Turning Point

It has been a great month for private sector space ventures. SpaceX’s Dragon capsule returned safely to Earth after a perfect mission to the International Space Station. Virgin Galactic received an experimental permit from the Federal Aviation Administration. Planetary Resources announced plans to mine asteroids for nickel, platinum and other metals.

We are at a historic turning point. One that is long overdue. The private sector is finally leading the way into the new frontier. This is as it should be and reflects the established course of history. In the 1400s, government-financed explorers blazed the way across the Atlantic and then gave way to private ventures, with Royal Charters, that colonized the New World. In the 1800s President Thomas Jefferson authorized Lewis & Clark to explore and document the Louisiana Purchase, but generations of individuals and families made their own way West. Presidents Lincoln and Grant issued rights-of-way for transcontinental railroads, but private individuals laid the track and operated the trains.

Most technology breakthroughs occur because of private initiative and funding. For every invention arising from warfare or government labs, there are tens of thousands that come from geniuses like Thomas Edison, Orville & Wilbur Wright, and Bill Gates. These people passionately pursue new horizons not to seek government contracts, but to create something that has not previously existed. They push the boundaries of invention and creation because they see how things could be and have the will and the intellect to make a new reality.

We should rejoice that this turning point is occurring in our lifetime. In Stanley Kubrick’s masterpiece, “2001, a Space Odyssey”, the space craft taking voyagers to the rotating Hilton Hotel is the Pan Am Space Clipper. This is the exciting vision of the future that should inspire dreams among the young and ignite an explosion of ideas and innovation.

The shameless pandering to Space Coast voters during the Republican Primary in Florida was hopefully a momentary lapse of judgment. None of our leaders should want to hobble humankind’s next adventure with lumbering bureaucracies and political favoritism.

There can be international agreements to avoid space wars, similar to the protocols that govern Antarctic research. NASA can still send out probes and robots to pave the way forward, and governments can fund satellites and telescopes to expand knowledge and to scan the heavens for alien objects that could do us harm. The rest of space should be reserved for private enterprise and individuals with dreams.

Back to the Future

What to do with the U.S. Postal Service?

The USPS just backed away from closing 600 rural post offices. This will probably be the first of many “blinks” over the decision to close 252 mail-processing centers and 3,700 post offices, as part of a plan to save some $6.5 billion a year. Rural interests and Members of Congress are howling about eradicating pieces of Americana. However, deepening deficits are eradicating tax dollars while consumer use patterns spell doom for “snail mail”.

Two solutions are never discussed.

One has existed since the mid-1990s. The USPS actually experimented with 24-7 automated Postal Service. It was so successful that one of these automated kiosks was installed in the Longworth House Office Building when I was Chief Administrative Officer. On October 19, 1995, Postmaster General Marvin Runyon and I cut the ribbon on this facility. Its equipment allowed customers to weigh and mail letters and parcels, as well as process registered & certified mail. This was not your parents’ stamp vending machine. So why not install these automated kiosks in the 600 rural post offices and others as well? I am sure this 18-year-old technology is even more efficient and cost-effective today. Postal employees could “ride circuit” and be available for that “human touch” on designated days and hours. At all other times, rural customers could do everything they need 24-7 in the local post offices they love.

Another solution is one that allowed Western Union to survive and thrive into the 21st Century. No one sends telegrams, but people still need to wire funds outside of the banking system. Western Union quickly realized its market niche while also realizing it did not need its own facilities. Enter the world of strategic partnering. Western Union partners with Walmart, Winn Dixie, Weis, and countless pharmacies and stores to provide their services – eliminating staffing and other fixed costs. Why isn’t the USPS co-locating their 24-7 service kiosks in a similar network of partner locations? Why couldn’t there be mailboxes at Walmart and other large stores? This simple solution would allow the USPS to expand service into new population areas without building new facilities.

The reason these “back to the future” options are not pursued is that few in government are creative and have the desire to fight the Postal Unions and other special interests to change with the times. Until there is a will the way will be ignored.

Ship of Fools

The Federal Government’s “ship of state” found its own way to mark the 100th Anniversary of the Titanic’s sinking.

April started with the bizarre antics of “bureaucrats gone wild” at the General Services Administration (GSA). This was soon eclipsed by the sordid details of the Secret Service and other special security units in Cartagena. Partisan bickering then trumped what had been bipartisan concerns as both sides spared over whether these rogue acts were the tip of the iceberg for the entire Executive Branch and if President Obama was the captain who steered the ship onto this iceberg of waste, fraud and abuse. The final day of the month provided a final bone chilling death to responsibility and accountability in these icy waters – the U.S. Senate announced it would not pass a budget for the third year in a row.

The sinking of America’s faith in the Federal Government was documented by the latest Pew Research Center survey. Only 33 percent had a favorable opinion. This is troubling on several fronts. It is a precipitous drop from nearly 74 percent in 2002. It is also wide spread, with only 27 percent of Independents being favorable and a measly 17 percent across the ideological board thinking the Federal government is careful with the public’s money.

The other epiphany from the Pew survey is that only the Federal Government has sunk under the waves of disrepute. Views of state and local remain relatively constant with favorable scores of 52 and 61 respectively.

This could be a clear case in favor of Federalism, localism, and the Tenth Amendment. It is also a clear case that there is something fundamentally wrong in Washington, DC. The cause of this disconnect goes far beyond partisanship. At its heart is how to make the workings of the Federal government accountable in a meaningful way. How can citizens break through the bureaucratic trenches to know what is really going on and do something about it?

One attempt at breeching Washington’s fortifications is the Digital Accountability and Transparency Act (DATA Act). This Act requires federal agencies to report spending information on a searchable Web platform. However, the operative term is report. It is a management maxim that the moment you stop what you are doing to report what you are doing the data degrades in both timeliness and accuracy. That is why corporations have invested in real-time information capture for decades. Corporations have built massive live databases to the magnitude of petabytes and exabytes to discover consumer trends, guide their supply and distribution chains, and track dollars down to the penny and the nanosecond.

The Federal Government wants to keep away from real time anything. Time lags are the allies of parsing, spinning, and obfuscating. Yet, the only way to finally and fully solve what ails the Federal Government is a requirement that every penny spent (minus clearly defined covert accounts) should be maintained in standardized live databases, complying with Generally Accepted Accounting Principles (GAAP), open the public, and searchable at all times.

This sounds like a quest for a fiscally accountable Holy Grail, but it can happen in the Federal Government, because it has happened.

In 1983, GSA Administrator Gerald Carmen wanted to institutionalize the operational integrity of the agency. His vehicle was to base the agency’s annual report on the SEC’s 10-K report, a document required from publicly held corporations. The GSA is the most financially complex agency in the federal government with its maze of reimbursable accounts, revolving funds, and capital funds overlaying massive account receivables and payables. The inventory of assets is also daunting, especially the evaluation and depreciation of all the non-Defense capital assets and inventories of the executive branch. There is also consolidating statements on each Cabinet Department and Agency and the National Defense Stockpile.

The GSA’s 10-K took a small GSA team less than four months to complete. I was part of that 10-K team. The report was unprecedented in providing a tangible example of how the real world could replace the fantasy world of federal accounting. The GSA’s Fiscal 1983 10-K was made public and was immediately ignored. No one wanted to see real accountability spread throughout the Executive branch – even one run by conservative Republicans under Ronald Reagan.

In 1995, as Chief Administrative Officer of the U.S. House of Representatives, I resurrected Carmen’s financial reporting crusade. In the early information age, an annual 10-K report could become a monthly or even a weekly release drawn from live financial databases commonly used in the private sector. By June 1996, it was done, thanks to an amazing team of CPAs and data management experts. It went live for 24 hours with CSPAN and other news outlets cheering its existence. Plans for a nonpartisan editorial board, ranging from Common Cause to Americans for Tax Reform, writing explanatory notes were underway. Republican leaders of the House charged into my office demanding it all be eradicated. Even conservative Republicans under Newt Gingrich felt this display of public information was “too public”.

Now in 2012, we have the DATA Act. It is a useful step in the right direction, but it falls far short of the disclosure revolution needed to refloat the federal ship of state. How many collisions with scandalous icebergs need to occur before a real solution is embraced?