Ex-Pentagon Management Chief Isn't Worried By Spate of Staff Departures

After eight months serving private-sector clients, Beth McGrath, the Defense Department’s former deputy chief management officer, expressed confidence in the ability of her successors to handle the many challenges in front of them.

In an interview with Government Executive discussing budget cuts, auditing and acquisition reform, McGrath, now a director for the federal practice at Deloitte Consulting LLP, said she is not worried about the spate of departures in the department’s financial management team over the past year.

Those changes include: Comptroller Robert Hale retired this summer and was replaced by Mike McCord;  McGrath’s assistant Dave Wennergren retired last August to move first to CACI and then the Professional Services Council; and McGrath herself, after 25 years at Defense, left last November and has been replaced on an acting basis by David Tillotson III.

For political appointees, “It’s not unusual for people to leave—the average may be close to 18 months,” McGrath said. “But both Hale and myself were in our positions for quite a long time. I stood up the office during the tail end of the [George W.] Bush administration.”

McCord, she added, “had been with Hale for some time and knows what he’s getting into -- budget formulation, sequestration and audit.” Similarly, Deputy Defense Secretary Bob Work was previously the Navy undersecretary, “and so is very well versed in the business aspects,” McGrath said.

Federal rules require a two-year “cooling off” period for Senate-confirmed appointees before they can sell for or represent a private firm before the Defense Department, so McGrath’s current role focuses on “continuing to enable business to do better in the federal space,” she said. “It’s about ensuring that the federal government is organized to deliver its capabilities and services the best it can. That involves what do to, how to do it, and performance management.”

The rules, however, “don’t mean I can’t talk to friends I worked alongside with for 25 years, while not representing or selling.”

Today’s tight budgetary climate is forcing changes for private contractors as well as the military, McGrath noted. “You’re seeing lot of different companies making adjustments and looking at their structure, and the federal government is doing the same thing,” she said. Deputy Secretary Work with Secretary Chuck Hagel are “looking at the organization of things not only for fringe efficiencies, but to ask whether they are organized in the best way to optimize the business environment,” she said. Unlike the big program cuts submitted by then-Defense Secretary Robert Gates during Obama’s first term, today’s Pentagon “doesn’t have those big programs to cut, and so they’re looking at doing things different or doing different things,” McGrath said.

Next month, the Defense Department confronts a deadline to submit its first auditable statement of budgetary resources, with a congressionally mandated deadline for fully clean books by September 2017.

“From what I’m hearing all three services seem ready to proceed into readiness,” McGrath said. “In 2015 we’ll see how things went.” The longtime quest for auditability “is taken very seriously across the Defense enterprise, and being under audit will be an illuminating experience for the entire organization,” she said. “It will help them better understand where the gaps are in the data, and they can then assess the strength of the internal controls and the soundness of the process.”

Drawing on the experience at the Homeland Security Department, she said her old team when she left “was working so hard to make sure all things are in place. But you really need to start it to see what areas are covered, and where you’re perhaps vulnerable.”

McGrath recently testified to House Armed Services Committee members working on acquisition reform. She said Frank Kendall III, the Defense undersecretary for acquisition, technology and logistics, has “the right focus” in his updated Better Buying Power initiative. “I’ve been in government long enough to see the pendulum shift, from in-sourcing to outsourcing,” she said. “It’s important that government have really good trained people, not only for putting the contract together but for managing it effectively.”

The more the players can “create a venue for communication between government and industry, the better the products and services, the end item, are going to be,” McGrath added. Particularly when it comes to information technology services, “many times we’ve forgotten we’re on the same team because of the arm’s length approach to contracts. But dialogue will help every time, and that conversation before the request for proposals makes the difference.”

As for any obvious differences between working at the Pentagon and Deloitte’s Arlington, Va., offices, she noted:  “The Defense Department is extremely structured and more hierarchical than industry,” whereas at Deloitte “things are more flat and matrix-based. I’ve become a good translator here, as my Deloitte colleagues reading an RFP might ask, what does the government mean by that?” But the terminology is “not as dissimilar as you might think,” she added. “The work is different, but it’s a lot of fun.”