Three departments offer important lessons on reorganization

The last three Cabinet departments to be cobbled together from scattered components—Defense, Transportation, and Energy—all offer important lessons for today.

Creating a Department of Homeland Security will demand the biggest reorganization of government in 50 years. But those who don't remember the past are condemned to repeat it, and in Washington, there is an awful lot of history that no one would want to repeat. The last three Cabinet departments to be cobbled together from scattered components-Defense, Transportation, and Energy-all offer important, if often painful, lessons for today.

Defense: The 40 Years' War

Hunting for a historical analogy for the creation of the sprawling Homeland Security Department? It's clear which date the Bush team wants you to pick: 1947. That year saw the origin of the Defense Department (and the National Security Council and the CIA). White House spokesman Ari Fleischer invoked 1947 three times in briefing reporters on President Bush's new plan. And Condoleezza Rice, speaking during the 2000 presidential campaign, long before she became national security adviser, actually told National Journal to expect Bush to make the biggest government reforms since 1947. But just what do administration officials mean by harking back to the 1947 model? And what awkward aspects of history would they like us to ignore?

On the surface, the National Security Act of 1947 was a "big-bang" reorganization, much like Bush's plan: A stroke of President Truman's pen put the rival Army, Navy, and Air Force under a single civilian secretary, a unified chain of command, and an interservice Joint Staff. And like the proposed Department of Homeland Security, the Department of Defense was a reaction to a devastating surprise attack: Japan's raid on Pearl Harbor in 1941, during which the separate Army and Navy headquarters failed to coordinate a defense.

But the 1947 reorganization did not fix the lack of coordination. Political scientist Amy Zegart (who studied under Rice at Stanford University) went so far as to title her history of the National Security Act and its aftermath Flawed by Design. The rival bureaucracies fought the reform so successfully, both within the administration and on the Hill, that the final structure of the department was a compromise: The military services still submitted separate budgets to Congress, the Joint Staff became a graveyard for officers' careers, and the "unified commanders" could not actually order unified action. As late as 1983, during the invasion of Grenada, the Army and Marine Corps simply split the island down the middle. Their separate, ill-coordinated campaigns against a Third World enemy that they outnumbered 10-to-1 took three days and cost 18 American lives.

Ironically, it was America's first losses to radical Islam that inspired a reform of the 1947 reform. In 1980, an interservice attempt to rescue U.S. hostages from fundamentalists in Iran ended in a deadly fireball at a place called Desert One, where a Marine helicopter collided with an Air Force plane loaded with Army commandos. Eight men died. Congress was outraged. But three years later, legislation to fix the problem had run aground. What restarted the push for reform was the deaths of 241 Marines in their Beirut barracks in 1983, in the first massive suicide bombing by Muslim extremists against Americans. Two of the wounded servicemen went into cardiac arrest while Navy and Air Force medics bickered over who would treat them. A subsequent investigation showed that the military's complex, multiservice chain of command had failed to recognize and defend against the terrorist threat. Nevertheless, it still took the Grenada disaster and three more years for Congress to pass the Goldwater-Nichols Act, the next major overhaul of the Defense Department-and it passed over the Reagan administration's objections.

Unlike the 1947 act, the 1986 reform went beyond organizational restructuring and changed some important career incentives. Explained Harvard political scientist Joseph Nye: "One of the reasons Goldwater-Nichols worked was that any officer who wanted to rise in his own service had to have a `purple' assignment, a joint assignment"-a requirement that forced the future leaders of the Army, Navy, Air Force, and Marines to learn to work together if they wanted to be promoted.

So what is the true lesson of history here? The 1947 act was not a total failure: Flawed as it was, it did lay the structural foundation of a better organization. But it took 39 years, and many deaths, to finish the job.

Transportation: A Long, Strange Trip

The Department of Transportation was born on April Fool's Day, 1967-just 13 months after President Johnson started knocking congressional heads together to get it done. With 30-odd component agencies and 95,000 employees, Transportation was the most ambitious consolidation of federal functions between the 1947 Defense Department merger and Bush's proposal for a Homeland Security Department. Thirty-five years later, Transportation still struggles to make its components cooperate, share information, and generally play nice-but it has come a long, long way.

Jack Basso lived through almost all of Transportation's evolution: He started in the Commerce Department's Bureau of Public Roads, which was shunted into the new department on day one, and he retired in 2001 as Transportation's assistant secretary for the budget. Now at the American Association of State Highway and Transportation Officials, Basso greeted the announcement of the proposed Homeland Security Department with a jaundiced eye. "I was thinking, `Man, are they in for an interesting time,'" he laughed. "With the stroke of a pen, you legally create a structure. Making it into a [real] structure takes years."

The Transportation Department's early days were roiled by power struggles between the secretary and his subordinates, to whom Congress had directly delegated some key authorities. An effort to consolidate all of the department's inspections and audits into a single office, for example, took six months, during which the secretary issued orders and the agency heads invoked their independent powers to ignore them. The bickering extended to the trivial: The headstrong Federal Aviation Administration-which had pushed for the reorganization in the first place-for years refused to fly the new departmental flag in front of its (separate) headquarters building.

Today, the flag is flying, but the battle over power drags on. Congress's decision to give the subordinate administrators their own legal structures meant that individual modes of transportation could and did prosper without bureaucratic interference from above. But it also gave the secretary few levers to make the component agencies cooperate, let alone to restructure them in the interest of efficiency. More than one Transportation secretary has left office with battle scars from trying to meld, say, highways and mass transit into one coherent office for land-based transportation, or to consolidate different safety offices into a single agency. Today, with multiple congressional committees retaining their pre-1967 ties to individual agencies, getting approval for any department-wide change is still a nightmare.

But the main lesson of Transportation, Basso said, is to plan carefully at the inception-and then get on with business: "If you're going to make changes, get them over with," he said, "and let people settle in and get back to doing their jobs."

Energy: Criticized Mass

The history of the Department of Energy reinforces the lesson that legislating a bureaucracy into existence is just the beginning of the battle. Created in 1977 after OPEC oil embargoes had racked the U.S. economy, the Energy Department faced little opposition during its legislative birth in Congress. But in the decades since, with scandals over stolen nuclear secrets and missing hard drives, Energy has taken flak, including some from its own officials, as one of the most dysfunctional bodies in government.

President Carter proposed the new department in 1977, drawing on a similar plan floated unsuccessfully by President Ford. Congress took only five months to approve Carter's blueprint. In a key contrast to today's divided government, however, one party then had control of both Congress and the White House. "Part of it was the fact that you had a Democratic Congress, and you had a new [Democratic] president who made this a high agenda item," recalled former Rep. Phillip Sharp, D-Ind., who sat on the Select Committee on Energy that was formed to consider Carter's proposal.

The core of the new Cabinet department was the Energy Research and Development Administration, itself an evolution of the Atomic Energy Commission, which focused on federal energy research. Energy also brought together the Federal Power Commission, the Federal Energy Administration, and bits and pieces of five other federal agencies.

In a model that Bush spokesman Ari Fleischer explicitly likened to the current role of Tom Ridge, Carter's special assistant on energy, James Schlesinger, devised the new department, lobbied for it on the Hill, and then was confirmed as its first secretary. In his new job, Schlesinger had authority over nuclear weapons production, the prestigious national nuclear research laboratories, and even regulation of oil and natural gas prices (a power later abolished). But if getting the legislation passed had proved easy, actually creating a new department out of such diverse parts proved to be surprisingly difficult. "The problem," Schlesinger said, "is to bring together the various rather sharply divergent cultures after-after-the creation of the department. And one has to choose ... a dominant culture and the budgetary processes, the organizational processes, for the new department. And the disparate units that are brought together in the department will have to adjust to that dominant culture."

In the case of Energy, that adjustment wasn't easy. "You have no idea how aggravated workers became when they were asked to move from their old offices to Energy headquarters at 1000 Independence [Ave.]," said lobbyist Andrew L. Zausner, who in 1977 was a top aide to Deputy Energy Secretary John O'Leary. "It took unbelievable negotiations over months to get people to move."

Many of the staff members who finally did move over to headquarters were employees their parent agencies were glad to see go. "Who gets passed off isn't necessarily the best and brightest," one former Republican Energy official said. "I've always felt that Energy was thin in terms of really high-quality people."

As a result, Zausner said, "for a period of time, the new Cabinet department in reality worked less well than the original parts." He added, "When you create a new agency, you take two steps back before you can take three steps forward."

Some Energy-watchers argue that it was more like two steps forward and three back-in large part because Congress never changed its committee structure to align with the new department. "With each assistant secretary reporting to a separate subcommittee on the Hill, you're going to wind up with the assistant secretaries working for subcommittee chairmen rather than for the Cabinet secretary," said nuclear expert John Pike of "You've seen this for the last quarter of a century with the Energy Department ... which has always had difficulty achieving institutional coherence."

But one crucial difference between 1977 and today gives cause for optimism, said former Rep. Sharp: As bad as the oil embargoes were, today's national security crisis is far more compelling. "This is significantly different than when Energy was created," Sharp said. "Today there is a deeper recognition that there are serious problems that have to be solved."