S. HRG. 111–735 

TASK FORCE HEARINGS 

HEARINGS 

BEFORE THE

COMMITTEE ON THE BUDGET 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

July 12, 2010-PERFORMANCE ‘‘STAT’’: MEASURING PRIORITIES, 

PROGRESS AND RESULTS 

July 15, 2010-RESPONISBLE CONTRACTING: MODERNIZING THE 

BUSINESS OF GOVERNMENT 

( 

Printed for the use of the Committee on the Budget 

TASK FORCE HEARINGS 

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58–155pdf 2010

S. HRG. 111–735 

TASK FORCE HEARINGS 

HEARINGS 

BEFORE THE

COMMITTEE ON THE BUDGET 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

July 12, 2010-PERFORMANCE ‘‘STAT’’: MEASURING PRIORITIES, 

PROGRESS AND RESULTS 

July 15, 2010-RESPONISBLE CONTRACTING: MODERNIZING THE 

BUSINESS OF GOVERNMENT 

( 

Printed for the use of the Committee on the Budget 

COMMITTEE ON THE BUDGET 

KENT CONRAD, NORTH DAKOTA, CHAIRMAN 

PATTY MURRAY, WASHINGTON 

RON WYDEN, OREGON 

RUSSELL D. FEINGOLD, WISCONSIN 

BILL NELSON, FLORIDA 

DEBBIE STABENOW, MICHIGAN 

BENJAMIN L. CARDIN, MARYLAND 

BERNARD SANDERS, VERMONT 

SHELDON WHITEHOUSE, RHODE ISLAND 

MARK R. WARNER, VIRGINIA 

JEFF MERKLEY, OREGON 

MARK BEGICH, ALASKA 

JUDD GREGG, NEW HAMPSHIRE 

CHARLES E. GRASSLEY, IOWA 

MICHAEL ENZI, WYOMING 

JEFF SESSIONS, ALABAMA 

JIM BUNNING, KENTUCKY 

MIKE CRAPO, IDAHO 

JOHN ENSIGN, NEVEDA 

JOHN CORNYN, TEXAS 

LINDSEY O. GRAHAM, SOUTH CAROLINA 

LAMAR ALEXANDER, TENNESSEE 

MARY ANN NAYLOR, Majority Staff Director 

CHERYL JANAS REIDY, Minority Staff Director 

(II) 

iii 

C O N T E N T S 

HEARINGS 

Page 

July 12, 2010—Performance ‘‘Stat’’: Measuring Priorities, Progress and Results ....................................................................................................................... 1 

July 15, 2010—Responsible Contracting: Modernizing the Business of Government ...................................................................................................................... 77 

STATEMENTS BY COMMITTEE MEMBERS 

Senator Cardin ......................................................................................................... 6 

Senator Murray ........................................................................................................ 83 

Senator Warner .......................................................................................................... 1, 77 

WITNESSES 

Congressman Sarbanes ........................................................................................... 9 

Honorable Shay D. Assad, Acting Assistant Secretary of Defense for 

Acquistion, Office of the Under Secretary of Defense for Acquistion, Technology, and Logistics, US Department of Defense......................................... 102, 104 

James Jay Carafano, Ph.D, Director, Douglas and Sarah Allison Center for 

Foreign Policy Studies, The Heritage Foundationr ....................................... 133, 136 

Daniel I. Gordon, Administration for Federal Procurement Policy, Office Management and Budget ............................................................................................ 84, 87 

Honorable Isiah ‘‘Ike’’ Leggett, County Executive, Montegomery County, 

Maryland ............................................................................................................... 33, 37 

Honorable Martin J. O’Malley, Governor, State of Maryland .............................. 10, 17 

Allison Stanger, Ph.D, Russell Leng 1960 Professor of International Politics 

and Economics, Middlebury College ............................................................... 123, 126 

Christopher Thomaskutty, Deputy Mayor, Public Safety and Operations, Baltimore, Maryland.................................................................................................. 62, 66 

QUESTIONS SUBMITTED FOR THE RECORD 

Questions and Answers ......................................................................................... 75, 155 

(1) 

PERFORMANCE ‘‘STAT’’: MEASURING 

PRIORITIES, PROGRESS, AND RESULTS 

MONDAY, JULY 12, 2010 

U.S. SENATE, 

COMMITTEE ON THE BUDGET AND THE TASK FORCE ON

GOVERNMENT PERFORMANCE, ANNAPOLIS, MD 

The Committee met, pursuant to notice, at 2:07 p.m., in the Governor’s Reception Room, Maryland State House, 100 State Circle, 

Annapolis, Maryland, Hon. Mark Warner, Chairman of the Task 

Force, presiding. 

Present: Senators Warner and Cardin. 

Also present: Representative Sarbanes. 

Staff present: John Righter, Ben Licht, Ronald Storhaug, Amy 

Edwards, and Gregory McNeil. 

OPENING STATEMENT OF SENATOR WARNER 

Senator WARNER. The hearing will come to order. I want to first 

welcome everyone and thank you for being here. In particular, 

thanks to Governor O’Malley for hosting us here in the Maryland 

State House in Annapolis. Our task force greatly appreciates the 

cooperation and assistance provided by you and your staff. 

I want to thank my colleagues Senator Cardin and Congressman 

Sarbanes for accompanying me to this hearing. Of course, it was 

perhaps a little shorter trip for both of them than for me—although 

maybe not. Coming from Alexandria, it is not that far. 

I want to particularly thank Senator Cardin. He is an important 

member of both the Senate Budget Committee and the Government 

Performance Task Force, and I have benefited greatly from his 

guidance and support. 

This is an official hearing of the Government Performance Task 

Force of the U.S. Senate Budget Committee. The hearing is being 

webcast, and an official record of it will be provided to our colleagues in the Senate. The record will include the full written 

statements provided by each of the witnesses, and we are going to 

have two panels today. 

Let me make my statement, then I will call on Senator Cardin 

and Congressman Sarbanes for comments, and then we will get to 

the Governor. 

I would like to begin by welcoming everyone to the Government 

Performance Task Force Hearing, ‘‘Performance ‘Stat’: Measuring 

Priorities, Progress, and Results.’’ 

2 

Today we will explore how the Stat performance management 

model uses data to directly improve outcomes and how it has been 

used at all levels of Government in the State of Maryland. Today 

also marks the tenth anniversary of the Stat model in Maryland, 

and I know Governor O’Malley started it in Baltimore as CitiStat. 

As I mentioned, I am honored to be joined by both Senator 

Cardin and Congressman Sarbanes. When I first came to the U.S. 

Senate, I was asked to chair this task force. The task force works 

to examine the Federal Government performance policies. Now, 

this is normally a fairly wonky category, but as we are in periods 

of enormous budget challenges, trying to get this part right in 

terms of Government performance measurements and procedures is 

going to become, I think, a wave of the future. And, again, we are 

with one of the leaders here with Governor O’Malley. 


58155.085
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This task force works to improve the information base for Federal decisionmaking, helps us refocus goals. We focus a lot on data 

and reporting information that matters to Congress, and we are 

looking at how we can perhaps use some of these tools to develop 

cross-cutting policy goals across various agencies and departments. 

Our goal is to create a more efficient Government and identify savings for the American taxpayers. 

Now, this is a particular area of interest for me. As some of you 

in the audience know, I am a former Governor of Virginia. This 

was an area that I focused on during my tenure there. We developed some of the similar cross-cutting policy goals and measures to 

support them, similar to what Governor O’Malley has done. As a 

matter of fact, we even changed our budget processes so we could 

see those results, and I was proud that during my tenure Virginia 

was named the best managed State in the country. Of course, I will 

acknowledge that was before Governor O’Malley was in office. 

Today the Stat model is sweeping across the country. If we could 

go ahead to the next chart, this initiative started in Maryland. If 

you look all across the country at how many other locations, you 

can see the model is used in D.C., San Francisco, St. Louis, Atlanta, Washington State, among others. A total of 11 cities have 

adopted CitiStat. 


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The Federal Government is also implementing the Stat model; 

however, we have a lot of work to do in D.C., and we need to do 

what Governor O’Malley has already done in Maryland: create governmentwide goals and incent our Federal agencies to work more 

closely together to achieve those goals. 

The Governor’s administration has worked to define 15 strategic 

and visionary goals to improve the quality of life in Maryland. The 

Governor’s delivery unit was created to work with agencies to align 

State and Federal resources around those 15 goals. Now, as somebody who wrestled with this issue at the State level, how you align 

Federal funding flows to actually meet your State goals, I am anxious to hear if you cracked that code. I am anxious to hear, again, 

from the Governor on his successes and challenges. 


58155.087
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The Stat model, as we have up here on this chart, is relatively 

simple. Government must set clear goals. You have to hold agencies accountable. You have to make sure that once you set those 

goals and you tell the agencies you are going to hold them accountable, you actually have regular progress meetings. Time and again 

I found that even as Governor, if you set a directive, unless you are 

consciously relentless on following up the progress of reaching 

those goals, there are some in the work force that might just say, 

well, this guy is going to be gone at some point, and even more so 

in Virginia where it was a 4-year term. But I think that regular 

progress meetings are very important. Strong analytical support 

and then aggressive followup. 

I would add that the Obama administration has taken the Stat 

model as well and is implementing it at the Federal level with 

TechStat, launched by the Federal CIO, Vivek Kundra. TechStat 

provides a forum for examining at-risk and failing IT projects. An 

IT dashboard website was established to help provide data to inform TechStat meetings. Plans are underway to convene quarterly 

meetings between the OMB and agencies to discuss progress in 

achieving high-priority performance goals and to establish a Federal Government web portal that focuses on performance. This area 

around IT projects and failure sometimes of those projects, I think 

most of us have read about. I have personally been involved as the 

local Senator on the failure of Arlington Cemetery to keep appropriate records of our fallen heroes, and if there was ever a case of 

an example of an ill-performed and ill-monitored IT project, it is 

what has been going on at Arlington Cemetery. We are in the process of trying to get that fixed. 


58155.088
6 

While overall we are starting to see signs that our economy is 

growing again, millions of Americans are still facing hardships and 

turning to State and local governments at a time when governments are cutting back on services. Again, it is critical for governments at every level to identify savings to improve the services 

they offer. 

While most Stat initiatives have been well received as efforts to 

institutionalize good management practices, some concerns have 

been raised about agency capacity and workload and the limitations of the data that is collected. However, critics cannot deny that 

the Stat model has enhanced transparency between high-level officials and the organizations’ operating units. One of the things I 

hope the Governor will at least comment on is, in moving toward 

this Stat model, whether part of encouraging the work force is also 

to look at ways you would eliminate some of the past data collection efforts that might not be useful data. 

I believe the model is working, and I believe that we can at the 

Federal level learn a lot about what is going on, not only at the 

State level here, but in our second panel when we get to what is 

going on at the county and city level as well. 

So, with that, I will turn to my colleague Senator Cardin and 

then Congressman Sarbanes for comments, and then we will get to 

the panel. 

OPENING STATEMENT OF SENATOR CARDIN 

Senator CARDIN. Well, first, Governor O’Malley, thank you for 

your hospitality in allowing us to use this historic State House for 

our Committee hearing. I cannot think of a more appropriate place, 

so thank you very much for your hospitality. 

Senator Warner, I want to thank you and congratulate you for 

your leadership. 

This task force was the recommendation of Senator Warner. Senator Warner brings a wealth of experience in Government management to his position as the Senator from Virginia, and he is looked 

upon by his colleagues in the U.S. Senate as a person who can lead 

us in the right direction in trying to get a handle on our most important responsibility, and that is Government oversight, accountability, performance standards, spending the taxpayers’ money in 

a correct way, not only in the allocation of priorities but in the 

manner in which those dollars are spent. So I thank Senator Warner for his leadership. 

It is nice to have Congressman Sarbanes with us. Congressman 

Sarbanes is my Congressman, and I think he is doing a great job 

in the U.S. Congress. It is always nice to be with him. 

To Ike Leggett, our county executive from Montgomery County, 

who has one of the toughest jobs in America, the size of his county, 

the complexity, and demands of his constituency are second to 

none, and he does an incredible job in managing resources with 

very, very high expectations from the people who live in Montgomery County. County Executive Leggett is meeting those expectations. So it is nice to have all of our colleagues here. 

Our State is home to more than 50 Federal agencies, including 

the Census Bureau in Prince George’s County; the Food and Drug 

Administration, the National Institutes of Health in Montgomery 

7 

County; the National Security Agency in Anne Arundel County; 

and the Centers for Medicare and Medicaid Services and the Social 

Security Administration in Baltimore County. In all, more than 

132,000 Federal employees, many of whom, work in Washington, 

D.C., reside in the State of Maryland. 

The Task Force on Government Performance represents an opportunity for us to evaluate how effectively Government is functioning and to examine the mission assigned to our Federal employees and whether they are given the necessary tools and resources to fulfill it. Whether by increasing agencies’ coordination, 

improving management, or streamlining hiring or other personnel 

practices, our efforts in Congress in conjunction with those of the 

Obama administration can improve the outlook on both of these 

fronts. 

I am honored to serve on the Budget Committee. One of the most 

important responsibilities of the Congress is to pass a budget to establish the priorities of our Government. But it is more than just 

establishing our priorities. The Budget Committee is also responsible for the budget process, to make sure that we have efficiency 

and accountability in the manner in which we determine the budget for the Nation. And that is why this task force is so important. 

These are most challenging times with unprecedented deficits and, 

to be a little gentle about this, skepticism among our constituents 

as to how well Government is doing its work. It is even more important than ever for the work of this task force to restore the type 

of confidence necessary for us to be able to govern. So I think all 

the work that we are doing is very, very important. 

I just want to point out that our witnesses today can be extremely helpful. As mayor of Baltimore and then Governor, Martin 

O’Malley has been nationally recognized for developing tools to 

quantitatively measure performance. Two of his initiatives, CitiStat 

and StateStat, use data to increase accountability, transparency, 

and cooperation between agencies. These initiatives have been 

studied by international organizations and local governments 

across the country, and they have been recognized by the Harvard 

Kennedy School of Government. In addition, Lieutenant Governor 

Brown has developed BRACStat to evaluate the BRAC-related 

progress in our State. 

Now, Senator Warner, let me tell you, I have seen Governor 

O’Malley use the Stat process, and I must tell you, I haveten there 

a little bit early and I’ve seen the administrative heads come into 

the meeting a little worried and concerned, because they know that 

either Mayor O’Malley or Governor O’Malley has really studied the 

material and expects to see performance improvement. He does not 

just have one meeting and then 2 years later have another meeting. He has regular meetings with his department heads, using the 

information with expectations as to how he can improve performance, and having the administrators sign off on what Stats should 

be improved at the next meeting. And then when they show up at 

the next meeting, the Governor will quiz them as to whether they 

have accomplished that increase. And I must tell you, it has been 

extremely effective. I think Governor O’Malley is one of the most 

effective Governors not only in the history of our State but I think 

8 

in our Nation in using hese performance evaluations to make sure 

taxpayer money is being properly spent. 

We can learn a lot at the Federal level from what has been done 

in Maryland and what has been done in Montgomery County, 

Maryland. I understand that the State budget is $32 billion and 

the Federal budget is $3.5 trillion. But we can learn from how 

things are done at the State level. The Montgomery County budget 

is—I have your budget here, Ike—$4.6 billion. Now, that is a lot 

of money by anybody’s calculation. Again, we are dealing with 

multi-trillion-dollar Federal budgets. But if we do not break it 

down to smaller elements, we will never really get the type of efficiency and accountability needed. 

So I really do think we can take the best practices from Montgomery County, the best practices from Baltimore City, the best 

practices from the State of Maryland, and we can do much better 

at the Federal level, and that is why I was so pleased that this 

hearing was scheduled here in Annapolis. 

Let me just give a little advance warning to the three witnesses. 

There are three areas that I will be asking specific questions about. 

We will not have a Government that performs at its highest potential without a work force that is given the opportunity to perform at that level as well. Interestingly, employee performance 

management dates back to 1883 when the Civil Service Act established a merit system to handle promotions. This is a longstanding 

reform effort that continues today. I will be interested in hearing 

how our witnesses have modified your personnel practices, including retention strategies, training, and merit increases as a result 

of the information you gather from your performance evaluation 

programs. In other words, how are we putting information into 

practice to best incentivize our workers to do the work that we 

want them to? 

Second, as the world’s largest buyer of goods and services, with purchases of more than $425 billion each year, the Federal Government has an unparalleled opportunity to promote efficiency and entrepreneurship through awarding contracts to American small businesses. We have a Federal set-aside program; 23 percent of the 

Government’s procurements are targeted at small firms, and individual agencies have goals set in coordination with SBA for contracts with veteran-, women-, and minority-owned firms. 

Unfortunately, our record of meeting these goals is spotty. Last 

year, only one agency—GSA—met its goals in all areas, and two 

agencies—OPM and USAID—met none of their goals. So as a member of the Small Business Committee, I believe these set-asides are 

critically important for economic growth in our community, for creating jobs, and for encouraging the type of innovation that comes 

from small businesses. 

How can these performance evaluations can be used to help us 

meet the goals for small business contracting; what obstacles you 

have encountered in meeting those goals; and what strategies are 

you developing to improve Government performance in this area? 

And the third area I would like to talk to you about is the coordination between the legislative and executive branches. Senator 

Warner talks about this frequently. If we are going to be successful, we have to be on the same page. You can do a lot of work in 

9 

identifying issues, at the Executive level, but if we do not enact the 

policies or support you with our actions, then the executive actions 

will be overruled by the efforts made by the legislative branch. 

How can we get the legislative and executive branches on the same 

script to make Government work more accountably? Also, I would 

be interested in your observations as to how your findings have 

been used by the General Assembly or by the County Council in 

implementing the type of policy changes that reflect the good work 

that you have done with your staff programs. 

With that, Mr. Chairman, I look forward to our witnesses and 

look forward to the exchange we will have after their testimony. 

Senator WARNER. Thank you, Senator Cardin. Thank you for 

your leadership on this issue. And setting out, I know, Governor, 

we are going to have a few questions for you afterwards. 

Congressman Sarbanes? 

OPENING STATEMENT OF CONGRESSMAN SARBANES 

Mr. SARBANES. Thank you very much, Senator Warner. I am 

going to keep my remarks brief because I want to hear from the 

Governor and from the other witnesses. But I appreciate the opportunity to participate in the hearing today. I think all the witnesses 

are going to give us some good information about how the Federal 

Government can model some of our practices after what you have 

done at the State level and the county level to improve efficiency. 

I have been very involved on the House side with procurement reform, which is designed to do this, and I will have some questions 

along those lines when we get to that part of the hearing. 

I do want to salute the Governor, though, because he has been 

a leader on this from day one. And I will tell you the impact it had 

in Baltimore City, because when CitiStat was started, I was still 

in the private sector, and the effect it had on the private sector’s 

perspective on the public sector was tremendous. In other words, 

when the private sector saw the kinds of efficiencies and the management improvements that came from CitiStat, it made the private sector more willing to step up in the partnership with the city. 

And I think that is one of the things that we can gain from this. 

If there is a perception that Government is managing its affairs in 

an efficient way, that is going to promote more collaboration between the private sector and the Government sector. 

Then the last thing I just wanted to mention is I do not think 

anyone understands better than this Governor how you have to 

never forget what the stats are about. It is easy to become mesmerized by the Stat model, but at the end of the day it is about using 

it to improve the quality of lives, in this case of Marylanders, and 

help them get through their day and do the right thing for Maryland families. And the Governor has always understood that this 

is just a tool to that end. 

So we are really looking forward to your testimony today, Governor, and I yield back. 

Senator WARNER. Thank you, Congressman Sarbanes. 

You have heard this line from me before, but as the former cofounder of Nextel, it does not offend me at all if cell phones go off 

during hearings like this. 

10 

[Laughter.] 

Senator WARNER. One quick last comment before I introduce the 

Governor, and that is just picking up on what both Senator Cardin 

and Congressman Sarbanes have said. I want to hear your testimony, but I want to also commend you because you have to be relentless on this stuff. You know, everybody talks about saving 

money. Everybody talks about bringing efficiency. But this is hard 

work, and to try to keep whether it is your legislators, your work 

force, the press interested, people’s eyes glaze over when you start 

talking about some of these performance metrics. But since this is 

now 10 years that you have been at it, I salute you for your efforts. 

Our first panelist will be Governor Martin O’Malley. He has a 

long history of public service. He served as Assistant State’s Attorney for Baltimore City, a member of the Baltimore City Council, 

and eventually mayor of Baltimore City. Governor O’Malley has 

been a real innovator in the area of performance measurement and 

management in Maryland, building and improving upon the Stat 

model that he started during his tenure as mayor. His administration has been focused on developing goals for the State of Maryland 

to achieve real results. The Governor has also received national 

recognition for his and Maryland’s implementation of the American 

Recovery and Reinvestment Act funds. 

Governor, we are again pleased that you were willing to host us 

here. We are anxious to hear your testimony, and the floor is now 

yours. 

STATEMENT OF THE HONORABLE MARTIN J. O’MALLEY, 

GOVERNOR, STATE OF MARYLAND 

Governor O’Malley. Mr. Chairman, thank you very much. We are 

flattered by your visit to Baltimore and for bringing the Committee 

here, and I also want to thank Senator Cardin for his very kind 

words and also Congressman Sarbanes, and also for their leadership. I have a great delegation. You do not mind if I brag about 

them a little bit. I do not think there is another Governor in America that has a delegation as strong as our delegation is in Maryland, and, again, we really appreciate your leadership on these 

issues. And I personally appreciate, Senator Warner, when you 

were Governor Warner, that you took the time to spend with me 

and gave me some great advice as I was taking over the responsibility and the trust of running our State government. And I welcome you to the oldest State capital in America in continuous legislative use, and I am also looking forward to hearing Ike Leggett’s 

testimony, who has really picked up the Stat model, run with it at 

the county level in a very large and complex county, and he is one 

of the best county executives in the country and is taking my home 

county to another level. 

In times when governments are finding an increased necessity to 

do more with less, measuring performance is more important than 

ever, and the topic of this Task Force on Government Performance 

could not be more important than it is right now. I believe that our 

Government should actually work to protect our quality of life, improve our quality of live, and improve the conditions that allow us 

to create jobs, save jobs, and that allow small businesses to create 

and save jobs. And having a functioning, livable city or State, makVerDate Aug 31 2005 12:47 Sep 14, 2011 Jkt 000000 PO 00000 Frm 00016 Fmt 6633 Sfmt 6601 H:\DOCS\58155CON TISH
11 

ing timely investments in effective ways in the talents of our people and the health of our people is all a part of that. 

The things that get measured are the things that get done. We 

have heard that said time and again. But it does require that expectation of progress, and it does require a relentless system that 

forces human beings into the same room to actually coordinate, cooperate, communicate, and find ways to make things better even 

though there might be a lot less dollars to do them this quarter 

than there were the last quarter. 

It is hard to believe that it has been 10 years since we began 

that first CitiStat meeting in the city of Baltimore, and Congressman Sarbanes reminded me of the perspective of business people. 

That room was visited so often during my 7 years that I served the 

people as mayor there, and people coming from government, Chairman Warner, would come into that room, and they would say, ‘‘I 

cannot believe you guys are doing this.’’ Then people from business 

would come into that room, and they would say, ‘‘Thank God you 

guys are finally doing this.’’ 

Today, if you plug the term ‘‘CitiStat’’ or ‘‘CompStat’’ into Google, 

you will see them popping up all across the country, in big cities 

and small. It is a testament to any good idea when people want to 

adopt it, which is what we did at the inception of CitiStat, actually 

adapting and bringing home the tenets which helped New York 

City’s Police Department achieve such dramatic reductions in crime 

under the leadership of Commissioner Bratton and also Deputy 

Commissioner Maple. 

The Stat model which we have brought with us to State government merges emerging technologies that we just did not have in 

widespread use 10, 15 years ago, like GIS, geographic informationbased systems, with certain timeless human principles, mainly setting goals openly and accountably measuring progress, and on that 

one, Jack Maple would say everyone, when you say that second 

one, measure progress openly and accountably so that everybody 

has the information, you will always get pushback. People say, 

well, you mean some people get the information. No. All people get 

the information, and the most important people that need to be 

able to see that information is the public, which we can now do because of the Internet, and broadly sharing information rather than 

hoarding it, finding the willingness to change course when necessary to move our graphs in the right direction before a headline 

or a bad story tells you that it is not going in the right direction. 

Governments tends to do, have traditionally done a decent job of 

measuring inputs: how much we are budgeting for a specific priority. But the Stat model is really governance by outputs—measuring how effectively and efficiently we are delivering results, taking action to get better results. 

I enjoy laying out these two tenets of city government and 

human nature. They are timeless, actually. These were the old tenets of city government, and it was true across the country, and 

it was true in our State government. If the Governor really wants 

to know, we can find out, but we will have to pull all our people 

off their other jobs and it will take weeks. 

Tenet number 2, we will get to it as soon as we can, but it will 

take a few months longer because our budget was cut last year. 

12 

Tenet number 3, my favorite, that is the way we have always 

done it, or we are already doing that, or we tried that and it did 

not work. And how many of us have heard all of those things. 

Or the fourth one that Senator Warner alluded to, I hope the legislature forgets about this before next year’s budget hearing. This 

cannot be episodic. It has to be a system. 

When faced with the adversity of turning around the public safety situation in the city of Baltimore, these were the new tenets, the 

Stat tenets that we used there, that we use here. Timely, accurate 

intelligence or information shared by all, and all means all, including the public, not just top managers, including workers, not just 

top managers; rapid deployment of resources; effective tactics and 

strategies; and relentless followup and assessment. 

When we faced the adversity of turning our city around from violence and addiction, schools that had been failing for a long time 

where not even one grade was majority proficient in reading or 

math, tons of vacant houses in neighborhoods with a lot of vacant 

hearts, and we began measuring and geo-mapping every conceivable service problem and opportunity. And the great thing about 

the map is a map does not know whether a neighborhood is black 

or white or rich or poor, Democratic or Republican. The map tells 

us where our opportunities are and, therefore, where we need to 

deploy our limited resources to take advantage of those opportunities for improving our quality of life. 

This is an example of our pothole map. We have a map for that. 

We were accused in the early days by a former mayor of Baltimore 

of not having any vision, so we came out with the 48-hour pothole 

guarantee, and we were able to hit it with a 98-percent success 

rate, and part of that was because we already knew we were hitting it in 53 hours. And so people rise to those higher expectations. 

Another example, sadly, we call it the kidneys of death. This 

shows the concentration of homicides and shootings in the city of 

Baltimore in 1999 and then 2000, 2001, 2002, 2003. You get the 

point. Baltimore over the last 10 years has achieved the biggest reduction of Part 1 crimes—that is, violent and property crimes—of 

any of the major cities in America. We are third in violent crime 

reduction, only behind Los Angeles and New York, thanks to courageous police officers and thanks to a much better system of timely, 

accurate information, relentless follow-up, tactics, strategies, and 

making the graphs move in the right direction. 

Let me run you fast-forward through some of the examples of 

this as we have been applying it to State government, where oftentimes, as the Senator knows, and actually both Senators know from 

both having worked at the highest ranks of State government, a lot 

of times the movement from municipal services or county services 

to State government becomes more complex, less immediate to the 

eye, and can sometimes defy measurement. But we still subscribe 

to Jack Maple’s belief that everything can be measured. 

So through the State Stat process, senior staff and I meet with 

key agency leaders not once a year or once a quarter but every single month to track our progress, to share information, to determine 

where things are working, and where we need to do better. And our 

delivery unit works with agencies every day to help them deliver 

better results around big goals that we have openly set for our 

13 

States—15 major goals, dozens of sub-goals. And there are some 

who warn against setting big goals: It is political precarious. What 

happens if you do not hit your goal? Everybody will say, Aha, you 

only got three-quarters of the way there. I find that people are 

pretty smart, and they would much rather have a government that 

is setting goals and sometimes falling short than a government 

that is not setting any goals and is instead slipping backward. We 

have exceeded some goals, and some we have not hit, but always 

we move forward in an open and transparent way. 

Over the past 4 years, we have been able, together with law enforcement, to drive down violent crime in Maryland to its lowest 

level since 1975, including the steepest 3-year reduction in homicides, I think, over these last 3 years, driven homicides to their 

lowest rate since 1975. Our violence prevention initiative, we now 

track the most violent offenders who statistics and probabilities tell 

us have the highest propensity to commit further acts of violence 

if they are not tightly monitored, and so that is what we now do. 

When we took office, we found that our predecessors had allowed 

a backlog of 24,000 unanalyzed DNA samples to collect dust, had 

neglected to collect an additional 15,000 that were legally mandated, samples that were to have been taken from people that have 

been convicted. We used our State Stat process to guide our efforts 

to eliminate both of these backlogs, and since that time, we have 

made 245 arrests of some pretty bad actors that would not have 

been made had we not knocked out that backlog of DNA samples, 

uploaded them so that law enforcement could clear those cases. 

We have also created a public safety dashboard where we are integrating—boy, this is a nightmare graph, isn’t it? Our public safety dashboard has led to the integration of data that we had always 

had, had always collected, but had never been accessible to a law 

enforcement officer who is working a case with one click of a button. We have now put together data from our prison system, parole, probation, firearm registries, our fingerprint systems, mug 

shots, DNA, motor vehicle records, taxation records, and many 

other sources, and all a law enforcement officer needs is a user 

name and password to have real access to all of that data in 

realtime. We are now receiving 25,000 to 40,000 queries a day from 

100 different agencies all around the State. It is almost like Google 

for crime solving where we have been able to put together this 

data. NASA actually came to see how some smart people forced to 

meet relentlessly without any additional money came out with clever ways within existing budgets to piece this together. 

The Department of Public Safety and Correctional Services, we 

have been able to reduce overtime by 20 percent. It did not happen 

overnight. It happened by measuring it every week, every day, 

every 2 weeks, and when you look over your shoulder, you save $10 

million in overtime by constantly doing the little things that together get you the big results over time. 

You might have heard some of the ads in the telecommunications 

industry. There is a map for that. You could summarize our strategy as that we are geo-mapping everything. One person explained 

it to me this way: We always hear about the pyramids of human 

organizations, in this case different departments, and those pyramids, you could spend a lifetime trying to connect through IT soluVerDate Aug 31 2005 12:47 Sep 14, 2011 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6601 H:\DOCS\58155CON TISH
14 

tions up and down that pyramid with the complexity of individuals 

doing complex jobs up and down that pyramid. But if the base of 

all of those pyramids has to land on a common map with GIS, with 

coordinates, people start organizing their information in such a 

way that those efforts become integrated and collated together. 

We have created for the first time in our State a number of GIS 

maps. We have created a base iMap. We have created GreenPrint 

and AgPrint through which we now have done an ecological ranking of every parcel of land in the State of Maryland so that when 

we preserve land or use precious dollars for the preservation of 

open space, we are able to give the public an objective criteria 

ranking this. You can pull it up in your own county and see in a 

dashboard type way how much of our GreenPrint have we preserved, how much remains to be preserved, in order for the bay to 

have a fighting chance at functioning. 

We have done the same thing with our agriculture lands to better see where those lands are so hopefully at the county levels and 

municipal levels we can better protect contiguous farm economies 

that still, thank goodness, exist in our State and that we need, that 

our ecosystem needs to breathe, and that all of us need in order 

to buy local and sustain ourselves in better ways for the environment. 

For the first time in our State, we are also mapping now our capital budget so citizens can click on and see where the dollars are 

being invested in their neighborhood. We are using BayStat to 

guide our efforts to restore the Chesapeake Bay. This is one slide 

from that map which shows the sources of nitrogen, phosphorous— 

no, in this case it is actually just the nitrogen and the sectors that 

contribute to that. Whether it is wastewater treatment plants, 

farms, stormwater run-off, septic systems, or the forests, we can 

click on to any of those ten tributaries and show you how it differs 

from one area to another. And we also have about 26 solutions that 

we track on a tributary-by-tributary basis. This one is commodity 

cover crops in order to keep the nitrogen from rolling off over the 

course of the winter. 

The Federal Government has now adopted a BayStat initiative 

for their own drive to help us clean up the Chesapeake Bay and 

get in all six of the watershed States to agree to two things: One 

of them was the 2-year milestones, critically important. Things that 

get watched are the things that get done, if you measure them and 

you have deadline. And so now instead of a 20-year deadline, we 

have 2-year milestones so we will know whether we are hitting it, 

whether we are not hitting it. And also the Federal Government is 

creating ChesapeakeStat, which is a GIS-based system, so that all 

of these six States can also coordinate and cooperate. 

This is from our 2-year plan on—our 2-year milestone. The green 

line is where we are trying to move. The red line is the human activity across all of those various actions from cover crops to upgrading stormwater rules and regs, upgrading wastewater treatment 

plants, installing more modern septic systems, getting communities 

off of septics and on to sewer. And so we have set 2-year milestones, and we are committed not only to holding ourselves accountable but really the value of this is not—the value of this is 

that the public—that we are able to hold one another accountable 

15 

as neighbors for what it is that are common platform that we call 

our State government, or in this case our county, State, and Federal Government is doing, what we are doing together to improve 

our quality of life. 

Beth, let us click through the Recovery and Reinvestment Act. 

President Obama and Congress very courageously and rightly 

passed the Recovery and Reinvestment Act. Had we not done that, 

we would all be sitting in the middle, in the depths of the second 

Great Depression instead of debating whether we were moving 

quickly enough into recovery. We took the President’s challenge on 

the Recovery and Reinvestment Act very seriously. He challenged 

all of the Governors to make sure that we measure performance at 

a level of openness and transparency the likes of which we had 

never seen before. Fortunately, we already had the iMap in place, 

so we were able to just plug in the dollars that came to the State. 

We used StateStat and our first in the Nation iMap to target those 

Recovery and Reinvestment Act dollars, to rapidly deploy the resources, to ensure that we were hitting our goals for Minority Business Enterprise when we award these contracts, and to guard 

against the possibility of waste, fraud, and abuse. And we believe 

that the best elixir against waste, fraud, and abuse is openness and 

transparency. 

Information shared by just the legislature? No. Information 

shared by all. Just by the legislature and the managers and the 

county executives? No. Shared by all. The press that serves the 

public, the public themselves that is served by all of us. 

Beth Blauer, our StateStat director, is demonstrating our recovery website. It has been rated the No. 1 site in America. The head 

of President Obama’s Recovery Act and Transportation and Accountability Board has cited our mapping initiatives as the basis 

for those that are now being implemented by the Federal Government. 

Beth, what do you want to tell us here? We are clicking on to 

any of those icons that can tell you in transportation, in Montgomery County. This is a resurfacing project. It is on I–495, Potomac River Bridge to 270, construction costs—hold on just a second. 

My old eyes. What is that, 7.48? 

Ms. BLAUER. 7.49. 

Governor O’Malley. 7.49. Estimated jobs is—— 

Ms. BLAUER. It is 98. 

Governor O’Malley. 98. 

Ms. BLAUER. It was advertised. 

Governor O’Malley. Advertised on February 17, 2009. There is 

the bid date. There is the—what is the NTP? 

Ms. BLAUER. Notice to Proceed. 

Governor O’Malley. Notice to Proceed date. And there is the 

MBE goal, 18.9 percent on this particular contract. 

We have used this on our MBE program. You know, we have 

long had, thanks to Parren Mitchell’s leadership, the highest MBE 

goals of any State in the Nation, but for the first time, we actually 

believe we are going to hit that 25-percent goal this year. It did not 

happen in the first year, it did not happen in the second year. But 

every year we got closer. 

What are you showing me here, Beth? 

16 

Ms. BLAUER. This is the MBE attainment for just ARRA—— 

Governor O’Malley. I am sorry. I did not see that you had a 

microphone. You might pull that over for—that is why I was repeating as you were whispering in my ear. 

Ms. BLAUER. Each quarter we also put out the MBE performance 

for all of the ARRA contracts separately on their map so you could 

see where we are toward our goal for just ARRA spending. 

Governor O’Malley. The nice thing about this is you can go into— 

any person in any county can go on this at home and say those Recovery and Reinvestment Act dollars, where are those? What are 

those projects? Let me click on it. 

It is also a way that we are able to make sure that those dollars 

are being invested in a way that is fair to all the jurisdictions, that 

does not leave our rural Maryland or inner Beltway in the Washington area or the city of Baltimore. 

As I close, I just want to whip through a few more examples of 

some of my favorite sites, which are graphs that are moving in the 

right direction. Mr. Chairman, we have graphs that move in the 

wrong direction. We have chosen not to share them with the Committee today. 

[Laughter.] 

Governor O’Malley. Reducing the number of children placed in— 

are we OK, Beth? 

Ms. BLAUER. Yes, we are good. 

Governor O’Malley. Reducing the number of children who are 

placed in group homes. Instead, we drive up adoptions, drive up 

other things so the children—because place matters. 

Cracking down on Medicaid fraud, moving in the right direction. 

Inmates participating in employment programs so they have 

some sort of job skill and hope when they come out instead of a 

higher likelihood of recidivism, moving in the right direction. 

Energy performance contracts, something we never did in the 

State until recently, moving in the right direction. 

Reducing fatalities on our highways, moving in the right direction, and if you save just one life, it is as if you have saved the 

world. 

Expanding health care coverage to more of our fellow citizens 

rather than fewer, moving in the right direction. 

Robert Kennedy once said that there is no basic inconsistency between ideals and realistic possibilities, no separation between the 

deepest desires of the heart and of mind and the rational application of human effort to human problems. And that is what this system is all about, is the rational application of human effort to 

human problems. And that is what performance-based government 

is about, and, again, thank you so very, very much for coming to 

Maryland and bringing your Committee here. 

[The prepared statement of Governor O’Malley follows:] 

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Senator WARNER. Thank you, Governor O’Malley. Thank you for 

your presentation. In respect of your time, we will try to make sure 

each of us takes 5 or 6 minutes in our question period, and particular kudos on not only the whole presentation but the data you 

have on the Recovery and Reinvestment Act. It is so critical because I think—I can only speak for my State—a lot of folks did not 

understand what that act involved, did not understand it was the 

third largest tax cut in American history, did not understand the 

dollars that went to the State or other programs, and what you 

have done with ARRA funds is to be commended. Also on MBE, 

that was an area that we were woefully behind in Virginia in just 

not having data, and being able to do that buy project, I give you 

great congratulations. 

Governor, you tried this model out at the city level where you 

could get your arms around it. You grew it to the State level. We 

are thinking now about how do we take it to the Federal level. I 

guess I have a two-part question as my first question. 

One, advice or counsel to us as we try to think about how we implement this or implement portions of this at the Federal level. 

Should it be done on a holistic basis? Because you set 15 policy 

goals broadly as your basic function to start the whole process. Or 

recognizing the enormity of the Federal Government, would you 

recommend taking it in chunks as opposed to Federal Governmentwide? And could you also talk for a moment about, as you get these 

goals and as you lay out these details, clearly they do not all fit 

into an exact silo of a particular department, so you have to have 


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these goals embraced by, I would imagine, agency leadership beyond a particular agency. So how did you get at that cross-cutting 

ability to get all of your various silos to work together on these 

common goals? 

Governor O’Malley. I would say the two biggest—the 

foundational decisions we made as CitiStat started ramping up was 

that we were all going to use a common GIS map, and we were all 

going to use a common template for reporting information. 

Now, we did not care what you labeled these columns, but those 

were the two standards that we really insisted upon. And it took 

a little while because some departments would come and say, ‘‘Oh, 

but we really like our software and the way we have done our 

map.’’ 

‘‘Well, we are sure you do, but we are going to use’’—I think it 

was the Department of Public Works that picked the best GIS system. That can only come about, I think, with strong executive insistence. If you leave it to people to do it on their own, I think you 

are in for trouble. It is like trying to run a railroad on 25 different 

gauges of track. You have to have one gauge of track. You have to 

have one map. You have to have one common template that then 

can be shared among all the departments, and something that is 

as user-friendly, as off-the-shelf as possible. People would come 

from other cities and be shocked at how cost-neutral we were able 

to ramp up the CitiStat process. Well, that is because we used offthe-shelf software. The GIS map at the time was a new thing, but 

that is pretty ubiquitous now. 

Ms. BLAUER. Our application, if another State wanted to come in 

and replicate what we have done with RecoveryStat, all of the application is free. You can just go onto a resource page and 

download it. So it is a very minimal cost, and most States already 

have pretty well developed GIS programs, and all they need to do 

is just basically download the application. 

Governor O’Malley. Now, having said that, we did ramp up one 

department at a time. I mean, there are only so many hours in a 

14-day cycle, and so we did ramp up those meetings adding a new 

department every few weeks for that first year. And so we added 

the departments one at a time, but it was only after we let them 

know, You are coming, here is your turn in the queue, you might 

want to think about what the primary colors of measurement are. 

One of the things that we learned—I think it was—someone on 

the panel talked about how you can become mesmerized with the— 

John was saying you become mesmerized with all the things you 

can measure now that you could not measure before. You have 

really got to hone in on the main goals, especially in order to get 

cross-departmental collaboration. At the municipal level, our mission statement was a cleaner, healthier city, better place for kids, 

a place where people want to invest and grow their businesses. 

Those were our big goals, and every department knew they had to 

contribute to those in some ways. 

At the departmental level, in solid waste, one of the things we 

did was to—we had a competition before Christmas, not on A to Z 

performance measurement, but the primary colors, if you will, of 

solid waste becoming better: the tonnage they collect, fewer citizen 

complaints, less absenteeism and, therefore, less overtime. And 

27 

based on those four things, I think the Abell Foundation gave us 

some cash incentives for the crews that could finish first, second, 

third. The crew that went from last place to first place, that actually happened. One crew that was in last place stayed in last place, 

I believe made more overtime by keeping their absenteeism high 

and their unexcused absences than if they had gone after the prize. 

But the thing that we have done at the State level was to create 

a unit that we borrowed from Tony Blair called the Delivery Unit. 

In our State government, we used to have—there was really no robust policy office. We never had one. No Governor ever had one. 

But out of legislative frustration, the legislature would see that we 

were not coordinating in ways that would allow us to grow in a 

smarter way between transportation, housing, planning, and other 

departments, so they created by legislative initiative, usually—although this one, I think, came from Governor Glendenning—Office 

of Smart Growth. We would see that we were not coordinating like 

we should across social services, education, health in order to protect children, youth, and families, so we created an Office of Children, Youth, and Families. So we consolidated those offices. 

Another one, Governor’s Office of Crime Control and Prevention. 

Well, why do we need that office? Because we are not cooperating 

in order to control crime and prevent crime across rec. departments 

and police and the like. 

So we have consolidated all of those now into a delivery unit in 

State government that works in conjunction with the performance 

measurement around 15 big goals and links together what is a 

much more attenuated chain of delivering results at the State level 

than we had, say, in filling that pothole, which took about three 

steps. You know, a person calls, the crew goes. 

Senator WARNER. Let me ask one more, recognizing I want to get 

my colleagues time in, too. We actually did have Michael Barber 

come in and talk to us about the Delivery Unit model from the 

U.K., which was very helpful. But one of the things, just as Senator 

Cardin and I have delved into this, we see at the Federal level, 

every new administration reinvents the wheel on what performance 

management and performance metrics ought to be. Go back. Clinton had one, Bush had one, President Obama has got one now. And 

one of the things we are hoping, working with President Obama’s 

administration, is with a legislative partner we can institutionalize 

this. 

Talk to me a little bit about how—you have talked for a moment 

about how you get the public involved, but how do you keep the 

press involved as using this as a way to measure your performance? How do you get your legislators to buy into that these are 

the right measurement tools and that they could all argue if you 

agree that the charts ought to be going this way, you can argue 

about how you get there, but if you at least agree on what the common framework is, you are halfway through the battle. I mean, 

have you found ways to try to bring your legislature involved in 

this? Have you found ways to keep the press and the public actively engaged? 

Governor O’Malley. The city council, we were able to get them on 

board by giving them all portals so that they could access—we created a 3–1–1 system on the front end for city services as well. So 

28 

that is how we got the city council on board when they were a little 

bit concerned that we might be cutting them out of the constituent 

service business. The openness and the transparency allows everybody to use it. 

The legislature here has embraced it. It has been very supportive 

of it, appreciative that they can come to the meetings if they like 

and see whether we are moving in the right direction or not. I hope 

over time it informs better legislative policy if we continue to keep 

it going and open and transparent. 

The media has been a tougher sell because some of this stuff, if 

you only look at it incrementally, can be like watching the paint 

dry and not the stuff that in an overworked press corps makes the 

headlines. We are trying to drive more and more people to the 

website, and it has been a bit of a frustration—I should not say 

frustration. We have yet to really communicate to the public just 

how much more open, transparent, and accessible their State government has been made. The Recovery and Reinvestment opportunity was a good shot at that, doing some of the town halls around 

it. 

Beth, did you want to chime in on something? 

Ms. BLAUER. I think also we have for the first time all of the 

data and summaries of what happens in the meetings is available 

on the website as well. So we certainly—States that have been 

asked to come and meet with legislators during the session as they 

are articulating their ideas before the session, we were brought in. 

And this session was really probably the first time where we really 

spent a lot of time sharing the information and explaining how to 

access the information that is available on our website. 

Governor O’Malley. We had been putting it on the website in 

such a dense way that nobody could sort through it. So now we 

haveten a little better at boiling it down and giving people more 

sort of the executive dashboard summaries like I receive when I go 

into a meeting and sit there. This is how they look. It is in English. 

You have the charts and the graphs. Hopefully more and more people—we find our labor leaders will look at this site a lot more than 

anybody else does. And some of the things we are doing on stewardship with the bay is driving a lot of traffic to the BayStat 

website and a little bit to this website as well: Marylanders plant 

trees, Marylanders grow oysters, and children and nature, and 

those sorts of thing. 

Senator WARNER. We appreciate it. I personally appreciate it. I 

hope you will stick to it, and with that, Senator Cardin? 

Senator CARDIN. Well, thank you, Governor O’Malley. I am always impressed by, and enjoy watching, your the presentations. I 

have looked at it many times, and it is very impressive, and it really does help the public to understand what you are trying to get 

done. It gives them more confidence that you are trying to use resources in a most effective way. 

I want to followup on Senator Warner’s point about how the legislature and executive can be on the same page on this. You have 

given many examples in which legislators have been part of the 

process. They have had a chance to see the statistical information. 

They have had a chance to challenge whether you are using the 

correct barometers, and you have been receptive to their comments. 

29 

But let me just challenge you as a former House of Delegates 

speaker and as a former State about legislator how we judge the 

independence of the legislative branch of Government. Probably 

there is no more clear place in the Maryland budget process than 

in the capital budget. And you have indicated you are putting more 

information up on the capital budget right now. 

I am curious as to how your evaluation process would be used. 

If your evaluation process shows that you are getting a better return for the public dollar in one area of Maryland versus another, 

but yet your political challenge is from the legislature, particularly 

on the capital budget, which can alter the Governor’s budget, how 

do you resolve that? What have you learned about how to get legislators to overcome their local bias or their political bias to work together to use the public resources as efficiently as possible to get 

the best results for the citizens of Maryland? 

Governor O’Malley. You are clicking on the live map? 

Ms. BLAUER. Yes. 

Governor O’Malley. I have found whether it was tough decisions 

like closing firehouses in the city of Baltimore or the tough decisions like the capital allocations in the budget, if everyone can see 

where the dollars have landed and where the investments have 

gone, and if you have done it to the best of your ability, in a way 

that is fair and equitable, and also promotes the statewide one 

Maryland policy goal, that takes a lot of the pushback that you 

would otherwise—that is otherwise part of the legislative process. 

Let me say that another way. 

In our State—and I will not name any counties, but you know 

that there is always a reason why ever major county or rural areas 

believe that they are not treated as fairly by the Governor, whoever 

the Governor is, because—and then you fill in the blank: Because 

we are so loyal and Democratic, you take us for granted. Because 

we are poorer than other jurisdictions, you take us for granted. Because we have more wealth than other jurisdictions, you take us 

for granted. 

But when you actually put it out on the map and everybody can 

see that they are not getting shortchanged and that their neighbor 

is doing better than they are on the merits of things, that I have 

found to be the single most helpful—one of the single most helpful 

tools in getting through these tough budgetary times and the cuts 

is the fairness that the map so brings home. The willingness to 

have yourself held open and accountable and audited by that map, 

by showing where the dollars are landing. 

I saw a great demonstration of this. Jack Dangermond, who is 

the head of a company called ESRI—it is the company that does 

all of our GIS thing, great company. He was showing Ed Rendell, 

Governor Rendell, who is a big-time advocate for transportation 

funding and making sure the dollars get to the right places, and 

he had a map of a State that showed where the most structurally 

deficient bridges are. He did an overlay on that map to show where 

the greatest numbers of people travel over those structurally deficient bridges. And then he overlaid on top of that where the Federal dollars for structurally deficient bridges go. And when he 

clicked that third application, the dollars were all over the map instead of landing on the targets, to which Governor Rendell rightly 

30 

said, ‘‘None of the money is landing on the targets.’’ To which Jack 

Dangermond responded, ‘‘No, but they are all landing on the map.’’ 

[Laughter.] 

Governor O’Malley. And so our challenge is the rational application of human effort to human problems, and in that openness and 

transparency to get it to land—you know, since they are landing 

on the map, we have just got to coordinate it. And I think the only 

hope—every legislator feels a tremendous burden to make sure 

they bring home everybody’s fair share of their tax dollar, and I 

think the map and showing people that we are all in this together 

and having objective criteria—I mean, for all of the dollars that we 

have protected for open space, I am not sure we have ever had 

someone, once we grade it and do it openly, make a solid case that 

we are not deploying those dollars properly or fairly. And where 

the GreenPrint is, that is another one. People were afraid, Senator, 

that if we put the GreenPrint there, people would see where the 

GreenPrint is, and maybe they might get in the way or obstruct efforts to fulfill that policy goal. But we are taking the chance that 

our best hope of this republic having better and stronger days is 

better and more information in the hands and the minds of citizens. 

Senator CARDIN. Well, it would be very useful to do this type of 

exercise at the national level. I chair the Water and Wildlife Subcommittee on the Environment and Public Works Committee, and 

we are trying to develop a water bill that reflects the Nation’s 

needs. The politics of this is extremely difficult. It will be interesting to see this type of analysis used at the national level. 

One last question dealing with your comment about labor leaders 

looking at these pages rather carefully. I want to hear how the 

State workforce looks at this and what lessons you have learned. 

They have legitimate concerns that resources should be made available so they can get their jobs done. And they have a legitimate 

concern as to whether there is the right motivation as to how we 

operate the Government for the work they are doing. 

What have you learned in working this system as it relates to 

the confidence of our work force? 

Governor O’Malley. These have been really tough years for public 

employees. We have had to do furloughs for 3 years in a row. We 

had to do some consolidations that resulted in layoffs. We have 

tried our very best to place people in other places wherever possible. But as far as the system itself, it has been my experience 

that the public employees, like all human beings want to know that 

when they work hard it is recognized by somebody making the decisions that is leading their organization or their piece of the organization. And so I would like to believe from my interactions, especially around the environmental things and the bay and the like, 

that there is a certain esprit de corps that is developing even in 

these tough times from that shared sense of commitment and that 

openness and that ability to see that, hey, when we are doing 

things and working hard, somebody at the top recognizes that we 

are going in the right direction. 

A lot of times when the press would initially report on this, they 

would make it seem like it was a firing squad and that the public 

employees were coming in and offered a blindfold and a cigarette. 

31 

But that was not the day-to-day experience. The day-to-day experience was men and women would come in and the high performers, 

when they were recognized, the rest of the organization would recognize that. 

The great Jack Maple described it to me this way. He said 90 

percent of us fall in the middle of the bell curve, and in a big organization it can either lean this way to the leaders or it can lean 

that way to the slackers. And if the top of the organization recognizes and celebrates the achievers and the leaders and lets everybody know, that organization will tilt toward the leaders. And in 

that is nation-leading progress. 

Senator CARDIN. Thank you. 

Thank you, Mr. Chairman. 

Senator WARNER. Thank you. 

Congressman Sarbanes? 

Mr. SARBANES. Well, I was going to ask you a question along 

those lines, but I will just echo what you said, and that is, I think 

when you go to change culture, particularly to introduce more performance-based measure, it is critical that there be a feeling on the 

part of the work force that you are supportive of them, that they 

are not under attack. And that is a challenge we have had at the 

Federal level, because sometimes when the initiatives come along, 

they cause the work force to circle the wagons, and then you cannot 

make progress in terms of changing that performance culture. So 

you have to create the accountability, as you have indicated, but 

also make it clear that there is really strong support for people all 

through the ranks. And then you get the success that I think you 

have been able to demonstrate in Baltimore and also at the State 

level. 

I have one question. One of the things we are wrestling with at 

the Federal level is the proper balance between what sort of the 

inherently governmental jobs are that are done by Federal employees and then what gets outsourced to third parties, to outside contractors. And for a while there in the last administration, my sense 

and the sense of many was that there was an ideological push toward outsourcing that put things out of whack. I would imagine 

that the Stat process has allowed you to drill down in a way that 

you can understand what this proper balance between sort of the 

employee of the Government is and those resources you need to 

pull in from outside to deliver a good product to the State. And I 

thought maybe you could address that. 

Governor O’Malley. Sure. This process helps you manage your 

contracts a lot better because, I mean, they also have to perform 

in their part of this. We have not done a lot of privatization because of the Stat process. What we have done, though, is imbued 

the State organization, public employees, the bureaucracy of our 

State government, with a much higher level of managed competition than there was before. Mayor Goldsmith of Indianapolis 10 

years ago did a lot with bidding services out for contracts, seeing 

who could bid better and do it more efficiently. We have not had 

any success in doing a lot of that. We had one incident some 10 

years ago that I will not bore you with where we actually did go 

totally private on—I think it was building security in the city of 

32 

Baltimore, and part of that was a loggerhead, and in retrospect I 

think some of us wish we might have done things differently there. 

But we did measure the trash collection crews against each 

other. We measure soil conservation districts against each other 

now when it comes to signing up farmers for cover crops. We measure parole and probation in terms of the supervision that they provide to our more violent offenders and also the speed with which 

they get their warrants processed so that we get those offenders off 

the street more quickly. 

So if I am answering the call of your question, we have not—we 

have used this to imbue the entire bureaucracy with a better—with 

that tool of managed competition, recognizing the leaders, making 

sure the leaders are seen as leaders by their colleagues. We have 

not done a lot on the privatization. This has helped us to reduce 

some redundant contracts where we realized, hey, we had somebody in this department who is providing one technical service, and 

guess what? Another department was retaining the same company 

to do the same technical service. Why don’t we put them together 

in one contract? Or, worse, a different company to do the same 

service. So it has helped us to save some money by consolidating 

contracts. 

Mr. SARBANES. Thank you. 

Senator WARNER. Well, Governor, thank you very much. You 

have been very generous with your time, and congratulations on 

this 10-year experiment. I think I go back to that second slide we 

had when we were up to see the way that this Stat effort has 

spread across the whole country. Kudos to you and your team. And, 

again, a final comment, as somebody who has been grappling with 

some of these issues, particularly more in my old job than this current position, I commend you as well for sticking to it, because getting the public, the press, other shareholders and legislators engaged, involved you got to have the metrics and the measurement 

tools first, and you have clearly set a way. So congratulations. 

Governor O’Malley. You know, I think the White House—the 

Federal Government—not to belabor this, but I think that relentlessness has been something that has been lacking in the way that 

we have—that the national Government has, to the extent they 

have approached us in the past, I mean, I cannot go to every meeting, especially now with the campaign in full swing. But, by golly, 

somebody very close to me is running this whole operation as the 

chief operating officer all the time. And I think we need a person 

like that. 

Senator WARNER. Well, if you look at the last three administrations, usually with big fanfare in their first year in office, they announce a reinventing government or Bush had a different one, 

Obama has got a chief performance officer and others. But it has 

got to have that relentless—— 

Governor O’Malley. Right. 

Senator WARNER. Because it is not coming easy. But thank you 

again for your good work and thank you for appearing before us 

today. 

Governor O’Malley. Thank you. 

Senator WARNER. We will now call up the second panel. 

33 

Our first panel focused on lessons we at the Federal level could 

learn from State government. This second panel is going to focus 

on local government. We are very honored to have two distinguished panelists: Ike Leggett, who is the county executive from 

Montgomery County, and Deputy Mayor Christopher Thomaskutty, 

the Deputy Mayor for Public Safety and Operations in Baltimore. 

I will introduce both of our panelists, and then we will hear testimony from both. 

Ike Leggett has served as the Montgomery County executive 

since being elected in November 2006. He has also served four 

times as an at-large member and as the council president three 

times and as its vice president three times. He served as a professor of law at Howard University Law School from 1975 to 2006. 

He ran the day-to-day operations of the law school as its assistant 

dean from 1979 to 1986. Mr. Leggett served as a captain in the 

United States Army. His tour of duty in the Vietnam War earned 

him the Bronze Star Medal, the Vietnam Service and the Vietnam 

Campaign medals. 

Christopher Thomaskutty serves as Deputy Mayor for Public 

Safety and Operations for Mayor Stephanie Rawlings-Blake, overseeing departments that include public safety—fire and police—and 

health, public works, general services, CitiStat, and other operating 

agencies. 

You have a much longer list than I initially thought here. 

Christopher began his career in Baltimore City government as a 

CitiStat analyst in 2003—so you were there at the birthplace— 

under former mayor Martin O’Malley. In 2007, he was selected to 

serve as the Director of CitiStat and later promoted to the position 

of deputy mayor. Christopher received a B.A. in Political Science 

from Birmingham-Southern College in Birmingham, Alabama. 

While at BSC, he was named a Truman Scholar by the Harry S. 

Truman Scholarship Foundation. He has a master’s in Public Policy and Urban Planning from the John F. Kennedy School of Government at Harvard. 

We will start with Executive Leggett, if you would go ahead, 

please, sir. 

STATEMENT OF THE HONORABLE ISIAH ‘‘IKE’’ LEGGETT, 

COUNTY EXECUTIVE, MONTGOMERY COUNTY, MARYLAND 

Mr. LEGGETT. Thank you, and thank you, Senator Cardin, Senator Warner, and Congressman Sarbanes, for undertaking an effort 

that I think sometimes is not fully understood by the public, but 

it is so, so important to the efficiency and effectiveness of governments today. 

Let me say that I came at this through the efforts of the thenMayor O’Malley in Baltimore, and as county executive I fully 

adopted it as one of the principles of leadership in my county. But 

when I first heard of it many, many years ago, I was not impressed 

when I first heard it because I thought it sounded like something 

that managers would get together, hold hands, and sing 

‘‘Kumbaya,’’ and come out and maybe adopt some principles and ultimately get something done. And it was a skeptical public who, in 

fact, heard and saw many of the things that we are talking about 

today and were not very, very impressed. It was not until, I think, 

34 

people started to see the connectivity between budgets and outcomes in a way that impacted their lives that it started to take on 

a different meaning. 

The main objective for us in Montgomery County, CountyStat, is 

to improve the efficiency and responsiveness of government by 

using up-to-date data as an ongoing focus for day-to-day management and long-term policymaking. For us, I believe that our government can and must do a better job in its use of finite public resources to help achieve and sustain Montgomery County residents’ 

priorities and objectives and deliver meaningful results. 

The objectives for us are outlined in what I put together with a 

task force immediately upon my election, which is to provide a responsive and accountable county government, affordable housing in 

an inclusive community, an effective and efficient transportation 

network, children prepared to live and learn, healthy and sustainable communities, safe streets and secure neighborhoods, a strong 

and vibrant economy, and vital living for all of our residents. 

I mention this because one of the things I think we fail to recognize is that unless CountyStat or the Stat programs are tied to 

some meaningful objective which the public fully embraces and understands, then we will not have the kinds of results that I think 

we want. Unless it is also part of a comprehensive program, we 

still would not meet the objective. 

Most recently, we followed the example of the Governor and others, and we introduced in Montgomery County something called 

MC311, a comprehensive integrated program that is online and call 

online for people to call with any requests for services and programs in one central comprehensive data base unit which we can 

track. In addition to that, we use other tools consistent with the 

CountyStat program. So we have consistency, we have a comprehensive approach, and it is not something in isolation, and it is 

tied to our objectives. 

Now, here are a couple of lessons learned that I think- -some of 

which you have heard this afternoon, but I want to emphasize 

again. To be successful and lessons learned, you need to ensure 

commitment and support for performance management at the highest level. At the highest level. Unless the executive, chief administrative officer, Governor, whoever, is not personally involved, then 

you will not have the results that you see. You need to partner 

with the community, develop buy-in from directors and managers, 

because it is not easily always understood. You heard earlier buyin through the legislative branch that was talked about, establish 

a collaborative relationship, focus on what matters, because despite 

the technology, despite all the efforts, we simply cannot do everything we want to do. 

You need to have a dedicated staff who performs and assists the 

departments, take a long-term, comprehensive view of this. You are 

not going to have the results overnight. 

Develop capacity within department offices to measure and manage performance and institutionalize this new approach. 

The process is valued. The people understand the process, it is 

open, it is transparent, and there is some consistency in the followup. 

35 

And, of course, we separate it; the CountyStat process is not the 

budget process. It is a tool to help us in our budget process. So 

those are separate operations. 

Now, in terms of things that we have seen and that we have had 

some success with, I just want to go through and track just a couple things for us. First of all, we look at overtime. Look at this 

chart. You will see that we have had some success. The success for 

us, when you look at it cumulatively now, would probably be over 

$7 million. That is a considerable amount of money. 

It also helps us to explain and track the performance. For example, if you look at that yellow line there, that yellow line represents 

the Department of Transportation’s overtime. And all of a sudden 

you will see a number, that line going sky high there. That line 

represents the most recent efforts related to snow, snow removal. 

So now we get to a question of the tracking devices that we have 

had, looking at overtime, savings that we have had traditionally by 

the use of the tracking system that we have in place, quarterly reports, constant management of this, and the county executive or 

any executive in a position will have to make a decision at some 

point. Do I utilize an excessive amount of overtime in order to respond to the challenges of the snow? Or do I stay and continue on 

this path? 

Well, by having this system in place, it allows us a tool for which 

a person can simply click on and see and track, and having this 

explanation allows us to in some way explain to citizens that we 

did not meet our objective at this point in time because we had a 

challenge before us; i.e., to move the snow, to respond to your concerns of safety in the community, or respond to the efficiency problems of reduction in overtime. Very good for explaining it. 

We have similar results that you look at in terms of the savings 

that we have had. We had additional challenges in a number of 

charts here that you may see from the overtime itself going 

through department by department, quarter by quarter, and staying on top of our managers and walking through this, getting explanations as to why the performance is one way or the other. 

We have also had another initiative called our Pedestrian Safety 

Initiative. Huge numbers of collisions, and we have tried to target 

the entire county. The dots that you see represent incidents of collisions, annually about 450 or so collisions. Probably 17 to 18 deaths 

per year. We targeted four high-incident areas, and interestingly 

enough, the efforts that we are making now on education, enforcement, and engineering, one of the things that was revealed to me, 

despite the fact that I have been looking at this for years in county 

government, one area that had been completely under the radar for 

many years has been the fact that a quarter of the collisions occur 

in parking lots, shopping centers. Our efforts for the most part 

were on the streets, intersections. So we had to refocus our efforts 

to, in effect, look at what we were doing as it relates to the parking 

lots, especially related to the elderly. 

Paper. Huge amounts of paper. You can see the chart as it indicates where we were headed. We have been able to monitor that. 

It is inconsistent with our environmental goals. It is cost-challenging for us, and we have been able to save, I think, somewhere 

36 

in the neighborhood of $1.4 million just in following and tracking 

paper. 

Overall in the county in the last 2–1/2 years, we have held 114 

meetings on CountyStat, and we have looked at possibly 80 different subject areas. I have with me our chief administrative officer 

who is the person that oversees this on a day-to-day basis, and his 

staff, but it is a considerable amount of time that we spend following this. 

There are quite a few other things that I would like to talk to, 

but I know that time is limited, but I want to end where I started, 

No. 1, to thank you for coming here today, to thank and congratulate our Governor for his leadership in this role, and to let you 

know from a local perspective that this is something that works. 

In times of tough budgets, it is something that is needed. The 

transparency, the efficiency with which this operates, and the savings that we have had over the last few years justifies, in my opinion, the need for this at the Federal level. 

There are a number of things that I would like to address, and 

we provided information for you that I think you need to look at, 

that I think may be helpful from a Federal perspective. But in 

order to preserve time, I am going to turn it over to the deputy 

mayor to—— 

[The prepared statement of Mr. Leggett follows:] 

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Senator WARNER. Thank you, Executive Leggett. 

Deputy Mayor Thomaskutty? 

STATEMENT OF CHRISTOPHER THOMASKUTTY, DEPUTY 

MAYOR, PUBLIC SAFETY AND OPERATIONS, BALTIMORE, 

MARYLAND 

Mr. THOMASKUTTY. Thank you, Senator, and Senator Cardin and 

Congressman Sarbanes. It is definitely an honor to be here, and it 

is an important hearing, and we appreciate your interest in what 

we have been doing. I am here for my mayor, Mayor RawlingsBlake. She is out of town today. You mentioned earlier that I would 

not be here but for the fact that Mayor O’Malley hired me in 2003 

to work for him in CitiStat. 

Governor O’Malley. He was a great hire. 

[Laughter.] 

Mr. THOMASKUTTY. There are many others who he has helped 

groom and bring along to focus on performance. I think those of us 

who live in Maryland are very fortunate that we have an executive, 

a Governor, who understands governance and performance the way 

that he does, and it has translated throughout the counties and 

maintained in Baltimore City. 

You have heard a lot of very good examples, I think, of specific 

improvements that we have seen at the State level, and especially 

in Montgomery County. What I would like to focus my few minutes 

on are some of the hidden benefits and some of the aspects of our 

strategy that I think are beneficial, and there may be tangible 

links to the Federal Government. 

First off, as you have heard, this is the 10-year anniversary. 

There is a longevity to our strategy that has lasted. I think that 

is because there is a very good fit between what is needed in our 

city and what this strategy brings. CitiStat has also helped, I 

think, three different mayors through their transition. What probably started out as a question, would CitiStat last without that executive leadership from Mayor O’Malley, has now turned into an 

answer that it is a tool for an incoming executive. It flattens that 

learning curve because you have an exceptional opportunity to 

learn very quickly the strengths, the weaknesses of your operations 

and of your et. 

I think Mayor Rawlings-Blake was hit with a pretty nasty snowstorm within days of her taking office. Within weeks, by reading 

a lot of these executive memorandums, by looking at a lot of the 

analysis, by attending CitiStat meetings, she was able to learn her 

agencies and learn her managers quickly and well. She was able 

to turn the ship toward the direction that she wanted to see the 

city move in much quicker than I think other executives who have 

not taken advantage of this type of strategy. 

One of the other things I just want to talk about in terms of the 

speed with which an executive can put their stamp on an operation. We are 10 feet from each other now. Imagine if you got to 

be 10 feet from each of your managers on a bi-weekly basis. Communication improves, what your expectations is better, and you 

quickly see, as the Governor mentioned, who your stars are. And 

I think one of the things that we have been able to do is develop 

a cadre of leaders in the city over the last 10 years who are manVerDate Aug 31 2005 12:47 Sep 14, 2011 Jkt 000000 PO 00000 Frm 00068 Fmt 6633 Sfmt 6601 H:\DOCS\58155CON TISH
63 

aging based on performance, and that is incredibly important for 

a large organization to get that mentality and the culture of leadership ingrained. It started with Mayor O’Malley, and it has continued under the last two mayors. 

It has also enabled us, I think—an unexpected benefit is a lot of 

our CitiStat staff—and we are joined by Spencer Nichols, one of my 

staff members today. We have been able to groom and place leaders 

throughout our government, chiefs of staff, department heads, division chiefs, all who have been brought up in this mentality of what 

gets measured gets done. 

A few of the other things I wanted to point out. Over 10 years 

we have evolved. Every successful management strategy must 

adapt to its people, to its time, and to its resources. What once was 

a process that focused on an individual agency or an individual department, we have now evolved to where we are focusing on policy 

issues. As Senator Warner mentioned, very few public problems 

can be isolated to a particular department. 

For example, CleanStat, our city requires a tremendous amount 

of effort and collaboration to try to keep it clean. Our Bureau of 

Solid Waste cannot do that by themselves. It involves our Recreation Department, our Transportation Department, our housing 

code enforcement officials. We have been using CleanStat as a 

method of unifying six or seven different operating groups under a 

common theme and under common principles with common objectives. 

With the past year, we have revised our collection process. We 

have increased—as I think both Senator Cardin and Congressman 

Sarbanes have seen, our recycling collections are up 53 percent in 

a single year. That is unprecedented change for a city like Baltimore. We have seen an 80-percent increase in sanitation enforcement citations because we were able to move resources to where we 

needed them. And we are finally obtaining convictions in court for 

illegal dumping. That is done by the housing department. We used 

to only talk about it with the trash department. Everybody has got 

to be on the same page to have good, effective results. 

The next example may be one we want to think about the most, 

and that is GunStat. This is where we have a session and a meeting on a monthly basis based on a common shared goal across city, 

county, State, and Federal levels of government. And I have to say, 

without, I think, the Governor’s participation from the State agencies and those that are involved in the State of Maryland, it would 

not be as successful. But we have the police department, the county 

police, State police, all the State agencies that are involved in supervision, our local State’s authority and our U.S. Attorney, all focused on targeted enforcement and increasing sentences for those 

who are carrying illegal guns. You know, I will be frank. At the beginning part of the struggle is getting folks who do not report to 

the same person. You know, this is not about the same boss. It is 

about the same goal. And once everybody understood that here is 

what we all share in common in terms of what the outcome should 

be, you begin to develop the trust around data sharing. I am not 

a law enforcement official. There was some initial concern that why 

should I get access to certain data, you should, but we got to the 

point where we had certain agreements about what would be 

64 

shared and what would not, and now we are all looking at the 

same amount of data, and it has been incredibly effective at the 

city level. 

Just to give you an example—and I am purposely showing you 

a map that we did not create. Probably one of the Governor’s staffers created this map. This is showing in the city of Baltimore. You 

know, we mentioned this earlier. You can collect all the data you 

want, but if you do not have a system in place to take action on 

that data, you are wasting your time. This shows where we have 

mandatory releasees under the age of 25 who have been out of jail 

for less than 6 months of two or more federally significant convictions. We know based on a year-plus, almost 2 years of solid data 

collection on felony gun crimes that that is the population of people 

we need to be touching. The Governor has people in place in his 

VPI unit who are in regular contact with them from the State level. 

And we at the city level have patrol officers on their post who are 

aware of these particular individuals who have served their time, 

but we want to make sure they know that we know where they are, 

that we love them and we want them to see us. So they see a coordination between the city and the State that has never been 

there before, and as the Governor mentioned, we are seeing the results in our homicide reductions. 

Another evolution of our strategy I think has to do with the way 

we are beginning to make links with our budgeting process and 

with our operations. Outcome budgeting is the process we brought 

to the city this past year, and a long story short, you normally 

build your budgets, you start from the baseline of where you were 

the previous year as opposed to the objectives you want to accomplish. The intent of outcome budgeting is to say what are your priorities, what do you really want to accomplish, and then you start 

putting your dollars at what you think is important. And through 

a pretty intensive process, you are able to determine what your priorities are. And so you have heard this many times. We have tried 

to start taking the scalpel approach instead of the sword. Instead 

of across-the-board cuts, we are able to see what is the incremental 

impact of an increase here or a decrease there, and that has been 

able to help us have in very difficult austere budget times a lot 

more confidence in what we are funding and what we are not funding and explaining that to our citizens better. 

Here is just a sample of what an outcome budgeting template 

would look like for us. I just grabbed a water example from our 

Water Bureau. We unapologetically in CitiStat have always been 

heavily focused on outputs. So this attention to purchasing outcomes, to funding the outcomes that you want is different, and it 

is not always simple to measure an outcome, at least at the city 

level. But we are becoming more and more comfortable with taking 

a step back on a quarterly basis, looking at these broad city-wide 

outcome measures, and bringing the same level of attention 

through our Stat meetings that we typically do through more of 

your everyday operational inputs and outputs. They are much easier to measure. 

Finally, just some quick thoughts on the application. I think both 

the Governor and the county executive have spoken to some of this. 

I am not a management professor, and I do not know the Federal 

65 

Government all that well. But the four tenets that we use are effective. I think they are effective if you are running a coffee shop or 

if you are running a $2 or $4 billion operation. 

The first thing I would say is learn the lesson that we learned 

from the Governor, and that is just get started, pick an operation, 

pick an agency, pick a section, pick a sector, and just get started. 

I think there are clear applications, as I have seen your BorderStat 

and others in the Federal Government that are doing direct service 

delivery, especially those where there are clear lines of authority 

and accountability. The application there I think is much simpler 

and much more straightforward. 

But for those Federal functions and agencies that are perhaps 

less involved in direct service delivery, that may be pass-throughs 

of Federal funds or more focused on compliance, I think there is 

something to this collaborative model that we have started along 

the lines of GunStat with multiple levels of government. Again, not 

focused on the same executive, but focused on the same goals. And 

as long as you can agree to a common shared outcome, you can find 

smart people to help you figure out the way of measuring it, sharing information, and then you have to figure out the way to keep 

the ball moving forward in terms of that executive interaction. 

There may be multiple executives at the table, but I think that is 

possible. 

There is a dynamic that I think the Governor is probably in the 

best position to speak to, the geographic size. In the city we have 

the benefit of crossing the street to find many of our managers. At 

the State level, and especially at the Federal level, just the lack of 

proximity to some of those who you are managing is something 

that has to be thought through. There is definitely an appeal and 

an advantage in managing people you can talk to and see face to 

face. There is a limit to what you can do via videoconferencing and 

other things. I think there is a way of applying the strategy to specific divisions within the departments, within agencies, that folks 

can think through. I think there is definitely promise. I think the 

four tenets are solid, and I very much appreciate the opportunity 

to tell you a little bit more about the city and to think through 

some of the ways this could help the Federal Government. 

[The prepared statement of Mr. Thomaskutty follows:] 

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Senator WARNER. Thank you both for excellent testimony from 

both of you, and I am just going to ask two questions, and either 

one of you can respond to both or either one. 

One, it just seems to me that as I look at—from the Governor’s 

presentation and the county’s and the city’s presentation, a lot of 

this is pre-framed by what questions are asked. And I would be curious from both of you who is making the determination of what 

Stat is being measured or what outcome is being measured. Do you 

solicit collaboration from the work force in the county executive’s 

position in terms of the council? How do we make sure we are asking the right questions, No. 1, in terms of what we are going to 

measure? 

And then No. 2, it seems that most of the efforts here have been 

on relatively objective criteria which you can measure against. So, 

for example, as we—and this may actually—I am just going to get 

into your area about the budgeting piece. If we were to measure, 

on a CitiStat, CountyStat, or StateStat, a child’s readiness for 

school, that readiness for school pushes us more into the policy 

area, and it might be health care, it might be pre-school, it might 

be parental supervision. You know, have you consciously in 

CountyStat and CitiStat tried to stay on the cleaner, more objective 

questions? Who gets the input? And at some point could this be 

drawn or is it being drawn now into actually the broader policy 

areas? 

Mr. LEGGETT. Thank you, Senator, for your question. I think it 

somewhat evolves, because I think the first task is to demonstrate 

to people in a very clear, straightforward way what are the meaningful results. Our demonstration, for example, of the overtime 

used grabs the attention of a lot of people. 

Senator WARNER. Right. 

Mr. LEGGETT. They could see it, they could feel it, they know 

about it, it is there. We will—and I see that we will evolve to more 

subjective areas that you cannot measure quite as well. But the 

first thing that we have done would be to establish the value of the 

program itself. But until you have that buy-in, I think it would be 

very difficult to go to the ‘‘soft’’ objective areas and demonstrate the 

efficiencies of the program rather than to do it the other way 

around. 

Senator WARNER. And when you started even on the —in the 

ability to demonstrate the effectiveness of the program, did you sit 

with your leadership team and try to sort through which questions, 

did you have your staff—how do you even decide which is your—— 

Mr. LEGGETT. It is all of the above, but more importantly, I 

think, from the people involved directly, the managers, the employees, and for us even the public itself. So our process is open. The 

results are online. You can see every report that we have conducted. If you want to participate, if you want at least to come in 

and watch what is going on, the public is invited to do so. 

So we have input of the question from individual components of 

the work force, especially the managers, and also from average citizens. 

Mr. THOMASKUTTY. And I will speak to your comment about trying to put the strategy around something like childhood readiness. 

That is exactly where we are going, because I think you start with 

71 

what is your immediate operational needs, and then you take that 

step back as to what is your city or your county or your government need. So childhood readiness, what are the factors that impact that? The mayor wants us to start ChildStat for this very reason, and we know that a kid is not going to be ready for school unless a few things happen. One, they have to be loved by their city. 

Two, you have to take care of them immediately upon their birth 

outcome. So are we taking care of the mom during the prenatal 

stages? When the baby is born, are they getting a home visit from 

a trained nurse? How are we doing the immunizations throughout 

their early term? Then it is being healthy and safe in their home, 

and there are tests, right? Honestly, you give us a lot of money for 

Head Start, both private Head Start and public Head Start, and 

there are certain providers that we have not yet started to measure, but we know we get better results from some than we do from 

others. 

So that is what I already know and what we already know. What 

we do not know is how to turn the needle, how to make the investments that you are providing us, give us better outcomes than 

what we are currently getting. But it can be measured, and there 

can be a way of applying the strategy around that particular policy 

issue to where those at the table, nonprofits, foundations, private 

citizens, State agencies, city agencies, are sitting there around common objectives, and instead of every time saying, well, you need to 

do this differently, it may be you are developing the policy that is 

going to help someone else make that decision. But it is possible. 

It is just you have to adjust what you have seen applied successfully, I think, so far to your typical municipal operations and county operations. 

Senator WARNER. It would seem to me—and I will turn this over 

to Senator Cardin—that if you can rank order child readiness for 

school and the goal is 90 percent of our kids are going to be ready 

for school by kindergarten and then you have to rank order that 

versus the other goals you have, but you can then argue as policymakers between how much prenatal versus early childhood health 

versus brain development activities. But until you can get that goal 

set—and then you have the inputs and some tools to measure, and 

I think this is where this—and you guys are at the lead of this, 

or hopefully this journey will take you all and then hopefully at 

some point the Federal Government behind it, because it is—you 

know, the notion of unlimited dollars or even dollars circa 2006, 

2007, fiscal year 2008, fiscal year—I just do not think we are going 

to see them again anytime soon. 

With that, Senator Cardin. 

Senator CARDIN. Well, thank you very much, Senator Warner. 

You both have said there has got to be buy-in at the highest level 

for it to effectively work. Can you define what you mean by that? 

What is required from the county executive to make this work? 

What is required from the mayor of Baltimore? Are you talking 

about your personal time? Are you talking about delegating it to 

another person? Give me an idea of what is required for this to 

work at the county level. 

Mr. LEGGETT. Well, buy-in means that I fully embrace it and 

adopt it as a policy consideration, or me as county executive that 

72 

I show and demonstrate that level of commitment by participation, 

by involvement. You can delegate some of it, and the person who 

probably does the day-to-day operation is the chief administrative 

officer. For those outside of county government, it is the city manager. But I would not delegate beyond that point that it must be 

at that level, because the chief administrative officer is the head 

of the county government in terms of its day-to-day operation. All 

the department heads report to the chief administrative officer. 

If you go much below that, I think that you lose a commitment. 

Again, you are making a transition. Many people, believe it or not, 

in government believe that they are doing an excellent job with 

what they have, and they have been doing it for the last 25 or 30 

years and do not see a need to change. They see a narrow focus. 

And so you have to educate and transition them. So unless you 

have the people at the very top making that personal commitment, 

then it would be a very, very difficult challenge, as well from the 

legislative branch. You know as well as I do that unless there is 

that commitment from the top of the executive branch, the legislators are not going to be so tempted to go and make these changes 

on their own. 

Senator CARDIN. In Baltimore City, what does it mean to have 

buy-in at the highest level? 

Mr. THOMASKUTTY. It is the way we are going to do business. It 

is understood. And so the mayor has spent a lot of her personal 

time, especially early on, but she will not have to moving forward. 

It is understood that I am speaking on her behalf, and it is as if 

she is always in the room. So this is just the way we are going to 

manage, it is the way we are going to keep score. I think after 10 

years it has been ingrained in the culture in the city. 

Mr. LEGGETT. Let me just add something. We have only been in 

it about 2–1/2 years. I would hope that at some future point it is 

not so dependent upon the individual executive, that it becomes a 

way of doing business, and that it is a standard operating procedure for all county executives and for all agencies of government. 

I hope we get to that point, and we are moving in that direction. 

I am not sure we are quite there yet. So it requires a direct, personal involvement. But the way we would make certain that this 

is successful long term, that it is not dependent on an individual, 

but it is a way of doing business. And I think that is the direction 

we are moving. 

Senator CARDIN. My second question is: In a time of declining 

budgets, is there concern that the Stat program is being used to 

justify budget cuts and, therefore, agency heads are more suspicious about cooperating with the program? 

Mr. LEGGETT. Let me take our situation. In the last 3–1/2 years, 

we have closed budget gaps of about $2.5 billion. We have reduced 

the overall work force by 10 percent, 1,100 positions. We have had 

furloughs. We have had eliminations of COLAs and a variety of 

other things. Certainly there were challenges as a result of that. 

We faced some difficulties. But the way I approached this was to 

personally engage myself both in the CountyStat process as well as 

the rec. department. This is why I stated earlier you cannot look 

at this in isolation. There are other tools that you have to employ 

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tem. But I engaged in the last year 33, 34 separate meetings with 

individual employees to walk through the potential challenge that 

we had, to talk about what CountyStat had found. And I think that 

we have developed a level of credibility of CountyStat that it is not 

looked upon as a political tool but as sort of a neutral, fact-finding, 

data analysis, clear, succinct, that goes above—it is over and above 

the political consideration. That is where the policy comes in where 

you then have to make the decision between is it early childhood 

development, something else, do you priority A versus B. But the 

data is clear. It is consistent. It is neutral. It speaks for itself. And 

the people that you have—and this is why it is so important to 

have competent people operate in the system and over and above 

the political considerations. 

Senator CARDIN. In Baltimore City, does the mayor say, ‘‘Where 

can I get another $10 million of cuts?’’ 

Mr. THOMASKUTTY. The finance director might. I would say it is 

a tool. I think through CitiStat and through our budgeting process, 

we definitely were able to cut smarter than I think we otherwise 

would have been. But your good managers view that podium as a 

two-way street. They advocate just as much as they take questions. 

And so you will find through this particular budget we spent 

money on things that we probably otherwise would not. We never 

could find a way to fund a $140,000 program in our fire department that would put less expensive vehicles out to go to some of 

our most frequent callers of 911. Because we could show the value 

of that particular service through this new budgeting model, we 

had the confidence and the proof in the data to say it makes a heck 

of a lot of sense to send an SUV than a fire truck to someone who 

calls the city 180 times a year for 911 service. 

Senator CARDIN. Well, thank you both very much. 

I will just make one final observation, and that is, you can tell 

there is a buy-in at the highest level when you meet with the Governor and he wants to take your laptop and show you a new 

website that he has on statistics. You do not want to challenge him 

on his technology. 

Senator WARNER. And when the Governor stays for the second 

session, too, which is really a commitment. 

[Laughter.] 

Senator CARDIN. Thank you. 

Senator WARNER. Let me just add a couple of quick closing comments. Again, my thanks to the Governor, to the county executive, 

and the deputy mayor. 

Two things, just observations at the Federal level. I think at the 

city and the county level, as a mayor or county executive, this is 

your job to run the city or the county. I think it gets harder at the 

State level, but you still have that chief operating officer role as the 

Governor or someone in the Governor’s office. There really is not 

that equivalent at the Federal level, and I think that has been one 

of the challenges. President Obama has appointed somebody who 

I think is extraordinarily talented, Jeff Zients, to be chief performance officer. But whether this position will be maintained, whether 

it will have enough juice I think the jury is still out. I am hopeful. 

But, conceptually—and, candidly, there is very little buy-in, I 

think, to our efforts at the legislative level. There is governmental 

74 

oversight, but there is not a governmental efficiency metrics performance group. And you got to have a legislative, I believe, at 

least at the Federal level, partner as well so you do not have this 

constantly reinventing the wheel every 4 to 8 years. Again, I commend the Governor for having the stick-to-it-iveness with CitiStat 

that now it has been implemented at the State level and others like 

Montgomery County are implementing it. 

The other thing I think we have one challenge at the Federal 

level—I am a new Member of Congress, although I think I have 

been guilty of this as well—that to our Federal work force we are 

always additive on reporting requirements, and we never subtract. 

So I think our Federal work force at times feels overwhelmed with 

whatever—whoever is coming in has got a new set of reporting requirements, we never get rid of any of the old ones, and the volumes of data—I think about the PART initiative under President 

Bush, huge volumes of data, but not user-friendly, and I think it 

was well intentioned. I am concerned that as we think about how 

we get better performance and metrics, at least at the Federal 

level, when we add new reporting we ought to be thinking as well 

maybe we could take away some of the others, because that sends 

a message, I think, as well to the work force that this is not just 

make-work, but this is going to be critical and it is going to be evaluated, it is going to be viewed, it is going to be useful. And I will 

close with the comment that all three of you have made, and that 

is, you have to be relentless, that none of this is easy, none of this 

comes quickly, and kudos to all of you for having that relentlessness. 

With that, I again want to thank the Governor, the county executive, and the deputy mayor. The hearing record will be kept open 

for additional questions for our witnesses until noon tomorrow. I 

ask that each witness respond promptly to any questions submitted 

to them. 

The Government Performance Task Force will hold its next hearing this Thursday at 10 a.m. in the hearing room of the Senate 

Budget Committee. The hearing will cover the issues of Federal 

procurement and contracting. 

If there is no other business, the hearing will come to an end. 

Thank you. 

[Whereupon, at 3:54 p.m., the Committee was adjourned.] 

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QUESTIONS SUBMITTED FOR THE RECORD 


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RESPONSIBLE CONTRACTING: MODERNIZING 

THE BUSINESS OF GOVERNMENT 

THURSDAY, JULY 15, 2010 

U.S. SENATE, 

COMMITTEE ON THE BUDGET AND THE TASK FORCE ON

GOVERNMENT PERFORMANCE, 

Washington, DC. 

The Committee met, pursuant to notice, at 9:58 a.m., in room 

SD–608, Dirksen Senate Office Building, Hon. Mark Warner, 

Chairman of the Task Force, presiding. 

Present: Senators Warner, Cardin, and Whitehouse. 

Also present: Senator Murray. 

Staff present: John Righter, Amy Edwards, Ron Storhaug, and 

Gregory McNeill. 

OPENING STATEMENT OF SENATOR WARNER 

Senator WARNER. The hearing will come to order. Welcome to the 

Senate Budget Committee’s Government Performance Task Force 

hearing on ‘‘Responsible Contracting: Modernizing the Business of 

Government.’’ I want to thank my colleague Senator Whitehouse, 

who actually was the instigator of this hearing, for his leadership 

and interest in this subject and for the willingness of our more senior members on the Committee and in the Senate, Senator Murray, 

for being here as well. 

As I have explained to a number of the witnesses, let me acknowledge on the front end there may be some shuffling of the 

gavel. Things here happen on strange time sequences that as a new 

guy I do not fully understand yet. Today we have a key vote at 11. 

I personally have a NASA markup going on right now that is very 

important for facilities in my State, so there will be a bit of shuffling. I know Senator Whitehouse has an important conference call 

he has to take midstream, so I ask the indulgence of the witnesses 

and our audience. 

So, let me go ahead and make my opening statement, and then 

I will ask Senator Murray and Senator Whitehouse if they would 

like to make a statement. Then we will introduce the witnesses. 

Today we will take a closer look at the Federal Government’s 

contracting procedures and practices and learn about opportunities 

to improve contract oversight and leverage greater savings. 

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Specifically, I hope our witnesses will tell us more about contracting reforms that are already underway at Federal agencies; 

second, the potential savings from contracting improvements; and, 

third, steps to modernize procurement operations. 

This Task Force on Government Performance has held several 

hearings examining opportunities to improve the performance of 

the Federal Government to achieve better savings and service. As 

we attempt to scale back and deal with our growing fiscal challenges, we must also look at ways to modernize the business of 

Government, and contracting practices are due for some upgrades. 

Unfortunately, as my colleagues know, whenever I make any 

comments, I always refer back to my previous job for at least a moment. During my tenure as Governor of Virginia, we developed a 

centralized approach to State procurement and developed an online 

marketplace that has achieved some impressive results. 


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Thank you, Amy, for holding up the chart. 

Senator WHITEHOUSE. How well managed was Virginia during 

the time you were Governor? 

Senator WARNER. Thank you, Senator Whitehouse, for that very 

important—— 

[Laughter.] 

Senator WARNER. You know, as a matter of fact, it was ranked 

No. 1 in the whole country, a designation that we maintained until 

changes just in the last week or so. I think we fell to No. 2. But 

you can only keep good practices going for so long. 

But part of those good practices were represented here on our 

procurement activities. As of last year, Virginia’s electronic procurement system has registered more than 38,000 vendors, has 

supported more than $20 billion in purchases, and saved Virginians more than $280 million from streamlined purchasing— 

something that I think could be brought to the Federal Government as well. I know firsthand that results can be achieved by 

smarter spending, and, again, I think we can do that at the Federal level as well. 

But effective contracting and procurement is more than just saving money. Contracting is also critical to providing the quality services the public deserves. A recent example and one that has been 

important to me as the home-State Senator—but I know Senator 

Whitehouse and Senator Murray have expressed concerns as well— 

has been the mismanagement of millions of dollars to develop what 

should be a basic data base at Arlington Cemetery. 


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The Army’s Inspector General found that Arlington Cemetery improperly paid millions of dollars to contractors that failed to deliver 

a new data base to hold the cemetery’s records. As a result, they 

found 211 misplaced or misidentified graves for our fallen heroes, 

and that is actually only three sections of the 75 sections of the 

cemetery that have been audited so far. This was literally a system 

where they were still using three-by-five cards because all of the 

millions of dollars that have been spent on upgrading the data 

bases had never been coordinated. The IT functions had never been 

put in place. And right now the Army is scrambling. We have put 


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in place a series of private sector folks who would like to come in 

on a pro bono basis and help. But if we do not have good contract 

management, this is the results that we could see. And, again, that 

is what our hearing is about today. 

Chart 4, the Federal Government spent $538 billion on contracts 

in 2009, and 70 percent, or $372 billion, was spent on the Defense 

Department alone. 


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And as our final chart shows—following in the footsteps of our 

great Chairman, Chairman Conrad, you cannot have a Budget 

Committee hearing without charts and graphs. As our next chart 

shows, defense contract spending has more than doubled over the 

last decade. 

It is worth pointing out that this growth is in line with the 

growth in the overall defense budget, which has also doubled over 

the last decade. 


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Given the growth in contracting, I hope our witnesses today will 

discuss the oversight structures in place to ensure that this growth 

has been effectively managed. 

I am also pleased with the Obama administration’s focus on contracting and procurement improvements and mandates to save, 

and I would like our first panel to discuss how they are currently 

working to ensure effective contracting oversight and to better leverage the spending power of the Federal Government. 

With that, I would like to call upon first Senator Murray and 

then Senator Whitehouse for opening statements. 

OPENING STATEMENT OF SENATOR MURRAY 

Senator MURRAY. Well, thank you, Mr. Chairman, for holding 

this hearing, and I will not have an opening statement. I just want 

to welcome both of you and look forward to the question-and-answer period. I have several questions I would like to ask, and 

thank you for hosting this hearing today. 

Senator WARNER. Senator Whitehouse. 

Senator WHITEHOUSE. Thank you very much, Senator Warner. I 

think this is exactly the sort of hearing that we envisioned when 

I asked Chairman Conrad to set up this Task Force on Government 

Performance for the purpose of trying to better evaluate Government performance, efficiency savings, ultimately toward the goal of, 

I hope, being able to put an efficiency number into our budgets in 

the future and hold administrations to account to try to achieve 

those efficiency savings. 

Clearly, Government contracting is an important area because, 

as you have pointed out, the extent of it and the hundreds of billions of dollars that flow through it just gets bigger every day. Anytime you have that much money out there, it is a target for waste 

and abuse and for greed and for laziness and all of those human 

characteristics. 

So particularly when you have for-profit corporations involved, 

there are all sorts of risks. The oversight and management function 

becomes incredibly important. It is not unheard of, particularly— 

I am on the Intelligence Committee—in very classified programs 

where there is little oversight and highly technical issues at stake, 

to question whether the Government actually has the capability to 

oversee what it is being told by the contractors or whether the contractors are running the show, running the oversight, running 

every element of it, because they have simply run ahead of the capability of Government to keep track of what they are doing and 

to understand the technical substance of what they are doing. 

There is always the danger in the contracting oversight world of 

what I call and what economists have for a long time called regulatory capture, that over time slowly but steadily the influence of 

the regulated entity—the contractors, in this case—through revolving doors, through putting their own people into Government, 

through threats of litigation if you do the wrong thing and subtle 

rewards if you do the right thing, step by step it gets to the point 

where the regulator or the oversight authority becomes more beholden to the industry than to the public. And that is a common 

theme throughout administration, but particularly acute where you 

are dealing with very big corporations with huge resources and 

84 

enormous public dollars at stake. And then, of course, campaign 

and political activity by these corporations can compound the problem and make it even more acute. 

So I think it becomes very important that we take an active role 

to defend the American taxpayer and make sure that these moneys 

are being wisely spent. Clearly, there is an important role for corporations and for contracting in Government. But it is also a role 

that we have a responsibility to carefully oversee. So I applaud you 

for holding this hearing and look forward to the testimony of the 

witnesses. 

Thank you. 

Senator WARNER. Thank you, Senator Whitehouse. Thank you, 

Senator Murray. 

Our first panel, we have Daniel Gordon, the Administrator of the 

Office of Federal Procurement Policy at OMB. Mr. Gordon is responsible for developing and implementing acquisition policy, supporting over $500 billion in Federal spending annually. Prior to 

joining OFPP, he spent 17 years at GAO and served in several 

posts in the Procurement Law Division before being appointed Deputy General Counsel in 2006 and Acting General Counsel in April 

2009. 

Our second witness is Mr. Shay Assad, the Acting Assistant Secretary of Defense-Acquisition in the Office of the Under Secretary 

of Defense for Acquisition, Technology, and Logistics at DOD. Mr. 

Assad is responsible for all Department of Defense acquisition and 

procurement policy matters. He serves as the principal adviser to 

the Deputy Under Secretary of Defense for Acquisition and Technology and the Defense Acquisition Board on acquisition procurement strategies for all major weapon system programs, major automated information system programs, and service acquisition. So 

clearly, Senator Whitehouse, I think we have the right two guys in 

terms of oversight, both overall Federal Government and particularly at DOD. 

Let us start with Mr. Gordon, and before you begin, let me make 

clear that each of the witnesses’ full written statements will be included in the hearing record. So, gentlemen, thank you for both 

being here. 

STATEMENT OF THE HONORABLE DANIEL I. GORDON, ADMINISTRATOR FOR FEDERAL PROCUREMENT POLICY, OFFICE 

OF MANAGEMENT AND BUDGET 

Mr. GORDON. Thank you. Senator Warner, members of the Committee and the Task Force on Government Performance, I appreciate the opportunity to appear before you today to discuss Federal 

acquisition and the part it can play in improving the performance 

of Government. 

What I would like to do is briefly highlight now some of the 

progress we have made following the President’s direction in March 

of last year to achieve real, sustainable improvements in our acquisition system. As Senator Warner pointed out, the context of the 

President’s direction was the fact that in the years 2001 through 

2008, we had been seeing an unsustainable increase in spending on 

contracts and contractors, rising an average of 12 percent a year 

85 

during that period, so that the amount we were spending on contracting each year more than doubled in that period. 

The Government’s acquisition work force, however, barely grew 

in size, which meant they could not cope with this tsunami of buying that was taking place with predictable results. 

I cannot tell you today that we have solved all the problems. Far 

from it. It took years to dig the hole that we are in, and we cannot 

dig ourselves out of it in a few short months. But I can tell you 

we have made real, measurable progress. 

First of all, we are finally investing in our acquisition work force. 

They are the lifeblood of the Federal procurement system. Agencies 

have started hiring acquisition professionals, albeit in modest numbers, and we are working on improving the training that they get. 

For fiscal year 2011, the President has requested that Congress appropriate $158 million for the civilian agencies’ acquisition work 

force, and I urge you to support that request. This is a relatively 

small investment that will have a high return, especially when you 

consider that our acquisition work force is handling more than half 

a trillion dollars in contract spending every year. And in terms of 

where we are with that enormous annual outlay, the big picture 

headline is that we put the brakes on spending. 

Instead of the 12 percent annual increase that we have been seeing, in fiscal year 2009 we had an increase of only 4 percent. Across 

the executive branch, both at DOD and the civilian affiliate agencies, we are more carefully reviewing what we buy and how we buy 

it. My colleague Shay Assad will be telling you about DOD’s commendable efforts in this regard, and we at OMB are, of course, 

working very closely with Shay and his colleagues at DOD. But the 

heightened sense of fiscal responsibility of acquisition is, of course, 

not limited to DOD. We are seeing proof of it and encouraging it 

every day in every agency. 

My written statement has statistics about our governmentwide 

progress in savings and risk reduction. What I would like to do 

very briefly, though, is give you five examples of how our agencies 

are demonstrating fiscal responsibility in their procurements, one 

of which is going to resonate with Senator Warner’s comment about 

e- procurements in Virginia where I do think the States and local 

governments have done extremely well. 

No. 1, agencies are pooling their buying so that we are finally 

leveraging the purchasing power that the Federal Government 

should have as the world’s largest customer. Perhaps the best example is the set of agreements GSA recently negotiated for office 

supplies. Those agreements will guarantee for the first time that 

every Federal buyer in every Federal agency, whether they buy in 

person, over the phone, or on the Web, will receive deep discounts 

for hundreds of different office supplies. That may sound mundane, 

but the result could be as much as a quarter of a billion in savings. 

Second, agencies are focused on increasing competition, and a 

great example I would like to mention about increased competition 

comes from DOD, the Military OneSource Program, which provides 

important support services for our military personnel and their 

families. That procurement has never been competed until now. 

DOD collaborated with the Department of Interior’s Acquisition Assistance Center, which ran a full and open competition. That comVerDate Aug 31 2005 12:47 Sep 14, 2011 Jkt 000000 PO 00000 Frm 00091 Fmt 6601 Sfmt 6601 H:\DOCS\58155CON TISH
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peted contract is expected to save taxpayers $300 million as well 

as to provide better services to our military families. 

Third, agencies are moving away from pricing arrangements that 

have the Government, which means the taxpayers, bearing too 

much of the risk, to more prudent fixed-price contracts. For example, EPA recently shifted from a cost reimbursement to a fixedprice contract for remediation clean-up services at a Superfund site 

and is now paying 65 percent less. 

Fourth—and this is what the Senator’s comment about EVA 

made me think of—agencies are now routinely driving down prices 

by conducting electronic reverse auctions on the Web in which vendors are bidding online for the Government’s business. One example, again: DHS last year ran more than 2,000 electronic reverse 

auctions, saving us millions of dollars. 

Finally, agencies are giving long overdue attention to contract 

management. FEMA, for example, has put together high-quality 

training for its COTRs, as they are called, the contracting officer’s 

technical representatives. They play a key role in ensuring that 

taxpayers get the price, the schedule, and the quality that the contractor committed to deliver. 

I realize these are only examples. We need to make these success 

stories the norm across the Government. To do that, we are working with the agencies’ chief acquisition officers, their chief procurement executives, and directly with the work force. I am meeting 

them, we are meeting with them in town hall meetings, by e-mail, 

on a wiki, to share best practices and push for their adoption 

across the Government. 

There is much work yet to be done, but our early results show 

that we are on track in our efforts to achieve savings, reduce risk, 

and achieve better results for our Government and our taxpayers. 

I look forward to working with you and other Members of Congress 

on this important endeavor, and I would be delighted to answer 

any questions you may have. Thank you. 

[The prepared statement of Mr. Gordon follows:] 

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Senator WARNER. Thank you, Mr. Gordon. 

Mr. ASSAD. 

STATEMENT OF THE HONORABLE SHAY D. ASSAD, ACTING ASSISTANT SECRETARY OF DEFENSE FOR ACQUISITION, OFFICE OF THE UNDER SECRETARY OF DEFENSE FOR ACQUISITION, TECHNOLOGY, AND LOGISTICS, U.S. DEPARTMENT 

OF DEFENSE 

Mr. ASSAD. Senator Warner, members of the Committee, thank 

you very much for the opportunity to speak with you today. The 

subject of today’s hearing is ‘‘Responsible Contracting: Modernizing 

the Business of Government,’’ and it is a matter that is one of Secretary Gates’ highest priorities. He recently directed all echelons of 

the Department to take a ‘‘hard, unsparing look’’ at how we operate 

with the goal of cutting overhead costs to transfer those savings to 

force structure and modernization within the programmed budget. 

Just over 2 weeks ago, Dr. Ashton Carter, the Under Secretary of 

Defense for Acquisition, Technology, and Logistics, directed that all 

DOD acquisition professionals find ways to improve the way we 

conduct business in order to deliver better value to the taxpayers 

for the goods and services we acquire for our warfighters. Dr. 

Carter’s memo is really about increasing the buying power of the 

Department and getting a better deal for the taxpayers. 

In directing us to re-examine every aspect of how we do business, 

Secretary Gates has told us that we should ask two questions. 

First, is what we are doing respectful of the American taxpayer at 

a time of economic and fiscal duress? And, second, is this activity 

or arrangement the best use of limited dollars given the pressing 

needs to take care of our people, win the wars we are in, and invest 

in the capabilities necessary to deal with the most likely and lethal 

future threats? 

We need to examine not only what we are acquiring, but also 

how we are acquiring these activities and programs. Within the Department of Defense, we process over 3 million contracting actions 

a year. This year we will spend somewhere between $350 and $400 

billion in goods and services on behalf of the taxpayer. 

There are a number of actions that we can and must take to infuse arrangements into our contracts and motivate industry to 

achieve greater efficiency, and we must expect to reap the benefits 

of those efficiencies, and we will insist that industry share those 

savings with the Government. 

In the coming months, Dr. Carter will issue final guidance to implement this initiative. I will conclude by stating that there is a 

significant opportunity to save billions of dollars. But the savings 

will only be realized if we have a well-trained and sufficient work 

force to implement the change that is necessary. 

As the individual responsible for overseeing the growth and the 

development of the acquisition work force, I know I speak for the 

entire work force in expressing my gratitude to Secretary Gates, 

Deputy Secretary Lynn, Dr. Carter, and Members of Congress in 

supporting the much needed growth and increased capability of our 

work force. We will not accomplish this savings without a competent, capable, well-trained, and properly sized work force. 

I thank you for the opportunity, and I welcome your questions. 

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[The prepared statement of Mr. Assad follows:] 

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Senator WARNER. Thank you, Mr. Assad, and thank you, Mr. 

Gordon. 

Let me start by echoing what you both have said, that as we see 

these dramatic increases in the amount of contracting, the worst 

example of penny-wise, pound-foolish is not investing in the Federal contracting oversight work force so that we have the appropriate procurement officers, we have the oversight, and we have 

the expertise. Again, I know from limited prior experience as Governor that not having folks familiar with new techniques, new 

tools, and simply loading up additional responsibilities without increased oversight is a recipe for disaster. I think Secretary Gates 

is right, and I know Mr. Gordon has also been a big advocate for 

this. 

I have a couple of questions. Then as I mentioned earlier, I may 

have to step out for about 15 minutes. 

First, perhaps both of you could address this. One of the things 

we have seen in contracting—and perhaps this goes to work force 

issues—is the appropriate size and scoping of a contract. When we 

go low bid, which at first blush sounds best, but if we get the inappropriate sizing in the contract on the front end, time and again 

we see contractors come in on a low bid and then with change orders see the original contract size doubled, tripled, or quadrupled. 

How do we put in place better sizing procedures and framing procedures and have both appropriate penalties and restrictions both on 

contractors who have underbid and expect to have change orders 

and agencies that do not have any line responsibility in terms of 

doing the hard work up front in terms of sizing a contract? 

Mr. ASSAD. Senator, there really are two types of products that 

we buy. We buy products—that is, equipment, goods—and we buy 

services. And we have to look at them slightly differently. In the 

world of services, we are now spending more money in the Department of Defense than we do on major weapons systems and/or 

goods. We spend about 53 percent of our funds on services, 47 percent on major equipment and goods. And in the world of services, 

the key is to expand competition as much as we possibly can when 

we buy services, and to ensure that the scope—that is, the work 

statements that we are asking contractors to bid to—is understood 

and that we are using the proper types of contracts to buy the 

goods and services that we are about to do. 

In the world of services, one of our problems has been that, 

again, probably for convenience and expediency, we hold a competition, we select a particular contractor, and that contractor becomes 

an incumbent over an extended period of time. What we are trying 

to do at the Department is to extend the number of contractors 

that will compete on a competitive basis continuously, to reduce the 

length of time of our services contracts so that the scope of work 

can be more properly understood and we can get more effective 

control over what is being performed, and then be able to conduct 

the oversight to ensure that we actually got the services that we 

contracted for. 

In the world of major weapons systems, it is a little bit of a different situation. In that world it is all about properly defining your 

requirements. And Secretary Gates has talked a lot about the 75- 

, 80-, 85-percent solution versus the solution which shoots for the 

115 

moon. and the idea and concept being we are much better off getting equipment into the hands of our warfighters 3 or 4 or 5 years 

down the road that increases their capability rather than taking 15 

or 20 years in an effort to try to produce something that remarkably increases their capability but inevitably takes longer than we 

thought and costs the taxpayers significantly more money. 

So in that particular case, what we are doing is we are spending 

a lot of time up front talking about what are the technologies that 

are risky and have we made the proper investments up front before 

we begin making significant amounts of spending in engineering, 

manufacturing, and development, of ensuring that we are not asking our contractors to achieve things that are incredibly difficult to 

achieve, and that there is a recognition of the proper type of contract that is fair to both sides in terms of expectation. 

What we have failed to do in the past is create contracts that are 

reflective of the outcomes that we want to get, and what we were 

doing was measuring process rather than measuring the outcome. 

And at the end of the day, that is what the taxpayer wants. Did 

we get what we paid for? And are we paying a fair price? 

So I think what you are going to see from the Department is a 

lot more time spent on the front end of programs because much 

like in industry—and I spent a good deal of my career in industry, 

in major corporations—the fact of the matter is most of the time 

is spent in defining the requirement. 

Senator WARNER. I guess very briefly, because my time has expired, Mr. Gordon, do you want to—— 

Mr. GORDON. I will be very brief. Shay’s office and mine work 

very closely together. I agree with everything that Shay said. The 

one point I might add is that the challenge of requirements definition is directly tied to the weakness of the acquisition work force 

and the need for the acquisition work force and the program people 

to work together. When we do not write the statement of work 

properly, we end up with contractors coming back and saying they 

need more money, saying they want an equitable adjustment. 

Starting the acquisition properly makes all the difference in the 

world, and for that we need better trained acquisition professionals, and we need them working with their program people. 

Senator WARNER. You are consistent on your points, but I would 

only add two quick points—and we are joined by Senator Cardin. 

I appreciate Senator Cardin being here as well. One, I would have 

liked to have heard in that answer, Mr. Assad, something that 

said, And we are laying out both specific incentives and penalties 

to reward good behavior in terms of contracts, not expanding beyond scope and size, and clearly I understand the weapons system 

differently than, say, the services piece, particularly focused on 

some of the IT contracting, which is very robust in my community, 

but how we size that correctly and reward contractors or keep to 

that size and penalize both contractors and/or agencies who get it 

wrong on sizing. And since my time has expired, Mr. Assad, you 

will not get, at least at this point, the very pointed question I was 

going to ask you right now on how did we get into this outrageous 

mess at Arlington Cemetery and what are we going to do to make 

sure—and I know the Secretary of the Army and I have had a 

number of conversation about this to make sure that it is corrected 

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and never happens again. It has been, a national embarrassment. 

But if I can get another round, just to forewarn you, that is what 

I am going to come back to. 

Senator Murray? 

Senator MURRAY. Thank you very much, Mr. Chairman. 

Mr. Assad, thank you. We are all focusing on the Federal deficit, 

and bringing down the national debt. In light of that, it is more important than ever that we make sure all of our programs are running as cost-effectively as possible. Every penny counts here. 

I want to talk to you—because the GAO recently testified that 

the reliance on contractors continued to increase and we heard that 

again today that this is leading to overall cost increase. In their 

testimony, the GAO noted that of the 50 programs in their 2010 

assessment, only 19 had filled all of their authorized positions, and 

86 percent of the programs providing data needed to hire contractor support to do the job. How can Congress better assist the 

Department of Defense in recruiting qualified candidates so we can 

avoid using these contractors and save the taxpayer money? 

Mr. ASSAD. Senator, the point you made is absolutely valid and 

on point. The reality is one of the things that we are looking at 

right now is we grow the acquisition work force some 20,000 people 

over the next 5 years. About 10,000 of those folks will be in program management, systems engineering, logistics management, 

business management roles. It is in those roles that the growth of 

the contractor community has really burst to points where it is way 

beyond where it should be. 

Mr. Gordon talked about inherently governmental work, and the 

fact is we need to bring back into Government more of the capabilities so our program managers and our program offices can, in fact, 

properly oversee these contracts with an arm’s-length relationship. 

We are making good progress. 

Senator MURRAY. And are there hiring incentives—— 

Mr. ASSAD. Yes, and I would like to talk about that. We are making good progress. At this point we would have—we were planning 

to have hired about 3,400 people over—it is a 5-year plan. Of those 

20,000, we thought we would be at about 3,400. We have, in fact, 

hired about 4,600. So we ahead of schedule. We are hiring quality 

people, and I think the flexibility that Congress gave us with the 

852 funds and the increased funds provided by Congress with regard to hiring our acquisition work force give us the tools we need. 

So I think it is a little bit too early for us to request additional 

assistance from Congress. We need to actually go out and do what 

you have given us the authority to go do. And I think we are well 

on our way to do that. 

Senator MURRAY. OK. And are we working to get veterans 

into—— 

Mr. ASSAD. Oh, absolutely. Absolutely. One of the key things we 

are finding is a number of our technical—especially at the Defense 

Contract Management Agency, we are finding that a lot of veterans, especially retired E–8s, E–9s, folks with tremendous maintenance experience, are now coming into our work force to help oversee the very equipments that they were maintaining. So that is a 

good thing. 

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Senator MURRAY. OK. And I also wanted to ask you a really important question. As you know, on June 30th this year, the WTO 

publicly announced that Airbus had received illegal subsidies that 

have damaged the U.S. aerospace business. According to U.S. Government estimates, that is about $200 billion in today’s dollars in 

total subsidies to Airbus. That has artificially lowered their prices, 

and tens of thousands of our American work force have lost their 

jobs because of those illegal subsidies, and our U.S. industrial base 

capacity has been reduced significantly, including our knowledge 

base that we need to build our defense system. 

Now, competition is key—we all know that—in making sure the 

Department of Defense gets the best value for their dollar. But it 

is also really important that the DOT factor in any unfair competition that another company may be receiving. And I wanted to ask 

you today, in light of that, how is the DOD planning to account for 

those illegal subsidies that have been received by Airbus—WTO 

has said that publicly now, and very clear—in the upcoming bid for 

the KC–X aerial refueling tanker? 

Mr. ASSAD. I have to be measured in what I say, Senator, because this is an ongoing source selection. But we think that we 

have taken adequate steps to ensure that the taxpayers are protected from any findings that might come out of a WTO ruling. As 

you know, there are two particular cases—one, the European 

Union versus the United States, the United States versus European Union. I personally—my office represents the Department in 

supporting the Trade Representative in both of those cases. And it 

is an extremely complicated situation and matter. It is a matter 

that is not likely to be resolved and is going to be subject to appeal, 

and it is going to take a significant amount of time for that to play 

out. 

What we have ensured is that in any instance the taxpayers will 

be totally protected if, in fact, there is a ruling, a final ruling—— 

Senator MURRAY. I know why you are saying what you are saying to me, but I just want us all to remember the taxpayers have 

been harmed now, significantly, and our work force, our industrial 

base, and our capabilities. So I know why you are saying what you 

are saying, but I will tell you, there is a lot of us that feel very 

strongly about the fact that we are now competing against a company with a plane that has been illegally subsidized so they can 

artificially lower their cost, and that is not a fair competition. And 

I know what you have to say. 

Mr. ASSAD. Yes, ma’am, I certainly understand your position. 

Senator MURRAY. Thank you. 

Senator WHITEHOUSE [presiding]. I have a call that I am supposed to take at any moment, but it has to come in first. So what 

I might do is go ahead, and if the call comes, I will yield immediately to Senator Cardin. But if you are answers my question and 

somebody taps me on the shoulder and I suddenly jump up, it really does not have anything to do with what you have said, so please 

take no offense. 

Mr. GORDON AND MR. Assad, what is the total amount that the 

U.S. Government spends annually on contractors, both generally 

and within the Defense Department? 

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Mr. ASSAD. Well, I can tell you that the total amount of funds 

that we spend for the goods and services we buy is approximately— 

in fiscal year—— 

Senator WHITEHOUSE. Define the ‘‘we’’ in your answer. 

Mr. ASSAD. The Department of Defense. 

Senator WHITEHOUSE. Department of Defense, yes. 

Mr. ASSAD. $372 billion last year, and about 53 percent of those 

funds were for services, and services typically are getting contractors to provide service to support the Department. 

So it is a significant amount of money that we spend in the contracting of services, so it is about 53 percent of the funds. 

Senator WHITEHOUSE. Mr. Gordon, governmentwide, what is the 

number? 

Mr. GORDON. Government-wide, including DOD, of course, Senator, it was in fiscal year 2008 something like $535 billion, maybe 

$537 billion. And in 2009, when we slowed that increase from the 

12 percent we had been seeing annually on average, it was about 

$560 billion. It would have been much higher if we had continued 

on the prior track. 

Senator WHITEHOUSE. So to go from $535 billion to $560 billion 

was actually a reduction in the rate of increase that we were seeing? 

Mr. GORDON. Yes. 

Senator WHITEHOUSE. That is a pretty significant tell-tale all on 

its own, isn’t it? 

Mr. GORDON. It is, sir. More than half a trillion dollars a year. 

Senator WHITEHOUSE. Is it the case from time to time, indeed 

relatively regularly, that under the services contract side of the Defense Department contracting you will find American soldiers and 

Government employees providing similar services, in some cases 

side by side in the field, to Government contractors with the Government contractors being paid more than the soldier or Government employee? 

Mr. ASSAD. I think that there is no doubt that we have a large 

contracted work force in the field working side by side with our 

warfighters. What we have done is basically logistics support of our 

warfighters in terms of what we call life support—dining facilities, 

laundry, things like that. We really do not have warfighters doing 

much of that anymore. It is provided by contractors. But there is 

no doubt that contractors make more money than our military 

work force. I mean, there is no question about that. 

Senator WHITEHOUSE. What effect do you think that has? I 

mean, clearly there is a bit of a morale effect if two people are more 

or less side by side, suffering the same risks, doing the same work, 

pursuing the same goal, and one is being paid significantly more 

in the private sector than the other one on the Government payroll. 

But in addition to that morale effect, does it clearly to recruitment, 

revolving door, other concerns? Sometimes I feel that people get 

trained at Government expense and then move out into the contractor world where they take the training that they received at 

Government expense to go back and do the same work for the Government at a higher rate, and that is sort of an unfortunate result 

that merits a little bit of attention. 

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Mr. ASSAD. It does merit oversight, Senator, but I do not think 

it is as widespread as your concern might be. For the most part, 

we have tried to divide those responsibilities so that what the contractors are performing is work that really our soldiers—either the 

choice has been made by our commanders in the field they do not 

want soldiers and marines performing those responsibilities, or 

they are of a technical nature such that our marines and soldiers 

are doing certain amounts of maintenance and the contractors are 

doing perhaps more sophisticated maintenance. 

Senator WHITEHOUSE. The Commission on Wartime Contracting 

in Iraq and Afghanistan report identified in particular KBR, which 

collected nearly $32 billion since 2001, was connected to what the 

Commission called the vast majority of war zone fraud cases and 

a majority of the $13 billion in questioned or unsupported costs, 

and in particular, an issue that we focused on a lot has been the 

payment of at least $80 million in bonuses to KBR for the allegedly 

faulty electrical work that resulted in the fatal electrocutions of 

more than a dozen U.S. soldiers in the field. That sounds like a 

massive failure of oversight and really a bitter irony for the families of those dozen soldiers to realize that KBR was paid bonuses 

for that work. 

How are we responding to the Commission’s report in terms of 

trying to protect against this sort of stuff happening again? 

Mr. ASSAD. Senator, in fact, the information is not exactly accurate. The fact is we paid zero award fee to KBR during that period 

of time for which we deemed them to have unsatisfactory quality 

oversight of their electrical performance. That was between, I 

think, the period January of 2008 to around May of 2008. The fees 

that they got—I mean, the reality of life is if you go to the field 

and you talk to the commanders in the field, they will tell you that 

in general KBR does an adequate job in supporting our troops. The 

amount of money—and $80 million is a lot of money. But they also 

performed a lot of work outside of that particular period for the 

electrical work, and I think what we awarded them was about 40 

percent to 50 percent of the fee that was available for the work beyond the electrical work. But we actually awarded them zero—irrespective of what they performed during that period, it was zero 

award fee. My office oversaw that. 

Senator WHITEHOUSE. Senator Cardin. 

Senator CARDIN. Well, first, thank you both very much for your 

service. We very much appreciate it. The Federal Government is 

the largest purchaser of goods and services in the world, and Congress has made it clear through statutes that we want a certain 

amount of that procurement work reserved for smaller companies, 

23 percent. There are five goals that are spelled out in law, and 

the most recent survey indicated that only one agency complied 

with all five of the goals and two agencies failed to reach any of 

the goals set out. 

So, Mr. Gordon, I want to ask you whether you are satisfied with 

the efforts we are currently making for small businesses to be able 

to participate in Federal procurement as Congress has envisioned. 

As you know, small companies are the living force behind job 

growth and innovation in this country. Are we doing enough, or do 

we have to do more? 

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Mr. GORDON. Senator Cardin, we are not doing enough. The 

President and the administration are not satisfied with the situation. We need to be meeting those statutory goals not only for small 

businesses, a 23-percent goal, but also the goals for the subsets, 

such as the service-disabled-vet-owned small businesses. 

The President, as you know, signed a direction to us on April 

26th to set up an interagency task force to look for ways to expand 

the opportunities for small business contracting. We in OMB are 

working with the Department of Commerce, the Small Business 

Administration, and the buying agencies right now, this summer, 

to come up with concrete recommendations for ways to move forward. There have to be more opportunities. 

I will tell you, Senator, too often people think, Oh, well, if you 

buy smarter, if you use strategic sourcing, that is going to mean 

you turn to the big companies. Not true. In my opening statement 

before you arrived, Senator, I talked about a new initiative to buy 

office supplies through blanket purchase agreements at much lower 

prices. At the time those were rolled out at the beginning of June, 

GSA awarded 12 of those agreements. Eleven of the 12 were to 

small businesses. Eleven of the 12 were to small businesses, two 

of which were service-disabled-vet-owned small businesses. 

In our experience, we can make progress on small business contracting and get a better deal for our taxpayers. We can meet both 

of those goals if we are open to flexibility and looking for opportunities for our small businesses. 

Senator CARDIN. Well, thank you for that reply. You know, one 

of the major problems we have is the abuse of bundling, which is 

somewhat related to whether the different agencies have enough 

personnel to be able to evaluate the number of interested contractors. In the Department of Defense, I must tell you a frequent complaint I receive from defense contractors is that they are often required to work with the larger companies in order to be able to 

have their work seriously considered, leading them to be subs or 

in some cases actually bought out by the larger companies. 

Mr. Assad, I know your background, and you have had a distinguished private sector career working for one of the Nation’s largest companies. With no aspersion at all as to the company you 

work for, there has clearly been intimidation within the defense 

contracting industry to partner with a larger company if you intend 

to do business with the Federal Government. What is your response for more direct contracts between small companies and the 

Department of Defense so that they do not have to rely on being 

subcontractors or in some cases being bought out by the larger 

company? 

Mr. ASSAD. Senator, right now our goal is 23 percent. We are 

running at about 18.9. That is not good enough. That is nowhere 

near good enough. And one of the things—I do not know if you 

have had an opportunity for your staff to show you Dr. Carter’s recent memo that he put out into the work force, but the biggest single area where we have an opportunity to significantly increase 

small business is in the world of services. And we are going to 

focus on this like a laser beam. 

We get a better deal when we have small business participation, 

and especially competitive small business involvement. And where 

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we are going is if we establish multiple award contracts in the future, we are going to insist that not just a certain amount of the 

work be set aside for small businesses, but that small business participation exists in every multiple award environment, and if there 

are two or more firms that can accomplish that work, we want it 

competed amongst the small businesses. 

So what you are going to see from us is a tremendous focus in 

trying to grow in the world of services opportunities for small business, because what happens on our hardware side of the street is— 

you know, when we buy an aircraft carrier or we buy some major 

pieces of equipment in any particular year, it really hurts our ability to get that percentage up. However, I just mentioned to you 

that we spend 53 percent of our money on services, and so that is 

where we are going to focus to grow small business opportunity. 

And I could not agree with you more about small businesses being 

in that limbo state of not being able to compete on the hardware 

side of the street with a major equipment supplier, and we do want 

to foster, for example, through our Small Business Innovative Research Program, opportunities for small business in that environment, too. 

There is a lot of work to be done in this area, Senator, but I can 

assure you that—I am personally responsible for small businesses 

in my acting role, and I can assure you that we are focused on 

growing this. 

Senator CARDIN. Thank you. 

Thank you, Mr. Chairman. 

Senator WHITEHOUSE. Thank you, Senator Cardin, and thank 

you, gentlemen. This more than half a trillion dollars a year in 

climbing is clearly a geyser of taxpayer funds that needs to be carefully watched, and I appreciate your efforts to increase and improve the oversight on it. 

As you depart, I would ask if you would take as a question for 

the record and respond in writing, Mr. Assad, to the question that 

Chairman Warner asked having to do with Arlington. 

Mr. ASSAD. Yes, sir. 

Senator WHITEHOUSE. And if you could both respond to the recommendations of the Commission on Wartime Contracting in Iraq 

and Afghanistan and their September 21 report and let me know 

whether you think those recommendations are advisable and any 

comment you may have on those recommendations, I think that 

would be helpful. So I appreciate it very much and you are both 

excused. I thank you for your presence here today. 

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Senator WHITEHOUSE. We will take a 2-minute recess while we 

call up the next panel of witnesses. Thank you both so much. 

Thank you for your service. 

[Recess.] 

Senator WARNER [presiding]. The Committee will reconvene. I 

want to again thank Senator Whitehouse, Senator Murray, and 

Senator Cardin for chairing, whoever did, while I slipped off to the 

Commerce Committee. And I thank our second panel as well. 

Our second panel will offer outside perspectives on both contracting practices and suggestions for improvement. I think it is 

going to be a lively panel. I know we have different views here, 

which I think is important that we as members hear. 

First we will hear from Dr. Allison Stanger, a professor of international politics and economics and Director of the Rohatyn Center 

for International Affairs at Middlebury College. Dr. Stanger’s most 

recent book, ‘‘One Nation Under Contract: The Outsourcing of 

American Policy and the Future of Foreign Policy,’’ was published 

by Yale University Press in 2009. She is a member of the Council 

on Foreign Relations, Academic Leadership Council of Business for 

Diplomatic Action. She was also a contributor to the Booz Allen 

Hamilton project on the world’s most enduring institutions, the 

Woodrow Wilson School Task Force on the Changing Nature of 

Government Service, and a whole lot of other stuff which will be 

submitted for the record. 

Our second witness is Dr. James Carafano, the deputy director 

of the Kathryn and Shelby Cullom Davis Institute for International 

Studies and director of the Douglas and Sarah Allison Center for 

Foreign Policy Studies at The Heritage Foundation. Dr. Carafano 

is a historian and teacher as well as a writer and researcher on the 

fundamental constitutional duty of the Federal Government to provide for the common defense. Dr. Carafano’s most recent book is 

‘‘Private Sector, Public Wars: Contractors in Combat—Afghanistan, 

Iraq, and Future Conflicts.’’ He is also a 25-year veteran of the 

Army, manages the day-to-day research program as the director of 

the Allison Center, and has a series of very distinguished background as well. 

We will get to the panel. Dr. Stanger, you go first. 

STATEMENT OF ALLISON STANGER, PH.D., RUSSELL LENG 

1960 PROFESSOR OF INTERNATIONAL POLITICS AND ECONOMICS, MIDDLEBURY COLLEGE 

Ms. STANGER. Senators, it is an honor and privilege to share 

some thoughts with you here today. I have submitted a longer 

statement for the record, and I am going to use my 5 or 6 minutes 

here to make a simple argument: that our cherished value of selfgovernment now depends on radical transparency in all Government business transactions. 

As we have heard on the first panel, the business of government 

is increasingly in private hands, and there is broad consensus that 

the current Federal acquisition system is antiquated, ill-equipped 

to deal with the surging demands placed upon it. A few key figures 

from USASpending.gov make the general trend clear. In 2000, 

DOD spent $133.2 billion on contracts. By 2008, that figure had 

grown to $391.9 billion, which is an almost threefold increase. 

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Again, the same period, 2000 to 2008, the State Department spent 

$1.3 billion on contracts. Eight years later, contract spending had 

grown to $5.6 billion, an increase of 431 percent. In 2000, USAID 

spent $478.6 million on contracts. By 2008, the figure had grown 

to $3.3 billion, which is an increase of 690 percent in 8 years’ time. 

Despite this paradigm shift in how Government conducts its 

daily business, contracting, I think, continues to be perceived as 

something peripheral to policy itself. Yet when contracting and 

grants comprise 83 percent of the State Department’s requested 

budget, as they did in 2008, 82 percent of the Pentagon’s budget, 

and a whopping 99 percent of USAID’s net cost of operations, it is 

clearly no longer the case that contracting is something peripheral 

to policy. In the foreign policy realm, with America’s first two contractors’ wars in full swing, contracting has clearly become a strategic issue. It must be treated as such. 

Now, I am a Vermont-based professor without a security clearance. I can present these numbers to you here today because of the 

2006 Federal Funding Accountability and Transparency Act, or 

FFATA, which created USASpending.gov. 

In preparing my written testimony, the figures I cited to you, I 

pulled them from that website in December 2009. But I discovered 

last week that sometime in early 2010 USASpending.gov’s platform 

and interface were totally redesigned. Once significant change 

caught my immediate attention. The old version of 

USASpending.gov used to have a page entirely dedicated to subcontracts and linked to the home page. The subcontracts page used 

to report that the site was under development. It really provided 

a clear place holder for important forthcoming information. Today 

there is no subcontracts or sub-grants page linked to the home 

page, and the category does not even exist in the menu of choices. 

Given recent revelations that U.S. taxpayer money has been 

flowing through subcontracts into the pockets of the Taliban in Afghanistan, the evaporation of the subcontracts page is troubling. 

Without transparency in subcontracts, we are effectively pouring 

taxpayer money into a black hole in Afghanistan with no real 

means of knowing how well that money is likely to be spent or even 

who is receiving it. 

FFATA required that information on subcontracts be made available to the public by January 1, 2009, and the old website really 

made it clear that USASpending.gov was a work in progress, that 

this information was forthcoming. Today that has changed. The 

irony here, at least at the level of appearances, is that a website 

designed to show American taxpayers where their money is going, 

whose very existence is owed to legislation championed by thenSenator Obama, has grown less rather than more transparent 

under President Obama’s administration. 

Writing in Federalist No. 10, Founder James Madison saw what 

he called ‘‘the mischief of factions’’ being neutralized that the plethora of special interests in vast colonial America canceled one another out through both federalism and representative Government. 

In 21st century America, however, Government by contract instead 

encourages inside-the-Beltway special interests to coalesce and 

carry the day. 

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Government by contract means that Government is entirely dependent on the private sector to conduct its daily business, so effective oversight is too often hostage to a corporate bottom line. Whenever the economy falters, the profit motive encourages businesses 

to cut safety and security measures unless Government insists they 

do not do so. And our disdain for bureaucracy makes it difficult for 

Government to secure the staffing it needs to ensure that these 

short cuts are not taken. 

Congress and the White House can, therefore, have the best of 

intentions yet be unable to escape the quagmire that Government 

itself has in part created through its incessant outsourcing. And I 

want to be sure that my basic point here is not misunderstood. 

There is no partisan villain in this tale, no conspiracy. We have together constructed a system that no longer functions as the Founders intended. 

Rescuing Government by the people from the current Government by checkbook is a project for a generation, but we need to get 

started now. When so much of the work of Government is in private hands, standard approaches to transparency will no longer 

suffice. President Obama’s March 4, 2009, Presidential memorandum ordering a governmentwide review of our contracting practices was a bold step in the right direction. The next step is to ensure that the spirit and letter of FFATA are upheld. 

Thank you for your attention, and I welcome your questions. 

[The prepared statement of Ms. Stanger follows:] 

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Senator WARNER. Thank you, Dr. Stanger. 

Dr. CARAFANO. 

STATEMENT OF JAMES JAY CARAFANO, PH.D., DIRECTOR, 

DOUGLAS AND SARAH ALLISON CENTER FOR FOREIGN POLICY STUDIES, THE HERITAGE FOUNDATION 

Mr. CARAFANO. I do not know if— 

[off microphone]. 

Senator WHITEHOUSE. Oh, come on. Try. 

[Laughter.] 

Mr. CARAFANO. I would like to highlight five quick points and 

highlight three recommendations. My first point is contracting in 

the private sector, if it is done right, is a huge competitive advantage for any nation. World global product is $58 trillion. About a 

fifth of that is the United States. Most of that wealth was created 

by the private sector. Much of it was created by small and medium 

businesses, so harnessing that power is really the key to being the 

winner in the 21st century. And if you are a free nation, you actually start out with a competitive advantage. If you have rule of law, 

if you have transparency, if you have low rates of corruption, if you 

have a media and other people that bring transparency and sunlight, you have an enormous advantage in executing this thing. So 

getting this right—really, it is not even just about fiscal responsibility. This is about protecting and keeping the Nation free, safe, 

and prosperous in the 21st century, and leveraging one of the absolute most powerful advantages on the known planet is a big piece 

of that. 

I and a team at Heritage, we have been looking at this issue for 

a very, very long time, and after years of study I come back again 

and again and again, when I get to the root of the problem, 99.9 

percent of the time the root of the problem is Government is not 

a very good customer. And a lot of what I hear today is the right 

discussion. The enemy is largely us, being the people that contract 

for goods and services. 

My concern is it is great to hear all this discussion and talk 

about fixing the problem and do this, and we can put aside the fact 

that we have heard this for decades and decades and decades from 

administrations both Republican and Democrat. Intentions are 

great, but intentions have to be meaningful, and analysis that focuses on outputs as opposed to outcomes to me is very troubling. 

So when we just throw numbers around out of context, numbers 

independently as if they mean something, whether they are good 

or bad or we are going to do this or we are going to do that, and 

it is not tied to a specific outcome that is clear and compelling, 

then I wonder whether reforms are actually going in the right direction. 

The fourth point I would make is by and large the solutions that 

I would argue for, my personal prejudice is always people overprocess, particularly where you are dealing with very, very huge, 

complex systems. Probably a great example of this is back in the 

1990’s, when information technology was really exploding, people 

had a good heart, and so we had the Clinger-Cohen act, and the 

notion was Government has to get on top of this. So we added a 

process. We said, Look, consider IT a major enterprise acquisition 

134 

for your Federal agency, period. And that seemed like a good thing. 

We were putting people in charge. Well, of course, we were really 

at the dawn of the IT revolution, and the people who were put in 

charge were clueless. They did not have any ideas on what good IT 

was. So it is like we gave matches to the kid, and as a result in 

the 1990’s Government locked itself into a lot of stupid decisions 

that the private sector did not make in terms of buying proprietary 

software and different services. And we have been locked into that, 

and in large part you could argue that our IT policies and acquisition have stunk for decades because we put stupid people in charge 

at the beginning, and now we are just playing catch-up. 

When you get the people piece right, everything else falls into 

place. And I want to just emphasize three areas of that. Getting 

an acquisition work force, I think everybody agrees that is absolutely right. We powered down our acquisition work force, particularly in DOD, at the end of the cold war. Huge mistake because we 

knew the only way we were going to grow capacity in time of war 

was to use the private sector and to take away the head that was 

supposed to run that. That was just dumb. And we have to build 

that back. 

When we build that back, we have really got to be smart, and 

there is a good analogy here. If you look in the scientific community what keeps scientists at a university or a research center? And 

it is not just what you are paying them. They like to hang out 

there because it is cool. They have cool research facilities. They got 

great work. They have the tools that they need, and they are doing 

exciting things. So when we build this IT work force, we have to 

give them the tools and the capabilities and the authority to do 

their job; otherwise, they are not going to stick around. And if we 

just have a lot of people cycling through the system every 12 or 18 

months, we are not going to get any oversight. Particularly in the 

area of the IT systems that support the acquisition oversight and 

management process, we have to put the investments in there and 

get the right systems in place. 

The second piece I would emphasize is auditing. Everybody talks 

about auditing. Auditing is great. When we look at the history of 

the auditing of the auditor of the Defense Contracting Auditing 

Agency, it is not a pretty picture in the last couple years. You 

know, we have to get that piece right, and we have to, I think, 

make a distinction and re-create the difference between doing auditing of fiscal processes and what the Inspector General does. 

And I am very concerned that in our rush to fix things, we are 

tending to blur these things together to the point that it actually 

might get counterproductive. They are important activities, they 

are interrelated activities, but they ought to be cleanly separate activities, and they ought to be a resource and run appropriately. 

Then the last point I will make is we have really got to end the 

process of micromanagement. The concept of risk management was 

created to help leaders make decisions. It was not created to 

childproof the universe. You are never going to eliminate risk. And 

if you make laws and rules and processes that their sole purpose 

is to drive risk out of the system and not get anything done wrong, 

at the end what you are going to do is drive a process that is incredibly inefficient and incredibly risky. 

135 

So risk management works when it is in the hands of the people 

who have responsibility, so we need to be empowering program 

managers, we need to be empowering the acquisition work force, 

we need to have the oversight and transparency. But we cannot 

continually saddle them with more and more regulations and requirements and have them in turn impose more and more regulations and requirements which are actually creating a more inefficient system. So we get to the point where we are buying absolutely nothing with zero risk and spending an awful lot of money 

on it. 

With that, I thank you for having me here today. 

[The prepared statement of Mr. Carafano follows:] 

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Senator WARNER. Thank you both. I think there may be some 

spirited disagreement, but I think—not as much as you promised 

me, Sheldon. But I do think it was important that we have heard 

from all four of our panelists that the acquisition work force, getting those folks right, and getting them trained is key. 

Dr. Carafano, I would like you to expand on your comment in a 

moment. I am going to ask one broad-based question and let you 

both answer. This notion of fiscal auditing responsibility versus the 

Inspector General role, I agree with you. They were different functions, and the two tend to blur sometimes and trying to recognize 

one—in the normal course of business, one is looking for that 

outlier, bad instances. I would love you both to expand on that. 

What this Task Force has looked a lot at is the next level of Government performance geekiness, which we would all like but most 

folks’ eyes roll over, which is performance metrics. And we have 

talked here a little bit about how do we have transparency, how 

do we get the contracting right. I would like you each to talk a little bit about, let us take DOD as an area. How do we get some 

common consensus on those performance metrics and what they 

ought to be? 

My personal bias is—and I would like you to both comment on 

this, particularly Dr. Stanger. I think Dr. Carafano has a point 

that we are—we want to do our oversight job well, but at times 

what we do is simply layer on more requirements, layer on more 

reporting, without taking anything away. And I think sometimes 

the work force was caught with this 20 years of accumulated reporting requirements, and nobody sorts through what is important 

and what is not important. And then when we get to the question 

of how do we present that information in a website that is user 

friendly and understandable by somebody other than distinguished 

professors with incredible backgrounds, we do not get it right. So 

I would like your comment on, in this move toward more transparency, would you be willing to say we ought to audit a little bit 

of what all the reporting requirements are already out there and 

see what we can actually remove and prioritize so that the work 

force can do a better job of recognizing what is really important for 

us to know to do our job right. Broad-based throwing in questions, 

and recognizing that at the front end will be my only question. 

Then we are going to move to Senator Whitehouse because the roll 

call vote has just started, so we are going to have to probably slip 

out in about 10 or 12 minutes. 

Ms. STANGER. Well, the point I would make is I am not an expert 

on auditing requirements, but I know that there has been this 

layering of requirement upon requirement, and when you get accumulated regulations over time, it tends to operate in irrational 

ways. So I definitely think that would be something for review. 

But my point about transparency is just a simple one. It is not 

allowing everybody to understand ordinary citizens to understand 

the requirements. It is simply letting citizens know where the 

money is going. That is the part that concerns me, is that if you 

have these enormous percentages of business, the business of Government, in private hands and it is flowing through contracts to 

subcontracts and we cannot see where it is going, that to me is at 

145 

odds with the principle of self-government and needs to be corrected. So I am a keen advocate of transparency for those reasons. 

I think we would all agree that the acquisition work force needs 

to be increased and better trained. I am wondering whether you 

might want to consider linking appropriate training—increased 

funds for building up the work force to appropriate training. 

I will stop there. 

Mr. CARAFANO. I think there is a real lesson to learn here from 

GPRA, the Government Performance and Review Act, which, again, 

interestingly, is another product of the legislation in the 1990’s in 

a time when we were facing a similar fiscal situation that are 

today. We wanted to reduce Federal spending. We were trying to 

grow the economy, and so we wanted to make Government more 

efficient and more effective. So we introduced GPRA, which is by 

and large borrowing concepts from the private sector and applying 

them to Government, without clearly recognizing that Government 

business processes are different than private sector business processes because we have a Congress and we have rules and we have 

the foreign—the private sector does not. And if you actually look 

at the implementation of GPRA over time, what has increasingly 

happened is we have seen an increasing proliferation of metrics 

which are increasingly outputs as opposed to outcomes. So what we 

have actually been doing is, again, driving a bunch of behaviors 

which do not necessarily lead to the key things that we are interested in, which is getting the best value and the best services for 

the taxpayer. 

So, clearly, I think from Congress’ perspective, fewer, more truly 

meaningful metrics that are truly outcome-based are something 

that is worth striving for. So I commend your notion and your idea 

of where it is really worth going and delving into, because I think 

there is some real ‘‘there’’ there. 

Senator WARNER. I personally believe we have gone from GPRA 

to PART to now the Obama administration’s efforts as well. It 

seems like we reinvent the wheel. Part of the challenge and part 

of what this—it seems to me the administration has come in and, 

in a flurry in the first year, talk about transparency and performance metrics, and that quickly gets very tedious to people other 

than folks like us who get excited about it, and that process recedes, and then a new administration comes in and we reinvent the 

wheel. Part of the goal—and I appreciate Senator Conrad and Senator Gregg giving us this task force—is to try to get an ongoing legislative entity that beyond a particular administration will keep 

that focus in place. 

I would ask you to—Dr. Carafano, you took on the issue around 

metrics performance. Dr. Stanger, you came back to transparency 

again. I would like you to reverse role each other and, Dr. Stanger, 

if you could talk a little bit about how do we get those performance 

metrics right. And, Dr. Carafano, I assume—I would like you to say 

Dr. Stanger’s point, which is we at least ought to know where all 

the dollars are going. It seems to me like pretty common sense. I 

would take a little bit of an exception maybe to the notion that 

there are differences, but as somebody who has spent a career in 

the private sector and now some in the public sector the notion 

that they are totally apples and oranges, that there ought to be 

146 

some ability to measure in a better way the outcomes, as you said, 

because it should not be outputs. 

So if you could address more the performance piece, Dr. Stanger, 

and, Dr. Carafano, if you could get more into the transparency 

issue, I would be curious. 

Ms. STANGER. I think with respect to performance metrics, we 

can all agree that enhanced competition is key to both lowering 

costs and also encouraging innovation and the energy on which our 

economy’s growth depends. So I think actually transparency is 

linked to putting in place the right incentives for the private sector, 

because if we really do want to, as we heard on the last panel, increase the involvement of small business, if we want to be sure 

that every contract is properly competed, then transparency is key, 

because if you want small business involvement—and we see this 

in the development realm in particular—you know, having the information out there on what is possible and what has taken place 

in the past is absolutely critical. So I see a definite link between 

my transparency theme and getting better Government performance in that realm. 

Senator WARNER. Let me just ask, before we go to Dr. Carafano, 

the point I made and the point that I think Dr. Carafano made, 

which was sometimes under the guise of transparency we add on 

more and more requirements, I do think he has a point in terms 

of at some level in oversight a 535-member board, which in effect 

the Federal Government has with both the House and the Senate, 

each trying to ask specific items, can get into a level of micromanagement. How would you as an advocate for transparency sort 

through those? You know, should we be doing an audit of all the 

reporting requirements and all the management requirements that 

are out there to hone that list down so that we could focus on more 

important items, or the most important items? 

Ms. STANGER. It sound to me like that would make a lot of sense, 

but I would just add to that that—I have lost my train of thought. 

Senator WARNER. It happens to me all the time. Because we are 

seeing—what we are focusing on here is I hear from Federal employees all the time. Every administration comes in with a new set 

of reporting requirements. The Congress adds in every piece of legislation new reports requirements. It is hard to be against any new 

reporting requirement that sounds when you are arguing and there 

is an amendment that this is in the guise of transparency and to 

get us to greater effectiveness and better value. But at times I have 

seen the GPRA reports and PART reports. They are so voluminous 

that, again, perhaps with very few experts around there there is 

not a focus to them. 

Ms. STANGER. My thought came back to me. Can I speak again? 

Sorry about that. I think it makes sense to perhaps redefine how 

we think of transparency, because in the way you are discussing 

it, transparency is very much a question of what Government is requiring what needs to be provided in terms of reporting to satisfy 

Government. 

I would suggest that we instead think of transparency as being 

something that is in the eyes of the beholder in the sense that it 

is not what Government thinks needs to be required or put out 

there but, rather, that we ask people who are providing the servVerDate Aug 31 2005 12:47 Sep 14, 2011 Jkt 000000 PO 00000 Frm 00152 Fmt 6601 Sfmt 6601 H:\DOCS\58155CON TISH
147 

ices what they would like to see publicly available or not publicly 

available and that transparency exists when the people who are depending on open sources agree that it is there. In other words, Government does not define transparency; the people do. And so I 

would encourage thinking about transparency in that sort of way 

with respect to regulations as well. 

Senator WARNER. The only question I would have with that is I 

am not sure in this case more is always better and that at some 

point limitations—you could have—whether it is your contracting 

officials, whether it is your senior management, spending a disproportionate amount of time on simply reporting rather than 

doing their job. 

Dr. Carafano? 

Mr. CARAFANO. I would just like to jump back to the point on 

metrics, if I may for a second. Competition in small and medium 

businesses is actually a really good example, so defining—for example, small and medium businesses truly are the backbone in this 

country, enormous amount of innovation and a great resource for 

Government, absolutely. The question is: As a metric, is defining 

small business contracts as a percentage, is that a really useful 

metric, or is that just another output? And in driving to get to that 

metric, will you drive inefficient and poor behaviors as opposed to— 

I mean, and we really looked at why do small and medium businesses not do a lot of Government contracting, and it is usually because of the Tower of Babel of regulations and everything they 

have to go through to even find out about contracts and get them. 

So if we remove the barriers to entry level in the Government contracting, wouldn’t that be maybe more effective than just establishing a percentage? So that is just a thought. 

On the transparency side this is an enormous issue for Government, and I think one of the problems is when we try to address 

the field of contracting we try to come up with a silver bullet to 

solve every problem for everything. And Government contracting is 

incredibly complex. It is a lot of different vehicles doing a lot of different things. You should look at them all differently. 

So if you are looking for a place to start, looking, again, at the 

IT support for the acquisition work force and the resources they 

have available and the adequacy of them I think is a very good 

place. 

You know, the notion that giving us a lot of information is burdensome, that was true in the 19th century, and it was true in the 

20th century, but I am not so sure it is true in the 21st century. 

We are creating new network tools, new social network tools so 

that places an enormous amounts of data incredibly quickly and 

allow you to slice and dice every way you do that. So I can go buy 

a piece of social ware, and I can tell you everything on the Web 

everybody is saying about Senator Warner today and who likes him 

and who does not like him, and I can give you all that data in 

about 5 minutes. And if I went to an acquisition work force and I 

asked you where are all the subcontractors working on this contract, he would say, ‘‘I will get back to you in 3 or 4 months.’’ 

So the IT is out there to give us a lot of information to solve a 

lot of these transparency problems, and if you work that piece at 

the start, at the acquisition start, it is not going to solve the transVerDate Aug 31 2005 12:47 Sep 14, 2011 Jkt 000000 PO 00000 Frm 00153 Fmt 6601 Sfmt 6601 H:\DOCS\58155CON TISH
148 

parency problem for all of Government and all of Federal contracting. But it sure gives you a good start point to look at things. 

Senator WARNER. Your point being that getting that—again, 

back to that initial sizing of the requirements right, at least on the 

IT piece, that—and I think you are saying then you have unlimited 

access to the data and how you slice and dice may not be as burdensome as in the past. 

Mr. CARAFANO. Right. 

Senator WARNER. I am going to turn it over to Senator 

Whitehouse to close out this part of the hearing, and I appreciate 

both of your testimonies and answers to questions. In terms of a 

written response I would love both of your thoughts as this administration takes on this conversation about what is an inherently 

governmental function, that whole broad-based philosophical basis 

of how we are going to sort through this. It is something I think 

we are going to have to be engaged in as well and would love at 

least your thoughts about how we ought to at least even approach 

that debate, and I would look forward to those written responses. 

Senator WARNER. I will turn the balance of the hearing over to 

my colleague Senator Whitehouse. Thank you. 

Senator WHITEHOUSE [presiding]. Thank you, Senator Warner, 

and thank you both for your testimony. As much as we have joked 

a bit back and forth about the dispute that often comes between 

majority and minority witnesses, what struck me was that the 

areas of overlap between your testimony were far, far greater than 

your areas of disagreement. Even when you go to the more thorough written testimony, you guys are very much in synch about the 

need for better management of this contracting practice and the 

tools for doing that. 

A couple of things struck me. The first is that you seem both to 

agree that the practice of contracting has to a very significant extent run ahead of the policy about how we should be doing it. I noticed in Dr. Stanger’s book, ‘‘One Nation Under Contract: The 

Outsourcing of American Power and the Future of Foreign Policy,’’ 

two quotes that seemed to illustrate this a bit. Susan Yarwood, 

Deputy Director of Enterprise Services in the Office of the Secretary of Defense, in June of 2007 said, ‘‘We do not even know how 

many contracts we have now.’’ And General Zinni, Anthony Zinni, 

the former commander-in-chief of the U.S. Central Command, said, 

‘‘If I had to revamp how we do things, I would start with what 

should be contracted and what should not.’’ 

So we are at a fairly basic level to start with where the questions 

are what should be contracted and what should not and how many 

contracts do we have. Do you agree that we are—that the practice 

of contracting has run ahead of the policy as to how and when we 

should do it and how it should be overseen and there is a gap 

there? 

Mr. CARAFANO. Maybe I will just start. Yes, I think that is very 

true. A great example of that is the A–76 process that was developed to determine whether some things should be inherently governmental or outsourced. So the A–76 process was a peacetime 

process, and it was designed for a very different military. And 

when you go back—and I discussed this example at length in my 

book. When you go back and you look at the tragedy of Walter 

149 

Reed, the tragedy of Walter Reed was everybody was just doing 

their job, they were just clunking through on the A–76 process as 

it existed and doing what it said, and the result of that is we have 

tragically failed to take care of our soldiers because the A–76 process did not recognize the notion that there would be a war tomorrow and all of a sudden you have to surge capacity and then you 

need to stop and go in a different direction. 

So I think the answer to the question and where I would disagree with General Zinni is there is—and General Zinni knows 

this, and I am sure that is not what he said. You know, when they 

say how do you fight a war, the answer is, well, if you have seen 

one war, you have seen one war. You know, what should you contract? And the answer is, well, it depends. Technology is going to 

evolve. Governance is going to evolve. People’s needs are going to 

evolve. So what is incredibly appropriate to contract today might 

not be a good idea to contract tomorrow. 

What we tend to do is to use always economies and dollar as the 

key determination about whether something should or should not 

be contracted out or not. Oftentimes, that is not good. And, again, 

to my mind, no contracting vehicle is perfect, and nothing is more 

virtuous than others. A fixed contract is not more virtuous than a 

sole-source contract because it is all developed in a context. But 

certainly in situations where, you know—— 

Senator WHITEHOUSE. Certainly some are a little bit more risky 

than others, though, and would need strong oversight. 

Mr. CARAFANO. It depends on context, absolutely. Certainly 

where national security is involved and people’s lives are on the 

line, such as a contingency theory, contingency situations best 

value, I think—that is in the FAR for a reason, because that allows 

you to do the risk assessments that you need. So get the system 

and the people right, and then the decision about should I buy this 

or should I hire—you know, should I do this in the Pentagon, I 

think that will fall out more rationally. 

Senator WHITEHOUSE. Yes, so you are behind the perspective 

that you presented. You accept the presumption that our policy as 

to how we should do this is not adequately settled for the extent 

of the practice we are engaged in. 

Mr. CARAFANO. Absolutely, and if I just may very quickly, one of 

the reasons why I was a big fan of Secretary Gansler’s report that 

he did for the Army was because they focused on exactly the right 

thing, which is how to build a system that is flexible and agile and 

accommodate the Army’s changing needs as they change over time 

to in a sense get the policy and the structure ahead of the problem, 

not to wait for the war to figure out how we contract for it, but to 

have the things that we can adapt to the war and the needs we 

have. And I thought the philosophy and the structure behind the 

Gansler report was a good step in the right direction. 

Senator WHITEHOUSE. Dr. Stanger. 

Ms. STANGER. I think you are absolutely right that our policy has 

lagged practice, that we are only just beginning to think strategically about this issue, and much of it is due to what Secretary 

Gates has aptly called willy nilly contracting, that we wanted to 

pursue two wars simultaneously and to do so without a draft, and 

I think it is pretty clear that contractors have filled that gap, have 

150 

enabled us to fight both wars without a draft. And with a draft, 

of course, we would have a very different political situation. 

But there have been some negative consequences of that. One of 

the big ones—and I think you pointed to it—is that accounting systems have really lagged reality. So the FFATA can ask for certain 

information, and the reality is that agencies simply were not collecting it. Even though billions of dollars were going out the door 

in contracts and grants, there were simply not systems in place to 

track that explosion in spending that everybody has identified and 

talked about. 

So part of the reason I am insisting that the spirit and the letter 

of FFATA be upheld is I think it is going to keep the pressure on 

to get those accounting systems in place and be sure that the information that should be in the public domain is indeed there. 

I think there is one thing where we might differ. I am not sure. 

I am not—— 

Mr. CARAFANO. I do not like a draft. 

Ms. STANGER. Yes. That was not the point I was going to make. 

It might be on—— 

Senator WHITEHOUSE. Going to my next question, it is actually 

more helpful to me to single out that places where you do 

agree—— 

Ms. STANGER. Sure. 

Senator WHITEHOUSE [continuing]. Because that gives us the 

foundation for moving forward and taking action, which is the ultimate purpose of the hearing. 

The second place where you both seem to agree is that, in addition to the policy gap, there is also an accountability gap. Dr. 

Stanger, you document this in your book with a note that there are 

over 300 reported cases contracting mistakes or abuses in Iraq 

from 2003 to 2007, and the Government Accountability Office testified that there was not a single instance of anyone being fired or 

denied promotion in connection with those cases. That is sort of 

just one example, and it is really secondary. It has more to do with 

the oversight function. But do you both agree that there is a very 

substantial accountability gap both in terms of oversight of the contractors and oversight of the oversight function, who is watching 

the watchman? 

Ms. STANGER. Absolutely. I would totally agree with that. 

Senator WHITEHOUSE. Dr. Carafano? 

Mr. CARAFANO. Yes, my concern is how in our effort to strive for 

greater accountability is we have actually accomplished the opposite because we have put more requirements, more requirements 

on, and what that has done is create a risk-averse acquisition work 

force that does not make decisions. So we see the train wreck coming, but a lot—— 

Senator WHITEHOUSE. I would actually add that what it also does 

is it creates a sufficiently complex contracting process, that it gives 

strategic advantage to larger and professional contractors who can 

leverage their ability to negotiate the process; whereas, the new 

company, the small company, the company with the bright idea 

that is not an institutionalized Government contractors, finds that 

forbidding and in many cases gets trapped in its snares and may 

not actually work its way through the process, even though they 

151 

have a better, cheaper product. So it actually, I think, hurts at both 

ends. It hurts at the oversight end in terms of the way the accounting folks work, the oversight folks work in the Government, and it 

is a deterrent or at least—a deterrent or an advantage in a way 

that is not relevant to the quality of the product and creates an artificial distinction between different contractors. 

Mr. CARAFANO. I would argue that excessive regulatory requirements are the single greatest barrier to entry of small and medium 

businesses in Government contract competition. 

Senator WHITEHOUSE. People get hired into the big contractors 

because they are expert at negotiating the snares and mines of the 

process. So we have the policy gap. We have an accountability gap. 

It also strikes me that we have a transparency gap. You both have 

mentioned that also. And in that context, one of the things that interests me is that if you are a Government employee and if you 

have a Government program, that is subject to considerable 

amounts of public scrutiny and the boundaries of what is amenable 

to public scrutiny and what is not is usually determined by national security concerns and the classification process, which has a 

sort of regimented nature of its own. And we can argue about how 

wise that is, but it is what it is. 

Once you step out into the world of private Government contractors, the question of corporate proprietary interests rears its head, 

and that brings in a whole other level of non-transparency and 

non-disclosure that does not necessarily match with what should be 

classified or not. And I would submit that there are probably a 

great number of activities that if the Government engaged in them 

and then tried to claim that it was proprietary, the roof would fall 

in on whoever made the claim, and it would probably not withstand 

legal scrutiny; whereas, by having outsourced it, now suddenly you 

have raised this new barrier to public transparency in our democracy. 

So you have to—I think we have to recognize that there is an inherent transparency problem with private contracting where proprietary protections are honored; on the other hand, you do not 

want to force people to give up trade secrets. Any thoughts on how 

we could improve in our contracting the way—what we demand 

that a private corporation should disclose when it is executing a 

governmental initiative? 

Mr. CARAFANO. You know, as a general principle, I think it is a 

difficult question to answer. It is much like do you want security 

or liberty, and the answer is yes, right? And democracy is set up 

to create a natural tension so you seek to maximize both qualities 

simultaneously. So it would be hard for me to propose an overarching principle to address that. So I think there are some one 

eaches that we could start with in looking at some of these issues, 

and a related issue I would raise, for example, is the Defense Cooperation Act with Australia and Great Britain, which are treaties 

which are now pending before Congress, both designed to open up 

governments to having more knowledge about what contractors are 

doing and allowing contractors to have more knowledge of each 

other. So large companies in the United States which have, for example, subcontract—have divisions in Australia and one of the part 

152 

of the company cannot even talk to the other part of the company 

because of proprietary restrictions and ITAR and all the rest. 

So those treaties are some good examples of the kinds of baby 

steps, but I think this is particularly an issue where it would have 

to be work on the eaches rather than trying to implement a general 

principle across the Federal enterprise. 

Senator WHITEHOUSE. Now, one of the—Dr. Stanger, did you 

want to answer that, also? 

Ms. STANGER. I would just add to that that I think just as we 

need to rethink what transparency means in the information age, 

we may need to rethink this as proprietary and how it relates to 

work done for Government. I think there has to be a higher standard of openness if it is done for Government, precisely because such 

a large percentage of the work is in private sector hands. 

Senator WHITEHOUSE. Yes, and not to mention that we are well 

over half a trillion dollars a year going down this pipe, so it is 

worth making sure we can track it to the end. 

In that context we are charged on the Budget Committee with 

trying to put a budget together every year. I am hoping that the 

process that we undertake through this task force will ultimately 

lead to having some confidence to add a savings number into the 

budget when we go through the process in future years. We obviously have to develop some ground work for that because you do 

not want to be willy nilly about throwing a number in the budget 

any more than you want to be willy nilly about your contracting 

practices. 

But in terms of our enthusiasm to pursue this question of contracting, it will relate to results, and so I am going to ask each of 

you for a real ballpark-range number. If we are doing $560 billion 

a year in contracting and if we were to by your standards get it 

right, what order of magnitude savings would you guess we might 

expect? Are we talking about 1 percent and nibbling at the edges 

and, therefore, probably not worth devoting a lot of time and energy from this task force to the problem? Are we talking about 5 

to 10 percent, 20 percent, maybe 50 percent, maybe 80 percent? 

Where is your range of comfort as to where those numbers might 

lie? And, again, I am not trying to pin you down, but this is a new 

effort, and we need to deploy our resources wisely as well. And if 

it comes back with everybody saying at best you will be able to 

knock $560 billion down to $555 billion, well, frankly, we should 

probably go look somewhere else then. 

Mr. CARAFANO. I am going to give you a very unsatisfactory answer to that question, which is it is the wrong question, because 

we know for a fact that we do not really understand fully Government business processes. So anybody that comes to you and says, 

well, you can save X amount of money, they are just guessing, 

right? There are no analytics behind that. 

I have been very critical of Secretary Gates who said we are 

going to save $100 billion in defense practices, and then they turn 

right around and issue out a letter, a request to people saying, 

‘‘Give us some ideas.’’ So they have defined a number which has 

no rigor behind it whatsoever. What the number is is the gap between what they have and what they need, right? 

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So, again, driving to get $100 billion savings in the end may cost 

us how many trillions of dollars of inefficiencies, we do not know. 

So driving to get to a number that we do not know if it is the 

right—how it got there, where it makes sense, I am very opposed 

against. I am very laudable of your effort, and I am all for fiscal 

conservativism, and I think you are on exactly the right intellectual 

track. But I think you are not ready to ask that question. 

Ms. STANGER. I think you are ready to ask that question, but 

there is an inherent problem here that needs to be acknowledged, 

and it is what makes this so difficult, your job so difficult; namely, 

that everybody is talking about we need to buildup the acquisition 

work force because we cannot have oversight without some threshold level of employees to do it, to have them properly trained to be 

able to manage contracts in this new world. Yet obviously building 

up a work force is going to cost money in the short term, and you 

are doing it in the short term in order to get long-term savings. But 

on its face, it looks like you are adding to the budget rather than 

getting savings. But you need to do that in order to realize the 

long-term cost savings and restore oversight to Government. 

So just one example to illustrate, I know that your Committee 

proposed cuts to the operating expenses budget of USAID. USAID 

is probably the hardest-hit Government agency. It has really become a contract clearinghouse. 

Senator WHITEHOUSE. Contracting service, yes. 

Mr. CARAFANO. It is all contractors. 

Ms. STANGER. It is all contractors, and they want to restore that 

oversight function. Yet they cannot do it without an increase in the 

operating expenses budget, yet it looks like a good place to actually 

get immediate savings. So to me, that is the real conundrum, and 

it is a difficult one politically. 

Senator WHITEHOUSE. But, I mean, encourage us a little bit. Assuming that we did this right, are we talking about potentially saving the American taxpayer a couple of million dollars here and 

there? Are we talking about potentially saving the American taxpayer a billion dollars here and there? Are we potentially talking 

about savings in the tens of billions of dollars if we got this right? 

Ms. STANGER. Senator Whitehouse, I think we would be saving 

lots of money, probably billions of dollars, but I think more importantly we would be saving self-government. That to me is the central issue here. 

Mr. CARAFANO. You know, I actually very much agree with that. 

I think we are shortsighted when we look at this in dollars and 

cents. We have a Government—— 

Senator WHITEHOUSE. Bearing in mind that you are in the Budget Committee. There are some obligations in that regard. 

[Laughter.] 

Mr. CARAFANO. And we have a budget for a purpose, right? And 

the purpose is to have a Government that serves the people. So the 

virtue of your effort, regardless of whether at the end of the day 

the Federal budget is bigger or smaller—and I could just say we 

could deal with entitlements growth and that would solve the 

whole problem. But you know what? Even if we solve the problem 

of Social Security, Medicaid, welfare, and all the other Federal programs tomorrow, I would still say that this is an incredibly virVerDate Aug 31 2005 12:47 Sep 14, 2011 Jkt 000000 PO 00000 Frm 00159 Fmt 6601 Sfmt 6601 H:\DOCS\58155CON TISH
154 

tuous effort, because what is at risk here, as you well stated, is 

Government is supposed to serve us. If Government is not contracting correctly, if they are not doing the people’s business, then 

democracy is at risk. And as I said in my opening statement, this 

is a huge competitive advantage for America. Tapping in to the 

most vibrant, exciting, capable private sector in the history of the 

planet is an enormous source of power. It is better than oil. And 

we cannot do that if we cannot do this right. 

So if you never could credit saving a Federal nickel but you made 

a Government that served the people, I would add a statue for you 

out there. 

Senator WHITEHOUSE. Final question. Was President Eisenhower 

right to worry about the military-industrial complex? 

Mr. CARAFANO. No. 

Senator WHITEHOUSE. We finally have disagreement because Dr. 

Stanger was nodding her head. 

[Laughter.] 

Mr. CARAFANO. Read the introduction in my book. 

Senator WHITEHOUSE. All right. So at least we ended with some 

disagreement, although through a great deal of it there was much 

agreement, and as I said, the agreement between witnesses who 

come from different perspectives and points of view is a very helpful place for us to move forward from. So I thank you both for your 

areas of agreement and disagreement, and thank you for your testimony and all the hard work that you have put in in this area, and 

I encourage you to continue, because we depend on people like you 

who are willing to look hard and persistently at these important 

questions. 

The hearing will remain open until the end of the day today. 

Sometimes the hearing record stays open a week. Sometimes it 

stays open 2 weeks. We are on a short leash, so the hearing record 

will close at the end of the day today. So if anybody wants to get 

anything in to add to the record, they have to do it today. But the 

hearing is adjourned, and I thank both witnesses for their testimony. 

[Whereupon, at 11:41 a.m., the Committee was adjourned.] 

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QUESTIONS SUBMITTED FOR THE RECORD 

Response from Daniel I. Gordon, Administrator for Federal Procurement Policy 

QFR’s from Senator Warner 

1) Can you describe some of the successes agencies have 

experienced in using strategic sourcing to date, and also 

identify any future plans for strategic sourcing in other 

areas of procurement? 

As noted in my written statement, agencies are using strategic 

sourcing to help them achieve savings and efficiency goals. Agencies use enterprise-wide initiatives, such as VA’s efforts to leverage 

he buying power ofits own medical centers through an intergrated 

network of national and regional contracts, and also participate in 

government-wide Federal Strategic Sorcing Initiatives (FSSI). The 

current FSSI efforts for express delivery services and office supplies are available government-wide and further leverage the government’s buying power. In the case of office supplies, for example, 

GSA projects government-wide savings of nearly $50 million annually. Additionally, the Strategic Sourcing Working Group (SSWG) 

of the Chief Acquisition Officers Council is pursuing FSSI opportunities for wireless services, software licensing, and a variety of IT 

equipment and services. 

2) Do you have plans to evaluate more strategic sourcing 

opportunities with government-wide technology? 

As mentioned above, we plan to evaluate government-wide strategic sourcing opportunities for a variety of IT equipment and services. To support this evauluation,we have expanded the leadership 

of the Strategic Sourcing Working Group, the senior governance 

body for FSSI, to include as Co-Chair OMB’s Deputy Administrator 

for E-Gov and IT. The SSWG is working closely with GSA to identify new opportunuities in wireless services, software licensing and 

other areas. 

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