Attitude Adjustment

reg Woods has a vision for the Office of Student Financial Assistance in which employees happily provide stellar customer service to college students using state-of-the-art technology at a low cost to taxpayers. But he still has to get the agency's employees to share that vision.

The student aid office is one of two congressionally chartered performance-based organizations (PBOs), which commit to tough performance goals in exchange for exemptions from federal procurement and personnel rules. (The other PBO is the Patent and Trademark Office.) "The [PBO] contract is to deliver results in exchange for flexibility in obtaining the results," Woods explains. "Unless there is some explicit reason not to, we're pushing the envelope in terms of faster procurement, in terms of our IT projects and the kind of business relationships we structure with folks that most people call contractors, but we call operation partners."

But many employees still aren't comfortable with the new structure and freedom embodied in SFA's new organizational arrangement. "A lot of people understand what their part of the elephant looks like, but they don't understand the rest of it," says Woods, SFA's chief operating officer for more than two years.

"People have been here 27 years, and ideas come and go," Woods says. "We help put America through school. A lot of them, that's what they signed up to do, they really believe that we are part of the American dream." Selling longtime employees on the PBO transformation, begun in 1998, is the first step toward making the agency work, says Woods. To ease employees into the new structure, managers passed out coupons explaining that the changes were not a threat to the staff. The agency created a training program not just to provide employees with technical skills, but also to teach them how performance plans and objectives affect every person's job.

Performance goals

SFA gives, guarantees and administers college student loans-and makes sure students pay them back. The agency also issues grants. Its PBO status requires that the agency have a carefully crafted performance plan. SFA's plan includes specific multi-year goals, such as reaching a customer satisfaction level equal to the private financial services sector, ranking among the top five federal agencies in employee satisfaction, cutting the cost per aid recipient, and finding a way to identify $18 million in savings to reinvest in computer systems.

Toward that end, the agency is phasing out nearly half its 11 computer systems over the next three years. In July, SFA signed a share-in-savings contract with Andersen Consulting, now known as Accenture. The agency hopes to garner nearly $46 million in savings from revamping its loan servicing computer system. Under the contract, Accenture will help SFA integrate and simplify its central data system, which is used to process 1.8 million direct student loans each year.

Operating costs for the system were $20.3 million in fiscal 1999. By eliminating duplicative functions and integrating others into a streamlined system, SFA officials hope to bring annual operating costs down to $9.1 million. That amounts to savings of $45.7 million over the next five years, with Accenture getting a decreasing percentage of the savings each year. For example, in fiscal 2001, Accenture will receive 47 percent of accrued savings. In 2002, the percentage will drop to 45 percent. In 2003, it will be 41 percent. If SFA hits its five-year projection, Accenture will get a total of $14.4 million, leaving SFA with net savings totaling $31.1 million.

"Our operating partners put in the investment dollars in order to reengineer our systems, and we don't pay anything until they succeed," Woods says. "Now we are starting to incur savings and we share those with [Accenture]. The approach allows us to make investments in our system without upfront expenses." The deal with Accenture has helped SFA speed up its agencywide computer systems modernization.

A Steep Climb

SFA faces a steep climb to reach its performance goals. It has spent the past 11 years on the General Accounting Office's list of federal programs most prone to waste, fraud and abuse due to mismanagement in the areas of financial management, information technology and contracting. Last year's Federal Performance Report gave SFA a C for overall management with a B in managing for results and Cs in financial, human resources and information management.

But the agency met all but one of the 80 annual performance objectives and projects it set out to measure in 1999. The agency fell short on one goal: achieving a clean financial audit. "We didn't make the mark," Woods admits. "We wanted to get a clean audit and we didn't get it. We expect to do a lot better this year." Recommendations from the audit have led to the implementation of a new financial management system to replace old ones that failed to provide managers with timely or accurate information.

Woods says SFA "kicked the devil" out of its remaining goals. For example, SFA sought to answer 92 percent of its phone calls in 30 seconds and ended up answering 96 percent within the time limit in 2000.

"We really think we've gotten a great start in this agency and I think we are realizing the hopes that Congress had when it originated this idea of a PBO," Woods says. "We think we are delivering on that promise. We've got big plans and there's a major reengineering that can be done to bring e-commerce and e-business to our core business practices." Woods also is seeing progress in convincing his staff that SFA is capable of mastering the change to PBO status and meeting its new, more exacting goals. "The biggest shift in the whole equation is attitude," Woods says. "Our people assume that we can do things."