Arlington, Virginia Tuesday, April 25, 2000 Mr. Lawrence: Good evening, and welcome to The Business of Government Hour, conversations with government leaders. I'm Paul Lawrence, a partner at PricewaterhouseCoopers and a 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 approving government effectiveness. To find out more about the Endowment and our research, visit us on the web at 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 Robert Mallett, deputy secretary of the United States Department of Commerce. Mr. Mallett was appointed deputy secretary in 1997. Welcome. Mr. Mallett: Thank you, Paul. I'm glad to be here this evening. Mr. Lawrence: Mr. Mallett, can you tell us a little bit about your career prior to your appointment as deputy secretary of the Department of Commerce? Mr. Mallett: Well, I'm a Texan. I'm a native Texan. I grew up in Texas. That's where my family is, and I attended school down there except in college. I attended Morehouse College in Atlanta, and upon graduation I attended Harvard Law School, and I clerked for a judge on the Federal Circuit Court of Appeals. Following that, I joined a firm in Washington. It was a New York law firm, and I was in the Washington office, and I spent about four years there and left there, and I worked on Capitol Hill for Lloyd Bentsen. Then a friend of mine became the corporation counsel, sort of the chief lawyer, the attorney, for the District of Columbia. A very dear friend, John Payton, became the corporation counsel and asked me if I would come to be his deputy. It was a very odd career move, but I had worked in the court system. I had worked for the legislative branch of government. I had never worked for local government, and Sharon Pratt Kelly was a new mayor with a great deal of promise, and I had a great deal of confidence in John's judgment so I decided to take a risk. And I did that, and I went to work for John as his deputy. I was there for about eight months, after which the mayor asked me if I would become the city administrator and the deputy mayor. Obviously, it was a difficult job to refuse at the time, and I took the mayor's invitation, and I stayed there for three and a half years until another mayor came into office and I joined a law firm as a partner in the city and I stayed there for as short a period of time as I could, and I was offered the job as the deputy secretary of the Department of Commerce, and I'm very, very pleased to be there now, working with the secretary of commerce, Bill Daley. I think we have made a very fine team. I think we have a very strong leadership team at the department, and very, very effective senior-level management. Mr. Lawrence: How well did these previous positions prepare you for your job as deputy secretary? Mr. Mallett: Oh, I think quite extraordinarily well. Obviously, my work on the Hill, I think, has enhanced my understanding of the legislative process and what it takes to move a bureaucracy and to get legislation moving. As well, I had taught previously at law school. I taught at Georgetown Law School, talking about statutes and the creation of public policy, so I had a very good practical sense of how the legislative process worked and the division between the executive and the legislative branches as well. I had an academic understanding of how it worked, and now I really understand how it works, working in the executive branch as a subcabinet officer in a major department of the government. I would say my job as city administrator has been the biggest help to me in this job because it made me understand extremely well how to move things in government, how bureaucracies work, how they respond to certain kinds of things, human resource management, procurement. It gave me a much deeper appreciation. Obviously, the District was very different than the Department of Commerce, but I dare say it was wonderful preparation for this opportunity. Mr. Lawrence: Well, you just talked about how government works. Tell us, how does it work? Describe your role as deputy secretary. Mr. Mallett: Well, as the deputy of the department one of the hats I wear is the chief operating officer function. It's something I embrace and I enjoy very much. It allows me to run the department in terms of its resources, manage its assets, chief of which are its people. Human resources is a very big part of my responsibility; procurement, making certain that we can get the goods and services we need to serve the public in an effective way at the lowest cost and highest quality; as well keeping a very close reign on our budget, how we spend and allocate our resources as well as settings priorities for the department in concert with the secretary, obviously. And also I have a representative function. As the second-highest-ranking official in the department a lot of my representational responsibilities there are actually quite numerous, both for the department but also internationally for the government of the United States. So it's a fascinating job I have. I work for a wonderful man. Bill Daley is just a terrific secretary, and it's a great department. It's a very diverse cabinet department. We do lots of things. We are actually, in terms of budget, the smallest of the cabinet agencies. Our budget this year is about $8 billion because of the Year 2000 Census, ramp-up for the census. Ordinarily, it's about $6 billion, but it has about 40,000 employees. We do everything from the census to the National Weather Service, international trade, patent and trademarks, economic development, export, licensing. We do a number of things. It's a very fascinating department. Mr. Lawrence: Well, who is part of your team that makes all that possible? How does that team work? Mr. Mallett: Well, we have about nine different agencies within the department, and each agency has a political leader, a political appointee, an officer appointed by the president. Most of them are confirmed by the Senate. They are undersecretaries or assistant secretaries. And then, under them, there are obviously deputies and assistants, and they help to manage this department. We have a very strong career elite within the department, and they are very strong managers. They try to follow directives. They are very innovative. I think it's a very dynamic department. Mr. Lawrence: And how do you work with that team? Mr. Mallett: Well, I meet with them with probably more frequency than they would like, but I see that as very much a part of my responsibility is to develop relationships with people in the department who can help us achieve the administration's goals. That's part of what I do. I have a little saying sometimes that I think 70 percent of any leader's job, if not more, is identifying the right people for the right jobs, and once you do that you have most of the work done. So a lot of my time is spent working with people, trying to help them to understand what our goals are, trying to help them help us make certain we've set the right goals, a good and effective plan on how to implement them, as well as spending time listening to people and learning from them and learning how an operation works. No person who is a leader in the government can do his or her job without paying a lot of attention to people who have been doing what they are doing for quite some time. And they will usually be able to tell you the best way to get something done because a lot of times they wanted to see some change, and when you spend the time with them they can help you innovate. Mr. Lawrence: You just talked about the importance of listening and understanding. With so many people and even such diverse missions within the department, how do you do that? How do you communicate? Mr. Mallett: Well, you communicate through a variety of ways. You can communicate by who you are, what you represent, what you stand for, what they believe that you stand for. You also communicate through the written word, making certain that you communicate effectively those things that have to be done. But more importantly it's through teamwork. It's through people understanding, each team member understanding, what her role on the team is and how you carry out your respective mission. You develop strategies and goals together and you pursue them. It's a lot of fun. If you like people, a job like this is a great deal of fun. Mr. Lawrence: Well, that's great. We'll be right back with more of The Business of Government Hour and our conversation with Robert Mallett, deputy secretary of the U.S. Department of Commerce. (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 Robert Mallett, deputy secretary of the Department of Commerce. I know you're a member of the President's Management Council. Can you tell us a little bit more about the PMC and the role of the PMC in this administration? Mr. Mallett: Well, the President's Management Council is comprised of the number-two persons, the deputies, of the major cabinet departments and major agencies of the government. The thought was that the deputies should definitely be operating officers for the department, to care a lot about the management, the nuts and bolts, and mechanics of how you make an agency run. These are very large bureaucracies using a lot of the taxpayers' dollars, and I think the president wanted to have a very specific focus, and certainly the vice president has insisted that we have a very clear focus on trying to improve the delivery of services to the public and the management of departments. So thus we have the President's Management Council comprised of people in positions such as the one that I hold. It meets on a monthly basis, and there are any number of items that are usually on our agenda where we discuss with one another about the ways that we are handling fairly specific problems. We also try to work through some very serious issues that all of us mutually face and propose methods to change them. It's been a very effective group. It's a lot of helpful advice given and a lot of things we learn from one another. Mr. Lawrence: The departments have different missions, but my sense is that the challenges every deputy secretary might be facing would be the same. Does the PMC bring that out? Mr. Mallett: Well, certainly we have different missions. Each department has a different mission, but the kinds of problems we face are quite similar. The first thing we do is we manage a very large bureaucracy, so we all have very significant, human resource challenges and issues that have to be dealt with. We also have procurement. All of us procure goods and services, no matter which department you are in. We also have legislative items that may be different in terms of their substance, but we are all called upon to respond to the same legislators about the same sets of issues. For example, we are all responsible for what they call the "GPRA," which is the Government Performance and Results Act. The long and short of it is it is supposed to help us put our strategic plans in place and performance plans in place so that we ally our missions and everyone in the department is moving towards a singular goal. We all have the same kinds of issues that are challenging us, and that's why it's heavily used to get all of the deputies together to discuss them. Mr. Lawrence: I know this administration has attempted to transform the job of deputy secretary into the chief operating officer. Do you think future deputy secretaries will continue to acted as COOs? Mr. Mallett: Well, that will depend obviously on who the leadership is. Certainly, President Clinton and Vice President Gore have made this a high priority of their administration. I think it's helpful. I think it has served the administration well in our effort to improve how we deliver services, and I'm certainly hopeful that that will continue to be done. Mr. Lawrence: You mentioned your responsibilities in managing people in the department. Can you tell us more about the changes you made in the department's Senior Executive Service, the SES? Mr. Mallett: Well, we are trying to make some very positive changes, and we've conferred with a number of people. You know, change in the federal government is rather difficult sometimes, but the Senior Executive Service is truly the management elite of the federal government. It was established in 1978 as a result of the Civil Service Reform Act, and what it envisioned was a senior corporation of government executives who would be reasonably well-compensated, by government standards. They would be mobile and focused on leadership and management rather than on their rather specific technical skills. Over time some components of the Civil Service Act with respect to the SES, I think, have been lost, and what we're trying to do is revitalize the original purpose and intent of the Senior Executive Service. So we have focused our initiative around the SES on a number of things. First, we really want to be focused on executive development, ensuring that our senior managers are real executives, real managers, that they get the kind of training they need, that they get the kind of professional development opportunities, that they get assignments that will help mine those skills. We've also tried to emphasize in our SES improvement initiatives succession planning. Do we have the right people in the right place as people begin to retire? Right now we have almost 40 percent of our senior executives who are retirement eligible. Go another five years, that percentage goes up to about 72 percent. So it would be irresponsible not to begin to think about whether we have people in the right line of succession. Are we identifying new people who are not yet at the senior executive level but putting them in places where they can become candidates for those kinds of leadership positions? We also are trying to put some emphasis on performance measurement, how do we measure their contribution, how do they get rewarded, and we want to do a better job of communicating ideas and hearing from the senior executives about what's important. Now, that has a number of very, I think, critical details that I didn't mention. One is that we attempted last year and I think quite successfully now -- I think some of the executives were a little concerned about it at first -- to return to some modicum, a small percentage, of senior executives who were mobile, who got reassigned to different jobs, so that we can make certain that skills don't atrophy and that we put some of our top-performing managers into some of our most critical jobs. That was very important. You know, you can be a terrific manager at something, and sometimes you stay in a job 10, 20 years. You just need to change. The organization needs to change. You need to change to reinvigorate you. We did some of that last year, and I think it turned out very successfully, better than most people thought. Mr. Lawrence: Many say that government service is getting less attractive over time. How do you respond to that? Mr. Mallett: Well, certainly there are some headaches associated with government service that all of us could do without, but it's still, by my money, the best job around. It's interesting, it's current, it's things that people care about, and it allows you an opportunity to see if you can make life better for people. That's what government service ought to be about, and if you are in there for any other reason, you ought to not be there. In a position like mine I know it's temporary, so I have a chance to fulfill some of the administration goals, but also the point is to improve services to the taxpayer and that's what we're trying to do. Mr. Lawrence: Thank you. It's now 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 Robert Mallett, deputy secretary of the Department of Commerce. Let's turn our attention now to the department. Can you describe the department to us? Mr. Mallett: Yes, I'll be glad to, Paul. The Department of Commerce has been variously described by people, but one of our senior executives said to me that it's like Noah's ark, although we generally have only one species, but it's a large department with nine different bureaus. We do everything from collect and analyze and predict weather, collect data around weather, to collecting data and statistics about our nation through our Census Bureau. We aid rural areas and towns as a result of disasters and try to help them do economic development planning. We have a National Trade Bureau that deals with international trade issues around the globe. We also have a minority business development agency helping minority businesses, small businesses, in this country. We also work a tremendous amount with trying to deal with our environment, particularly our marine environment, through our administration called NOAA, the National Oceanic and Atmospheric Administration, everything from counting fish to making certain we pay attention to what our fish stocks look like to satellites that help us get better weather data. We have essentially our own Navy. We have the NOAA Corps that works on a number of ships, and even we have a small air force, people who fly planes through hurricanes, and things like that. We also have offices probably in every state in the union, most major cities. We have a function where we advise the Federal Communications Commission about telecommunications policy and other kinds of things. It's quite an interesting and dynamic department. Mr. Lawrence: Which bureaus within the department have most significantly reinvented themselves? Mr. Mallett: Well, I could go on and on about that because I think we have paid a lot of attention to government reinvention. The National Performance Review run by the vice president, I think, has been a very good thing for the government. Let's see. I think there are probably a few that just jump, leap to mind. One is the National Weather Service. When Secretary Daley came into office the department was midway through a modernization program, but it had been generally slow moving and over budget, and people weren't certain whether we were going to make our targets. Well, we paid a lot of management attention to that through the acquisition of new technology, and we came in at budget and on time. It's not bad for government work, and we had a very good team in place to do that. The result of this modernization of the service and the work we've done is we essentially increased the lead time that we can tell people that hurricanes are coming, that tornadoes are on the way, increase the lead time in telling them about floods. We are able to improve the accuracy of our forecasts. They are very high as a general rule. We tell people when severe thunderstorms are coming. These are very important things for the public to know, and it's through their National Weather Service that they are getting it. Now, most of the time that information is disseminated through commercial channels, through the television and radio and the Weather Channel and things like that, but the raw data, the information and materials upon which those broadcasts are based, come from the National Weather Service. That's one. I think they have done a spectacular job in improving their communications with the public and giving them ideas about fairly severe weather. El Niño was a six-month forecast and it was very accurate, for example. I think the Patent and Trademark Office deserves a lot of credit for improving itself. The Patent and Trademark Office has been tremendously burdened in the last five or six years because we have had a burst of innovation in our country, and they have improved service a lot, trying to cut the times for patent pendency, that is, before we tell people they have a patent. We're trying to reduce it to a 12-month cycle, and we're trying to give people better ideas. We are finally allowing people to begin to front-load information for patents, which allows them to pay their fees, and it also allows them to, I think, apply for a patent, at least put in a patent application, over the Internet. That's a pretty good innovation, putting our library of patents on the Internet so that people have access to that data and information and reducing the number of our patent-examining groups to a smaller number to make it more manageable, make it more efficient. That's fairly important. The Economic Development Administration, which is a bureau and agency of the Department of Commerce that aids industries and towns and governments in communities all over the country improve their economic development possibilities, it secured its first reauthorization in 23 years. The Congress thought it finally merited it, and for the first time in 23 years we were reauthorized. The Minority Business Development Agency is reaching out to minority and small businesses and women-owned businesses in ways they had never done before, doing more match-making with particular government procurement opportunities through the Internet, through electronic commerce. The U.S. and Foreign Commercial Service, which has just been a tremendous innovator in bringing more people on line and showing people new to export businesses which have never exported anything before because 96 percent of the world's customers live outside the United States, and if you want to grow your market one of the ways to do that is to go beyond our borders. The U.S. and Foreign Commercial Service, that is part of what they do. We have had a number of innovations that we are very proud of. Mr. Lawrence: Well, I know that one of the department's major accomplishments has been the creation of the government-wide acquisition contract. Can you tell us about that initiative? Mr. Mallett: The GWAC, the Government-Wide Acquisition Contract, we are very proud about that. That's something that we care a great deal about. What we noticed is the Clinton-Gore administration came into office and procurement was still a large challenge for the government, the way we acquired our products and services. The administration, before I joined, put in a number of reform measures to improve the way government products and services were acquired to make it easier to acquire materials so it wouldn't take as long and to give us an opportunity to try to get the best value for our dollar. The result of that was astounding. It's just astonishing. It saved the government lots of money, got products and services to managers in government quicker, and also really affected productivity. That's a very good thing. We had a few things as a result of some of those changes, some of those efficiencies, that didn't rebound to the benefit of small businesses, that we thought � appropriately � we should take a very close look at because as we made those efficiency improvements, the number of contracting dollars going out to small businesses, both small businesses that are in the majority community and the minority community, began to decline. We thought that we could do better than that, that if we took a look at where the government's contracting dollar was being spent primarily and where there would be increases in that contracting dollar would be in the technology sector, the information technology sector. So we at the Department of Commerce created what we call a GWAC designed for information-technology services, operations and maintenance services and IT-engineering services, security services for IT. But we limited those firms to small businesses who would participate, small, minority, woman-owned enterprises. We got as a result some fantastic applicants for this GWAC � 29 outstanding firms, award-winning firms, that are now eligible. They are pre-qualified, pre-certified. Agencies all over this government can simply choose one of those contractors, give them some business to do some information-technology work in that agency, and be assured that they have a highly-qualified vendor doing that work. It's real innovation in government contracting, and we are very proud of it. Mr. Lawrence: I know you're anxious to talk about GPRA, and everybody is getting ready for the March 2000 submission of the plan. Can you tell us how the department has implemented GPRA and its impact on the department as a management tool? Mr. Mallett: Well, GPRA has been, I think, a very useful tool to a department like the Department of Commerce. We have a very diverse department, but this provides us some kind of a framework for bringing all of our attention to our several different missions. We have looked at the department's work over the past year and a half, and we see improvements in a number of areas, and I think that view is shared by both the Office of Management and Budget and people in the Congress. When we first submitted our GPRA report a few years ago, we didn't do so well on our score, but this year we improved that quite markedly and put us in the top tier agency in terms of performance. What we've been able to do, we think, through GPRA, is engender a real refreshing, intellectual rigor and competitiveness within our organization. Organizations are competing to put together the best plans. We worked with our bureaucracy. They put together very effective plans, how to justify themselves every day, how to make certain that we allied our goals and each individual's performance together so that we have a way of looking at what we specifically do to see if in fact are performing at the level we need to perform. It's been a very useful tool. Mr. Lawrence: 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 Robert Mallett, deputy secretary of the Department of Commerce. Mr. Lawrence: Let's talk a little bit about the future. Can you give us an update on the Bureau of Census and how it's doing with the Year 2000 Census? Mr. Mallett: Well, I know we don't have very much time, and that's a very large undertaking, but I'll try to see if I can give you a statement about the census that's like giving you a history of the world in three minutes or less. This is a pretty immense project. We have lots more people in the United States than we've ever had before. We're going to hire 800,000 people to do this. We're putting together the address list. There are some 120 million households in the United States, and we've got to get those addresses accurate. We've got to get it right. We are printing some 426 million forms for the census, mailing them out, asking people to mail it back. We're trying to publish a questionnaire assistance guide in a number of languages, trying to promote very vigorously the census, and we're going to have an advertising campaign, a paid advertising campaign, for the first time in the history of the census to hope that we can get people understand the criticality of the decennial census. We do this every 10 years and funding decisions for the next 10 years are based on this data. It's used for political empowerment purposes, redistricting, and apportionment. The census is absolutely critical, and we're trying to do all of that, and that's a big undertaking to hire 840,000 people, acquire over five million square feet of space, some 520 census offices all over the United States. It's a very large undertaking. It's our largest peacetime mobilization. Fortunately, we are on schedule. We are doing very well. We've gotten a very good report recently from a government watchdog agency of the Congress, and we're pretty pleased about how that's working out. Mr. Lawrence: Well, how about the future of government? Let's take a few minutes and look ahead. If you return to government again in a decade in the Year 2009 what do you think government will look like then? Mr. Mallett: You know, I want to say one other thing about the census. I don't want to paint so rosy a picture to suggest that we're not going to have problems. We obviously will. We obviously do. There are concerns about the way we're proposing to conduct the census and the use of modern, statistical methods, but they have been found to be some of the best methods available today, but the census has a lot of challenges and we're going to be working to resolve them. With that caveat, I'll move to your question. Mr. Lawrence: Ten years from now, when you've got to do it again, how do you think it will look? Mr. Mallett: Well, when you ask me a question like that, you really have to take the long view. We will always have a need for government. There is no question about that, but you hope that we are a lot more flexible, a lot more empathetic and understanding about what people need, the services they need, and the kind of help they may need to acquire them. So I think the things that ought to change in the government and the things we ought to be doing differently have to do with the government being a lot more responsive and flexible in the way it conducts its business and the way it interacts with members of the public. I think also that as a manager, one of the most critical jobs that we will face in government is as technology begins to improve and the ability of people to get their jobs done from the privacy of their homes and to increase their productivity without ever leaving their homes, I think it causes us to rethink the rigidity of the government and some of its processes. I think we also have to improve our incentives to attract and hire people and develop talent among motivated people. We ought to take better advantage of what technology offers us by allowing more telecommuting and people going to remote locations and not coming straight to the office sometimes to get their work done. I think there is a new concept called "hoteling," where you temporarily use office space to meet a very short-term need. We ought to recognize, because we value it, the evolution of family dynamics and alternative family structures. New mothers, for example, who are home with their child after birth can continue to work but do it from their home through the use of technology. I think we've got to just become a lot more flexible and innovative about how we approach government employment and government provision of services to people. Mr. Lawrence: How about the management of those services? What do you think remains to be done in terms of improving the management of government? Mr. Mallett: Well, clearly, we need to keep our eye on the ball with respect to the human resource development. There is no more valuable entity than your human resource assets, period. If we don't do a better job of that, we won't do a better job of delivering the taxpayers' value. That's first. Second, we always have to keep learning how to be more efficient, how we save the taxpayers' money, and at the same time continue to provide maximum services, and that has to do with both how cheaply we acquire goods, what kind of business deals we strike with the private sector to make certain that we get as good of a value on the service of the product we buy as any buyer in the market. That continues to be critical. I also believe there's got to be a lot more harmony between the branches, certainly the legislative and executive branch, to move the country forward in a way that is productive and we have a shared vision about that. I guess I ought to be reasonably careful here, but these constant confrontations about the budget and what that means and the different direction of the branches, I think, is a little disconcerting to people. Obviously, I share the president's views about the direction we want to take the country, but we're going to have to reconcile some of our major differences and understand that it's important for us to move the ball forward. The public expects us, no matter what our differences, to keep moving the ball forward, and I think that we can all do a little better job of that. Mr. Lawrence: Here is my final question, Mr. Mallett. Would you comment on the future of public service in our nation? Do you think that government will be able to attract outstanding individuals to serve in both career and political positions in the years ahead? Mr. Mallett: Well, I certainly hope so. I think we'll have to do some different things. I think we can't keep trying to fit a round peg in a square hole or a square peg in a round hole, however you want to put it. Yes, I do believe that we will continue to produce excellent people who will be interested in government employment. It will be harder to attract them, for lots of different reasons, some of them to do with compensation, most of them not, actually. But I do think that we continue to have that ability because when all is said and done, public service is truly, and I now understand that better than I've ever understood it before, the highest calling, and you get the richest reward for what you do. Mr. Lawrence: You indicated that it wasn't all monetary. What else did you think that it was a function of? Mr. Mallett: Well, people don't like to be hassled in their work. They also like to believe that their work is important, they have a clear mission. They want to make certain that they are properly evaluated, that they are well trained to the job, and that they have an ability to move from one job to another if their talent so allows it. People don't like rigidity. They don't like monotony. They want to be challenged. So I think we have to begin to think about ways that we make certain that we keep doing that. Mr. Lawrence: And one last question. If you were a government employee now, what would you be doing to prepare for the future? Mr. Mallett: Obviously, I think that technology and technical literacy are of tremendous import today and having skills in those areas will serve you well in the future. That is not to say that language skills are unimportant because they are of paramount importance, both facility in your native tongue, but also if you could acquire a second language. Sometimes we underestimate that in the United States. We are so insulated, but we're a changing country and our demographics are changing. Mr. Lawrence: Thank you very much, Mr. Mallett, for spending time with us tonight. I very much enjoyed our conversation. This has been The Business of Government Hour, conversations with government leaders. I'm Paul Lawrence, a partner in PricewaterhouseCoopers and the co-chair of the PricewaterhouseCoopers Endowment for the Business of Government. To learn more about the Endowment's programs and research into new approaches to improving government effectiveness, please visit us on the Web at endowment.pwcglobal.com.