A Pragmatic Approach to Stimulus Oversight. Authors: Erik Buice Andrew Robinson Paul Brenner Louis Pack

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1 A Pragmatic Approach to Stimulus Oversight Authors: Erik Buice Andrew Robinson Paul Brenner Louis Pack

2 Summary Although the American Recovery and Reinvestment Act (ARRA) provides Effective management of stimulus for more than $250 million in oversight costs, the management budget is programs requires a fresh and agile proportionally lean and must be managed effectively to meet the required approach to oversight, built upon a solid foundation of proven Program standards of accountability and transparency. Consider that the stimulus Management Office (PMO) methods. plan will invest more than $2,500 per American in a myriad of complex programs with less than one dollar invested per American for oversight. The Office of Management and Budget (OMB) provided clear and timely insight with the Initial Implementing Guidance for the ARRA memorandum. 1 Although additional guidance is forthcoming, departments and agencies have a daunting task in addressing the critical action steps from this first round of guidance. This paper provides a high level framework for ARRA oversight activities and offers innovative and pragmatic recommendations that can be implemented immediately to help ensure accountability and responsibility in program execution. While each Federal program will develop, expand, and improve upon its own oversight plans at the agency and program level, several cross-cutting elements are presented here that apply to virtually any ARRA program investment whether in the form of a contract, service level agreement, grant, loan guarantee, or tax credit. Thoughtful application of these principles will significantly increase the probability of success. The $787 Billion Oversight Challenge In discussing the congressionally approved economic stimulus plan during his weekly radio address on February 14, 2009, President Obama stated our goal must be to spend these precious dollars with unprecedented accountability, responsibility, and transparency. I ve tasked my cabinet and staff to set up the kind of management, oversight, and disclosure that will help ensure that, and I will challenge state and local governments to do the same. This commitment has been reinforced and strengthened through guidance documents from OMB and President s address to the joint session of Congress on February 24, While many stimulus investments, infrastructure projects in particular, focus on shovel-ready projects that are ready for implementation, many other large investments may be headed toward implementation before the requirements and performance drivers are completely identified, defined, and understood. These complex programs require an agile, flexible, and scalable management methodology to succeed. It may surprise the average citizen that many government projects begin without a complete understanding of the requirements, though this is often the reality. Imagine asking a disaster victim to wait until all other victims, their needs, and the necessary resources are identified before beginning relief efforts. Similarly, American s today cannot wait until the fundamentals of our overall economy improve before seeing the benefits of the stimulus plan. Many programs in the stimulus plan will begin before all objectives and requirements are completely defined. In addition, the duration of many of these programs ensures the inevitability of change that will constantly impact how the program is executed. Through the effects of emerging requirements, program scale, program duration, emerging technologies, and many other causes of change, there is a mandate to equip government and industry program managers with processes, methods, and tools to provide effective and transparent oversight. A Pragmatic Approach to the Oversight of Stimulus Programs The American Recovery and Reinvestment Act will ultimately be measured in terms of improvements in both the microeconomic and macroeconomic conditions of America. Broad economic measures such as jobs reports, consumer confidence, and spending and borrowing, will all be scrutinized and reported by the media while American s watch anxiously for results on Main Streets across the country. The Obama Administration s commitment to transparency and accountability is exemplified by a Web site devoted to providing Americans with both visibility into the results of the stimulus plan as well as an opportunity to offer comments and questions. As each agency mobilizes quickly to plan, budget, and execute new and expanded programs, it should consider both a strategic and a tactical perspective on program oversight.

3 Strategic Perspective of Program Oversight The stakes have never been higher than they are today for the success of large Federal programs. No single program will provide the silver bullet for economic recovery. Instead, every program must succeed and contribute to the objective of ARRA to create jobs, stimulate personal and corporate spending, and upgrade our nation s infrastructure. From a strategic perspective, stimulus success will be managed and measured on three distinct levels as shown below. National Level: The top level represents collaboration across the broad national community of interest. Stimulus projects will touch a broad range of stakeholders including Federal agencies, industry, academia, and the state, local, and even international communities. Each individual program must ultimately align with national level interest. Public-private partnerships are critical at this level to surmount challenges that neither industry nor government alone can address. Recovery.gov is the primary reporting tool at the national level. Agency Level: The middle level represents transparency at the agency (or organizational) level for planning, management, and oversight. Many of the 22 agencies receiving stimulus oversight funding must find a way to coordinate a multitude of programs in a parallel fashion with unprecedented scrutiny from lawmakers, the Obama Administration, and the public. Portfolio management, information sharing, budget management, acquisition planning, and organizational capacity are all agency-level challenges that must be addressed. The agency level requires the most extensive reporting under ARRA including major communications, agency-wide Recovery Act plans, award-level reporting, formula block grant allocation reports, weekly status and monthly financial reports. Program Level: Program level oversight represents the front lines of the battle for economic improvement. Performance accountability is the result of sound program management practices, tools, and methodologies, not individual champions or heroes. Tactical aspects of program level oversight are provided in the following section. Program-specific Recovery Act plans and recipient reporting are the primary artifacts at the program level. Tactical Application of Program Oversight Oversight of many stimulus plan investments will simply represent an expansion in scope to existing programs, many of which are currently guided by PMI PMBOK principles. New starts or changed programs can benefit significantly from proven PMI practices related to managing the scope, cost, schedule, resources, communications, quality, and risk. No two efforts are identical so each program s requirements will determine the specific oversight required. In addition to the PMI practices, several key elements should be considered in the management and oversight of the complex stimulus programs including those represented in the following framework.

4 Sole use of traditional program management processes and tools may not be enough for effective management and oversight of the large, complex programs included in the stimulus plan. Tailoring traditional management processes and methods, and combining them with innovative approaches will be necessary to ensure success. Flexibility and agility of management processes and resources are required to respond effectively in a dynamic environment. Recommendations for Immediate Impact With ARRA funding starting flow, agencies are faced with exponentially more oversight responsibilities that need to be addressed quickly and effectively with limited staff, resources, and systems. The following six recommendations provide a combination of innovative approaches to oversight and proven, pragmatic recommendations to move forward quickly and with low risk. 1. Adopt a Program Management as a Service (PMaaS) approach. The as a service label is gaining momentum in both the public and private sectors as an innovative and cost-effective method to obtain (and pay for) just the right amount of a product or service. This demand-based approach enables significant economies of scale. By analogy, imagine the cost savings that could be derived by replacing 32 separate NFL stadiums that stand empty 99.4% of the time with a single stadium that could be used on demand. A directly relevant example of the service-based approach is the current plan to move Grants.gov into Software as a Service (SaaS) or Cloud Computing environment in order to address dramatic variability in system loads as many large grant files are submitted simultaneously, which overloads the current system. Similarly, all agencies receiving stimulus funding are now experiencing a peak load in terms of program management and oversight needs. While 3.10 of OMB s Initial Guidance memo outlines flexible hiring practices to support ARRA oversight, it also clarifies that agencies should strongly consider temporary or term appointments with durations consistent with the monies. A better solution is to obtain Program Management as a Service (PMaaS) from a qualified contractor. The best value solution lies in quickly obtaining these program management services from a contractor that can provide a full spectrum of advisory services (e.g., with applicable domain expertise in energy, environment, transportation, housing, and education) and implementation services (e.g.,

5 program management, strategic communications, IT integration, performance measurement and analysis). Once the peak load subsides, the oversight services can scale back proportionally and even withdraw entirely as long-term performance monitoring functions are transitioned to existing agency staff. 2. Evaluate Current PMO/Oversight in Light of OMB Requirements. Much of the funding in the stimulus bill represents expansions to current programs. Even in cases where these programs currently have effective oversight, the bar has been raised for accountability and transparency. The challenge arises in clearing the bar quickly and effectively. An early gap analysis of the current oversight compared to what s needed will provide visibility into required adjustments. OMB s Initial Guidance memo as a whole and 3.6 in particular provide a good starting point for assessing current oversight practices. Every Federal or commercial program must continuously balance many competing priorities including scope, cost, quality, and schedule. The broad and urgent nature of ARRA investments compounds the complexity of managing competing priorities. Additional oversight priorities now include a sharpened focus on fair competition, transparency, and accountability. 3. Develop Performance Measures and Reporting Requirements Early. Performance metrics are essential for measuring and communicating success whether addressing project level service expectations (e.g., a Service Level Agreement for system availability), populating citizen-focused data on recovery.gov, or supporting the measurement of nationwide economic indicators. Through the Federal government s focus on performance-based contracting in recent years, both industry and the government have learned that effective performance metrics take time to develop and even more time to transition from merely reporting on what has happened in the past to influencing what will happen in the future. Agencies should ensure that clear and effective reporting requirements are established early for every stimulus funding distribution channel (e.g., contract, grant, loan guarantee, tax credit, or other method). ARRA funding recipients will only report meaningful outcomes if the expectations around metrics and reporting mechanisms are clear from the outset of the stimulus distribution. Tips on Defining Meaningful and Measurable Outcomes Retain and expand upon existing measures if possible to show marginal improvements Select/refine 5-9 critical measures of program performance and outcomes Align metrics with programmatic and organizational mission, vision, goals Obtain concurrence from internal and external stakeholders Communicate, monitor, and refine Don t settle for the easiest to measure 4. Use Web 2.0 Tools to Support Collaboration and Transparency. The Obama Administration is mandating the use of new and innovative technologies to improve transparency, public participation, and collaboration. Tens of millions of Americans use social media tools including blogs, wikis, video/photo sharing (e.g., YouTube, Flickr), Twitter, Facebook, MySpace, podcasts, and RSS feeds every day to connect with and participate in our society. Federal agencies are already tapping into the tremendous power of these tools to improve the transparency and accountability of the stimulus plan and increase the participation of American citizens. Section 2.2 of the OMB Initial Guidance memo outlines recovery.gov as a mechanism to provide videos highlighting major Federal actions and the impact of the Recovery Act on Americans. 5. Identify and Adapt Existing Technology to Support Oversight. Compressed timeframes and lean oversight budgets preclude the development of new systems to address the increased oversight requirements for accountability and transparency. As a result, each agency must look to existing technology to support the management and reporting associated with stimulus funding. For example, 5.3 of OMB s Initial Guidance memo outlines the requirements for using grants.gov to help recipients find and apply for grants. In addition to a review of existing internal systems (in alignment with 2.9 of OMB s Initial Guidance memo), agencies should consider IT systems from across the public and private sectors. Current tools could be tailored for program level, organizational level, or national level reporting on recovery.gov. For example, the Commonwealth of Virginia offers clear insight into all discretionary spending through existing online reporting tools. At the program level, commercial tools also are available for measuring and reporting the effectiveness of specific stimulus investments. Portfolio Manager, for example, is designed to provide data that aids in the selection of buildings that will benefit most from

6 energy efficiency improvements. Portfolio Manager also reports on the results of energy efficiency investments subsequent to implementation. 6. Use an Iterative Approach to Plans, Grants, and Contracts: OMB guidance establishes an aggressive schedule for the implementation of plans, reports, contract solicitations and funding opportunity announcements for grants. Industry is often required to respond to solicitations in similar timeframes. A key lesson learned from thousands of such solicitation responses is to use an iterative development schedule with specific interim milestones. For example, most contractors use a formal iterative process for proposals with blue, pink, and red team drafts/reviews. By developing annotated outlines and early drafts of required ARRA artifacts, agencies can identify gaps in content early and allocate resources in time to develop better end products. About the Authors This paper was written by Mr. Erik Buice, Mr. Andrew Robinson, Mr. Paul Brenner, and Mr. Louis Pack of ICF International s Technology and Management Solutions practice. Mr. Buice, a vice president at ICF, has successfully led dozens of Federal engineering and IT programs since 1995 and has been a certified Project Management Professional since He specializes in large scale solutions for Federal healthcare and human services agencies. Mr. Robinson, an ICF senior vice president for homeland security and civilian programs, manages more than 50 projects and programs in Federal civilian agencies and commercial clients focused on policy planning, program management, and IT management. He also is an Industry Advisory Council Board Member and Fellow. He frequently speaks on the topic of program and performance management. Mr. Brenner, a senior vice president at ICF, specializes in applying management science to private and public sector challenges. He has helped implement performance-based management for large Federal programs. Mr. Pack is a vice president with ICF with more than 25 years of management experience. He provides expertise to public sector and commercial clients, implementing best practices, tools, and techniques in project management and program management. The views expressed in this paper and any errors are those of the authors and not necessarily those of ICF International. About ICF International ICF International (NASDAQ:ICFI) partners with government and commercial clients to deliver consulting services and technology solutions in the energy, climate change, environment, transportation, social programs, health, defense, and emergency management markets. The firm combines passion for its work with industry expertise and innovative analytics to produce compelling results throughout the entire program life cycle, from analysis and design through implementation and improvement. Since 1969, ICF has been serving government at all levels, major corporations, and multilateral institutions. More than 3,000 employees serve these clients worldwide. ICF s Web site is 1 Initial Implementing Guidance for the American Recovery and Reinvestment Act of Memorandum for the Heads of Departments and Agencies from Peter R. Orszag, Director, Office of Management and Budget, February 18, 2009