Race for Survival

he management revolution that's been sweeping through the dusty corners of the U.S. Agency for International Development finds its symbols in cornball props collected by Larry E. Byrne.

Darth Vader dolls, for example, decorate the third-floor office at State Department headquarters where Byrne holds forth as AID's assistant administrator for management. They symbolize the image he cultivates as a destroyer of red tape-and a slasher of head count.

On a moment's notice, Byrne will roll out another prop: a 78-foot chart outlining the steps AID used to go through to transfer one foreign service officer from one mission to the next. The point is that 78 feet of steps aren't needed now that Byrne and his colleagues have simplified the process.

Hundreds of pennies, nickels, dimes and quarters are arranged on a glass-covered table top to portray the front of a locomotive-a representation not of a budget "train wreck," but of what Byrne calls the "train of change" he's engineering to retool the agency's management processes. He and his boss, AID Administrator J. Brian Atwood, know that if the management reforms aren't perceived as working, their agency's days will be numbered. In that case, Byrne says, the locomotive's coins would be used to buy a consolatory bottle of whiskey.

Reform or no reform, AID's days may still be numbered, as Republicans led by Senate Foreign Relations Committee Chairman Jesse Helms, R-N.C., drive to cut its budget and merge it into the State Department.

When Atwood arrived at AID in early 1993, the agency had a long and well-deserved reputation for poor management. Its computer systems were outdated and not integrated among its various bureaus and missions. Managers didn't have ready access to information on how funds were allocated or the financial status of projects in the pipeline. Disparate accounting systems couldn't provide agency leaders a timely picture of AID's overall financial status.

Mission operations were similarly afflicted. An assistance project, once designed, would typically languish for two years before implementation due in part to a top-heavy organizational structure that focused on process rather than results. There was no reliable way to track the size of AID's workforce or to monitor new hires in the field. The amorphous structure of the agency led to duplication of work and a lack of accountability.

These kinds of problems served as fodder for the agency's enemies, including Helms. The critics had other weapons as well: for instance, the 1992 report of a presidential commission recommending that AID be merged with State and run by a new undersecretary for foreign assistance. The merger idea, indeed, may make sense now that the Cold War's conclusion has changed the strategic landscape on which AID operates. But with the Clinton Administration firmly opposed to a merger, Helms and his allies have been stymied so far.

As Atwood prepared to defend his turf, management reforms emerged as a key means to the end of bureaucratic survival.

And Byrne has been his point man, drawing on experience in consulting for federal clients during a decade of work as national practice director for the Hay Group Inc. and in personnel work at the Energy Department and other agencies before that.

Atwood and Byrne launched a reinvention effort focused on reforming the agency's organizational structure, personnel systems and information technology. Reform efforts were focused in three areas:

• Organization. The agency abolished 90 different organizational units in Washington, eliminated several bureaus and enhanced the responsibilities of the management bureau, which now oversees personnel, procurement, the budget, all computer systems, administrative operations and the functions of the agency's chief financial officer. The State Department approved the closing-out of AID assistance to 21 countries-marking the first time any country had graduated from AID assistance since 1976. Six additional mission closings were announced in January 1995. Closings saved the agency $35 million in 1995.

• Personnel. AID currently has three personnel systems-Foreign Service, General Schedule Civil Service and Foreign Service National-to manage direct-hire employees, but lacks a central office for managing Foreign Service Nationals. In March 1994, the agency submitted a proposal to Congress to unify the general schedule and the foreign service by developing a USAID service that would offer all the benefits of both the GS and the FS.

• Business systems. AID has invested an estimated $50 million in its New Management Systems (NMS) initiative, the crown jewel of the agency's reengineering effort. NMS is comprised of integrated applications in eight business areas: core accounting, procurement, budget, operations, human resources, property management, communications and guidance. Software for computer systems streamlining the operations of the first four areas became available worldwide during the first two months of this year. The other systems are scheduled for deployment by the end of fiscal 1997.

As one means of emphasizing to AID staff the importance of these reforms, Atwood embraced the National Peformance Review, offering all of AID as a "reinvention lab," one of only two agencywide labs so designated. The point was to emphasize experimentation and innovation and thinking outside the box of normal bureaucratic procedures. Such reforms are viewed as essential by Atwood, as he stressed during a recent interview in which he spoke of the unexpected challenges the agency has faced since his arrival. "It certainly wasn't predictable two years ago, but I guess it was predictable after the last election, that our budget would be squeezed considerably, and if we hadn't started the reform process that we started two years ago, I don't think we'd be alive today."

More with Less

Two years ago, AID had "no honest answer" for how many people it actually employed, says Byrne. Estimates put the total then at about 11,700 employees. Today, Byrne says head count is down to "around 9,000," but he says the agency is getting more done with the smaller staff.

AID's most important downsizing initiative was graduating 21 countries from agency assistance. Some missions were closed in countries that qualified for graduation because they had shown the ability to sustain AID's efforts towards development without additional assistance. Other missions were shuttered in nations considered bad partners-where governments weren't cooperating with the thrust of AID programs. And other missions were subsumed in regional groupings, where assistance could be provided to a group of developing nations via one central regional bureau. Missions have yet to be closed in another six countries designated for graduation.

The agency deemed 10 of its missions mini-reinvention labs, or "country experimental labs": Bangladesh, the Dominican Republic, Guatemala, Jamaica, Madagascar, Mali, Niger, the Philippines, Poland and Senegal.

AID's proposal to unify its personnel systems has been lost in the shuffle of the foreign aid debate. American Foreign Service Association President Tex Harris says that AID's troubles have consigned that proposal to "a dramatic back seat." Harris, noting AFSA's concern that unification of the systems might give too much authority to managers, adds, "There's just not the energy to do it. It's fallen off the table."

Atwood, while indicating that in terms of workforce planning, the agency already operates as though it had one personnel system, reluctantly agrees with Harris that for now, pushing the measure in Congress is off the table. He adds that one of the problems of having two systems is that FS employees have an up-and-out system which differs dramatically from the GS system. "GS people can stay until they're 65 or 70. FS people, if they're not promoted, have to leave maybe at age 50. How do you bring those two together? Our idea was that we would make one development core and we would give credit to people who went overseas, so that they could retire early," he says.

New Systems

Byrne asserts that AID will quickly realize efficiencies worth the $50 million he estimates he's spent on the New Management Systems project.

An important element of NMS is the so-called PIPE system. PIPE stands for

Pipeline Information and Program Evaluation and it is the agency's new financial reporting system, replacing 11 separate financial systems. Prior to PIPE's implementation, employees in the field would send paper documentation of financial information to Washington, where it was logged into a central database, a process that often resulted in inconsistency and error.

Now all users can gain access to the same information by selecting the type of analysis, either a pie chart or bar chart, and the scope of the inquiry, either the whole agency, a geographic bureau or a particular mission. The system then displays budget data in a colorful, easily understandable graphic format. Charts can also be used to compare the data from different missions or geographic bureaus. Information that once took a week to obtain is now available in 12 to 15 seconds.

Glenn Cauvin, who works with planning and budget issues in AID's Africa Bureau, says PIPE has meant leaving behind a system "out of the 19th century." Prior to PIPE's implementation, Cauvin handled budget information manually-"a very tedious and labor-intensive process." He says the new system affords a view of what a mission is doing with its money, and allows him to answer more quickly budget-oriented inquiries from Congress, others in the agency and the Office of Management and Budget.

The agency's new information technology has also simplified business travel processes. Jay Byrne, AID's public affairs director whose travel woes were recounted in January's Government Executive, was spending about one month of his work year preparing and submitting travel vouchers. After those forms were approved, they had to be typed and copied seven times, after which point Byrne says it took at least two months to get reimbursed for travel expenses of as much as $10,000. Now AID's Office of Financial Management uses Travel Manager, an off-the-shelf software program made by Gelco Corp. that the agency has tailored to meet its special needs. Once a user enters trip dates and destinations, the software program provides per diem calculations for reimbursement.

Michael G. Kitay, an assistant general counsel with more than 20 years of experience at AID, praises NMS for enabling users to communicate electronically at any time, rather than grapple with time-zone differences that once necessitated midnight phone calls from the United States or abroad. He adds that the agency was once trapped in a "culture of clearance" in which cables often required multiple clearances before they could be sent. Today, he says, even the most junior employee can dispatch communications through electronic mail without clearance, and the information flow is much greater than in the past.

Atwood says the New Management Systems initiative is "intended to allow people to manage their pipelines and to move money around more quickly, and understand and know where it is." Increased communication throughout the agency has provided for greater accountability and has given AID personnel the ability to make quick mid-course corrections in project design without going through all the usual procedural hoops. That's made for better, more efficient project plans, say Atwood and Byrne. The management team hopes that increased flexibility and accountability will change the focus of AID from process and project design to performance and project realization.

Rating Atwood and Byrne

The current round of reforms have made a believer of George Ferris, an erstwhile critic of AID. Ferris chaired the 1992 Presidential commission which recommended AID's merger with State. Ferris now calls Atwood "the most effective administrator that AID has ever had" and says he's acted on many of the 1992 commission's recommendations. Indeed Atwood characterizes Ferris's criticism of the agency in 1992 as "right on the mark. It was an agency that didn't know where its resources were, it didn't know whether it was achieving results, it wasn't communicating among its various parts."

Ferris doesn't endorse all of what AID has been doing. He says, for example, that the agency wrongly puts humanitarian assistance and democracy projects ahead of economic development. He insists that democracy is more likely to be borne of a thriving economy than the other way around.

Ferris hopes to see the agency remain independent through the first term of the Clinton Administration so that Atwood can "finish what he's started." At that point, assuming President Clinton wins reelection, Ferris suggests a scenario in which AID is merged with State at the beginning of Clinton's second term, with Atwood appointed deputy secretary of State so he can bring to the department the same innovative ideas he has brought to the agency.

But Atwood demurs. "There's nothing wrong with the State Department's mission. I practice that mission," he insists, "But that mission is distinct. . . . My fear is that we will have people eventually running the State Department who have less appreciation for the long-term development mission."

Garber Davidson, AFSA vice president for AID, credits Atwood as a "magnificent" administrator who has helped to forge "a new diplomacy for the 21st century." Davidson also credits Byrne for his management skills, but fears that Byrne suffers from a lack of foreign policy experience and therefore espouses a vision for AID's future shaped more by "internal beltway experience than by a knowledge of what we do overseas." Noting that Byrne appears to have authority over both programs and management at the agency, Davidson says, "Naturally, with that sort of power, his perspective on the world is going to be very important. . . . I'm not sure that his views on the reinvention side have been informed adequately vis-a-vis the world in which we work." Davidson has additional concerns about AID's reinvention effort. He complains that the goals of decentralization and the empowerment of people in the field have been overshadowed by a concentration of power in the management bureau.

One senior official familiar with AID says Byrne "tends to be this hard-ass kind of manager, you know-'Well, fire the people, just do this. We've got to get the objective done,' " but he acknowledges that a firm hand was necessary to repair AID from years of poor management. He adds: "The problem that the foreign affairs agencies face is leadership fascinated by policy developments and oblivious to management and resource needs and concerns. AID was managed at the assistant secretary level and below due to its agency-level leadership being captivated exclusively by policy issues. That's not a good way to run a railroad."

Trouble on the Hill

Shortly after the 1994 Republican tsunami at the ballot box, Brian Atwood addressed the agency. "Three weeks ago today, the American people demonstrated that our democratic revolution is still alive. There was no mistaking the call for change. But they did not vote to end the foreign aid program. They did not vote to end my tenure at USAID-and they did not vote to end yours," he said.

That's not how Republicans on Capitol Hill would characterize the vote-and they have been pressing to eliminate AID as a stand-alone agency. The House version of the State Department authorization bill would force AID, the U.S. Information Agency and the Arms Control and Disarmament Agency to merge into the State Department. Helms wanted that outcome as well, but eventually agreed simply to cut the foreign aid budget by $1.7 billion over five years and require the Administration to come up with a plan this year to reorganize the foreign affairs agencies. The funding cut is considered deep enough to force the merger into State of at least one of those agencies. As of early February, the authorization bill hadn't emerged from conference, and a Clinton veto was still possible if the legislation attempted to force a merger.

With foreign aid under fire, morale in the AID community has been low, Atwood acknowledges. But he says, "Under that kind of extreme stress, the best thing for an organization to do to keep its morale up is to keep its eye on the ball and keep pursuing reform." He says 90 percent of agency employees are "change agents," involved in the reform effort in some capacity. He hopes their participation will raise their spirits. The success of the effort has everything to do with AID's survival, he says.