Arlington, Virginia

Friday, April 14, 2000

Mr. Lawrence: Welcome to The Business of Government Hour, conversations with government leaders. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and the co-chair of the PricewaterhouseCoopers Endowment for the Business of Government. The Endowment was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the Endowment by visiting us on the Web at www.endowment.pwcglobal.com.

The Business of Government Hour focuses on outstanding government executives who are changing the way government does business. Our guest tonight is Dick Calder, deputy director for administration of the Central Intelligence Agency. Welcome, Dick.

Mr. Calder: Good to be here tonight, Paul.

Mr. Lawrence: And joining me in our conversation is Ian Littman. Ian is a partner at PricewaterhouseCoopers and also the co-chair of the Endowment for the Business of Government. Welcome, Ian.

Mr. Littman: Great to be here.

Mr. Lawrence: Well, Dick, in this first segment why don't we begin by finding out more about the Central Intelligence Agency? The public clearly knows the brand, and we've read the books about it, but I don't think many of us know how the Agency is organized. Could you begin by talking about the organization?

Mr. Calder: Yes, I'll do that very briefly, Paul. The Agency is really built on four pillars. One of those pillars is the Directorate of Intelligence. That is really responsible for the evaluation, analysis, production, and dissemination of all source intelligence on key foreign-policy issues. This is really the key analytical core of the Agency, and they provide all source products to consumers throughout the government.

The second pillar is the Directorate of Operations, and they do clandestine collection of foreign intelligence, including human source intelligence. This is the directorate that does clandestine operations overseas and provides the product that our analysts find critical to doing the analysis and reporting that they do.

The third pillar is the Directorate of Science and Technology, and they're responsible for creating and applying innovative technology to meet today's intelligence needs. They are engaged in all phases of the intelligence process.

And the fourth pillar is the directorate for which I am responsible, and that's the Directorate of Administration. And while we do not do mission we enable mission. We do provide all the critical infrastructure pieces, and this is from finance to human resource to logistics to medical services, information technology, and communications, all of those things that make any vibrant organization work well.

Mr. Lawrence: Dick, you've had a distinguished career at the CIA. Can you tell us a little bit more about your career at the Agency and the various positions you've held?

Mr. Calder: Yes. I've actually been with the Agency for about over 30 years, hard to believe. Started in the mid-1960s actually as a communicator. I worked one overseas tour and decided to go back to the university and finish my degree. I came back to the Agency again in 1973 as a career trainee.

Following about a year of training I took Arabic language training and then spent six or seven tours overseas, mainly in the Middle East but some tours in Europe as well.

After that I came back and ran some of the senior offices in the Directorate of Operations, mainly for human resources and operations and management issues. And then I moved into the job that I'm in today in 1995.

Mr. Lawrence: Was it difficult to shift from field operations to administration?

Mr. Calder: Initially, yes. I had been a customer of the Directorate of Administration, so I understood how it worked, but now actually becoming the provider of those services and having to deal with some of the very difficult issues that we deal with in a demanding, ever-changing environment, it took me a little time to actually to begin to understand and figure out what areas I wanted to focus on. But because I understood the culture of the organization, the culture of the Agency, the change wasn't that difficult.

Mr. Lawrence: What are some of the biggest changes that you've seen in the CIA since you started, and what changes have you seen in the federal government overall?

Mr. Calder: In many ways I think the Agency has changed more in the last decade than it did in the previous 40 years. For up until the start of the 1990s the biggest strategic threat was the Soviet Union, and that's really gone and that's not going to come back.

Threats today are more diverse and dispersed. Our intelligence priorities shift continuously, presenting a much tougher environment for our collectors and for our analysts. The post-Cold War challenges are increased by the information revolution and by telecommunications. Fundamentally, all those issues are transforming the globe, transforming the way that we look at policy concerns and the way we look at security issues.

And the one thing that I think is really critically important is that everything seems to be moving much faster today than it ever did before. We seemed to have much more time to plan, much more time to make thoughtful considerations. Today we just simply don't have that luxury any more.

The one thing that I see is that Director Tenet has recognized this clearly and has really set a strategic direction for the Agency that calls on us to try and step up to these challenges in ways that we haven't done before. And he recognizes more than ever that the intelligence business is fundamentally about skills and expertise, and this really means it's about people, people in whom we need to invest more in order to deal with the vast array of complex challenges we face over the next generation.

And he has made this the center- piece of his strategic direction, and the centerpiece of what we're trying to do right now is develop the skills, develop the talent, develop the people that we will need to meet the many challenges that we are going to have to face in the next decade. And, of course, there are new technologies out there that we are going to have to master as well. So these are the kinds of changes that I'm seeing today at the Agency.

Mr. Lawrence: How about the changes that you've seen in the federal government overall, the entire government operation?

Mr. Calder: In some ways I think that those are some of the things that we're talking about, particularly in the information revolution. I just filed my taxes and I filed by e-mail. Today you can go online to just about any government organization and pull down the information that you need to get whatever thing that it is that you have to have done. This is a much different world that we're living in terms of the government's need to meet the consumers' demands in different ways.

No longer are people content with 800-numbers. No longer do people want to write letters and wait 3, 4, or 5 weeks for responses. Again, it's that speed issue. People want to deal, they want answers to their questions, they want those now, and over and over I see the government trying to respond to this.

Even the CIA has a Web site today. In fact, if I can plug it, I'd like to do that for those that would like to have a look at that Web site. It's www.cia.gov. All of us are trying to reach both the consumers of our products and those interested in us in a variety of ways that just simply weren't there 4 or 5 years ago.

Mr. Lawrence: What are the challenges managing at the CIA versus another organization? I mean, I think it is interesting that you have a Web site, but I would expect that the Web site is somewhat particular and unique given your mission. So what are the challenges of managing in this environment?

Mr. Calder: Well, one, I think it's the shifting and the uncertainty of the external environment which requires the organization to be much more flexible today than I think we were in the past. As I said, when the Soviet Union existed that afforded us a certain degree of stability, a certain degree of ability to focus on a single target. Today those targets are much more diverse, the interests of our policy community is much more diverse, and the time float, if you think about a crisis that erupts in one part of the world, CNN and others are almost immediately there.

So the pressure on our policy makers to make decisions, the pressure on our customers to respond, are much greater. Therefore, we have to be much more responsive in terms of being able to meet the needs of those customers as they try to address these issues.

In terms of the administrative side, this means that as our internal customers respond to these issues we also have to be there in a more agile fashion so that we can enable them to do the kinds of things that they understand have to be done from information technology, our communications, even being able to help them file travel claims more quickly. The expectation is that we will be much more responsive than we have been in the past.

It's the dot-coms that are killing us. Everybody has experience. Today if we put out an application that is three mouse clicks or more there's little tolerance for that. So people say why can't you do it better, why can't you do it like I do Amazon.com or one of those others that people are familiar with? So that's a real challenge for us.

Mr. Lawrence: It's time for a break. We'll be back with more of The Business of Government Hour in just a minute. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Dick Calder, deputy director for administration for the CIA. And joining me is Ian Littman, also a partner at PricewaterhouseCoopers. Ian?

Mr. Littman: Dick, let's spend some time talking about your current experience in reinventing the CIA. Before you took your present position in the Directorate of Administration, the Washington Post reported that you'd spent a lot of time criticizing it. What motivated you to take your present position, and what did you want to change within the directorate?

Mr. Calder: Ian, before I answer, I don't want to misrepresent myself. I'm not really trying to reinvent the CIA. It really is the Directorate for Administration over which I have responsibility. The Post did, I think, accurately capture what I said, but I want to really clarify that I wasn't criticizing the people in the directorate. It was really the bureaucracy that we have to deal with.

As someone who had to travel often, as someone who had to deal with a series of regulations often in environments where the regulations didn't quite apply it was always that battle back and forth about how do you fix this or how do you make it work here, and that was always a little bit frustrating for me. So that was the criticism.

And as I came into the job I said how can we make ourselves much more responsive, how can we take people who are imprisoned in this hierarchy that they work in and make them understand better what our customers need from us and therefore be able to shape and formulate policies that made the most sense to the people that were really depending on us.

And I think that in general I've read several articles of late that talk about the death of bureaucracy, people trying to move out of this command-and-control hierarchy of trying to restore some authority down into the ranks, and that was really what I was looking to do. Instead of having a series of policies and procedures that force things to march up through the organization, to try to restore to people who really work the front lines and understood the issues, to give them the authority and the capability to take care of problems on their own. That's what I was looking to do.

Mr. Littman: We note that one of your first actions was to perform an activity-based costing study. So I'm wondering for those of us at home if you could explain what that is and how you used it to drive your change initiatives.

Mr. Calder: Very, very simply, activity-based costing helped us to understand the cost of our processes. I think that one of the biggest problems with government is the free good syndrome. We could talk a lot about this, but basically I don't think any of us can get enough of a free good, and the administrative processes that we do, the services that we provide, were basically free to our customers.

And what I was trying to do was begin to understand what those processes, what those services, cost so that we could understand how better to deliver them. We could do some benchmarking outside.

For example, we learned very early on that a corporation, I guess I can mention the name, Hewlett Packard, has a very low transaction cost for some of the vouchering that they do, when compared to ours significantly lower. And it was only by beginning to understand the individual or incremental process costs that we were looking at that we could begin to see how we might do ours differently. So we needed to know those costs in order to drive some different behaviors within the organization.

Mr. Littman: Dick, as we all know, organizational transformation can be very difficult. What have you learned about changing large organizations?

Mr. Calder: Not enough. I would say Machiavelli says that change has no constituency, and I don't know when he said that, obviously many, many years ago, and I think that's very, very true through today. Change is great as long as it's happening to somebody else, and I think that what I have learned, one thing, is that change is never an event. It's a process, and it's a process that takes some time to get through.

What I found was that many of the things we were doing were more or less on auto-pilot. We had done them so well for so many years that the idea of thinking of doing them even slightly different was anathema to some of our people. What we had to do was to try to get people to reframe issues, get people to reframe problems, get people to think differently about what they were doing.

The biggest problem that I see in the government right now, though, is that we really do favor incremental change. I remember Nicholas Negroponte who wrote the book Being Digital. I think he argues that incrementalism is the worst enemy of innovation.

Now, there is a reason for this. Incrementalism limits the downside, but incrementalism also doesn't get you to where you really want to be. It makes change I think sometimes much more difficult, and it makes you have to settle for a solution that is probably less than where you really want to be.

I've had some luck in trying to push beyond the incremental change, but this seems to be the preferred road and this is going to make change, I think, in the government more difficult down the road, particularly as we have to deal with external changes that are even more different, more demanding, than we face today.

Mr. Littman: One of the things we noticed was that a major part of your strategy was to create an internal market for administrative services. Could you tell us more about this, what it is and how it works?

Mr. Calder: Basically, this is complicated, but let me just say this. What we did was take the money that was appropriated to our components after they had written a business plan, after we were satisfied, and after we had approval from our executive board, take the money that was given to those components to do their services and return all of that money back to the customers.

In other words, the customers now would have an opportunity to spend some, all, or none of those resources on us as providers. They could go to alternative providers, they could spend less for a certain service or a certain good, but they had the option.

And the reason here is we were looking at two behavioral changes. One, the incentive on us was now to deliver our services, our goods, much more effectively, much more smartly, much more competitively than we had in the past. So this forced us to look at our processes. It forced us to look at really trying to understand what our customers wanted.

It also had the effect of changing the behavior of our customers because now that our customers had the opportunity to understand cost-benefit analysis, the opportunity to make decisions and have an actual incentive for making a smarter decision, they chose to do the kinds of things that made the most sense for them and could use the savings, if there were savings, to be driven back to mission.

Mr. Littman: And did it change behavior?

Mr. Calder: It did in many, many cases. We found that a lot of our customers stopped doing some things. For example, we recently put telephones into this environment and we found that we had a reduction of around 8 percent in usage of telephone lines. People just gave up telephone lines. We had people now going back trying to figure out how many cell phones they had, how many beepers they had.

So it drives changes, it did drive people to focus on this, primarily because they would benefit from making a smarter decision.

Mr. Lawrence: It's time for a break. We'll be right back with The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Dick Calder, deputy director for administration for the CIA, and joining me is Ian Littman. Ian is also a partner at PricewaterhouseCoopers.

Well, Dick, let's talk about the employees at the CIA. What are you doing differently today than what you did in the past?

Mr. Calder: Well, basically, what we're doing is challenging people to think differently about how they do their work. Historically, we have worked in this bureaucratic pyramid which had very well defined rules, procedures, processes, and in some ways was frustrating. If I looked out at all the things that we've tried to do over the past, things like total quality management, business process reengineering, all those things were attacks and how you get around this bureaucracy, how you get around this hierarchical structure.

What we decided to do was to really drive decisions down to the employees. I hate to use this word, but what we're really talking about is empowerment, try to give to the employees the opportunity for them to make the decisions about how best to deliver their services, about how best to deal with the customers, about how best to do their individual processes.

I think that this is working. We have seen people really engage. In fact, if I had a meter, say, to measure where we see the most innovation today within my directorate I would argue that it's in those areas where we have moved them into a business environment. These are people that are constantly focused on the customer, and these are people that are consistently looking at how they do their business, consistently thinking about how they might do things differently.

Again, I was talking in the previous segment about our telephone people. They, on their own, started to monitor cellular bills in the Agency, taking the top 100 phones each month just to try to understand how they could help the customer perhaps drive their bills down. Why did they do that? Because I think that they have a better sense, a better linkage, with the customer but more importantly because they feel they actually have the authority, the power, to make those decisions.

So I think that what we're seeing is that people are finding novelty, they're finding meaning, they're understanding that they're having impact, and I think that these are very important elements in making a work force content, making a work force really feel that they are needed and that they are valued.

It's not just salary. Today the government, I hear this over and over and over doesn't compete well if you're looking at salaries compared to the private sector. At the Agency we have a tremendous work force, a very, very good work force, and I think what they are looking is to add value to what the mission of the Agency is. I believe the way that we are trying to organize them today allows them to feel that they are really adding that value.

Mr. Lawrence: Dick, what kind of changes have you wanted to make in the way employees at the CIA are hired, retained, rewarded, and developed?

Mr. Calder: Let me just if I can take one little quick diversion here. A lot of people talk to me about job security, job security being an organization that will offer you a job for life. I think in the world that we live in today any organization that offers that claim has to be suspect, even at an organization like CIA.

To me an organization that really offers you job security is an organization that if you choose to leave tomorrow you can walk across the street and feel assured that you can get another job commanding a salary that is commensurate with whatever you were making when you left or maybe even at a higher level.

In other words, keeping people so that their skills are marketable, so that they're marketable, so that they feel like they are constantly performing at the top edge of their business. That's how you retain people in any organization, and that's how we are trying to retain people at the Agency; the CIA is giving people opportunity, making sure that they have the skills that they need to do the job that is required, making sure that we give them opportunity to train and develop new skills, making sure that we are using them in a team format, making sure that we reward and recognize them when they add significant value. It is all of those issues.

It's not just a simple training program or a sheep dipping in some new technology that allegedly makes them more capable. It is really having them feel that they have an impact and making sure that we give them the opportunities to continue to expand their own skill base and do that regularly, and that's what we're doing at the Agency.

Mr. Lawrence: Are you worried about attracting young people or new people into the organization?

Mr. Calder: No, in fact we have a major recruitment campaign we have had and have had for the last couple of years. Again, the director, George Tenet, has really made this a centerpiece of his strategic direction. He wants to bring the right people into the organization and, quite honestly, part of it may be just the simple brand name, CIA, the attraction of what that might represent. But I think that gets them in the door. What really keeps them there is the wonderful mission that the Agency has, and our capability of really challenging people to perform at levels that probably surprise them.

Mr. Lawrence: And is that true for technology people? We noticed from talking to a lot of people in the federal government that it's particularly difficult to hire technology people. You mentioned earlier the dot-com environment. Is that also true?

Mr. Calder: It's true that we do attract people that have excellent skills in the technology areas. We do it both in the scientific area and the technical areas. And we do retain them. I would say that we probably lose some people to the private sector. Frequently we will get people already trained in certain technologies, only to find the company that trained them to come along and perhaps turn their head.

But I would say in the main we are as good as any other government Agency at being able to give people the types of jobs that are so attractive to them, putting them in teams that they feel so committed to that they are quite willing to turn their head at an offer that might exceed the salary that they are making today because of the satisfaction they are getting, because of the work they are doing.

Mr. Lawrence: Dick, coming from operations you knew your customer well. You were your customer. How do you get those folks to become more cost-conscious and efficient?

Mr. Calder: I wish I had a silver bullet that I could talk about here. I really think the issue here is the incentives. If you're going to ask people to think more critically about how they do something there has to be something in it for them. And one of the things that we have tried to do through having an internal market in CIA is to make sure that those people who are making smarter decisions, those people who sit down and do that cost-benefit analysis, those people who think through how they want to use our services and as a result effect a savings, that those people are able to benefit from those savings.

And the Agency I think has been very forward leaning on this. I know the comptroller and others have made sure that we have set our systems up such that those people who are making the right decisions are benefiting from those decisions, and I think it's the incentives that are more than exhortations, more than promises. It is seeing the benefit from the incentive that really does make a difference.

Mr. Lawrence: Do those internal customers resist change when you've presented it to them?

Mr. Calder: This whole effort, yes. As I think I said before, change has no constituency, so there has been some resistance. Everybody today is from Missouri - everybody says "I hear it all, but you got to show me." So it has taken some time to convince some of our customers that we are serious and that there are benefits to be had from using this internal market.

Not everybody is on board. We still have some work to do. I really believe that we what we're involved in is not a mile race, it's a marathon. We're only several miles into it. This is going to take some time. This is about changing cultures. A whole variety of issues are involved here.

But I think over time, if we can be consistent in the quality of the services that we deliver, and if the customers can come to recognize and trust in the way we are running these internal markets, I think more and more will sign up to the benefits of them and more and more will really engage in this change process.

Mr. Lawrence: You just mentioned it takes time. How long does it take if someone were to undergo the kind of changes you've just talked about, costing, internal markets, and incentives?

Mr. Calder: I've been at it now for 50-plus months and, as I said, I don't think I'm at the halfway point in this marathon. I think it takes organizations a significant amount of time to get there.

One of the things I think that is needed, and unfortunately in many organizations it's very difficult to get, is the persistence of leadership on these issues. I have been fortunate. I have had the backing of my director in what I have been doing.

I have been around for over 4 years now. I have been fairly consistent in the values that I have espoused. I have been consistent in the formulas that we have used or the methodologies that we have used. I have been blessed to have a wonderful team to work with. So it has been that consistency and also, quite honestly, we have been buoyed by the fact that it does seem to be working.

I can honestly demonstrate that we are saving the organization money, and I think that I am getting better returns out of our employees. The people who are engaged in this as they come up I can see it in the excitement. I can see it in some of the successes that we're having.

Mr. Lawrence: It's time for a break. We'll be right back with more of The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and tonight's conversation is with Dick Calder, deputy director for administration for the CIA. Joining me in our conversation is Ian Littman, and Ian is also a partner at PricewaterhouseCoopers.

Well, Dick, that's just finish what we were talking about in the last segment as you were reflecting on your pushing the CIA towards entrepreneurship and forward thinking. Any lessons learned that we can summarize?

Mr. Calder: There are a lot, but let me just pick out a couple here. I think one is the willingness to talk about things that don't go well, the mistakes. Let's say it as the right word here.

Historically, bureaucracies, particularly federal bureaucracies, don't tolerate many mistakes, and I would say at the Agency we have to be very careful about the mistakes that we make. But when you're trying something new, when you're trying to work through new issues, you're not always going to calibrate correctly.

And we have made an effort to be straightforward about good tries, talking about good tries, things that didn't work; things that we thought would work. We put the planning into it, we thought it would be the best way to approach it, but it just wasn't.

And I think we have developed a little bit of an ethos now, I don't want to over-exaggerate this, of being able to say hey, let's try this. Let's not be timid about this. Let's try this, and if it doesn't work too quickly, go back and make sure that we recover and that we give people credit for the trying, not necessarily only for getting it right.

The other thing that I would say is that I believe new ideas come from new voices, and the new voices tend to be on the periphery of the organization. And so one of our challenges has been to try to reach out to those new voices to try to be sure that we are getting their ideas.

One of the things of living overseas is that you get to see a lot of different cultures, a lot of different hierarchies, a lot of different bureaucracies. And I can remember working in one particular government. Its' economy was booming, it was really quickly coming into the 20th Century, and it didn't have sufficiently trained people to do all the things that the economy demanded of it.

It reached out and hired people from a variety, from Europe, from South Asia, from all over the world, and I was struck by how effective having that broad base of people was in making this work. And, in fact, I thought there was a richness of ideas there that I didn't see in some of the other environments that I worked in.

So I've become a believer in trying to reach out and bring together as diverse a group of people as possible to try and solve ideas, and I think that's been one of the factors that have made us successful, that we have tried to cut no one out but to try to be very inclusive.

Mr. Lawrence: Dick, let's talk a little bit about technology in the future. Technology has become increasingly important to the success of all government agencies. Can you tell us what role technology has been playing at the CIA?

Mr. Calder: Absolutely, a critical role. One of the things, I will again take it down to where I am, which is in the back- office business, and whole world of doing back office, of doing the support work around not only in our organization but in the private sector and other elements of the federal sector as well, there has been an increasing use of technology to dis-intermediate, to take people out of the circuit that historically were there when we were passing paper from-out box to in-box to out- box, et cetera.

We have been trying to leverage that technology to drive process costs down, to actually take steps out and in fact to blow up processes. Instead of just going down and trying to automate the status quo, we have been trying to use the technology to force us to rethink how we do processes.

We instituted a new payroll program not too long ago, and part of that whole effort was aimed at using the actual technology to drive us to think differently about how we did payroll. And we've seen this in several other areas. Technology, to me, is a real force multiplier in how we look at processes and how we're doing business at the Agency.

Mr. Lawrence: Now, technology often cuts two ways for employees, right? First, it's hard for people to learn because it's new. And, second, you just described a process where you could imagine fewer employees as a result. How does that work for you?

Mr. Calder: This is the real conundrum of government. If you think about government, government is basically people, most of your costs are people. If you now think about technology and you now think about making improvements, what you're really doing is threatening employees.

So, the issue for many of us who are trying to manage is how do you get people to engage when the outcome may be a real threat to their job? And what we have tried to do, particularly at the Agency as I said earlier on, is to make sure that we have outlets, to make sure that people understand that the way that they continue to add value in the organization is to be as flexible as possible in learning new jobs, in cross-training.

In our directorate we have a lot of guilds. We have logisticians, we have finance officers, we have people who for a career have worked within these small silos. And what we are trying to do now is to move, using technology, using information, and allowing these people to have broader opportunities. And, not surprisingly, we're seeing a lot of people step up to that challenge.

So that's how I think you deal with that dichotomy of all of your costs are in people, if you drive the costs out, you're going to put people at risk. How then do you ensure that people will play? I think it's by making them comfortable that they will have other opportunities as they work through some of these issues with you.

Mr. Lawrence: Dick, commercial organizations are deeply involved in the new economy. How do you envision e-commerce playing any type of role at the CIA?

Mr. Calder: Many of the ways we provide services in the Agency today have moved to having Web pages, and this I think is becoming very common across the federal government, certainly in the private sector.

One of the issues that we are struggling with and we want to fix very, very quickly is that you can get all the information on our Web pages that you want, when a service is available, how much a service costs, how to actually sign up for the service, how best to get it delivered to you. What you can't do today is do the transaction.

And we are working on it. We are spending a lot of time on this. If we can develop that final step so that you can actually do the transaction, this will be of enormous benefit to our clients, to our customers. But much more importantly, I can see thousands of process steps. I can see paper being saved, trees being saved, forests being saved, by not having to do much of the processes that we do today by using the technology as the process enabler rather than having paper backup, and that's really where we're trying to get to.

This means the use of credit cards, the use of other devices. As I said, we are fairly close, and we have a lot of people that are working on this, a lot of experimental ideas going on, and it won't be that long before I think we are on that edge.

Mr. Lawrence: Dick, what are some of the other key issues the CIA will be facing in the future years to come?

Mr. Calder: Well, we wrestle with a variety of new issues today. We have weapons of mass destruction. There's international terrorism. We have narcotics. We have organized crime. I think it was former Director Woolsey that talked, in referring to the Soviet Union, that we had managed to slay the dragon and what appeared in its stead were literally dozens of venomous snakes.

I think the challenge for us is almost impossible to predict. If you look out there you have information technology, you have telecommunications, biotechnology and robotics. You have all those issues out there. None of us can predict what they're going to be. I think the real challenge for us is to develop the agility and the adaptability so that no matter what happens we are capable of addressing it.

Mr. Lawrence: I'm afraid we're out of time. Thank you very much, Dick, for spending time with us tonight. Ian and I have enjoyed our conversation very much.

This has been The Business of Government Hour, conversations with government leaders. To learn more about the Endowment's programs, visit us on the Web at www.endowment.pwcglobal.com. See you next week.