Where We Go From Here

n the summer of 1941, the United States was inching toward war. The War Department, with 23,000 employees working in 17 crowded buildings across Washington, had an organizational problem and needed space. Department leaders wanted employees together under one roof, so Brig. Gen. Brehon B. Sommervell hatched a novel design to make it happen-a five-sided building with six office rings. On Sept. 11, 1941-60 years to the day before terrorists attacked Washington and New York-ground was broken near the Potomac River and the Pentagon was born.

The impulse that prompted construction of the Pentagon-to organize and marshal government's forces-surfaces whenever Americans are confronted with enormous new challenges, says Donald Kettl, a scholar with the University of Wisconsin's LaFollette Institute of Public Affairs. "Throughout American history, mega-problems have typically led to mega-reorganizations of government," says Kettl.

In the horrifying hours of Sept. 11, federal management and government design were far from the minds of most Americans. But as leaders and ordinary citizens struggled to understand the day's events, they began to ask disturbing management questions: How could terrorists so thoroughly defeat the nation's security and intelligence systems? If the Immigration and Naturalization Service and State Department knew that people were overstaying their visas, why didn't they do more to track them down? After years of security warnings, why weren't America's airports better prepared to nab terrorists before they boarded at least four separate flights?

Perennial management issues such as skills and staff shortages and contract oversight suddenly had new urgency. The FBI didn't have enough agents who read Arabic to follow the thousands of leads it received after the attacks, and the Federal Aviation Administration had a sudden need for additional air marshals. "To a large extent, these tragic events illustrate the impact of many of the management challenges we have been struggling with for years," says Rep. Steve Horn, R-Calif.

Freedom to Manage

President Bush took a first step toward reorganizing government on Sept. 20, when he announced the creation of a new Cabinet-level office to coordinate the efforts of dozens of agencies with responsibility for domestic security. The new Office of Homeland Security, headed by Pennsylvania Gov. Tom Ridge, will develop a national strategy for preventing terrorism and responding to possible future terrorist attacks.

The events of Sept. 11 will not fundamentally alter the Bush administration's government reform plan, according to Sean O'Keefe, deputy director of the Office of Management and Budget. "I think it stays on track," says O'Keefe, who adds that electronic government, competitive sourcing and the challenge of bringing talented people into the federal service are even more important now. The administration will continue to push its "Freedom to Manage" legislation, which allows agencies to use pay banding systems, $25,000 buyouts and performance bonuses to restructure their workforces. Agencies can use another provision in the legislation to get rid of laws that impeded their response to the disaster, O'Keefe says.

"As we try to remove the impediments to efficient management, [Freedom to Manage] now becomes a very handy vehicle for lessons learned, for things that got in the way," he says.

The terrorist attacks radically changed the terms of the federal budget debate. Arguments about cracking the Social Security lockbox and fiscal 2002 appropriations fell away as Congress rushed to pass a $40 billion supplemental spending measure. On Sept. 21, OMB announced that the first $5.1 billion in funds would be used to hire more air marshals, buy new federal office space in New York, repair the Pentagon and beef up federal building security.

OMB is committed to preventing a feeding frenzy over funds provided by the supplemental and subsequent relief bills. Agencies must receive budget office approval to dip into the supplemental money, most of which will be spent in fiscal 2002. A Sept. 10 memorandum from OMB Director Mitch Daniels ordering non-Defense agencies to trim 5 percent from their fiscal 2003 budget requests still is in effect.

O'Keefe also said OMB would continue its plan to put jobs in the Defense Department and civilian agencies up for competition from the private sector, prompting some of the first public criticism of the Bush administration in the wake of the terrorist attacks. Paul Light, a scholar with the Brookings Institution who has been critical of the administration's competitive sourcing program, said OMB should stop competing jobs and shift its entire focus to fixing management problems at critical agencies like the FAA. "This is a time to think boldly," says Light.

Federal unions also questioned continuation of the Bush administration's efforts to move work out of government. "We think the administration should be doing everything it can to support federal agencies in this time of crisis, and not be pursuing this policy of forced outsourcing," said Jacque Simon, public policy director of the American Federation of Government Employees, the largest federal employee union.

But having Defense Department civilians compete for their jobs will not interfere with Pentagon efforts to prepare for possible military action overseas, according to O'Keefe. "I don't think you're going to see brigades and carrier groups being occupied by the [competitive sourcing] issue. They weren't before, and they aren't now," says O'Keefe, who served as Navy Secretary in the previous Bush administration. "It's the administrative apparatus that's doing these things [that will be subject to competition]."

The attacks already have prompted reexamination of which activities can be performed by the private sector and which more appropriately belong in government. Many commentators believe the role of government will expand. "The state is back, and for the oldest Hobbesian reason in the book-the provision of security," wrote Fareed Zakaria in the Sept. 24 issue of Newsweek.

Nowhere is government more likely to expand than into airport security. After the attacks, several members of Congress proposed federalizing security. Transportation Secretary Norman Mineta formed a panel to study the issue.

Despite increased spending on government and likely expansion of its role, federal agencies almost certainly will continue to rely on contractors for support, according to Allan Burman, a former administrator of OMB's Office of Federal Procurement Policy and president of Jefferson Solutions, a Washington consulting firm. "I don't foresee some huge shift in how the government continues to conduct business in this area," he says. Rep. Horn notes that agencies may need to pursue more outsourcing to free federal staff to focus on their core missions.

What Next?

In the first weeks after the terrorist strikes, it was too soon for many federal employees to think about how the government might change. "Right now we're focusing on how we can evacuate the building safely," said an OMB staffer. "We're still in mourning," said Joe Sikes, director of the Pentagon's competitive sourcing office.

But Congress and commentators already had begun suggesting that management reforms must play a role in the response to Sept. 11. Improving management will be a necessary part of a war against terrorism, says Rep. Horn. "The priority right now is to work with the executive branch to find solutions to the problems we face," Horn says.

The perceived failings of intelligence agencies, the INS, and the State Department's visa procedures all face sharp scrutiny. The INS and the Customs Service are likely candidates for restructuring, according to Ronald Utt, a fellow with the Heritage Foundation. These agencies will become more focused more on preventing terrorism than on corralling illegal immigrants, he says. The nation will be hard-pressed to head off terrorists without closing several crossing points on the U.S. border and addressing serious management challenges at others, Utt adds. For example, he says, consider the the ferry that runs between Nova Scotia and Portland, Maine. It's a seasonal ferry that runs once a day. "How much are you willing to pay to get really close scrutiny of 400 to 500 people who are disgorged from that ferry?" Utt asks.

More broadly, agencies will have to think about security first when they consider building new offices, and should question whether they need all of the infrastructure they currently have, says Comptroller General David Walker. Agencies also should review the amount and character of information they make public on the Web and via other easily accessible methods, he says.

One development has buoyed the hopes of those who seek vigorous attention to staffing and other management challenges raised by Sept. 11. The attacks prompted a flood of new enlistments in the military and a torrent of job applications at intelligence agencies-the CIA alone saw a fivefold increase in the number of applications it received.

"We see a celebration of the bravery of Pentagon employees who rushed to save their colleagues from fire," says Kettl. "We see the beginning of a sense that working for the CIA is something people could aspire to." If this spirit holds, government will have a chance at winning back public support, closing its skills gaps and meeting the management challenges highlighted and created by Sept. 11.