial management have one x that's treasury, right? would that be the -- do iunderstand this chart right? male speaker: no. sam gilliland: is that -- beth colbert: no. male speaker: and that's a --

dave mater: -- in agriculture. we have -- a year and a half agothe decision was made -- the decision was made two yearsago to sort of identify four, in the case of financialservices, four providers. so we have interior,agriculture, transportation, and treasury. beth happens to sit in treasury,but they also happen to be a provider for financial services,but she really is omb's agent to drive shared servicesacross the government.

beth colbert: i think-- the goal, though, is to say how do we -- and maybewe're flipping to page 17, beth, right -- how -- i think theprocess we're on is not to have a single providerfor each thing. the needs are sort of complexand somewhat different, but if you sort of flippedit the other way and said, "how do we getagencies to migrate, " this is the chart that i thinkyou thought the original one is. enrique salem: that's -- yeah.

beth colbert: so hud is on ajourney to move their shared services for financialmanagement in a very holistic way to treasury, thereal part of treasury. dhs is doing somethings in -- you know, there's a set of things here --these are the agencies moving things around. beth angerman: and to giveyou -- i'm sorry, go ahead. jeffrey kindler: i'm sorryto keep interrupting, but -- beth colbert: that's okay.

that's the idea. jeffrey kindler: -- justa clarification again. what is the transfer price? in other words, if i'musing -- if i'm omb -- jeffrey kindler: -- and i'musing defense department's payroll system -- enrique salem: have youbeen in a big company, jeff? jeffrey kindler: yes, i have. i mean, it's notfree, is it, or is it?

dave mader: no, it is not free. jeffrey kindler: sohow does that work? dave mader: and that -- well,how about if we walk through this chart and then let's comeback because those are one of the -- those are one of severalchallenges that we're facing. stan meiburg: and people --just know people do move. epa used to be in interior. we moved over to dfas, then acouple of years ago we moved back to interior.

there are some transaction costsassociated with that but it is really on the point of one,there's competition, two, it's trying to find outwhich system best meets your particular needs. dave mader: thanks. beth colbert: for all thereasons we're getting to. exactly. beth angerman: so to give youjust a little bit of perspective on slide 17, where we were thistime last year, to beth's point,

is that the only agency thatwas actually implementing a financial managementshared solution was hud. and to show some of the momentumthat we've actually seen over the past year, the buy-infrom some of the agencies, we've actuallyalready, you know, moving forward with gettingdhs, working with the interior department, gsa, working withthe department of agriculture, education and discoverywith treasury, and commerce also workingto start the process for

identifying theirshared service provider. so seeing a lot of momentum,which i think is actually really demonstrative of thesuccess we've seen, but now we have the challenge ofmaking sure that we're balancing supply and demand correctly andthat we are actually identifying the right ecosystem of providersand that we can actually satisfy the demand that's coming. so just to talk a little bitabout our challenges and frame them up, i think we've talked alittle bit about the governance

and the need for governanceacross these lines of business and how we're managing theoversight and creating that marketplace. and the question, too, becomesaround we've got funding needs, so there's certain limitationsthat because we actually offer these serviceswithin our agencies, there are limitations on howwell these agencies can plan and actually scale for what weexpect to be the increasing demand.

and then there's the kind ofmore tactical service delivery type of things which are aroundquality of service and around transparency. and what i really like aboutthe theme for today is --

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