"THE CATALYST" JANUARY - FEBRUARY 1998

"Brilliant minds" notwithstanding, NIH "nevertheless has to attend to the necessities of managing its vast enterprise," the reviewers noted in an intro to their report, undertaken at the behest of Rep. John Porter (R-Ill.), chairman of the House Appropriations subcommittee that oversees the NIH budget.

"The closer a given function is to the scientific mission," they observed, "the more likely it is to mirror the excellence of the scientific work." They cited extramural and intramural management as examples of this good news.

But the bad news is that the farther away from the scientific core an administrative function is, "the more recognizable" it becomes as a "normal federal bureaucracy."

To remedy the latter, the Arthur Andersen team offered 80 recommendations based generally around four strategies:

The authors suggest NIH conduct such business in the manner of a "holding company," with the OD providing leadership and oversight in uniform administrative performance standards, professional requirements and criteria for service, and "best practices," while the ICDs carry on with their individual appropriations and internal management structure so that "routine service is performed as close to the user as possible."

Regarding procurement, strategy is best articulated by the OD, whereas operational procurement units should reside in ICDs or service centers regarding personnel, the Office of Human Resource Management should be reorganized to better provide the ICDs with advisory services and regarding property, effective management requires a more user-friendly centralized, integrated administrative database, whereas property accountability and transactions should be ICD-based.

The idea that administrative and scientific operations of NIH can be separated is false, the reviewers say, because scientists cannot perform well in a poorly run institution and administrators who feel removed from the work of NIH may not be moved to greatest efficiency.

Technology transfer and extramural research management are two realms in which a partnership is particularly relevant. Regarding the former, the reviewers note that the Office of Technology Transfer has plans to educate scientists in reporting new technologies by making this subject the "centerpiece of orientation for newly hired scientists" regarding the latter, the reviewers call for teamwork to replace the bureaucracy that often characterizes the interactions between the review, program, and grants management groups within the institutes.

The reviewers "strongly recommend" that the NIH CFO move up in the hierarchy and oversee finance, procurement, and logistics the better to solve "longstanding problems" in these areas.

They advise that NIH carry out an intended reshaping of the chief information officer position so that the CIO heads the Division of Computer Research and Technology, the Office of Information Resources Management, and Telecommunications.

They recommend that the principal official responsible for acquisition (PORA) have jurisdiction over all procurement policy. The Office of Management Assessment, similar to an inspector general, could also be elevated to report directly to the NIH director.

4. Identifying and tracking costs and benefits by core function, the better to budget and the better to present NIH activities to Congress

NIH ought to refashion its budgetary and organizational chart around three core functions: extramural research, intramural research, and health information and education, with the current administrative budget "disaggregated to the greatest extent into the core functions" and the remainder left in administration.

The health information and education budget should reflect the NIH focus on education rather than public affairs. Tracking costs by core functions, the authors reason, would enable NIH to better assess costs and benefits for its own as well as Congress's edification.

Should NIH follow through on the Arthur Andersen recommendations, the authors conclude, it "could very well become a model for efficiency for other complex government agencies."

Different Strokes for Intramural Research Management

Following are excerpts from some key Arthur Andersen findings and recommendations regarding intramural research management.

"Seek to establish a separate NIH personnel system." "Scientific staff are frustrated by the federal personnel system's inflexibility and intramural research's unique requirements. The following two major findings arose from the intramural focus groups:

"Limitations of personnel system recruitment requirements and the inability to deal effectively with poor performers are "thorns in the side" of the intramural scientific community.

"A rule-bound government personnel system is probably more antithetical to the scientists than to federal employees in general. . . .

"Although personnel authorities--the Senior Biomedical Research Service and Title 38--have provided increased flexibility in hiring scientists and medical doctors, their presence have further complicated a very complex administrative function.

"NIH is one of very few agencies to have planned turnover. Training postdoctoral students, a large portion of the scientific staff, and accommodating the large summer influx of student interns, create an unusually large volume of personnel transactions.

"Accommodating the cumbersome federal personnel system for this volume of personnel actions propels NIH far beyond the demands of a typical government agency.

"Arthur Anderson strongly recommends a separate personnel system to meet NIH's own needs. The extra efficiency and reduction in the valuable time scientists devote to administration would greatly enhance NIH's ability to carry out its research mission."

"Encourage the rapid adoption of the purchase card and IntraMall approaches." Procurement is a vital support mechanism for the intramural research effort at NIH. Despite relatively low satisfaction levels for procurement, most ICDs have managed to make the procurement system work adequately for them. The results are far from optimal. Timeliness is the predominant issue. . . . Vendors of critical scientific supplies and equipment have sometimes refused to ship to ICDs because of slow payment.

"Procurement-function decentralization to date is at least partially responsible for [some] improvement. Further decentralization and accelerated use of purchase cards should bring additional improvements.

"A major perceived impediment of purchase card use is concern about the time necessary to reconcile the statement at month's end. Some ICDs have overcome these issues. the proposed function for intramural research administration (see below) could serve as a catalyst in promulgating the best practices.

"Establish a senior administrative leadership intramural research function." "The DDIR has sole responsibility for scientific intramural functions, including the administrative functions. The amount of the DDIR's time necessary to deal with administrative issues is often substantial, with one of two undesirable outcomes likely--either the DDIR is stretched too thin and the problem does not receive adequate attention, or the DDIR's time is subtracted from pressing scientific matters.

"The establishment of a new senior leadership intramural research function could provide improved communications linkage at the OD/HQ level as well as an improved communication path at the ICDs. Intramural research AOs need a communication liaison between the scientific directors and the various administrative services provided under the deputy director for management. . . .

"To foster a continuous-improvement culture, this new function should hold periodic meetings among the intramural research AO community to include a process for identifying and resolving common issues. If additional resources are needed, this new function should act as the ombudsman."

NIH Committee Reviews the Andersen Review

In the time-honored tradition of one committee leading to another, an advisory committee of NIH senior managers was formed to respond to the Arthur Andersen assessment and advise the NIH director on the feasibility, desirability, and order of priority of implementing the recommendations.

The committee response was delivered by Tony Itteilag, NIH deputy director for management, at the meeting late last year of the Advisory Committee to the NIH Director. The 15-member group of administrators and scientists endorsed the first three Arthur Andersen "themes" but advised that the fourth--the proposed new "budget/organizational paradigm," which would disaggregate the budget into extramural research, intramural research, health information/education, and general administration categories--be deferred for further study.

The committee set priorities for recommendations related to the other three themes, designating as "Priority I (short term)" those that could be implemented quickly or required a brief (though intensive) effort to remedy a long-standing problem, as "Priority I (long term)" those addressing complex issues that would require more time to implement, and as "Priority II" those addressing less serious problems and those that could be implemented without NIH-wide oversight.

Among those recommendations accorded "highest" priority within the short-term Priority I items were:

Eliminating payment backlogs and paying bills promptly
Elevating the chief financial officer position
Pursuing IntraMall technology
Streamlining the property management system
Creating an accurate NIH personnel database

Other short-term Priority I items included reorganizing OHRM to be a policy and problem-solving organization being aggressive in recruitment and accountability, according to Equal Employment Opportunity guidelines enlightening scientists about technology transfer and the outcome of negotiations requiring supervisors to collect badges and keys at separation and establishing an administrative leadership function to expedite intramural research management.

Among those recommendations accorded "highest" priority within the long-term Priority I items were:

Creating an information technology organization under a chief information officer
Decentralizing procurement service delivery
Financing policy functions through direct appropriations
Investigating a new personnel system
Developing performance standards for administrative functions.

Among those issues the advisory committee accorded Priority II status were consideration by ICDs of creating a chief financial officer function, consideration of outsourcing police and locksmiths, designating an individual to serve as congressional liaison on cross-cutting legislative issues, and changing the title of "Public Affairs" to better reflect NIH educational activities.

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